The report states volumes hit £1.7bn at the half-year mark but were let down by a very subdued second half of the year.

Oliver Kolodseike, director of research & economics at Colliers, said: “Scotland had a very strong start to 2022 with investment volumes soaring at the half-year mark, however, the market wasn’t immune to the impact of the ‘mini budget’ and the resulting uncertainty damaged volumes in the second half of the year.

“The Q4 figure of just under £210 million, is well below the five-year quarterly figure of £570m.”

It was another quiet quarter for industrial investment, with only £30m transacted across nine deals. Despite the significant slowdown in transaction volumes towards the end of the year, the £360m invested in 2022 was the strongest annual figure since 2014 and above the ten-year average of £240m.

Take-up in Scotland for industrial all sizes reached around 5.3m sq ft in 2022, this is down by 15% on 2021 and 11% below the five-year annual average. Although demand for space remains resilient, there are signs that a lack of modern stock in the wider Edinburgh and Glasgow markets is hampering take-up activity.

Office investment volumes remained subdued in Q4, slowing from £40m in Q3 to just over £20m, marking the weakest quarter since Q2 2020. Despite the significant slowdown in activity in the second half of the year, the £550m transacted throughout 2022 represents an improvement on the £490m transacted in 2021. However, this is still below the ten-year annual average of £710m. The only sizeable office transaction in Q4 was the £19m sale of Edinburgh’s Orchard Brae House to VCM Global Asset Management, at a net initial yield of 6.9%.

At just £30m, annual volumes were significantly below the ten-year average (£150m) in Aberdeen, slightly below in Edinburgh (£240m vs £310m average) and in line with the average in Glasgow (£250m).

Patrick Ford in the national capital markets team at Colliers Scotland, added: “There is no denying that the second half of the year was particularly tough for investment into Scotland’s offices.

“Across the board investors paused their activity in the hope of some market stabilisation. The repricing of assets has taken place quickly and as such we expect there to be more positive investment activity in the second half of 2023.

“The occupational markets offer some glimmer of hope with the Q4 Edinburgh take-up figures reaching the highest level for 12 months, however, this was largely due to the headline pre-let of 20 Brandon Street to BlackRock. We are very much in a position of ‘wait and see’ for a lot of deals over the next few months.”

Retail investment volumes rose slightly from £70m in Q3 to £90m in Q4 but remained around 25% below the five-year quarterly average.

Most of the activity was recorded in the retail warehouse segment, led by the £30m sale of St James retail park. The sector attracted almost £400m throughout 2022, up from £300m in 2021 and the highest annual figure since 2005.

The alternative, mixed-use and leisure segments attracted a combined £50m of investment in Q4 2022, down from £70m in Q3 and significantly lower than the £320m transacted in Q2.

Annual hotel investment in 2022 reached £140m, down from £260m in 2021, PBSA investment rose slightly from £80m to £90m, and investment in the residential sector slowed to a four-year low of £140m. Despite the slowdown in transactional volumes in H2, Colliers predicts that activity should pick up again towards the middle of 2023.