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Scottish Town Centres, September 2012

Report Authors: GVA

Report Summary:


The UK retail sector has been hard hit over the last 12 months with minimal growth in the economy overall. Negative income growth in real terms has impacted on household finances, resulting in weak consumer spending growth. In 2011, UK comparison expenditure grew by just 0.5%, with 1.6% growth forecast for 2012. Looking ahead, from 2013 accelerating comparison goods expenditur growth is expected, averaging 3% per annum between 2015 and 2019. This remains well below the medium, long term and ultra long term trend rates.

The outlook for the Scottish retail sector, in line with that nationally remains weak, particularly in the short term.

A key indication of vitality and viability is commercial yields, with lower yields signifying keener investor interest. The trend of retail yields moving out again (which we started to see last year) has continued, thus indicating worries about rental growth and reduced investor interest. With the exception of Edinburgh, Dunfermline and Dumfries, the weak retail market has meant small increases in prime yields between June 2011 and June 2012. Prime yields across the Scottish towns monitored now range between 5% in Edinburgh and Glasgow to 8.25% in Kirkcaldy and Paisley, but these are still well below the peak yields in most centres recorded in 2009.

The weak outlook for retail sector rental growth means it is unlikely yields will change significantly over the short and medium term. Despite improving slightly in 2011, in 2012 retail rental value growth is now weakening again and for 2012 as a whole is expected to record overall growth of -2.5% for standard retail properties in Scotland. Within the three main cities Aberdeen shows the weakest rental growth for 2012 at -4.3%, compared with -3.2% in Glasgow and -0.8% in Edinburgh.

Forecasts for the longer term show rental value growth is expected to improve year-on-year to 2016 from its 2012 low point, returning to positive growth in all centres, and Scotland as a whole, by 2014.

About the Author:

GVA’s award winning Research team provides high quality research and analysis to the business and its clients. Our market commentaries, thought leadership pieces and consultancy advice drive industry debate, distinguish GVA from its competitors, and add value for our clients.