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Go with the flow

Jamie Addison-Scott explains the sources of equity in the Scottish investment market over the past 10 years.

There has been a clear increase in transaction volume as inflows into Scottish commercial property have risen from £900m in 2008 to more than £2.2bn in 2017. 

2013/2014 - Very high demand for Scottish commercial property with institutional money creating significant competition. Within that timeframe transactional purchases from UK institutions are in the region of £2.3bn

2015 - Scottish Independence referendum deters UK institutional spending

2015 - Overseas investors fill this demand and spend more than £1bn.

2016 - Investment decisions delayed in the months approaching Brexit. Certain overseas and opportunistic investors take advantage of the market conditions (10% - 15% discount), and are top spenders. Weakened Sterling also fuels increased demand from abroad.

2017 - Foreign capital continues to pour into Scotland, an example being Al Rashed’s purchase of Saltire Court, Edinburgh for £71m. Middle/Far Eastern investors are the biggest spenders, with almost £400m deployed across all sectors, an increase of more than 200% on the five-year average.

As we are now well into 2018 we expect to see a further increase in investment volumes and a year uninterrupted by elections or referendums. 

We anticipate that the yield gap between Scottish assets and their English equivalents will reduce further, possibly to within touching distance. 

Market and investor sentiment is that the likelihood of Scottish independence remains low. With UK institutions now back in the Scottish market, this will fuel improved pricing in certain sectors and locations. 

There are early signs of overseas investors starting to sell out of assets, with more than £500m of sales during 2017. 

Our view at Galbraith is that the amount of overseas equity targeting the UK and Scotland is still extremely strong. We are also seeing a variety of overseas requirements in the market and sources of overseas equity might include: 

• Private ultra high net worth investors 

• US private equity 


• German pension funds 

• Chinese banks 

• UAE family offices 

• Sovereign wealth funds 

• Korean and Japanese asset management houses 

To discuss investment opportunities, please contact Jamie Thain or Will Sandwell in our Commercial Investment Team.