Investment in Scottish offices hits all time record with £342m transacted in Q1 2018

Strong investor demand for Edinburgh against a lack of opportunities sees prices continue to inch up, notes the firm, with prime yields moving in a further 25bps (basis points) to 5 per cent in the first three months of 2018.

This sees the gap between Edinburgh investment opportunities, and those in the South, narrow, says Savills, with the Scottish capital now on a par with Leeds and Bristol for the very best space.

In Aberdeen, 2018 has seen higher levels of office investment during the first quarter (£131 million) than in the previous two years and it marks the strongest year of overseas investment into Aberdeen on record. The headline deal was LCN Capital Partners’ £112.5m acquisition of Aberdeen International Business Park, representing a 6.9 per cent yield.

In Glasgow where yields are currently 5.5 per cent, Savills says investor demand for prime lots remains strong evidenced by L&G LPI Income Property Fund’s acquisition of 3 Atlantic Quay for £50m and Hermes acquiring Skypark for an undisclosed sum.

Strong investment volumes reflect a healthy occupational story, says Savills, with take up in the first quarter of 2018 totalling 493,000 sq ft in Scotland’s core office markets (Aberdeen wider, Edinburgh city centre, Glasgow city centre), 9 per cent above the five year quarterly average. Savills forecasts core Scotland take up in 2018 will reach 1.8 million sq ft, in line with both the previous five year average and 2017’s level.

Over the next five years, Aberdeen, Edinburgh and Glasgow are forecast to see a combined 3.6 per cent office based employment growth, in line with the national average according to the firm.