Scottish commercial property sales hit lowest level in a decade as virus hurts

Edinburgh recorded the highest value of sales for Scotland but the figures were still well down on both the previous quarter and Q2 2019.

The Scottish Property Federation (SPF) said its analysis of the latest commercial property statistics from Registers of Scotland showed that sales amounted to £285 million in the second quarter of 2020.

That total is down 43 per cent on the first quarter of the year and 54 per cent behind the same period in 2019.

The SPF said second-quarter activity was heavily affected by the Covid-19 crisis and restrictions on property transactions and registrations amid lockdown.

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Scotland’s two largest cities, Edinburgh and Glasgow, both suffered sharp falls in activity during the second quarter.

Edinburgh recorded the highest value of sales for Scotland, with £91m transacted over the three months to the end of June, well down on both the previous quarter and Q2 2019, which saw sales of £126m and £108m, respectively.

Glasgow saw activity impacted by the pandemic, with total sales of just £24m, down some 86 per cent on the second quarter of last year.

SPF director David Melhuish said: “The SPF conducted a survey of commercial property owners in May that foreshadowed the extent that the industry would be effected by the pandemic.

“While reduced activity in the commercial property market was expected for this quarter, these figures indicate a much deeper and more rapid fall than we saw even at the time of the financial sector crisis in 2008-09.

“The extent of the fall in sales reveals a weakened wider economy, and consequently a reduced level of investment activity.”

He added: “The commercial property sector is facing a perfect storm of loss of income, minimal market activity and increasing liabilities in the form of empty property rates as businesses close stores or delay office moves.

“Unless we see a return to a sustainable level of business activity, the sector will struggle to produce the new buildings and places for a modern workforce, or to provide the quality property investments sought by long-term investors that provide reliable income returns for pension and life funds.”

A study last week by property consultancy Knight Frank suggested that Edinburgh’s office market was in a strong position to weather the recession, despite predictions of an industry shake-up amid the push to more home-working.

The firm said the vacancy rate for all grades of office space across the city was unlikely to exceed 8.5 per cent, less than half the rate registered in the aftermath of the financial crisis just over a decade ago.

The capital’s office market has been “resilient” during 2020, despite the challenges of Covid-19, the firm noted. Further analysis has found that occupiers are still looking for some 500,000 square feet of space.

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