Commercial property market in Scotland ‘subdued’ – Daily Business

Property demand has fallen (pic: DB Media Services)

Demand for commercial property in Scotland was “subdued” through the third quarter, though rents are expected to rise over the next three months, according to the latest survey.

A majority of Scottish respondents to the Royal Institution of Chartered Surveyors (RICS) commercial property monitor, noted that overall occupier demand fell through Q3.

Investor demand is relatively muted, with a rise in investor enquiries in all sectors, indicating a relatively flat picture.

In terms of the short-term outlook, Scottish respondents are relatively optimistic about rental growth, with a majority expecting rents to rise over the next three months.

Capital values are expected to fall broadly flat over the next three months. Industrial is the only sector expected to see a rise in capital values in the short-term.

John Duffy of Colliers International in Glasgow commented: “High street and shopping centre values are stable. There is upward pressure on retail park values.”

Leigh Porteous of DM Hall in Dunfermline said: ‘The market has slowed in the last few months with fewer enquiries. Values are not yet affected but it will take time to reflect.’

Commenting on the UK picture, Tarrant Parsons, head of market research and analysis at RICS, said: “The latest survey results point to a more challenging backdrop for the commercial property market, with the investment side bearing the brunt of higher borrowing costs following the recent rise in gilt yields to their highest levels in almost two decades.

“As financing conditions have tightened, expectations for capital value growth have softened, particularly in the near term.

“That said, market conditions remain far from uniform. Occupier demand has proven relatively resilient, albeit somewhat less robust than in the previous quarter.

“Prime offices and industrial assets continue to outperform, with respondents still anticipating rental growth and modest capital value appreciation across these segments over the year ahead.

“In contrast, sentiment towards secondary assets has weakened further, highlighting an increasingly pronounced divergence in performance across the market.”

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