3 Mar 2017
Recent analysis from the Scottish Property Federation has shown that the total value of commercial property sales in Scotland declined 13% in 2016 - the first annual fall since 2012.
Commercial sales data from Registers of Scotland revealed that in Q4 of 2016 (Oct-Dec) the usual pre-Christmas boost in transactions was less pronounced, adding to a weakening demand for commercial properties reflecting a wider slowdown in the economy.
Scotland’s major cities, with the exception of Edinburgh, mirrored the national slow down. The commercial real estate market in Aberdeen continues to be a casualty of low oil prices with the market data for October to December 2016 showing a 15% decline in the number of properties sold when compared to the same period in 2015, while Glasgow witnessed a fall of 30% in commercial property transactions. In Edinburgh the market remained buoyant, with the number of commercial properties sold increasing by 2%.
A strong commercial real estate market is important for the wider economy and indeed the Scottish Government if it is to meet its revenue targets for the devolved Land and Buildings Transaction Tax (LBTT). The slowdown in commercial property transactions has left the government over £23m worse off from the sector than during the same period in the 2015/16 tax year.
In the 2016/17 Scottish Budget, Ministers expected to generate £220m from commercial LBTT. With only February and March left to report there is still £73m needed to meet government expectations, a gap that is highly unlikely to be closed.
David Melhuish, Director of the Scottish Property Federation, said:
“A strong commercial real estate market is not only important for the Scottish economy as a whole, but also for the Scottish Government - as shown by recent LBTT revenue figures. We have to work collectively to ensure that we see activity and confidence levels in the commercial property markets boosted.
“We need to support commercial development to provide new offices, leisure and industrial buildings across Scotland that are right for modern businesses of all sizes. There are some fantastic developments such as Edinburgh St James but they are simply too few in number right now.
A better resourced, motivated and higher performing planning service that is open to investment, combined with supportive business rates policies for new development are two proposals that would help to stimulate investment in the Scottish markets.”
Note: All figures quoted are extrapolated by SPF from the Registers of Scotland. You can see the full set of figures here: http://www.scottishpropertyfederation.org.uk/sites/default/files/resourc...
About Scottish Property Federation
As a membership organisation the Scottish Property Federation (SPF) is the voice of Scotland’s real estate industry. Established in 2007, SPF represents 185 organisations operating in Scotland. We include among our members: property investors including major institutional funds, developers, landlords of commercial and residential property, and professional property consultants and advisers. The SPF works closely with those who advise and decide on public policy in Scotland to ensure that they are aware of the consequences of their decisions for the property industry and wider economy.
As part of the British Property Federation we also benefit from close links with the leading UK property companies and investors in the UK as well as the BPF's contacts with Westminster.
For more information, please visit http://www.scottishpropertyfederation.org.uk or follow us on Twitter @ScotPropFed.