LEADING independent property advisory firm Lismore Real Estate Advisors today released its comprehensive quarterly review of the Scottish investment market, which has seen a strong start for 2022.
Transaction volumes for Q1 are up 260% compared with Q1 2021, which was significantly affected by the pandemic. At c£630m, volumes are 35% over the five-year average, the first time this has happened in three years.
The top three deals for the quarter were the £140m sale of Silverburn in Glasgow, the £111m sale of Westway Park in Renfrew by Canmoor to Ares Management and Patrizia’s £78.05m sale of Waverleygate in Edinburgh to Kennedy Wilson.
Chris Macfarlane, Director of Lismore said:
“Prime distribution pricing is hardening, with investors continuing to chase opportunities, which is likely to sustain pricing during 2022. Opportunistic buyers are seeing value in prime shopping centres and investor appetite remains for the best re-priced quality assets.
“Retail warehousing remains in demand, but stock is limited and competition for the best assets is fierce. High Street retail shows signs of recovery, albeit with pricing discounted, offering opportunity for those willing to dip their toes in the water.
“However, economic pressures, including cost of living and rising energy prices are expected to push inflation to a 40 year high of 8.7% by Q4, so there is the potential for a knock on effect filtering through to retail spend.”
In terms of pricing, the distribution sector saw the strongest yield compression of 75-100bps over the quarter, with retail warehousing and PBSA are also seeing a sharpening of yields.
The distribution/logistics sector continues to attract a significant weight of capital with prime Scottish assets still looking like reasonable value compared to south of the border.
The US remains the most active source of overseas capital particularly targeting retail warehousing and core plus offices. South Korean investors remain the most active vendors for larger assets, primarily on the back of some institutions unable to secure sufficient syndication in their domestic markets