How general election uncertainty has taken its toll on Scotland’s property investors

Scotland’s commercial property market has been dogged by pre-election political uncertainty with investment deals falling by 15 per cent in the second quarter, new figures have revealed.

Transaction volumes during the three months totalled £272 million, down 15 per cent on the same period a year earlier and 31 per cent below the five-year average, according to the latest findings from property advisory firm Lismore Real Estate Advisors.

The firm noted that a smaller number of larger ticket sales, combined with “continued uncertainty” in the market over the timing of future interest rate cuts and the impending general election had affected transaction volumes.

The largest deal to be concluded in the second quarter was the acquisition of 1 West Regent Street in Glasgow, by Corum Asset Management.

The largest deal to be concluded in the second quarter was the £45.8m acquisition of 1 West Regent Street in Glasgow, by Corum Asset Management, followed by Remake Asset Management's £36.6m acquisition of HQ buildings, 2 Greenmarket in Dundee and 4 Pacific Quay in Glasgow, let to BT and STV respectively from LondonMetric.

Lismore director Chris Macfarlane said: “Despite a slower than anticipated quarter, buyer-seller standoffs are easing, with increased buyer activity and momentum improving. Fund activity remains selective and quite opportunistic, focusing on living and logistics sectors, with retail warehousing gaining interest.

“We anticipate that the expected interest rate cuts by autumn may improve debt terms, although development continues to be hindered by stubbornly high build costs and uncertain exit pricing. Amid the general election, we hope the victor fosters optimism, creating a business-friendly environment for sustained economic growth. Effective governance is crucial for job creation, economic prosperity, and social well-being. Change brings opportunity - let’s hope for competent leadership to drive our future forward.”

Other noteworthy transactions in the latest quarter included Ropemaker Properties £14.73m sale of four prime industrial units at Fullarton Drive in Cambuslang to clients of Ediston and the £23.5m off-market sale of Malmaison at St Andrew Square in Edinburgh by Associated British Foods to clients of Patrizia.

Lismore noted that logistics and multi-let industrial properties continued to see strong demand, with prime yields around 6 per cent. Office yields were improving, it added, while retail parks offered “compelling value” with 6.5 to 7 per cent yields.