NEW research has revealed that investment volumes in Scotland’s commercial property market bounced back in 2024, up 30% on the previous 12 months.
Total investment surpassed £2 billion for the year, according to Knight Frank analysis of Real Capital Analytics (RCA) data – significantly ahead of 2023’s £1.5 billion and slightly ahead of the £1.9 billion five-year average.
Investment increased across all major commercial property asset types. Hotels more than doubled with a rise from £236 million to £488 million. Edinburgh accounted for more than half of hotel deals.
Offices also saw a significant increase, from £368 million to £509 million. Retail was the largest category by total investment with £710 million – up 7% – and industrials rebounded from a five-year low of £292 million in 2023 to £359 million.
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.”
