Scottish investment volumes rebound in Q1

Investment in Scotland’s commercial property market bounced back during Q1, according to new data from Knight Frank. Total investment volumes rose by 53% on the same period last year to £383m. Retail accounted for 56% of deal activity, boosted by the sale of Union Square in Aberdeen for £111m. Hotels accounted for another 17%, while offices represented 15%. The sale of Union Square helped Aberdeen record its best first quarter in the past five years, logging £140m of deals. Glasgow also recovered, rising to £109m from £49m. So far this year, listed property companies accounted for 43% of investment, with international investors at 30% – well below their five-year average of 57%. Private capital represented 27%. Alasdair Steele, head of Scotland commercial at Knight Frank, said: “Last year was challenging for commercial property across the world, with interest rates rising sharply after a decade of historic lows and the economy adjusting to a new normal post-pandemic. While there was some mixed inflation data moving into 2024, a cautious sense of optimism has begun to emerge. “It is encouraging to see that beginning to be reflected in investment volumes. Although we are not quite back to pre-pandemic levels, there is a noticeable difference between now and this time last year as macro-economic conditions settle, and buyer and seller expectations move closer together. “The particularly good news is that it looks like there is still plenty more to follow this year – international investors weren’t as active in the first quarter, but are still very interested in Scotland; there are several large office assets on the market; and there is a strong constituency of potential buyers. All things being equal, we are moving in a more positive direction for the year ahead.”