The resurgence of interest followed a “period of significant falls in asset values” in the city, and as concerns around inflation and interest rates began to ease.
It also came against a backdrop of concern in Aberdeen over the city’s role in the energy transition, after the UK Government signalled it will not issue any new licences for further oil and gas developments in the North Sea.
Savills, which released the figures, said the resurgent commercial property activity could be attributed to investors seeking value, attracted by the “generous” yields to be had in a market that has “found a new level of pricing”.
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The biggest deal by value in Aberdeen last year was the sale of the Union Square Shopping Centre – home to a raft of big-name retailers such as Apple, H&M, Marks & Spencer, Next, and Hotel Chocolat – to real estate fund Lone Star from Hammerson for around £110m. The deal accounted for nearly one-third of the value of all commercial transactions in the city in 2024, and around 90% of retail investment in Aberdeen.
Away from retail, Savills found the office market accounted for 36% of commercial property transactions in Aberdeen last year, making the city the second-most active city in Scotland for office investment.
The agent noted that the overall value of office deals reached £128m, an 80% increase on the 10-year average and a five-fold jump on 2023. Savills said it was involved in 75% of all office transactions in the city, including three of the biggest deals. These included the £45m acquisition of Prime, 4 for EEH Ventures, the sale of BP’s Aberdeen headquarters to DS Properties for £16m, and the sale of TotalEnergies House, Westhill for £18m. Another notable transaction was the sale of Annan House for £32m to an Israeli investor.
“The substantial volume of deals seen in Aberdeen in 2024 followed a period of significant falls in asset values resulting in extremely attractive yields as the market found a new level of pricing,” declared Mark Fleming, investment director at Savills Scotland.
“In addition, we saw some return in investor confidence as inflation pressures receded, [the] cost of debt began falling and people started to return to their offices post-Covid. Looking ahead we anticipate that Aberdeen commercial real estate will remain appealing to investors in 2025 due to the attractive yields on offer.”
Savills noted that more than 75% of money spent on office investment in Aberdeen last year came from outside Scotland, in line with other key regional markets. The firm highlighted the US, Europe, and the Middle East, as sources of overseas investment, and said it expects the trend to continue this year.
With prime yields in Aberdeen equating to around 9%, compared with 6.5% and 7.5% in Edinburgh and Glasgow, Savills said the city offers an opportunity for investors looking to acquire assets at discounted prices, as investment market activity continues to increase across the UK.
Eilidh Levein, investment associate at Savills Scotland, said: “It has been great to see the resurgence of interest in the Aberdeen commercial real estate market from investors. For example, we received around 10 bids when we set a closing date on the TotalEnergies facility at West Campus in Westhill. This just demonstrates the latent demand from investors in the city where assets are priced correctly.”