and sales of distressed stock on the increase
Continued interest in Scottish property from overseas investors is confirmed in Lambert Smith Hampton’s (LSH) latest UK Investment Transaction (UKIT) report. The report also confirms a significant increase in sales of distressed stock.
In the second quarter of 2011, Scotland saw £300m of investment transactions, reflecting only 5% of the total UK transactions. However, over £100m of these acquisitions were by overseas investors.
Bill Binnie, Head of Capital Markets at LSH in Scotland, was encouraged, stating “This level of overseas investment is substantially greater than any other region throughout the UK, outwith London and the South East, reflecting the quality of investments and the perceived prospects for strong returns over the medium term.”
The most significant transactions overall in Scotland were the acquisition of IQ in Aberdeen for £50m by Aerium Finance and Gatehouse Bank’s purchase of the Rolls Royce facility at Inchinnan (£52.7m). This follows on from a number of other overseas investments in recent months in Glasgow, including the acquisition of Equinox House by Union Investments (£28.3m) and 110 St. Vincent Street, by Europa REI (£40m).
Mr Binnie also highlighted the report’s finding that sales of distressed stock had increased. He said, “Over the last quarter, almost 15% (£1bn) of transactions in the UK involved properties being sold by administrators. Whilst banks have been reducing their exposure consistently through consensual sales, and we see this continuing, this recent significant increase in forced sales reflects the banks’ drive to reduce the level of debt held against commercial property.”
“Whilst the latest figures once again show a strong bias to London, it is only a matter of time before similar distressed stock is placed on the Scottish market, presenting attractive opportunities for investors before the end of the year.”
The latest UKIT report confirms the continued focus on London and the South East for property investment in the current economic climate.
The report recorded £6.6bn worth of investment transactions in the second quarter of 2011, of which, £4.7bn (74%) was within London and the South East, reflecting the market’s continued concerns over the UK economic recovery and its impact on future rental growth.