Colliers has reported a third quarter slowdown in Scottish office investments despite the £20 million sale of Equinor House in Aberdeen.
Total sales slowed from £340m in Q2 to just £40m in Q3, the weakest quarterly figure since Q2 2020 when no office transactions were recorded.
However, the £520m transacted during the first nine months of the year beat full-year figures for both 2020 and 2021.
Aberdeen delivered biggest Q3 sale
The largest deal by value in the third quarter was the £20m sale of Equinor House in Aberdeen to an unnamed overseas investor.
BNP Paribas Real Estate sold the Prime Four business park property on behalf of Golden Globe.
The 46,000sq ft building is fully leased to Norwegian energy firm Equinor until March 2032.
Equinor, then called Statoil, made its UK North Sea home at Prime Four business Park in 2015. Image: Richard Frew
Equinor House was developed by Drum Property Group for the occupier in 2015. Golden Globe had acquired it in 2018.
According to Colliers’ latest Scotland Snapshot, total investment into all Scottish commercial property markets slowed to £200m in the third quarter of this year.
This is well below the five-year quarterly average of £570m.
But the £1.7 billion total for the first nine months of 2022 is about 15% up on a year ago.
Investor sentiment cooled at the start of the summer. The fall in sentiment and pricing was far more pronounced following the ‘mini Budget’.”
The industrial sector experienced a “quiet” Q3, with just over £20m transacted across three deals, Colliers said.
Q3 saw a total of £70m invested in retail property, driven by the acquisition of Glasgow’s West End Retail Park and Cumbernauld Retail Park for £34.5m and £24.5m respectively.
Colliers research director Oliver Kolodseike said: “Scotland isn’t immune to the wider economic challenges that are sweeping the UK and, as such, we are seeing the Scottish commercial property market find itself in the middle of a re-pricing.”
We expect sentiment to improve and more transactions to take place when there is more certainty in the debt market.”
Elliot Cassels, director in the national capital markets team at Colliers in Scotland, added: “Investor sentiment cooled at the start of the summer.
“The fall in sentiment and pricing was far more pronounced following the ‘mini Budget’, when gilt and debt rates rose significantly.
“Whilst some investors pulled out of deals, there are still some under offer that are being renegotiated.
“We expect sentiment to improve and more transactions to take place when there is more certainty in the debt market.”