Post-Indy Ref deals hit record high as commercial property investment flees ‘The Smoke’

The firm’s data revealed that last year’s hike in commercial real estate investment following September’s vote saw the value of deals completed in 2014 hit a record £3.5 billion.

Pension funds and private equity firms looking to improve on the returns offered by government and corporate bonds were also cited as reason for the greater appetite for office development investments along with the effects of a saturated market in London.

While investment in London increased by six per cent in 2014 to £27.9bn, it leapt by 52 per cent to £27.5bn outside the UK capital.

CoStar senior director Paul Norman (pictured) said huge investments in properties such as Canary Wharf and the HSBC tower by Middle Eastern sovereign wealth funds has driven investment in regional cities such as Birmingham and Manchester.

He said: “It’s impossible to compete because they have such deep pockets and are prepared to play such a long term game. Basically they want to park their money in real estate.”

Costar said nearly a third of all the investment made in Scottish commercial property last year came in the final quarter with several major deals having been held off until the result of the referendum.

One such deal is believed to have been Land Securities, £137.5 million move to expand its 50 per cent share of Glasgow’s Buchanan Galleries and take complete control from Henderson Global Investors.

CoStar also revealed that Scottish Widows’ headquarters at Port Hamilton in Edinburgh, which was sold by Aberdeen Asset Management to an unidentified overseas investor for £105m last month was also not brought to market until after the referendum.

Land Securities’ also completed the £244m sale of The Centre and Almondvale West Retail Park in Livingston to HSBC Alternative Investments in the post referendum period, while Legal & General Property Group’s spent £127m for space at Aberdeen International Business Park to house Norwegian firm Aker Solutions, and BAM Properties completed the £71.2m sale of 110 Queen Street (Connect11ons) to Deutsche Asset & Wealth Management.

Mr Norman added: “We certainly saw a lot of deals completed after the referendum. I guess it is open to debate whether or not they would have done had it gone the other way.

“It is a difficult one to quantify. There is that thing you can say, is that it surged ahead after . Notably more acquisitions happened .”

Mr Norman also said that the bulk of the investment had its sources in equity or pension money, rather than bank lending and what bank lending there was, is now more “sensible”.

CoStar found that £70.7 billion was invested overall in UK commercial real estate in 2014, 32 per cent more than in 2013. This outstripped the previous high of £67bn in 2006, it said.

Summing up and looking to the future, Mr Norman said 2014 “was the year when the story changed to let’s invest. London has been in an unbelievable position for a couple of years.

“This year the appetite for big regional centres was back. Investment wise, I don’t think people are expecting the figures to quite compete this year.

“The real reason for that is not a lack of capital or investor appetite, it is supply now.”