International investors are taking advantage of caution amongst their peers in Scotland to snap up commercial properties here. Reticence on the part of both domestic sellers and buyers – a lingering legacy of the crash 10 years ago combined with more recent political uncertainty – is behind the phenomenon.
Overseas buyers ploughed £300m into Glasgow’s office market alone in 2017, significantly outspending domestic buyers during the city’s busiest 12 months for office investment since the financial crash. A total of £461m was spent across 23 office deals in 2017, Glasgow’s highest volume for investment deals since 2006, when a total of £367m was spent.
Ten of Glasgow’s 23 deals last year involved international buyers, accounting for 65% of 2017’s total volume, showing the prominence of global currency in the largest sales. In 2016, when £208m was transacted across 14 deals, foreign buyers made up 52% of the volume. Of the 11 deals transacted in 2006, only one was a led by a European investor, and two Irish Investors with the rest accounted for by UK investors.
Glasgow has witnessed a significant increase in interest from investors in Asia, New Zealand, the Middle East, Europe and America in recent years. The city’s appeal for international investors is due to a number of factors including reduced competition from UK Institutions, value for money, a weakened pound, and strong local market fundamentals.
It mirrors a trend in Edinburgh where 93% of investment into offices in 2016 came from overseas, highlighting the capital’s profile amongst international buyers. For overseas investors, faced with volatility in America, eastern Europe, and the Middle-East, the UK and Scotland offers a relatively safe and stable environment.
So, where are the Scottish buyers? “There are some active investors,” said Graham Waddell, Director of Singer Vielle Scotland. “but our experience tells a different story. In many cases, they are sitting on cash but don’t have the appetite to spend. We’ve experienced a healthy run of transactions in the past six months, and the majority of buyers are from England, Ireland, or overseas.
“Are Scottish buyers too close to the market, too cautious and in conjunction with agents suffering from paralysis by analysis? With the more pro-active investors coming from outwith Scotland, that would seem to be the case. They are recognising the value in Scotland and are willing to buy based on quality of covenant, income stream and return.”
Analysis conducted by the Scottish Property Federation (SPF) on commercial property sales figures for Q3 (July – September) 2017 revealed the total value of transactions in Scotland fell for the third quarter in a row. The figures, which were released by the Registers of Scotland, show that there was just £693m worth of sales in Scotland during the quarter, down 12% on Q2 2017.
The number of sales also dipped between Q2 2017 and Q3 2017 with 1,089 commercial property sales in Scotland, down 8% (101 sales). Furthermore, Q3 2017 saw a big drop in the number of £5m+ commercial properties sold in Scotland, with transactions at this level of the market at their lowest since Q2 2014. There were 22 commercial properties sold at the £5m+ level, securing a total value £332m. This figure is significantly down on the previous quarter (Q2 2017), which saw 32 sales with a combined total of £385m.
“I am sure this came as no surprise to many commercial agents, particularly those working in the investment sector,” said Waddell. “But we are well positioned when marketing commercial investments for sale.”
Singer Vielle has developed a modern and unique sales platform, which combines cutting edge technology with proactive due diligence and high-quality marketing material comprising photography, video, and aerial imagery to create a bespoke ‘shop window’ for each property. It achieves greater value for both sides in a transaction, and faster completion of sales. The company also has true international reach.
“Our database gives us access to a wealth of investors throughout the UK and worldwide, with our sales particulars being translated into six languages. The high quality of our marketing allows potential purchasers to clearly understand the assets we are selling, enabling us to transact very quickly once a property is brought to market. Whereas traditional agents can take three to four months, we look to complete sales within four weeks of marketing.
“I’m excited about the next 12 months as we continue to build brand awareness within the Scottish market on the back of a very successful 2017. We continue to pick up sales instructions from a variety of clients, including property companies, private investors, and pension funds, ranging in value from £350,000 to more than £1.7m”
About Singer Vielle
Since its launch, the company has gained recognition, from buyers and sellers alike, as industry leaders in delivering a superior marketing service for the disposal of commercial property investments. Its unique and modern approach delivers significant and proven advantages over the traditional methods. Benefits of its market leading approach include:
- Unrivalled quality of presentation with UK and global reach
- Speed to market with proven results
- Highly cost-efficient marketing