Investment into Scotland’s commercial real estate in 2018 is expected to top last year’s total of £2 billion, according to the latest data from Savills, with investment volumes of £1.74bn already transacted, and £265 million currently under offer as we approach the final quarter.

The real estate advisor said volumes are 90% ahead of the same point in 2017, suggesting the year will be one of the strongest recorded in terms of investment volumes in the last decade.

The office sector has taken the lion’s share of activity in 2018 with £746m transacted year to date (YTD). In previous years the majority of office investment has occurred in Edinburgh yet in 2018 Savills said more than 50% of the total volume has been transacted in Glasgow with £382m invested across 16 deals, up from £134m at this point last year.

Stuart Orr, director in the investment team at Savills in Glasgow, said: “Having lived in the shadow of Edinburgh for many years, research suggests that perhaps we’re seeing the beginning of Glasgow’s resurgence, in particular amongst UK investors who account for 60% of the office deals in Glasgow, by volume, to date.

“Their confidence to invest is the consequence of four factors: a positive supply and demand ratio; that Glasgow has one of the lowest rental levels of the Big Six regional cities implying room for growth; rising headline rents and reducing incentives are now evident; and most influentially, at the current prime yield of 5.25% - only 25 bases points keener than last year – Glasgow offers an attractive discount to Edinburgh, Manchester and Birmingham.”

In other sectors Savills figures show £400m has been invested in Scotland’s retail warehousing sector in 2018, up from £60m last year. Key deals include Fort Kinnaird in Edinburgh, Almondvale South in Livingston and Caledonian Retail Park in Wishaw.

To the contrary, there have been only four high street retail deals across Scotland in 2018, totalling less than £57m, of which three have been on Buchanan Street. Growing appetite for alternative assets has seen £300m traded, said Savills, including the Waldorf Astoria and Jury’s Inn both in Edinburgh.

Finally the firm said enthusiasm for Scotland’s industrial assets remains strong, yet while over £230m of deals have completed across 25 transactions, Savills said volumes are hampered by a lack of stock on the market. A lack of supply sees yields continue to harden, now standing at 5.75%.

Nick Penny, head of Savills Scotland and director in the investment team, added: “Scotland continues to offer investors, both UK and overseas, attractive opportunities that are perceived as good value in the context of the wider UK investment market. While investor demand continues to push down office yields in Edinburgh, there’s growing interest in Glasgow which, with large developments underway, is on the cusp of significant change and investors are buying into this.

“Meanwhile deals are happening in Aberdeen to buyers attracted to the considerable discount on offer. However the strength of Scotland’s investment market is not confined to offices, but rather reinforced by the further appetite for the country’s retail warehousing, industrials and alternatives.”