UK - Aberdeen is the exception to a moribund regional office market, with a micro-economy that makes it comparable to London and the South East as one of the few UK property hotspots, according to Mike Pryer, associate partner at Rockspring.

Pryer, who earlier this week announced the £11.5m (€13m) acquisition of a prime waterside office building on behalf of Cheshire pension fund, said: "There is no traction in regional office. Aberdeen stands out because supply is virtually non-existent and the micro-economy is strong."

With international oil firms transferring expertise developed in the North Sea to oilfields across the world and consensus confidence in the sustainability of the current oil price, he said demand was likely to increase for office in the Granite city.

"The oil price may come down, but not below $50-60 per barrel," he said.

Pryer also pointed to burgeoning wind and wave renewable energy industries in the city.

"It's become an energy hub for a region far bigger than Aberdeen itself," he said.

In contrast, regional cities such as Manchester and Leeds will continue to depend on government spending amid public-sector cuts.

"The private sector will struggle to fill the gap," Pryer said. "There's no other influence in those cities, as there is in Aberdeen. The only reason to invest in regional office is if you're of a countercyclical nature.

"Long-term investors might think they're buying at the bottom of the market, but I think there could still be movement, and we're still 6-12 months away from that trend."

Although there were likely to be open-market opportunities for Aberdeen acquisitions, Pryer said banks were likely to be putting pressure on borrowers to realise cash by selling property assets without advertising distress to the market.

"There's a lot of talk of about the Aberdeen market picking up, with record rents, long leases and the rest," he said. "Whether it will attract more investors, I don't know."

Rockspring started tracking the Cheshire pension fund asset a year ago and waited until the vendor was willing to settle for a significantly lower price after failing to sell it.
 

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