Keith Scobbie from Graham + Sibbald offers an update on the property market in Perth and the wider region, including current investment opportunities.
Commercial and Industrial Property in Perth
Unsurprisingly, the industrial market in Perth has been the most buoyant, mirroring the national trend. The market has undoubtedly benefited from a Covid bounce and both tenant and purchaser demand has been as strong as I can remember.
Standout performers have been small units sub 3,000 sq ft where rents have moved from historically low levels of £4 to £5 per sq ft towards £7.50 per sq ft.
Traditionally, Perthshire’s owner-occupier market has always been strong, fuelled by a combination of a high concentration of SMEs operating in Perthshire, a constrained supply and ever-popular investment appeal of holding property in SIPPs, SSASs and other similar investment vehicles.
Demand continues to outstrip supply as evidenced by the number of competing parties prepared to offer for modern, well- located stock. This potential for growth in value has not gone unnoticed amongst investors, with industrial yields now as low as 6 to 6.5% for a quality, multi-let portfolio.
As a result, speculative build has started to look attractive despite increasing construction costs. Such examples of this include a recent development by Castlecroft at Riverview Business Estate for 11 units and another by Algo Ltd at Inveralmond, to the north of the city where a 36,700 sqft development will comprise nine units to lease and an additional two larger presold units for owner occupation.
In addition to this, further land holdings acquired in recent years at Inveralmond Industrial Estate, covering some 35-plus acres, also look set to add additional stock to the market in the medium term, details of which remain to be announced.
Kinross West, Site 1
- For Sale. Offers Invited.
- 0.91 acres (0.36 hectares) or thereby
- Serviced plot
- Excellent strategic location
- Visible from M90
- Download particulars now >
Arran Road, Perth
- From 464.5 sq.m to 7,432 sq.m
- Design and Build Packages
- Class 4 – Business
- Class 5 – General industry
- Class 6 – Storage and distribution
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Office and Retail Property
The office and retail sectors remain challenging and are likely to remain so
for the foreseeable future. However, such challenges also offer opportunities to re- purpose buildings with limited occupier demand offering scope for alternative uses such as a blend of residential, leisure and recreation.
Although accelerated by Covid, this trend was evident well before Spring 2020 where office occupiers had already shown a preference to move away from traditional period-style space to more modern offerings at Perth’s purpose-built business parks, such as those at Whitefriars and Broxden.
The appeal of modern, energy-efficient buildings with parking and increased space efficiencies is evident across the board. As such, demand for both medium-sized, self-contained suites, and smaller, serviced offices within business centres will continue as occupiers seek flexible accommodation, and place increased importance on the quality of their working environment.
This will likely widen the value gap between modern and older stock with rental growth for newer, quality offices remaining positive.
However, it is not all bad news for older, city centre stock. Most of these buildings are attractive Georgian or Victorian townhouses, easily capable of residential conversion to their original use.
Highland House, Perth
- For Sale. Offers over £950,000
- City centre location, adjacent to Retail Park
- Long-standing commercial tenants
- Passing rent £155,999
- Net Initial Yield 15.55%
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Caledonian House, Perth
- To Let
- Located at a busy interchange
- Quality open plan office accommodation
- Suites available from 2,500 sq ft
- Close to city centre
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Licensed Trade, Hotel and Leisure
Perth and the wider region is a popular tourism destination and with Perthshire hotel market’s largely leisure-led profile, the area has benefitted from the sector’s post- Covid resurgence; international travellers are now returning, and the domestic market remains strong.
The high-end leisure sector in particular has seen a strong rebound with wealthy travellers the quickest to return to travel. Room rates have held up well, with this market willing to pay a premium price for a luxurious experience. This trend is expected to continue throughout the year.
Some operators in Perth and the surrounding areas are indicating that 2022’s operational performances are now back to the pre- Covid levels of 2018 and 2019, with many exceeding those figures.
This has renewed optimism that 2023 may see a significant uplift in top-line sales and encouragingly, there are indications that investment into the hotel sector is now returning.
Trends have shown that acquisitions by overseas investors, UK-based hotel companies, private buyer operators and first-time buyers tend to have been in localities classed as destinations, such as Perth and Perthshire.
This is supported by the recent sale of the Queens Hotel in Perth city centre, as well as a number of smaller hotels in the Perthshire locale – a clear sign that a range of buyers are expressing confidence.
In addition to this, high-end properties such as Dunkeld House Hotel, Fonab Castle Hotel, Taymouth Castle, and Kenmore Hotel have all been purchased by international investors, keen to ensure they are capitalising on the appeal of Perthshire to the global tourist.
Royal George Hotel, Perth
- For Sale. Offers over £2,750,000 (Freehold)
- Historic 46-Bedroom City Hotel
- T/O c.£1.5million (net)
- Close to major attractions
- Bar, restaurant, function rooms
- Download particulars now >
For further details on any of the properties mentioned, please contact Graham + Sibbald, Perth.
3 Charlotte Street
Perth
PH1 5LW