The Scottish commercial property market has outperformed the rest of the UK, according to the latest RICS property survey.

Tenant demand for Scottish commercial property rose further in the office and retail markets in Q2 2010 in contrast to most other regions in the UK where it fell back, says the RICS’ UK Commercial Property Survey Q2 2010.

Despite this rise, there are some signs that the occupier recovery in the Scottish commercial property market is losing steam, particularly in the industrial sector where tenant activity has seen little change over the last two consecutive quarters.

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As a result, confidence in the outlook for future lettings activity fell back in Q2 despite ongoing rises in enquiries to occupy business space.

Surveyors reported that enquiries to occupy space are still rising across all three sectors, although the growth rate is easing in the office and industrial markets.

"Although the commercial property market in Scotland is performing slightly better than its UK counterparts, incentive packages offered by landlords to secure a letting are rising, indicating that the balance of power still resides with tenants across all three sectors of the market in Q2 2010," said Sarah Speirs, RICS Scotland spokesperson.

Investment transaction activity continued to rise in Q2 although at a much slower pace than was seen in the previous quarter across all three sectors.

Rents are expected to remain stable in the office and industrial sectors into Q3 2010 with falls envisaged in the retail sector, although at half the pace of the previous quarter.

The net balance of retail property rental expectations fell at -25 compared to -50 in Q1.

(GK)