The Celtic connection is adding further stimulus to the office investment market in Scotland, according to Jones Lang LaSalle. A large influx of Irish investors has been targeting the office sector and finds Edinburgh offering good returns on a scale that suits many Irish investors - opportunities ranging from £250,000 sterling to upwards of £20 million are not unusual.
The success of the Celtic Tiger economy has meant greater scope for investment diversification. Many Irish investors are taking advantage of this opportunity to spread and increase their portfolio interests by investing money overseas, especially in the UK.
Commenting, Alasdair Humphery, national director of Jones Lang LaSalle in Edinburgh, said: "Although the Irish and Scottish markets are not inter-dependent, they do move along similar lines being focused on high technology industries and financial services. Edinburgh especially is a key investment prospect being a self contained market of a reasonable size with a good record for security and growth potential."
With the Irish punt being tied to the Euro, investment in Scotland can, however, be expensive for cash buyers but as the Euro strengthens against sterling it might become more appealing to cash buyers. Many investors have looked to their banks to provide a solution to this problem as debt in the form of sterling can help avoid this currency risk.
Alasdair continued: "The vast majority of investment by Irish investors in Edinburgh is in the office sector, with retail playing a minor role. With the secure political and economic environment, Scotland also offers a relatively good prospect for secure returns and growth from rental increases in the office market. Typically, initial returns would be in excess of 6.5 per cent and possibly between 7 and 8 per cent depending on precise location."
Jones Lang LaSalle produce city reports for both Edinburgh and Glasgow, covering the main commercial property and investment markets in the cities, providing in-depth analysis and statistics. The Edinburgh city report, now available, indicates a particular interest by Irish investors in townhouse offices which yielded an average of 6.9 per cent last year.
Among the deals noted was the sale of a double townhouse at Melville Street to a private Irish investor for £2.19 million sterling, reflecting a yield of 6.85 per cent.
Another investment in the same street was bought by an Irish investor for £900,000 a yield of 6.75 per cent.
