Commercial Property Market In Scotland Still Affected by Weak Economic Recovery

Scotland's economic recovery remains weak, in line with the slow economic recovery following the banking crisis felt across the UK and throughout the world. Though it is predicted that the negative growth of 2010 will be offset by growth in 2011, there are as yet, no stable foundations for a full recovery.

While the occupier markets are still performing at a below average level in Scotland, and the development sector is worryingly flat, the investment market seems to have gained a level of stability. However, trading is sparce and it is thought that such conditions will continue into the next 12 months.

For many companies throughout Scotland, the lack of any Grade A office space development has led to a reduced choice for companies seeking to expand their operations. A lack of funding, and continued reluctance to invest have hampered the prospect of any considerable new city centre development in both Glasgow and Edinburgh.

In Glasgow, renovation projects have been more prominent than any new-build office developments. Last week the iconic Grosvenor Building, located opposite Glasgow's Central station in the city centre, entered the Scottish property market following a £3m refurbishment.

The commercial landscape in Aberdeen however is entirely different. Due partly to the rise in oil prices, Aberdeen has experienced rising demand for office space in the Northern city. Take up figures over the last 6 months have increased by 45% to 355,209 sq ft and above. However, even in Aberdeen there is little Grade A office space available.

Just a couple of days ago, Aberdeen's IQ building was acquired by fund manager Aerium. The 6 storey building comprises of 125,000 sq ft, and was bought for £50m.

So while Aberdeen commercial property has witnessed something of a mini boom, the rest of Scotland remains in the grip of financial uncertainty, and a slow economic recovery.

Recent reports revealed that a combination of less active investors, and a restricted supply of stock entering the market, there are fewer transactions taking place. On the other hand, such a lack of available stock has led to heightened levels of competition which in turn has resulted in stronger prices being achieved.

Across the UK, it was reported that a sense of momentum in the property market was somewhat disrupted in April. Despite the apparent slowdown of investment and office space take-up, figures in April were in line with those of the previous April.