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Investment in Scottish commercial property hits £2.3bn in 2017
Brief:As money spread throughout the country and across the office, industrial, retail and leisure sectors.
 
Investment into Scottish commercial property surged in 2017 as money spread throughout the country and across the office, industrial, retail and leisure sectors.
 
According to figures compiled by Savills, investment reached £2.3bn, 37 per cent ahead of the 10-year annual average of £1.7bn. The figure was boosted by 36 deals worth £20m or more, more than double the number of deals of that size recorded in 2016.
 
And unlike 2016 - when the £1.9bn invested was dominated by forward funding of the Edinburgh St James - last year's investment was spread across all the major sectors. Savills also noted a "healthy mix" of activity across Scotland.
 
Glasgow accounted for 38 per cent of activity, with £867m invested, followed by Edinburgh at 35 per cent (£794m), Aberdeen at 8 per cent (£174m) and 20 per cent (£461m) invested elsewhere in Scotland outside the three cities.
 
The overseas market accounted for more than a third of total investment volumes at £787m. 2017 also saw a return of property companies across Scotland, which accounted for 30 per cent (£688m) of the total invested.
 
Prime yields in Aberdeen ended 2017 at 6.25 per cent, 100 basis points below the start of the year. Prime yields in Edinburgh and Glasgow both moved in by 25 basis points during the course of 2017 to finish at 5.25 and 5.5 per cent respectively.
 
However, Scottish prime office yields remain attractive compared to the UK regional prime office yield, which currently stands at 4.75 per cent.
 
Nick Penny, head of Scotland at Savills and director of the investment team, said: "Investment in 2017 can be defined by the spread of transactional activity both in terms of sector and geography, where previously prime offices in Edinburgh had dominated.
 
"We have seen from significant deals done on trophy assets and pricing has continued to move in across the board.
 
"Whether some landlords sitting on stock will choose to sell in 2018 in light of the strong pricing being achieved remains to be seen and one of the main challenges for the year ahead could be a lack of product. If limited sale opportunities come to the market pricing may harden even further to return to 2007 pricing levels."
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