The combination of a depreciating pound, softening prices, and attractive yields will make Scotland an even more attractive prospect in 2017 for international investors, according to Knight Frank.
The advisory firm has predicted new entrants to the market from Asia and the Middle East in its forecast for the year ahead.
It also says UK funds should return to the investment market in Q3 or Q4 of 2017.
Patrick Ford, capital markets partner at Knight Frank, Glasgow, said: “From an investment perspective, we expect things to pick up again in Glasgow next year after transaction levels were relatively low in 2016, in the face of uncertain political and macro-economic events. A number of opportunistic buyers are sitting on substantial amounts of cash, waiting for the right opportunities to emerge.
“We expect to see UK funds re-emerge in the regions during Q3 or Q4 2017, after making their first plays in London in the first half of the year. We also anticipate overseas investors, who have been the biggest players in the Scottish market over the past 18 months, to remain the main purchasers of commercial property in Scotland’s central belt – certainly in Q1 and Q2, at least.
“The occupier market is set to do well in both Edinburgh and Glasgow with a lack of supply further driving rents and refurbishment projects. An increase in rent reviews reaching third-party determination is also predicted.”
Government Property Unit sites in both cities are set to attract retail and leisure tenants and drive regeneration schemes.
Iain McGhee, valuations partner at Knight Frank, Glasgow, said: “Next year’s revaluation is arguably the most anticipated for two decades.
“However, what we are likely to see is wide variations across sectors and locations in Scotland. Some areas have held up, or even moved forward, but out-of-town offices and high street retail in towns across west central Scotland are just two examples of markets completely re-shaped by the economic landscape.
“The upcoming revaluation should, and must, account for this period of unprecedented volatility by accurately reflecting these trends – whether property values rise or fall. Business rates are one of the main occupational costs for any organisation and it is therefore crucial that ratepayers take professional advice on their rates liabilities during this time of reassessment – particularly if they want to appeal.”
Listen to the podcast above to hear Alasdair Steele, head of Scotland commercial at Knight Frank, discuss how the state of the market this year has shaped the advisory firms 2017 predictions.
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