Confidence in Scottish commercial property market 'slumps'

Surveyors are expecting commercial rents in Scotland to decline over the coming quarter following the Brexit vote, according to a report.

The Royal Institution of Chartered Surveyors found confidence and investor demand fell sharply in the commercial property market after the referendum.

Its latest UK market survey suggested investment inquiries slumped across Scotland in the second quarter.

Foreign investor interest in Scottish commercial property also declined.

Responses to the survey were gathered after the referendum outcome was known.

Political uncertainty

Rics said political and economic uncertainty was also hitting confidence on the occupier side of the UK market.

In Scotland, occupier demand dropped for the first time since the third quarter of 2014.

Nearly a third more respondents said they now expected commercial rents in Scotland to decline over the coming quarter.

This was in stark contrast to the first quarter, when 17% more respondents anticipated rents would increase in the near term.

All parts of the UK saw an increase in the proportion of contributors sensing a downturn in the market. London exhibited the highest proportion, with 54% of respondents taking this view.

'More cautious'

Rics senior economist Jeff Matsu said: "Political and economic uncertainty in the aftermath of the referendum result has clearly dampened sentiment in the commercial property market, with the tone becoming visibly more cautious right across the UK.

"Although the impact is widespread, the drop in confidence has been most pronounced in Scotland and London.

"Nevertheless, following several years of strong capital value and rental gains, momentum had already appeared to be slowing.

"Whether or not the sharp deterioration in the Rics survey data is a knee-jerk reaction that will unwind as the result is digested, or the start of a more prolonged downturn, remains to be seen."