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The Scottish Commercial Property Market May 2017
We are almost midway through 2017 and the state of the Scottish Commercial Property market in Scotland continues to make for essential analysis. Neil Anderson MRIC, Lead Manager Planning & Performance, Location & Property Strategy at RBS, argues that the prime issues of the day in Scotland’s commercial property market are: ‘political, economic, supply and technology driven’ (Source); how exactly do these manifest?
Political uncertainty faces Scotland at present symbolised by Brexit, the possibility of a second Independence referendum and an up-in-coming snap General Election; there has been a downturn in market performance compared to last year which is likely explained by these factors.
However, Brexit, depending on the negotiations, and a second Scottish Independence referendum could, potentially, strengthen the Scottish economy as businesses are keen to relocate to the country away from the rest of the UK.
But equally, the potential loss of jobs and the resulting dip in the economy would place the property market on more uncertain terms; arguably, there is already some evidence of this in the depressed oil price of the Aberdeen market.
That said, there is some good news for the industry: investment which was more apparent in Edinburgh in 2016, is now balanced across Glasgow and Aberdeen: in excess of £330 million was transacted in the first quarter of 2017 (Source)
The change in the local economy away from high street retail opportunities towards large out of town developments and online shopping remains an issue — town centres are not as attractive commercial opportunities as they once were and so retail and office sectors are floundering; diversification is essential to keep up with these changes.
Out of town developments demand their own commercial property, however, and so this demand can balance the problems faced in town centres, for some time at least. Elsewhere, the industrial sector is performing well and unemployment is back below the UK average and so a demand for commercial property increases.
It remains in the interest of commercial property to attract technology and finance firms, particularly from overseas, to office space in Scottish cities as these industries continue their upward surge. Exchange Place in Edinburgh was recently purchased by a HSBC for £36 million and likewise in Glasgow, Credit Suisse purchased an Argyle Street property for £6.5 million and an increase in similar properties becoming available in 2017 and beyond are indicative of a potential upturn in this area. (Source)
In recent years, there have been some problem at a grassroots industry level in recruiting new employees to the commercial property profession, mostly due to a lack of education about the sector and the perceived low salaries that are offered by comparison to law, accountancy, and architecture. There is also a continued lack of women - only 15% of the workforce in our industry are women (Source) - as an industry we must work hard to attract young people and women to our ranks.
The annual RICS Commercial Property Conference, Scotland will see leading industry speakers, chaired by Anderson, meet in Edinburgh on 1st June to discuss the market and look to the future of the industry, the results of which will make for essential reading.