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Scotland recovered positive returns of 0.2% in Q1.
While Scotland continues to lag behind the UK as a whole, UK outperformance is being driven by the strength of the Central London property market, particularly the Central London office market. Scottish offices actually performed better than anywhere else in the UK outside of London and the South East of England.
Over the quarter there was also a slight easing in the pace of decline in Scottish capital values, from -1.8% in Q4 2012 to -1.4% in Q1 2013.
The pace of rental decline in Scotland in Q1 2013 remained unchanged at -0.4%.
Total returns were positive across all three property sectors.
Industrials were the best performing sector in Scotland with a quarterly total return of 0.9%.
£123m was transacted in the Scottish investment property market in Q1 2013.
Over 50% of Internet sales captured to date have been cannibalised from traditional non-store channels (mail order, traditional delivery, TV shopping et al) and electronically transferable goods (music, video, software, e-books etc): channels with no logistical obstruction to the transfer of sales online.
Profitably diverting mainstream store trade online is a much more difficult nut for retailers to crack because of the multi-channel investment required: evidenced by the online-induced margin dilution now apparent in both grocery and non-food markets as bricks-and-mortar retailers struggle to create viable multi-channel formats. The rate of online sales growth is progressively slowing as a result. For logistical cost reasons, click-and-collect is meanwhile winning-out over home delivery as a fulfilment channel.
This UK Retail ViewPoint paper explores how dwindling opportunities to divert further traditional non-store sales and electronically transferable trade online is resulting, for logistical cost reasons, in click-and-collect rather than home delivery emerging as the key remote shopping sales driver. As click-and-collect is largely space demand neutral, the impact of online sales growth is proving to be far less pronounced than expected; it is economic downturn, not the Internet, which is keeping letting activity sluggish.
Penthouses of the quality on sale in London cement its status as a home-from-home for the super-rich.
While you may find penthouses priced between £1.5m and £3m in Islington and Camden, in prime Central London the starting point for penthouses is closer to £4m. In the most desirable boroughs prices average £13m and can easily top £4,000 per square foot.
On average, penthouses sell for a 60% premium over the rest of a development.
The value of penthouses currently being sold in London now exceeds £1bn; when these are sold, this will generate over £70milion in stamp duty receipts.
Take-up in Southampton during Q1 has totalled 30,264 sq ft, comprising three deals. This included two deals within 2 Charlotte Place to AECON and Turley Associates.
Total available supply in Southampton has edged up by 3% during Q1 to 658,000 sq ft, as further secondhand space came to the market. Over threequarters of available space in the city is now secondhand.
Prime rents have held steady at £18.00 per sq ft, a position that has been maintained since the start of 2011.
Prime yields in all of the major regional centres edged out during 2012, but have stabilised during the first three months of 2013. In Southampton they currently stand at 7.25%.
April’s 0.6% total return for All UK Property was a slight increase on the 0.5% recorded in March while capital values remained unchanged from March.
Central London offices continued to outperform, however, the main driver in April was Mid Town offices with capital value growth of 0.5%.
All Property rental values remained flat for the fourth consecutive month. At the sector level Central London Offices recorded the largest positive rental value growth, driven by City offices, with rent increasing by 0.3%.
The volume of properties that are released for sale over the next two month period will ultimately dictate the outturn for the year considering the length of time it is taking to conclude transactions at present
Investor appetite remains relatively robust however, the lack of prime properties being offered for sale to satisfy this demand has stymied transaction volumes
With very strong interest in two prime investment opportunities currently on the market in Belfast & Dungannon, there is a clear need to release more assets for sale to capitalise on the volume of investor interest
Activity remains weak in the occupier markets with many office occupiers opting to remain in serviced accommodation which is impacting on take-up volumes
Limited activity in NI's retail sector with no notable new entrants over recent months although there has been a slight improvement in Belfast high street vacancy rates over the last 6 months
Retail occupancy in regional centres, has been primarily driven by local tenants attracted by rebased rental values and the ability to negotiate flexible lease terms
The five Target Express logistics facilities, currently on the market, are generating strong interest with local companies being the most dominant potential purchasers
A number of small hotels in the region have sold recently and this month sees the re-launch of the 5 star Lough Erne Hotel & Golf Resort in Enniskillen, guiding £10 million
The total number of multiple branches in Great Britain grew by 0.15% during Q1 2013.
Catering, leisure and service branch numbers grew respectively by 0.09%, 0.53% and 1.34% during Q1.
Retail branch numbers declined by -0.27% in Q1. Overall net branch growth on the quarter, at 0.15%, remains marginal.
The respective year-on-year change for catering, leisure, services and retail was 4.26%, 4.81%, 0.23% and -0.56%, a net overall change of 0.32%.
Speculative development activity is close to a record low. Expansion opportunities, in the prime stock most sought after by expanding chain traders, are now very limited. There are chronic shortages of larger-unit stock. Grocers, Pound shops and other large store players are all chasing the same dwindling supply of big unit space.
With little demand for poor quality secondary space and little new primary space coming on stream, chain retail expansion activity is set to remain subdued during 2013.
United Kingdom
Scottish Property Quarterly MarketView Q1 2013
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