Total investment surpassed £2 billion for the year (£2.027bn), according to the commercial property consultancy’s analysis of Real Capital Analytics (RCA) data – significantly ahead of 2023’s £1.5bn and slightly ahead of the £1.9bn five-year average.

Figure 1: Total investment in Scottish commercial property, 2020-2024

Investment increased across all major commercial property asset types. Hotels had a particularly strong year, more than doubling on 2023 with a rise from £236 million to £488 million – a five-year high. Edinburgh accounted for more than half of hotel deals, at £247m.

Meanwhile, offices also saw a significant increase from £368m to £509m, as interest in the sector picked up. Retail was the largest category by total investment with £710m – up 7% on £664m – and industrials rebounded from a five-year low of £292m in 2023 to £359m last year. 

Figure 2: 2024 investment in Scottish commercial property by asset type

After a relatively quiet first half of the year, international investors returned to the Scottish commercial property market in recent months, accounting for 44.3% of investment. At the same time, real estate investment trusts (REITs) and listed property companies were much more active during 2024, representing 23.9% - way ahead of their average of 9.5% for the last five years. 

Figure 3: 2024 investment in Scottish commercial property by buyer type

Alasdair Steele, head of Scotland commercial at Knight Frank, said: “The first half of 2024 got off to a slow start, with the election putting a pause in activity during the second quarter. But, since June there has been a noticeable upturn in deal activity, helped by a clearer idea of what the next five years look like in terms of policy direction and interest rates on a downward trend, combined with political upheaval elsewhere. 

“The pool of buyers for Scottish commercial property has also got deeper, and there is good reason to believe that will continue to be the case in 2025 too. International investors were more active in the second half of last year and we expect the new pooled local government pension funds to be actively looking for assets next year to up their weighting to commercial property, in general, but also to Scotland. 

“There has been a lot of interest in hotels over the last 12 months, with no signs of that stopping – particularly in Edinburgh. Meanwhile, industrials have picked up after keen pricing tempered appetite for the sector and retail is doing well – although there are growing signs of polarisation in that market, with the strong getting stronger and weaker areas going in the opposite direction.

“While ‘beds and sheds’ have been where many investors look to deploy capital, there are green shoots in the offices sector. Volumes were up 38% on 2023 and we would hope to see a rise again in 2025, with more people back in their workplaces and a greater need for diversification among property portfolios. But quality will still very much be the name of the game for some time yet.”