The reduction in stamp duty in the Republic of Ireland, from 6% to 2%, has led to a temporary respite in the decline in Irish property values. 

Values grew in Q4 2011 by 0.2%, according to the SCSI/IPD Ireland Quarterly Property Index, the first positive value movement in four years. However, had the reduction in acquisition costs, of 4%, not occurred, values would have declined by, roughly, -3.8%. 

Phil Tily, IPD managing director for UK and Ireland, said: “The raft of property reforms announced in December may take time to impact on Irish values. The decision not to implement rules regarding upward only rent review legislation, and the removal of capital gains tax on purchases before the end of 2013, should restore a degree of positive investor sentiment towards the market. 

North Lanarkshire Council has doubled its house-building target – 1,000 new council houses will be built by 2020 at a cost of £150 million. The council will invest a further £1.8 million a year to double the number of new homes from 500 to 1,000.

This investment was announced as part of our housing revenue budget for 2012/13, which also sees an extra £2.3 million of growth money spent on improving the housing stock. The additional funding will increase the resources available for next year's capital programme to almost £40 million.

Council tenants will also benefit from a rent increase of just 1.5%. Last year the council agreed a two-year deal to keep rent increases to 1.5%, which this year means an average weekly increase of just 80 pence. The average weekly rent in 2012/13 will be £53.99.

Exemplar Properties is to buy Edinburgh’s most prestigious development site, in a dramatic entry on to Scotland’s large-scale development scene, according to Property Week.

The London developer is believed to be paying around £65m for the Scottish capital’s Quartermile — a half-built mixed-use scheme that was put up for sale by Gladedale Group.

It beat bidders such as Moorfield and Axa Real Estate Investment Managers, and is believed to be in talks with several funders to form a joint venture to complete the development. Of these, Area Property Partners is the frontrunner.

Full story here

Hermes Real Estate Investment Management Limited (HREIML) has secured Colin’s Tyres as a new tenant at its Belleknowes Industrial Estate in Inverkeithing, Fife.   

The Aberdeen-based car services and tyre company has moved into Unit 7 at the estate, a semi-detached modern warehouse comprising 3,431 sq ft. The company signed an initial 12-month lease with an option to extend for ten years, at a rate of £16,983 p.a. 

Following this latest deal, Colin’s Tyres now operates in Aberdeen, Aberdeenshire, Edinburgh, West Lothian, East Lothian and Fife.

Gladman Developments Ltd  has secured an oil exploration company for its 25,000 sq ft headquarters building at Abercrombie Court in Aberdeen.

Independent North Sea operator, Fairfield Energy, is to relocate its Granite City operation from Dyce to the Arnhall Business Park site in Westhill.

The three-floor headquarter pavilion was the largest unit in Phase 2 of the Abercrombie Court development and has been taken by Fairfield on a 10 year lease.

Fairfield Energy was established in 2005 with major funding from North American and European private equity investors and has a growing portfolio of UKCS oil and gas interests, including the Dunlin, Merlin, Osprey, Darwin and Clipper South fields.

Image: Dan Smith, FG Burnett at Abercrombie Court   

Atria Edinburgh, the City of Edinburgh Council’s Grade A office development next to the EICC Edinburgh International Conference Centre (EICC), is making progress with one year to go until completion.

The development is split between two buildings, comprising nearly 200,000 sq ft of accommodation. It is the only speculative city centre office building in the UK, outside London and the South East, to offer more than 100,000 sq ft by early 2013.

Atria One provides 186,519 sq ft of efficient, flexible floorplates (up to 32,000 sq ft) over seven floors. The smaller Atria Two provides 13,218 sq ft split over two office levels.  Construction has already started and both buildings will be available for tenant occupation in the first quarter of 2013.

Image: 'Atria One, steel frame has reached Level 6'

Elite Training and Consultancy has purchased the first floor of 144 West Regent Street, Glasgow, for £177,500 from a private vendor client of Ryden.  The IT tuition specialists previously leased the 1,095 sq ft accommodation.

Ross Jubin at Ryden said: “Elite Training and Consultancy approached us looking to purchase office space in the city, whilst still tied into their existing lease at West Regent Street for two years.  

“As the West Regent Street suite was tenanted it was not being marketed.  Fortunately, our client was open to selling their accommodation subject to achieving a fair price. The sale also reflected significant savings for Elite Training in light of their existing lease commitment.

“Current market conditions have led to a reduction in the number of sales, but this transaction highlights how a deal that is mutually beneficial to both landlord and tenant can be achieved.”

Dear Editor,

Projections from CITB-ConstructionSkills that 2012 will be another tough year for the Scottish construction sector come as no surprise but are still a cause for concern. Longer term the industry is expected to recover – albeit slowly – but the damage caused by the current downturn risks being felt for many years to come.

It is particularly concerning to see the industry’s core manual trades hit so hard by redundancies, with thousands of skilled individuals expected to lose their jobs over the next five years.

It needn’t be that way. The Scottish Government’s ambitious commitment to create 25,000 new apprenticeships each year over the lifetime of the current Scottish Parliament should become more than a simple numbers game. 

Image: Michael Levack, 'targeted strategy to rebuild skills and capacity' 

In the fourth quarter (Q4) of 2011 city centre and out-of-town office take-up in the UK, including Glasgow and Edinburgh, was down by just 4% on the quarterly average over the last three years.

The latest quarterly report on Scottish city centre and out-of-town office occupancy by commercial property consultants GVA notes that Glasgow has one of the lowest supplies of grade A office space in the UK.

Glasgow has seen a large number of enquiries and viewings, but these have not all been converted into deals. Larger deals have been slow-moving, as companies have delayed decisions. Take-up has been dominated by small to medium sized transactions.

Image: 'Glasgow has one year's supply of new Grade A space'

Aberdeen Asset Management’s Nordic property transactions totalled € 330 million in 2011. The transactions were carried out on behalf of the Aberdeen property funds as well as AAM’s discretionary mandates. 

With a share of 83% the office segment saw the highest demand, followed by retail (9%), logistics/industrial (5%) and other (3%). At a country level the highest activity was in Norway and Denmark.

Aberdeen’s preliminary estimates indicate that transaction volumes in the Nordic region fell from € 20.2 billion in 2010 to € 19.2 billion in 2011. After sound activity growth in the first half of the year, the market slowed down after summer. 

In particular the fourth quarter, which normally is very busy, recorded a lower than expected transaction volume except for the Danish market, which experienced a very strong end of 2011 due to a handful of very large single deals.

Industrial Property Investment Fund (IPIF) has completed four unit lettings in Glasgow and Edinburgh, advised by Jones Lang La Salle’s industrial and logistics team.  

The four industrial lettings, comprising nearly 53,000 sq ft in total, were all completed within the space of two weeks in December 2011.

M&H Logistics signed a 10 year lease, with a 5 year break option, to take 23,064 sq ft at an average headline rate of £5.50 per sq ft in Unit 3 on Edinburgh Distribution Park in Newbridge – making it the second largest unit transacted in Edinburgh last year. 

In a move that could herald further retail or leisure development at Braehead, Capital Shopping Centres Group has acquired two development sites from Peel Group – one at Braehead, Glasgow and the other in Malaga, Spain.

In the first deal, Clydeport Properties was paid £4.7 million for the 30.96 acre site known as King George V Docks (West), adjacent to CSC's shopping centre at Braehead. The acquisition offers significant opportunities for future development in relation to the shopping centre and leisure activities at Braehead. 

In the second deal Peel Holdings was paid €2.5 million for a three year option, alongside a refundable deposit of €7.5 million, to purchase two parcels of land in the province of Malaga. 

The sites comprise: a 60 acre site which has initial planning consents for a high-class regional shopping centre and leisure development; and an adjacent 14 acre site which is earmarked for possible future development.

Image: Braehead shopping centre, more development to come?

Developer Sheratan Ltd is consulting the local community on its proposed residential development at the Edmonstone Estate, close proximity to the Edinburgh Royal Infirmary at Little France. 

It is intended that the development of some 9.8 acres will comprise around 100 two-storey family houses, providing a housing boost to the area and enhancing the quality of the environment at the estate. 

The infrastructure investment – comprising roads, as well as landscaping – will help progress the private hospital and other associated development, such as the BioQuarter.

After many years of planning, work has started on site to build Inverness Campus.

Morgan Sindall, Highlands and Islands Enterprise's (HIE's) contractor, moved onto the land at Beechwood at the end of last week to start the site set-up, creating a base for up to 250 workers over the course of the project.

From 2015 Inverness Campus will be home to a number of business, education, and community partners including Inverness College UHI, the Centre for Health Science, the Scottish Agricultural College, Albyn Housing Society and the Calman Trust.

Community and sports facilities, as well as opportunities for other research and education partners and business activity will follow.

Image: Inverness Campus, 'Vital for long term growth of Highlands and Islands'

The latest occupier to take space in Edinburgh’s Exchange Place office development is 4sight Financial Software.

The IT specialist has leased 4,467 sq ft of space for its new head office at Exchange Place 2, at a rental of £20 per sq ft, on a 5 year lease. The company develops software technology for the financial services industry and has expanded from its current premises in Conference House in the city. 

4sight Financial Software joins energy consultancy firm Wood Mackenzie in the building, which is part of the largest speculative city centre development in Edinburgh.

Angela Lowe of Cushman & Wakefield, who represented the landlord – Scottish Widows Investment Partnership – along with joint letting agents Jones Lang LaSalle and Cuthbert White, said: “4sight Financial Software is a great addition to Exchange Place 2, which offers outstanding, cost effective modern accommodation in one of the best locations in the city.  

PLANS for Newesk, a £250 million sustainable community proposed for land at Edzell on the border of South Aberdeenshire and Angus, have been lodged after a year-long master-planning process informed by local residents.

Aberdeenshire Council planning officials have now received the outline planning application and masterplan developed for Carnegie Base Services, a local family business which owns and operates the former RAF Edzell airbase and surrounding land.

The base, which is the business focus of the proposal, has operated as a commercial site since 2000 and covers more than 300 acres of land to the west of the main A90 Aberdeen to Dundee trunk road.

Image: Newesk, 'creating up to 1000 new homes'

GVA has appointed Adam Lansdown as a principal consultant within the company’s GVA Humberts Leisure Edinburgh team.

Adam has nearly 30 years’ experience in the hotel and leisure sector in Scotland and the north of England. Prior to joining GVA Humberts Leisure, Adam was an equity partner at Robert Barry and Co and, more recently, a director at Colliers International.  

Working alongside the valuation team in Edinburgh and Glasgow, Adam’s focus will be on hotel, leisure and associated tourist and recreational property related assignments throughout Scotland.

His appointment signifies an area of the market within which the company expects to grow, following recent successes with the sales of Fishers Hotel, Pitlochry, Taymouth Castle and the island of Little Cumbrae.

Aberdeen and Edinburgh both figure in the Centre for Cities’ “Five Cities to Watch”. The think tank says that many UK cities continue to feel the effects of the downturn and disparities between them are growing, according to Cities Outlook 2012.  

However, despite the downbeat national forecast, Centre for Cities’ annual health check of UK cities suggests that there will be glimmers of growth from some cities this year.

With the national economy struggling to create the numbers of private sector jobs needed to drive growth, or to balance job losses in the public sector, the results are playing out very differently across UK cities.

Cities Outlook, published today (23 January) and supported by IBM and the LGA, shows that the gap between cities is widening. In February 2008, the gap in the claimant count rate between Hull and Cambridge was 3.2 percentage points.  By November 2011 this gap had widened to 6.1 percentage points. 

Lifestyle hotel company Malmaison is to open its first new hotel since concluding a refinancing agreement last year. An agreement to lease has been concluded for a new 91 bedroom hotel in Dundee.

The new Dundee Malmaison is being created on the site of the old Tay Hotel, a listed city centre landmark building and will be Malmaison’s 13^th hotel. Bounded by Whitehall Crescent to the north and west and Dock Street to the south and east, the redevelopment will start in spring 2012 with completion expected in May 2013, creating 120 new jobs

The new hotel is the latest high profile investment attracted to Dundee Waterfront, and joins a growing number of local businesses choosing to locate in the area.

The vacant Tay Hotel is being redeveloped by M.E.C. Services (International) Ltd. The developer will work closely with the Malmaison team to create an international standard lifestyle boutique hotel.  

Image: V&A on Dundee waterfront (centre-left)

Would you like to win a bandstand? That’s the question Irvine Bay Regeneration company is asking young people in North Ayrshire.

Artist and Sculptor Peter McCaughey – commissioned to create a new giant artwork for the ongoing regeneration of Irvine town centre – is heading up the competition to offer local schools and youth groups the bandstand that currently stands on the site.

In a new podcast, he urges them to ensure their entries are in before the January 31^st deadline, and also offers a sneak preview of his fascinating mirrored artwork, complete with code. The podcast is available via the Irvine Bay Regeneration Company website www.irvinebay.co.uk

The town’s bandstand needs to be relocated to accommodate the transformation of the town centre being carried out by Irvine Bay Regeneration Company and North Ayrshire Council.

The Crown Estate has decided that the merger of Jones Lang LaSalle and King Sturge presents a conflict of interest for its regional portfolio, which the combined firm both manages and values. As a result, the organization is retendering its property management portfolio. 

James Cooksey, head of regional portfolio at The Crown Estate, said: "After 14 years managing the regional portfolio, we thank Jones Lang LaSalle for the high quality of service provided. In light of this regrettable conflict of interest we have decided to re-tender the property management mandate for the portfolio.”

The Scottish Futures Trust (SFT) has announced that WellSpring Partnership has been appointed to deliver more than £200m of public sector infrastructure projects for the west of Scotland’s 17 hub partners operating together under the West Territory hub. WellSpring Partnership comprises Community Solutions Investment Partners Ltd, Morgan Sindall Group plc and Apollo Capital Projects Ltd. 

One of the primary aims of the hub programme (which is managed by the SFT) is to bring complementary public sector bodies and services together under one roof, rather than in remotely located buildings. The West hub will cover all areas throughout Glasgow, Inverclyde, East and West Dunbartonshire, East Renfrewshire and Renfrewshire.

Work will now start to expand outline plans in the £200m investment programme to be delivered over the next ten years, which includes a range of health and education projects.

Mitchell House on Queensway Industrial Estate in Glenrothes has secured three new tenants, occupying a combined total of 19,000 sq ft:

• Unit 3, comprising a mid-terrace unit of 4,250 sq ft, has been let to The Coachworks at a rent of £3.50 per sq ft
• Unit 4, also comprising 4,250 sq ft, has been let to the Tyre Shop on similar terms
• Energy provider N Power has signed up on 5,000 sq ft of refurbished, open plan and partitioned office space on the ground and first floor offices of Craig Mitchell House at £7 per sq ft

Located close to both Glenrothes Town Centre and with good road links via the A92, Craig Mitchell House is situated adjacent to several well known tenants including Jewsons, Kwik Fit and Morrisons. The building was extensively refurbished in 2011.

Engineering and Technology students at Stow College are set to benefit from a pioneering new partnership.

A ‘Knowledge Transfer Partnership’ has been signed between the college and the Concrete Society Scotland (CSS) – a group which provides education, information and debate on the building material.

The new partnership has been created to provide students – on courses such as the HND Civil Engineering – with practical knowledge and understanding of the material. 

Alan Roseweir, Head of Faculty Engineering and Technology at Stow College, said: “Despite remaining largely unloved due to its connections with 20^th Century modernist architecture, concrete is at the core of construction in Scotland. This Knowledge Transfer Partnership with the Concrete Society is unique to the college. It gives us the opportunity to provide our staff and students with real exposure to latest practices in industry.

Revenue in Scottish hotels fell during November whilst occupancy remained static, according to the latest report by accountants and business advisers PKF. 

The firm’s monthly survey found that year on year revenue (measured as rooms yield) fell by 7.3% in Scotland, compared with: a drop of 1.9% in regional UK; down 0.6% in England; and down 12.4% in Wales. Occupancy rose slightly by 0.7% in Scotland; was up 1.0% in regional UK; up 1.0% in England but with no movement in Wales.

Scotland’s two main cities had falls in both occupancy and rooms yield. Glasgow experienced a 1.6% fall in occupancy and an 18.4% drop in revenue, while Edinburgh’s occupancy was down 0.9% and revenue fell 6.9%. Aberdeen increased occupancy by 4.2% and revenue by 9.9% and Inverness had an increase of 5.5% in occupancy and a rise of 0.3% in revenue. 

Legal firm Maclay Murray & Spens LLP (MMS) has boosted its construction and engineering team by enticing litigation partner David Scott away from rival McGrigors. The move marks MMS’ sixth partner appointment in three months, across the firm’s corporate, commercial dispute resolution and real estate departments.

David Scott was responsible for growing McGrigors' contentious construction and engineering unit in Edinburgh, having previously spent over a decade with Clifford Chance in London and Hong Kong. 

Authorised to practice as a solicitor in the Supreme Court of England & Wales and the Supreme Court of Hong Kong, as well as Scotland, David has specialised in contentious work since 1988. 

He has extensive experience across a range of disciplines, including litigation, arbitration, statutory adjudication and alternative dispute resolution; primarily in the construction, engineering and energy-related fields.

Image: David Scott 

Drivers Jonas Deloitte (DJD) has confirmed the £3.4 million sale of Shettleston’s Annick Industrial Estate to Berkshire-based Kewbrook Limited.

The site, comprising 55 units extending to 107,559 sq ft, has been bought from Rockspring Property Investment Managers acting on behalf of Hanover Property Unit Trust, advised by DJD.

Craig Leslie, senior surveyor in the national transactions team based in DJD’s Glasgow office, said: “This represents a great result in what continues to be a very challenging market.

“The deal demonstrates that there is continued investor demand for multi-let industrial stock – where the asset fundamentals are good and the property is priced correctly.”

Image: Annick Industrial Estate, sold at an initial net yield of 11% 

Dr Mark Robertson of Ryden comments on Finance Secretary John Swinney’s announcement on Scotland’s Enterprise Areas:

“Ryden welcomes the Scottish Government's confirmation of the four Enterprise Areas. Today’s (18 January) rise in Scottish unemployment highlights the need for initiatives, such as EAs, to bring jobs to locations across the country and generally make Scotland more attractive to high growth firms and inward investors.

“The incentives on offer, which are expected to include reduced business rates, will provide a boost for small to medium companies in the designated EAs, in sectors such as renewable energy and where we anticipate new investment and growth.

Image: Dr Mark Robertson, 'EAs will be targeted heavily at occupiers rather than developers or investors'  

558,000 sq ft of active office requirements

Increasing concerns surrounding Euro debt crisis

High quality premises on very attractive financial terms

With demand for office space in Edinburgh now at its highest since 2009, Edinburgh is enjoying steady demand from international companies. However, headline occupiers such as Amazon and Virgin Money might be masking an underlying downward trend.

Property advisors Cushman & Wakefield say that the capital’s latest 2011 statistics make disappointing reading, with office take-up totaling only 445,000 sq ft – 26% below the historic annual average (600,000 sq ft) and a similar reduction on take-up in 2010.

Slight uplift in like-for-like sales is illusory

Consumer confidence no better than during the recession

Govt should minimise business rates, retail levies, and regulation

Scotland’s total retail sales in December were 1.6% up on December 2010, when they had increased 3.4%. Although this was the best performance since July, the reality is that it represents the worst December figure since the survey began in 1999, according to the SRC-KPMG Scottish Retail Sales Monitor. 

Like-for-like sales were 0.4% higher than in December 2010, when they had increased 0.7%. Food sales growth picked up but was still the worst for any December since 1999. 

Image: Christmas Eve falling on Saturday provided a last-minute sales boost

Outlook for 2012 ‘less than ideal’

2012 a year of re-evaluation on pricing levels

Retail sector hardest hit in Q4, values fell by -0.3%

UK property returns were 8.1% in 2011, according to Investment Property Databank (IPD). 

The IPD UK Monthly Index reveals that capital growth slowed to 1.2%, while income return amounted to 6.8%. Capital values fell for the second consecutive month in December, by -0.1%, making growth just negative overall for the last quarter of 2011. 

Total return, which stood at 0.5% for all property in December, was down in all three market sectors. 

Phil Tily, IPD managing director for the UK and Ireland, said: "While growth for the year remained positive, the outlook for 2012 is less than ideal. During the last three months of the year, as the Euro situation worsened and the threat of recession increased, returns tailed off considerably.”

Opinion: Doug Smith, CBRE Scotland’s chairman, comments on today’s announcement of four Enterprise Areas:

The announcement today (17 January) by the Scottish Government that a number of new Enterprise Areas are to be designated is welcome news for the Scottish economy and the Scottish property sector.

Some observers may wrongly look to previous Enterprise Zones as the template for this latest tool in the economic toolbox, but in reality these new Enterprise Areas are much different.

The focus this time has been to identify sectors of the economy offering growth and, by implication, employment potential. Having identified these, Enterprise Area status is then applied as a means of accelerating and enhancing that potential in a limited number of locations.

Image: Doug Smith, 'any mechanism which encourages investment is to be welcomed'

Four enterprise areas comprising 14 strategic sites are to be created in Scotland. The Scottish Government’s aim is to focus on “dynamic industries with the greatest potential to create new employment opportunities, stimulate private investment and boost economic growth”.

Finance Secretary John Swinney announced the 14 sites while on a visit to Glaxosmithkline in Irvine this afternoon (17 January). 

The Glaxosmithkline site will form part of the Life Sciences Enterprise Area. Scotland's life sciences industries have an annual turnover of £3 billion and Irvine will be joined by sites in Moray, the Highlands, Edinburgh and Midlothian.

There are two proposed Enterprise Areas for Low Carbon and Renewables. The Renewable Energy Enterprise East Area will comprise the Port of Dundee and the Port of Leith, while the Renewable Energy Enterprise North Area will focus on Hatson and Lyness in Orkney, Arnish in the Western Isles and Nigg and Scrabster in the Highlands.

Image: Port of Dundee

Colliers International has let 10 Palacecraig Street, Coatbridge, on behalf of a private investor, to commercial vehicle repair company, CEM Scotland Limited. The 3.8 acre yard has been let on a five-year lease at an annual rent of £95,000.

Iain Davidson, director industrial and logistics with Colliers International in Scotland, said: “We are delighted to welcome CEM Scotland Ltd to Palacecraig Street. 

“The area is well known for its central location and we are currently marketing a variety of industrial units on Palacecraig Street, ranging from small workshops to a 50,000 sq ft modern distribution warehouse with a large yard.”

www.colliers.com/uk

First Minister Alex Salmond has signed an energy development agreement with Masdar, an Abu Dhabi-based renewables developer. 

The signing at the World Future Energy Summit in Abu Dhabi follows discussions between the FM and Dr Sultan Ahmed Al Jaber, Chief Executive of alternative energy company Masdar, during the FM’s visit to the UAE in November last year. 

In the first agreement of its kind between Masdar and a nation, the framework outlines a detailed plan of activity to deliver tangible clean energy projects. The agreement focuses on development opportunities, investment in low carbon projects, technological cooperation, policy making and best practice initiatives.

WORK is poised to begin on the first phase of the £14 million Clyde Gateway East Business Park, in Glasgow’s East End. The project marks Glasgow’s first major new-build industrial scheme in over three years.

Developer SCOT Sheridan will create 57,500 sq ft of modern, flexible business accommodation in three separate buildings at the park, which has a prime location off the newly completed M74 just four miles from Glasgow city centre. The development is accessed close to Junction 2a of the Motorway.
 

Following a letting to building consultants Gardiner & Theobald LLP, Mapeley’s newly refurbished Clarendon House in Edinburgh is now almost 30% let.

Gardiner & Theobald took 3229 sq ft on the 5th floor at an initial rental of £23 per sq ft on a new sub-lease expiring in 2021. The Nursing and Midwifery Council occupies the ground floor.

Clarendon House is situated on the south side of George Street in the block bounded by Castle Street to the east and Charlotte Square to the west.

The improvements included a comprehensive refurbishment of the building’s entrance, common parts, M&E, and floors to a Grade A standard. 

Ian Gladwinfield, asset manager at Mapeley said: “We are delighted to have signed up an industry leading company, providing its endorsement of the quality of the refurbishment works we’ve carried out. 

Image: Clarendon House

Work begins this week (16 January) on the next phase of breathing new life into Trinity Church, one of Irvine’s historic landmark buildings.

Clark Contracts has been appointed to carry out a package of advance works – designed to prepare the site in advance of the main redevelopment works and to provide additional information for the main tender.

The project sees another major step taken in the Irvine town centre initiative and also on the town’s Conservation Area Regeneration Scheme, supported by Historic Scotland.

The advance works would also cover issues such as utilities, statutory consents and archaeological interests. It is expected to take approximately eight weeks to complete this stage. The main redevelopment works will start later this summer, continuing until spring of 2013. 

Pamela Gray, Richard Higgins and Ian Forbes of CKD Galbraith predict 2012’s commercial property investment market:

2011 was a tricky year for the commercial property market: fewer transactions, a widening yield gap between prime and secondary assets, risk-wary investors continuing to sit on their hands and continued restricted availability of bank funding. 

Then add the Eurozone crisis at the end of year, which saw the market weakened further by increasing uncertainty. On a positive note, there were fewer distressed sales than anticipated.

Richard Higgins, commercial investment partner at CKD Galbraith, said: “Adopting a holistic approach to investment, agency and asset management is required for 2012. More than ever, it’s absolutely vital to work assets hard to maintain income and value.”

The Eurozone crisis remains unresolved, resulting in further market uncertainty. An unravelling, breakup, or default of the Eurozone is still a possibility, leaving the UK exposed. 

Image: Pamela Gray, 'growing appreciation that landlords and tenants need to work together'

In 2011’s largest Edinburgh office investment sale, Edinburgh One has been acquired by Frankfurt-based investment fund Deka Immobilien GmbH in a £23.75 million deal. The seller was F&C REIT and the deal was concluded after competition from a number of UK and foreign bidders.

The building, which is located at 60 Morrison Street adjacent to the EICC, covers 55,022 sq ft. It has a 14-space basement car park and is leased by Scottish Widows Plc until 2021.

David Plummer of F&C REIT said: “We are pleased to achieve a successful sale in such a challenging market. This sale fits in with our strategy of recycling our client’s portfolio as we have been active in buying as well as selling of late.”

Confidence in the building industry has collapsed – with only 5% of small building companies expecting workloads to increase in 2012, according to the latest State of Trade Survey from the Federation of Master Builders (FMB).

The FMB’s latest State of Trade Survey reveals that workloads in the SME construction sector have declined in each of the 16 quarters to the end of December 2011 – and that confidence in the repair, maintenance and improvement (RM&I) market is set to plunge.

Brian Berry, FMB’s director of external affairs said: “The disastrous results for the RM&I market are very alarming given that the Government will be launching its Green Deal home improvement initiative in October. Market conditions in the building industry haven’t been this bad since the first quarter of 2009. Clearly, robust incentives for householders are needed if the Green Deal initiative is to succeed in a depressed market.”    

Real estate advisor Savills has expanded its Scottish commercial team with the appointment of Alex France and David Boyce, who join the company as associates.

Based at Savills’ Glasgow office, Alex joins the investment team with over eight years experience in the industry – having previously worked at DTZ in both the UK and Australia. Alex will work with Glasgow-based investment directors Mark Fleming and Bruce Patrick on new and existing investment projects for a wide range of clients.

Mark Fleming, head of Savills Commercial in Scotland,said: “We have expanded our commercial business in Scotland over the last year and these appointments are part of our on-going plans to grow our offer further. With good experience in the transactional market, Alex will be an asset to our investment team.”

David Boyce joins the valuation team at Savills’ Edinburgh office, bringing  seven years experience from roles at Jones Lang LaSalle and CBRE where he specialised in commercial and residential valuations for loan security. David will work with the valuation team in Scotland, as well as the wider national valuation division.

CBRE has been appointed by Alshaya, a leading international retail franchise operator, to manage the 60-store La Senza UK portfolio acquired from administrators this week.

The lingerie chain has been sold to Alshaya UK Limited, part of the Kuwaiti-based business, following a deal to rescue 60 of La Senza UK’s 146 high street stores. CBRE will oversee acquisitions, rent reviews and lease renewals for the brand.

Alshaya, is the international franchise partner for a wide range of Britain’s leading retail brands including Mothercare, Debenhams, Boots, Next, River Island, Topshop, Miss Selfridge and The Body Shop. It will operate the stores and continue to trade as La Senza, under a franchisee agreement with Limited Brands Inc., the US retail group which owns the La Senza brand.

While 2011 proved to be a poor year for commercial property investment in Scotland, a flurry of big ticket sales during the final weeks “gives hope for a better year ahead” – according to a new review from Cushman & Wakefield. 

The firm’s Scottish Property Investment Market Review of 2011 shows that although there had been 195 transactions at over £150,000, which was similar to 2010, the total value was £1.2bn, 18.5% down on 2010's figure of £1.47bn. 

John Hamilton, partner in the Capital Markets Group at Cushman & Wakefield, said: "The transaction volume at £1.2bn is the lowest we have recorded since the recession began in 2008 – and a fraction of the average over the 2005 - 2007 period of around £3bn per annum."

Image: 141 Bothwell Street changed hands in £71m deal

December data signalled a sixth successive contraction in commercial development activity in the UK. The rate of decline was sharp, having accelerated since November, according to Savills’ latest Commercial Development Activity report.

Faster decreases in work on both public and private projects were recorded in December. The reduction in public sector activity was the fastest since September 2010.

Approximately 32% of commercial developers recorded a fall in overall activity in the month, compared to roughly 14% indicating a rise.

The Total Commercial Development Activity Index, a net balance monitoring the overall performance of the UK commercial property sector, registered -17.8% in December, from -15.4% in November.

Falling occupier demand exacerbated by increasing availability drove down commercial property rental expectations in the final quarter of 2011, says the latest RICS UK Commercial Market Survey.

Overall tenant demand continued to fall in the final three months of the year, with 13% more surveyors reporting decreases rather than increases in interest from prospective tenants. 

Notably, demand for commercial space in the capital also began to waiver for the first time in over a year, as London office space saw a notable downturn to a net balance of -19% (from +5%).

With demand falling back, overall availability continued to increase with a net balance of +16% of chartered surveyors reporting increases in vacant floor space. Retail and office space saw the most significant increases with net balances of +25% and +24% of surveyors reporting increases, while industrial space broadly stabilised (net balance +3).

More than one in five small building firms were forced to cut jobs as a direct result of last year’s VAT increase to 20%, according to latest State of Trade Survey from the Federation of Master Builders (FMB).

In addition, more than half of these small businesses reported falling workloads as a consequence of the VAT hike. 

Brian Berry, FMB’s director of external affairs, said: "We warned the Government at the time that raising the rate of VAT to 20% would suppress demand for building work and cost jobs. Unfortunately our prediction has been borne out by our latest research, which shows that the VAT increase is hurting the very small businesses that the Government is looking to for economic growth."

Image: 'More than 200,000 construction jobs lost since 2008'

The National Landlords Association (NLA) has published guidelines for homeowners considering becoming a landlord and letting out their property.

With the possibility of UK property prices falling by up to 5% in 2012 – according to Knight Frank’s UK Housing Market Forecast, Q4 2011 – many homeowners may consider letting their property as an alternative to selling. An NLA survey of more than 500 landlords in October 2011 found average rental yields are now 6.7%.

David Salusbury, chairman, National Landlords Association, said: “If house prices fall this year, we may see more homeowners who were planning to sell instead considering letting their homes while they wait for the market to stabilise. There are currently a record number of people searching for rental properties, meaning would-be landlords would have no problem finding a tenant.

“Letting a property can be a rewarding experience and an effective way of providing additional income, but prospective landlords will need to remember they are effectively starting a small business. They must ensure they are well aware of the rules and regulations governing the letting of private residential accommodation.”

The UK economy faces further deterioration and potential stagnation in the first quarter of this year, but recession is not inevitable, says the British Chambers of Commerce (BCC).

John Longworth, BCC's director general, said: “A new recession is not a foregone conclusion. However, action is needed urgently to tackle short-term stagnation and a lack of business confidence, damaged by the ongoing eurozone crisis.”

The BCC’s new Quarterly Economic Survey (QES) released today (10 January) shows concerning results for Q4 2011, pointing to a period of stagnation in early 2012. 

Image: John Longworth, 'expectations for the coming three months have significantly weakened'