This is a significant rise from the £250m of Q1, yet it remains 35% lower than the five-year quarterly average of £490m. The total investment for the first half of 2023 amounted to £570m, a sharp 66% decline compared to H1 2022.

Thirty transactions took place in Q2, with the average deal amounting to £10.7m. This is an increase from Q1’s average of £8.6m but is still marginally below the five-year average of £11m.

Oliver Kolodseike, director in the Research & Economics team at Colliers, commented: “As with all markets across the UK, Scotland is no stranger to the limiting impact that high interest rates, cost of living and the cost of construction is having on the market.

“While there’s no silver bullet that can help, it would seem we are reaching peak in interest rates and as such some pressures should ease as we head towards next year.”

The hospitality sector played a significant role in this trend. Hotels represented 35% of all investment activities by value in Q2, accumulating to £110m. This is a tenfold increase from the £10m transacted in Q1. The quarter’s most substantial transaction was Henderson Park’s £85m purchase of The Caledonian in Edinburgh.

Meanwhile, office spaces accounted for 28% of investment activity, amassing £90m in Q2. This was more than double Q1’s £40m. However, with only nine assets being traded in Q2, this is a drop from the five-year quarterly average of 12. Glasgow’s 191 W George Street, acquired by Corum for £36m, was the quarter’s largest transaction in this segment.

Elliot Cassels, director in the National Capital Markets team at Colliers Scotland, added: “Whilst the vast majority of investor appetite is for ‘beds and sheds’ there is still appetite for all sectors – but at adjusted prices to reflect the market. The gap between vendor aspirations and buyer expectations has caused transactional volumes to plummet.

“Additionally, deals have generally been taking longer to cross the line. However, with many now stating interest rates are close to their peak, and inflation expected to ease we are optimistic that 2024 will bring easier conditions and increased investment volumes.”

The retail sector saw a reduction in investment, with Q2 figures standing at £50m, down from Q1’s £110m. Q2’s most significant retail deal was the Realty Income Corporation’s acquisition of Auldhouse Retail Park in Glasgow for £31m.

Industrial volumes came to a standstill in the second quarter at below £10m. In Q1, £90m was transacted but the £100m recorded between January and June was 70% below the corresponding 2022 figure.