Investment in Scottish hotels and offices booms
13th Aug 2018
Edinburgh’s office investment market is outperforming every other part of the UK outside London, accounting for just under a quarter of all activity in the past quarter, new figures show. The latest Big Nine report from property consultancy GVA reveals that, from a total of £500 million invested across regional cities in the period from April to June, the Scottish capital attracted £124m – the highest volume outside of London.
Activity in Edinburgh was bolstered by the two largest deals of the quarter outside London, which saw MAS Real Estate purchase New Uberior House for £71m and Chris Stewart Group sell The Mint Building to global property firm Hines for £53m. Pricing on The Mint, which sits off St Andrew Square, is said to have reached a record for the city and reflects the scarcity of quality stock in the market. Baillie Gifford, the investment firm, is taking over all 60,000 sq ft of Grade A office accommodation, extending over the ground floor entrance, seven upper floors and including fifth and sixth floor terraces. The building will be capable of accommodating up to 700 members of staff once completed in early 2019. GVA said the lack of development and supply was pressuring yields. Investment volumes in the capital are more than double the ten-year quarterly average of £59m, the firm noted.
Stuart Agnew, senior director in investment for GVA, said: “Sentiment in Edinburgh has been strong for some time and the latest figures only underline the confidence in the market. “Both domestic and international investors are interested in good quality stock with excellent liquidity and rental growth prospects and Edinburgh is well positioned to meet those needs.” Significant deals are in the pipeline in the next quarter, with 40 Torphichen Street and Blenheim House both under offer totalling about £50m in value. Meanwhile, a separate report has revealed that investment into Scottish hotels in the first half of 2018 reached £389.7m, doubling the total annual investment volumes recorded in 2017 (£195m). According to property advisor Savills, investment was spread across ten individual transactions and components of seven portfolios.
The firm noted that the ten individual sales that occurred were principally focused in the £1m-£10m price bracket, with the Caledonian Waldorf Astoria Hotel in Edinburgh being the only transaction above this bracket, achieving a sale price of £85m.. UK buyers were the biggest buying group, accounting for 41 per cent of activity, followed by Middle Eastern investors (22 per cent of transactional volume), Israeli investors (16 per cent), US investors (8 per cent), Canadian investors (7 per cent), Singaporean investors (5 per cent) and German investors (1 per cent). Steven Fyfe, associate director in the hotels team at Savills in Glasgow, said: “Investment volumes continue to build on the strong level of appetite we witnessed last year as we find ourselves already surpassing last year’s total annual volume at the half year point. The spotlight is still firmly fixed on Scotland for hotel investors.”
Source: Scott Reid, The Scotsman, 10/11/18 - https://www.scotsman.com/business/companies/capital-s-office-investment-market-is-star-turn-1-4781278
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Good presentation of material and exploration of the challenges