The deals that have fuelled Aberdeen property market’s best performance in six years
“We would hope to see a rise in activity in the next six months both in Aberdeen and across Scotland” – Knight Frank
Aberdeen’s commercial property market appears to have turned a corner after racking up its best first-half performance in six years.
New figures show that £181 million was invested in commercial property assets in the Granite City in the first half of 2024 - more than double the £78m recorded during the same period in 2023 and well above the £99m average for the past five years.
The past six months of activity was dominated by the sale of the Union Square shopping and leisure centre, one of Scotland’s largest urban malls, which changed hands in a £111m investment deal. Hammerson, the UK-listed retail property giant, said in February that it had sealed an unconditional contract for the sale of the vast 52,000-square-metre complex to an affiliate of US investor Lone Star Real Estate Fund VI.
That bumper deal meant that retail assets accounted for about two-thirds (67 per cent) of the six-month total. Industrials was the second most active sector (15 per cent), while hotels were just behind in third place (13 per cent), according to analysis of Real Capital Analytics data by property consultancy Knight Frank. Investment in Aberdeen accounted for nearly a quarter (24 per cent) of total investment in Scotland during the first six months of this year, International investors were the most active buyers, representing 62 per cent of investment volumes during the period.
Alasdair Steele, head of Scotland commercial at Knight Frank, said: “While the uncertainty of when interest rates will be cut has generally slowed deal activity, Aberdeen’s investment market has been comparatively strong - buoyed by the sale of Union Square. The city has also seen a reasonable amount of activity in the industrials and hotels sectors. More generally, market sentiment remains cautiously optimistic and we would hope to see a rise in activity in the next six months both in Aberdeen and across Scotland.”
Aberdeen partner Matt Park added: “The occupier market in Aberdeen has bounced back from the lows of the pandemic era and is settling into a much more consistent level of activity. That is beginning to filter through into the investment market and, although the first half of 2024 may have been skewed by the sale of Union Square, we are seeing much more interest in the other assets that are being put on the market - particularly where there is re-development potential or the opportunity to add value through strong asset management.”
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