Scottish commercial property sales value suffer first consecutive quarterly drop in five years

For the first time since 2012 the total value of commercial property sales in Scotland has fallen in two consecutive quarters, according to figures released from the Registers of Scotland and analysed by the Scottish Property Federation (SPF).

The total value of commercial sales in Q2 2017 (April to June) fell to £785 million, down from £795 million in Q1 2017 and £982 million in Q4 2016. The figures also show that there was a year-on-year decline in the value of commercial sales, which were 4.2 per cent lower than in Q2 2016.

Investment in Scottish commercial real estate also fell sharply with CoStar reporting £330 million invested across all commercial property sectors in Q2 2017 - a drop of 60 per cent quarter-on-quarter and 42 per cent below the five-year average.

Regionally, Edinburgh continued to show its strength with £260 million worth of sales in Q2 2017, accounting for a third of the Scottish commercial property market value in the quarter. The Capital also sustained its dominance of the market in Scotland with strong year-on-year growth in total sales values, up 16.6 per cent compared to Q2 2016. This is in contrast with Glasgow, for example, which saw a 9.7 per cent fall in sales values.

A partial recovery appears to be taking place in Aberdeen after challenging market conditions in 2015 and 2016 caused by the collapse in oil prices. In the first 6 months of 2017 the total value of commercial transactions in Aberdeen was £177 per cent, up from £75 million in the same period in 2016 - an increase of 136 per cent.

Director of the SPF, David Melhuish, said: “The figures reflect the unsettled and unequal nature of the current commercial real estate market in Scotland, with Edinburgh continuing to grow ahead of other locations.

“Despite better news recently for the wider economy in Scotland, the commercial real estate industry is not seeing this translated into increased sales and investment.

“We expect the commercial property investment market to continue to be a challenging environment to operate in the immediate future, making it more vital than ever for Scotland to show that it is open for business and is willing to compete for investors.”