Nearly two-thirds (65%) of investors believe pricing as “found its level”, with nearly 90% of funds and investment managers sharing this view, according to an investor survey conducted by the Scottish independent property advisory firm.

A massive 93% expect that improved pricing will drive greater liquidity, especially after a slow start to 2024 and a Q3 rebound.

The industrial and logistics sectors are highlighted for yield compression potential, with 45% identifying them as the strongest. The living sector is also attracting attention, driven by a resurgent hotel market and strengthening PBSA yields.

Oli Lord, head of UK transactions at abrdn, said: “Prime is often overused, but true prime investments hinge on location - be it access to transport links or amenities, that attract staff, customers and residents.

“Beyond location, high-quality amenities and ESG credentials, such as BREEAM and EPC ratings, are critical in attracting and retaining tenants, enabling higher rents and securing long-term occupancy.

“With capital poised to enter the market and a clearer direction in interest rates, we believe pricing for prime assets has stabilised, especially in sectors like retail warehouses and industrials.

“While the office market remains under pressure, prime office assets are showing signs of reaching pricing equilibrium. Looking ahead to Q1 2025, we anticipate a rebound in activity, potentially driven by interest rate cuts.

“The challenge is not a lack of investor interest, but limited stock availability, as vendors await better pricing in 2025. A modest rise in transactions is expected in Q4, but more significant activity should emerge in 2025.”

Chris Thornton, associate at Lismore, added: “Recent transactions, like The Mint Building sale and Belgrave Logistics Park, suggest prime assets may have found their level. While these deals are few, they indicate renewed liquidity in the prime market, which has been limited in recent years. 

“We anticipate further interest rate cuts before the end of 2024, which could boost confidence among debt-backed investors and enhance liquidity in Q4. Rates are expected to reach 4.75% by year-end and fall further in 2025. Although sentiment is improving, geopolitical risks could still introduce volatility in the coming months.

“In addition, UK funds like Aviva and Schroders are active again, particularly in Scotland, driven by political stability and appealing prime yield discounts. Investors from across North America, Europe, and the GCC further diversify the market.”