Ryden Publishes Latest Scottish Property Review
31 October 2008
Ryden has just published the latest edition of its highly respected Scottish Property Review. The publication is recognised as a barometer of the wider Scottish economy, as well as the industry’s most in-depth and longest running study of the nation’s property market.
Commenting on the findings in the 63rd Review, Dr Mark Robertson, editor of the publication, said: “The third wave of the credit crunch is breaking across the property market. The first wave diminished investment values. The second halted development projects. The third is the impact on the business economy, as occupiers evaluate their property needs.
Our 63rd Review demonstrates a downturn in the retail sector, a slower but active office sector and an industrial sector which remains relatively unscathed.”
A summary for each of the Review’s key areas is below – see the full report for further information:
Economy
The ongoing credit crunch is beginning to constrain economic activity and dampen expectations for future growth. Unemployment has increased and retail spending growth is slowing. The number of new businesses has decreased, but fewer businesses have failed.
Offices
Office market demand is running at around average levels, as slowing market activity in Glasgow and Edinburgh is offset by high demand in Aberdeen.
Industrial
2008 continues to be a busy year for the industrial property market. It is inconceivable that the industrial sector will remain immune from the wider economic slowdown, but it appears to be business as usual for the moment. The most significant threat is a lack of credit impacting on sales and development.
Retail
Retail sales in Scotland increased by 0.7% over the 12 months to August 2008 on a like-for-like basis. This growth is mainly as a result of the food sector, which is substantially outperforming the non-food sector (source: SRC/RBS). The Ryden Retail Rent Index has declined by 1.5% since March 2008, as prime retail rents have fallen in Aberdeen, Dundee, Greenock, Hamilton, Irvine and Perth.
Investment
The investment market continues to be afflicted by falling values, as supply of property exceeds purchaser demand and transaction volumes run at low levels. Occupational market activity has held up, although rental growth is now slowing.
Investment values have fallen by up to 25% over the past 12 months. The fall will probably bottom out within the next six months, providing value to the seasoned investor at yields which properly reflect risks and returns.
As and when the bottom is reached, the landscape of the commercial property investment market, the active participants and the role of the banks will all have changed.
