Office investment in Edinburgh and Glasgow reached £864m in 2017, well above the 10-year average despite ongoing economic uncertainties.

According to the annual regional cities office market review produced by Knight Frank , the total value of investment in Edinburgh dipped by 8 per cent. Glasgow , however, enjoyed a four-fold increase.

The number of investments remained at a similar level to 2016, but the value of transactions increased, with 13 deals in Edinburgh and Glasgow worth £25m or more. In Glasgow, 82 per cent of the investment was placed in the final six months of the year.

Prime office yields in Edinburgh came under pressure at the end of the year in the region of 5.00-5.25 per cent. In Glasgow, by contrast, yields remained steady at 5.5 per cent.

Overseas investment accounted for almost half of all transactions in Edinburgh and Glasgow, standing at 46 and 47 per cent respectively.

The availability of new Grade A space fell dramatically during the year, particularly in Glasgow, with only 61,000sq ft available near the end of the year. That was 78 per cent below the city’s five-year average.

Alasdair Steele, head of commercial in Scotland for Knight Frank, said the overall market remained resilient with strong demand from investors, particularly for prime assets.

“The acquisition of New Waverley in Edinburgh for a purchase price exceeding £100m by Legal and General is a perfect example,” he said. “It was the largest investment transaction of 2017 and indeed, represents the biggest single office sale in Edinburgh on record.

“Overseas investment accounted for a substantial proportion of deals in 2017, yet, encouragingly, we also saw the return of the UK buyer.

“Clearly, prime asset opportunities in Scotland remain highly sought after across the globe. In 2018, we expect to see competition between investors, coupled with a shortage of premium asset opportunities, contributing to hardening yields. For many organisatons, it’s clear that Scotland remains very much on the wish list.”

Source

https://www.insider.co.uk/news/investment-glasgow-office-property-surges-12096287

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