News
Lismore: Scottish commercial property transactions fall 15% in second quarter
Scotland’s commercial property market recorded £272m worth of transactions in Q2 2024, a 15% drop compared to Q2 2023 and 31% below the 5-year average, according to Lismore Real Estate Advisors.
The property consultancy firm says fewer larger ticket sales, combined with continued uncertainty in the market over the timing of future interest rate cuts and the impending general election have affected transaction volumes.
The biggest deal of the quarter was Corum Asset Management’s £45.8m acquisition of 1 West Regent Street in Glasgow, followed by Remake Asset Management’s £36.6m acquisition of its headquarters buildings, 2 Greenmarket in Dundee and 4 Pacific Quay in Glasgow, leased to BT and STV respectively from LondonMetric.
Other transactions of note include Ropemaker Properties’ £14.725m sale of four prime industrial units on Fullarton Drive in Cambuslang to Ediston clients and the £23.5m off-market sale of Malmaison in St Andrew Square in Edinburgh by Associated British Foods for Patrizia customers.
The logistics and multi-let sectors continue to see strong demand, with prime yields around 6%. Office yields are improving, while retail parks offer attractive value with yields of 6.50-7.00%. High street properties in prime locations and residential investments remain attractive, with prime BTR and PBSA yields holding steady at 5.00-5.50%.
Director of Lismore Chris Macfarlane said: “Despite a slower-than-expected quarter, standoffs between buyers and sellers are easing, with buyer activity picking up and momentum improving.
“The fund’s activity remains selective and largely opportunistic, focusing on the housing and logistics sectors, with retail warehousing gaining interest. Core-plus buyers could benefit from potential interest rate reductions, while private equity shows interest in pressured sales and good value shares and long leases, indicating less pain than expected and expanding their investment scope.
“We anticipate that expected interest rate cuts by the fall could improve debt terms, although development will continue to be hampered by persistently high construction costs and uncertain exit prices.
“During the general election, we hope that the winner will promote 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 us hope that competent leadership will drive our future.”