Commercial property investment volumes in Scotland fell by 34% to £1.493bn in 2023, reveals new data from Savills.
However, deal activity picked up in the second half of the year, with investment in the second half of the year 39% higher than the same period in 2022.
Retail assets accounted for almost half of last year’s transactions in value terms (£714m), with £357m of office deals completing. Industrial, leisure and alternatives racked up deals worth £172m, £144m and £105m respectively.
Overseas investors were the most active buyers for a second year running, accounting for deals worth £680m – almost 46% of all transactions. However, this was a considerable decline on 2022, which saw £1.025bn of foreign money spent on Scottish commercial property.
Property companies (£342m), private investors (£187m) and UK institutions (£127m), also remained active in the market.
Key deals included the sale of Craigleith Retail Park in Edinburgh to Realty Income Corporation for more than £60m, Mike Ashley’s Frasers Group snapped up the Overgate Shopping Centre in Dundee (pictured) for circa £30m and Henderson Park bought the Waldorf Astoria hotel in Edinburgh for £82m.
Aly Wright, director in the Scottish investment team at Savills, said: “As we know the investment market across the UK has been impacted by ongoing uncertainty, with pricing yet to find its footing. However, Scottish investment figures have remained relatively robust at only 27% below the 10-year average. What is also interesting to note is the type of asset investors are buying, with retail investment in Scotland seeing the highest level of transactions since 2016.
“Although we continue to see uncertainty in the office sector, given the drive to repurpose obsolete stock, the investment rationale for up and built, well located product will become increasingly compelling moving forward, compounded by an extremely limited development pipeline across Scotland’s main centres. All things considered, 2023 was a relatively positive year, and whilst we anticipate a slow first quarter of 2024, we are positive this will pick-up post Easter as markets continue to stabilise.”
