Aberdeen city centre building sold in £5.25 million deal

Kings Close in Huntly Street has been sold for £5.25m. Image: FRPR.

Aberdeen building Kings Close has sold for £5.25 million making it one of Scotland’s top investment deals in Q1.

The office block, which currently has Dana Petroleum as its tenant, was sold earlier this year to an unnamed buyer.

The deal was one of many carried out across the country but latest figures from property consultants Lismore Real Estate Advisors show first quarter transactional volumes down 49% year-on-year at around £324 million, with volumes about 11% lower than the five-year average.

However, Lismore said looking forward, there are a number of sales being prepped, which is likely to see activity pick-up further in quarter two.

Signs of improvement in city

In Aberdeen, the office market at an occupational level is showing “genuine signs of improvement.”

Johnstone House was recently snapped up by US investors Norlin JH for £5 million.

Johnstone House in Aberdeen acquired by Norlin. Image: Norlin.

Tenants of the office building on Rose Street in the city’s West End include law firm Ledingham Chalmers.

Market to pick up

Commenting on the Aberdeen office sector, a statement from Lismore said: “Headline supply levels remain stubbornly high.

“However, a reasonable proportion of the total supply is effectively obsolete and requires re-positioning or demolition.

“Good quality stock is gathering letting momentum, both in and out of town and, with the backdrop of little planned new development, dynamics could continue to improve.

“At an investment level, the city remains low on buyers shopping lists.

“However, recent transactions such as the sales of Kings Close and Johnstone House provide considerable yield compensation for the more opportunistic and income-focused buyer.”

Other top deals of the quarter included the £36.8 million sale of Edinburgh’s Quay 1 by DWS to Capreon, Frasers Group £29.5 million acquisition of the Overgate in Dundee and the Lothian Pension Fund purchased Corstorphine Retail Park in Edinburgh for £16.265 million from Hunter UK Retail Limited Partnership.

ESG important

Lismore director Colin Finlayson said: “Despite limited supply and challenging conditions for new development, strong demand exists for high-quality office space, which creates opportunities for investors to underwrite rental growth.

“Yield levels are currently comparable to their long-term averages, making them attractive to long-term investors.

“Across Scotland, city centre offices show the greatest occupier demand, with potential for refurbishment/repositioning.

“To stay relevant in the market, retain existing tenants and achieve rental growth, owners of existing assets must invest in improving their ESG credentials and amenities.

“These improvements are also necessary to maintain liquidity in the investment market.”