Investment activity in Scotland fell to £149m from previous highs at the start of this year as the pandemic restrictions affected commercial property deals, according to new analysis by Colliers’ Scotland.
The property company said that the value of commercial property investment deals fell to £149m in the first quarter, down from £335m in the final quarter of last year.
It was more than 70% below the five-year quarterly average of £536m. However, Colliers expects a "strong rebound" in the second quarter of the year.
Yet, investment activity at the start of this year has already been much stronger than during the first lockdown in quarter two of 2020 when only £50m was transacted, the property agency found.
In the retail sector, deal activity came to a virtual standstill in the first quarter, totalling less than £10m.
It was down from £51m at the end of 2020 and much lower than the five-year quarterly average of £128m.
One notable deal involved the sale of 75 George Street in Edinburgh to an unnamed investor for £5.75m.
Office investment sales dropped to £55m in the first three months of the year from £136m in the last quarter of 2020, which was 70% below the five-year quarterly average of £170m.
However, Colliers found the sector showed an improvement in the second quarter of 2020 – the first national lockdown - when no office transactions were recorded - and there are signs of continued improvement.
The sale of the Cuprum Building on Argyle Street in Glasgow, covering 99,600 sq ft of office space, to Trinova Real Estate for £28.2m was the biggest deal of the first quarter by value in that market.
More than £30m was invested in the industrial sector, down from £94m at the end of 2020 and half the five-year quarterly average of £61m.
The largest industrial deal of the first quarter was the sale of a 124,000 sq ft distribution warehouse at Eurocentral in Motherwell to Lothian Pension Fund for £14.3m.
The largest deal of the quarter was Ares Management’s purchase of 301 student beds in Glasgow for £35m. It contributed to the student accommodation sector bucking the generally low level of activity, with investment volumes 20% above the five-year average.
Patrick Ford, director of national capital markets at Colliers in Glasgow, said: “Unsurprisingly, given renewed lockdown restrictions, it has been a slow start to the year in terms of commercial property investment in Scotland.
"However, we expect to see a robust rebound in investment volumes throughout this year, thanks to a significant build-up of capital waiting to target the market."
Oliver Kolodseike, deputy UK chief economist, research and forecasting, at Colliers, said: “Offices, retail and industrial all experienced muted levels of investment activity at the start of this year, well below their respective five-year averages.
“This was largely due to the impact of lockdown, including people being asked to continue working from home wherever possible.”
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