Knight Frank: Commercial real estate investment soars

SCOTTISH commercial property had its best first half of the year for investment volumes since 2018 as the market continued its recovery from the Covid-19 pandemic, according to new analysis.

Knight Frank, the independent commercial property consultancy, found that £1.2bn of commercial property deals were completed between January and June 2022, up 54% on the same period last year .

This figure is also 21% above the five-year average – although it was distorted by low investment volumes in 2020 and, to a lesser extent, in 2021.

Overseas investors accounted for over two-thirds (68%) of the total investment figure, or £843m, with UK property companies being the second most active buyers totaling £296m, or 23.9% of volumes global investments.

Investment in retail assets increased by more than 55% compared to 2021, from £148m to £230m, with retail warehousing accounting for £165m of the total figure.

Source: Knight Frank

Offices were the most popular asset class with £410million in deals, boosted by the sale of HFD Group’s 177 Bothwell Street in Glasgow in what is seen as a record deal for Scotland.

Edinburgh saw £400m of investment, while Glasgow accounted for a further £329m. Deal activity in Aberdeen continued to accelerate, reaching £189m, largely driven by the sale of two retail warehousing assets.

Alasdair Steele, Head of Scottish Trade at Knight Frank, said: “The first half of the year highlighted some key trends that have emerged over the past two years: retail warehouses and industrials remain in strong demand, while prime office space is in high demand – underscored by the deal for 177 Bothwell Street.”

HeraldScotland: Source: Knight FrankSource: Knight Frank

He also said: “Similarly, foreign investors accounting for such a high share of investment over the past six months also highlights the strength and depth of the buyer pool for Scottish commercial property.

“An uncertain macro-economic outlook will likely dampen deal activity over the next two months. However, commercial real estate has generally acted as an inflation hedge for investors and, with returns in major cities around the world, In Scotland relatively cheap and supported by strong occupancy markets, we expect interest to remain strong in the second half of the year.

WHEN Laura Leigh Kerr told her parents she wanted to become a hairdresser, her decision was met with “horror and dismay”.

The teenager was a high achiever, earning top marks in her fourth-year exams, and had set her sights on college.

IT has been a good month for getting out and visiting companies – a combination of less scheduled meetings and events for me and a reality that very few of our manufacturers are now taking official holiday stops make this a great opportunity to see and hear their successes and challenges are.

The reasons for joy continue to be orders and demand, backlogs and backlogs generally across the board, providing reassurance that current and future costs will be absorbed, and as long as we are all realistic about these costs – by focusing on the things we can control, not the ones we can’t – profitability and welcome business sustainability can be achieved.

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