Ryden reports on the 2021 outlook for Scotland’s real estate sectors.
The industrial market has been turbo-charged with demand hitting limited supply. Proactive landlords will be refurbishing vacant space this year. Development response is building but struggling to find readily developable land. Rental growth is strong but needs to be higher before developers risk additional development costs.
Development land is also sought by the residential sector. While demand stalled in early 2020 the market for well-located sites is back to pre-covid levels in Scotland and Build To Rent continues to compete with mainstream housebuilders for key city sites. Although only one BTR development completed in 2020 the pipeline is sitting at c. 9,000 units.
Office take up fell in Scottish cities as it did around the world. Occupiers planning a return to the workplace signal market recovery which could start to build from Q2 2021 as restrictions ease. There is an expectation of ‘grey’ surplus space returning to the market although so far there have been limited examples of this. Grade A space remains in short supply in Edinburgh and Glasgow.
Structural change in the retail market is well underway. Established retailers will invest heavily to ensure their physical stores interact with their online activities to offer the shopper a full experience and reason to visit. Some new store requirements continue from value supermarkets and drive-thru operators.
Dr Mark Robertson, Ryden Managing Partner and Scottish Property Review editor, commented:
“The pandemic is forcing adaptation towards agile working and online services which is still washing through the property markets in Scotland. For industrial units and warehouses demand has been fast tracked as businesses transfer their real estate from other sectors.
“Property investment transactions have picked up again with a significant rise in trading which started in Q4 2020. The shift to Alternatives has accelerated and while industrial continues to be the star performer there is ample money for investment in both those sectors and some opportunistic potential elsewhere.”
Download the 86th Scottish Property Review here.