Alasdair Steele

The independent commercial property consultancy’s analysis of RCA data found that nearly £750 million was invested in Scottish commercial property between January and June 2024.

While this was down 19% on the £922m in the same period last year and 22% below the five-year average of £954m, it was more than double 2020’s £447m.

Retail property accounted for the majority of investment by sector type, with a 51% share of the total volume. Hotels made up another 19%, while offices and industrials accounted for 16% and 10% respectively.

Real estate investment trusts (REITs) and listed property companies were the most active buyers, with a 32% share of investment volumes. International investors accounted for another 30%, while private capital made up another 20%, highlighting the increasing diversity of the buyer pool for Scottish commercial property.

Despite the overall fall in investment volumes, Knight Frank said there had been a recent pick up in activity, with its capital markets team having recently completed on a flurry of deals totalling well over £100m. These included the sale of Edinburgh’s 40 Torphichen Street, and in Glasgow the acquisition of 1 West Regent Street and a deal for a large multi-story car park.

Alasdair Steele, head of Scotland commercial at Knight Frank, said: “At the start of 2024, it looked likely that interest rates would be cut at least once in the first six months of the year and, as a result, we had a much stronger Q1 than 2023.

“However, a mixed set of inflation figures and economic indicators in the first few months, combined with the calling of the general election, meant many investors paused decision-making during the second quarter to see if a clearer picture would emerge.”

Mr Steele continued: “While that uncertainty has slowed transactions, there has still been a relatively healthy level of deal activity and interest – particularly in recent weeks. The headline figure for the last six months might not paint the best picture, but the reality on the ground feels a bit more positive.

“The spread of different types of investors in the last six months is also worth noting.

“Over the last decade international buyers have come to account for the majority of investment in Scotland, but in the year to date there has been a much more even share, with institutional investors buying as well as selling, alongside increased interest from private equity and property companies.

“A deeper pool of buyers can only bode well for the remainder of 2024.”