Scotland’s retail sector woes dragged down its commercial property market last year as customers continued to switch to online shopping.
Property consultancy Colliers International’s Scotland Snapshot report recorded “a very limited number of small retail transactions” during the final three months of last year. The total value of commercial property investment slowed from £718 million in Q3 to £396 million in Q4 2019.
For the whole of 2019, the value of commercial property deals in Scotland fell from £2.54 billion to £2.11 billion, according to Colliers' analysis of figures from PropertyData.
Rents in the retail sector are forecast to carry on falling as more shops lie empty, according to the firm. It also thinks rents in other parts of Scotland’s capital will be hit by the opening of the Edinburgh St James development.
Douglas McPhail, head of Colliers International in Scotland, said: “The Scottish retail sector is facing several challenges, including structural changes driven by changes in consumer habits and new technology. Therefore, retailers have to adjust by refining their business models and landlords will have to become more accommodating.”
Foreign investment accounted for 56% of all transactions in the wider Scottish commercial property market last year. Elliot Cassels, director of capital markets at Colliers International in Edinburgh, said: “Overseas investors spent £1.1 billion in 2019, the second-highest figure on record and accounting for over half of all commercial property transaction volumes.”
