An iconic Aberdeen office block once valued at about £5million has gone under the hammer for just £20,000.
Rocketing business rates and the downturn in oil and gas has seen the Salvesen Tower go from a thriving economic hub to a concrete shell overlooking the harbour.
On Tuesday, the eleven storey building complete with pub attached, a warehouse and 112 parking spaces sold at auction for 0.4% of what it was once worth.
It is not yet known who bought the building but the new owner is believed to be from the Liverpool area.
Last night leading north-east surveyor and partner at Knight Frank said the excess supply for office space and little demand, coupled with crippling business rates, would likely result in more buildings going for a fraction of what they’re worth in future – ready to make way for residential housing or to flatten for the land.
Mr Shearer said Custom House on Guild Street recently sold for £1million despite being valued at around £4million while the KMD building on Wellington Circle is due to go for auction with a reserve price of £350,000 when it was valued at around £3.5million.
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He said: “The buildings are worth nothing without tenants and when you have to pay out hundreds of thousands of pounds in business rates on vacant properties owners find themselves left with little choice but to sell for a ridiculously small sum or to knock it down.
“The problem you find with buildings like Salvesen Tower is that it could cost more than £1million to demolish given it was built around 30 years ago. The costs of the disposing of asbestos, for example, is high.” Mr Shearer said it was disappointing given the buildings were still fit for purpose, despite possibly needing a little bit of work.
Before the sale the owners of the Salvesen Tower, situated next to the Shetland ferry terminal, were receiving around £124,000 in rent annually with the few tenants that they had within the 3,994.35 sq m of space.
However, Mr Shearer said when he calculated the costs in business rates for the vacant space he expected they would total around the same as they had been taking in.
Last night north-east region Scottish Conservative MSP Tom Mason said he hoped to see the tower full in future of firms doing well.
He said: “I would like to see the tower full of firms doing well, despite the hurdles placed in front of them by their own government.
“If that same tax regime has forced owners to sell up, that’s a grim indictment of how the SNP treat business.”
Minister for Public Finance Kate Forbes added: “Our reforms following the Barclay Review of Non-Domestic Rates will support growth, improve administration and increase fairness for all rate payers. We have consulted widely on its implementation and are currently analysing responses to inform the delivery of these reforms.”
Reaction
Politicians last night reacted to the news that an office block in Aberdeen sold for 0.4% of what it was once valued at.
North-east Scottish Conservative MSP Tom Mason said the building had been an “attractive base” for dozens of companies over the years.
He said: “An AB postcode with a view on to the Dee is highly sought after.
“Although the global oil and gas downturn knocked some of the wind out of its sails, all reports now indicate that jobs and enthusiasm are coming back to the city.
“That is despite the SNP’s income tax and business rates regimes which see employees and firms paying more than those in England.
“I would like to see the tower full of firms doing well, despite the hurdles placed in front of them by their own government.
“If that same tax regime has forced owners to sell up, that’s a grim indictment of how the SNP treat business.”
But Kate Forbes, minister for public finance said the Scottish Government recognises the challenges facing the north-east economy from the decline in oil and gas and the uncertainty of Brexit. She said they were “committed to maintaining a competitive non-domestic rates regime for business.
She added: “That is why we implemented a rates cap for all offices in Aberdeen and Aberdeenshire and the Business Growth Accelerator as part the most generous system of rates relief in the UK, worth around £720million.
“Our reforms following the Barclay Review of Non-Domestic Rates will support growth, improve administration and increase fairness for all rate payers. We have consulted widely on its implementation and are currently analysing responses to inform the delivery of these reforms.”