Edinburgh property investment volumes soar

There has been a sharp rise in the number of overseas investors taking advantages of some ‘compelling income returns’ in Scotland, particularly in Edinburgh, newly released figures show.

According to Savills latest research, Scottish commercial investment in 2016 to the end of Q3 reached £1.04bn, with Edinburgh seeing £478.8m invested - the city’s highest level recorded for this stage in the year since 2007.

Key Scottish property deals include Aberdeen Property Investors buying Dundas House, Edinburgh for £25m, TRUIVA purchasing Waverley Gate, also in Edinburgh, for £63m and the FORE Partnership paying £23.25m for 50 Bothwell Street in Glasgow, with all three deals completing post Brexit.

Rod Leslie, associate director in the investment team in Savills Scotland, said: “A move by investors to redistribute money away from the more volatile stock markets, lower yielding gilts and riskier equities, together with an improved debt market and stabilised liquidity within the retail funds, have all combined to maintain a healthy level of investor activity in Scotland’s real estate sector.

“Commercial property continues to offer a compelling income return when compared to other asset classes.”

Of the total volume across Scotland, Savills report that 41% was transacted by overseas parties, attracted to the discounts the devaluation of sterling has allowed for with entry prices appearing 15-20% cheaper than four months ago.

Yet aside from resulting reductions from currency movement, Savills points out any concern over a widespread fall in property prices following Brexit have subsided.

Leslie added: “The few discounted acquisitions that emerged as open-ended retail funds took measures to create liquidity have quickly passed and we have returned to a relatively normalised market driven by investors chasing the defensive long income and covenant related deals.

“Discounts allowed for by the fall in sterling and a perceived value in the regions, versus London, has led to an influx of overseas investors into Scotland.”