What’s in store for the Scottish property market in 2019?

David Davidson, Chair of Cushman & Wakefield in Scotland comments:

“The main (only?) topic of conversation currently is Brexit. It is an undoubted black cloud on the horizon for occupiers and investors alike, but its impact will be felt across the whole of the UK and not just Scotland.

A short-term benefit of the Brexit negotiations has been some investor caution on the London market and the high pricing levels there relative to the risks of future market adjustment.

Aided by the UK’s weak currency, this has created a wave of new investors coming to the UK regions in 2018 seeking higher yields. At Maxim Business Park, near Glasgow, which we sold for £38m in September, we had new investors inspecting from Australia, South Africa, India, Singapore, and Northern Ireland, in addition to the usual investors from our local market and from London.

2018 has seen a surprisingly strong occupational market for offices, with high take-up and rising rental levels. Investment levels are up and international interest in the market is strong.

So, with my ‘Brexit will be ok – because surely it has to be?’ glass, what do I predict for 2019 in Scottish Property?

  • More office pre-lets – with no new supply coming through, tenants are having to look at longer term commitments. The Government Property Agency (formerly GPU) will lead the way but watch out for at least two large corporates to sign pre-lets in the Central belt.
  • Speculative space to commence – In addition to ‘the Haymarket’ office element starting on site at least three other schemes will start construction in 2019.
  • PRS – At least three developments start with UK Institutional fund backing. The economics for PRS for main stream investors has not worked so far in Scotland. This is going to change as pressure to invest increases.
  • Retail – Increased trade in the Shopping Centre market – pressure is growing for a re-pricing of secondary and tertiary retail centres which will then create buying opportunities for developers and opportunity Funds.
  • Aberdeen market activity to increase – Whilst the economy is diversifying and less reliant on oil and gas, the much-improved oil price will lead to increased confidence and activity across all sectors. Aberdeen looks under-priced.