Total investment reached £1.5 billion, down 38% on 2022’s volumes. The Snapshot shows that cross border investment accounted for 33% of all activity by value in 2023, which was also a decrease year on year with 2022 levels standing at 45%.

The report notes that it isn’t all negative and Scotland’s average 2023 PMI reading of 50.2 was higher than most English regions, Northern Ireland and Wales. The Q4 ICAEW Scottish Business Confidence Index has highlighted that companies plan to raise their capital investment and R&D budgets faster than any other region or nation in the UK over the next year.

Oliver Kolodseike, director in the research & economics team at Colliers, said: “Across the board investment into Scottish commercial real estate was down on previous years as high interest rates and falling capital values created a lack of viability for debt buyers.

“As we look ahead to this year, we expect a rebound in confidence of both domestic and overseas investors, buoyed by the fall of interest rates and debt costs. We currently predict this will come into effect from May or June.”

Retail was the best-performing sector in 2023, accounting for a 34% share of all investment (£500 million), slightly down on 2022 levels but higher than the 2019-2021 totals. Offices followed at 27% (£400m) and industrial at 15% (£220m).

Looking at Q4, the largest transaction was the £46m sale of The Centre, comprising 718,600 sq ft of retail space, in Livingston to M Core. The total volume of investment into retail assets in Q4 reached £105m, with a total of eight assets trading at an average sales price of £13m.

In Q4, office investment rose to £140m from the £50m seen in Q3 with 15 assets traded (above the five-year quarterly average of 11), and an average lot size of £9.5m. The largest deal in the fourth quarter was the £38m sale of Argyle House in Edinburgh to PGIM Real Estate.

Chris Lewis, head of UK office investment at Colliers, adds: “In line with the rest of regional markets across the UK, Scotland has been impacted by low investment volumes with limited domestic and international institutional demand.

“However, well-capitalised property companies and private buyers have been able to take advantage of the discounted marketplace securing core assets which were previously out of reach.

“We expect this to continue in 2024 and also see an increase in opportunistic buyers targeting well-located assets for repositioning or alternative uses, particularly in Edinburgh where sites have traditionally been difficult to secure.”

Industrial investment activity in Q4 reached £30m, a particularly low figure at 63% below the five-year quarterly average and below the Q3 total of £70m. Nine assets were sold in the fourth quarter, with the average lot size standing at just £3.5m. The largest transaction in Q4 was the £6.4 million sale of a warehouse on Cambuslang Road in Glasgow by Ropemaker Properties.

Investment into the hotels sector slowed from £50m in Q3 to £30m in Q4, the largest deal being the £8m sale of the Hampton by Hilton Glasgow to New World Hospitality. In total in 2023, hotels accounted for £220m of investment, up by 40 per cent on 2022 and 12% above the five-year average.