Investment in Scottish commercial property slumped 38% last year to £1.5bn, according to Colliers’ latest Scottish Snapshot.
Cross border investment accounted for 33% of all activity by value in 2023, which was also a decrease year-on-year with 2022 levels standing at 45%.
Retail was the best performing sector in 2023, accounting for a 34% share of all investment. The £500m of retail deals racked up last year was slightly down on 2022, but higher than 2019-2021 levels. Offices accounted for 27% (£400m) of total investment activity and industrial accounted for 15% (£220m).
The largest retail transaction in Q4 was the £46m sale of The Centre in Livingston to M Core (pictured). The total volume of retail investment in Q4 was £105m.
In Q4, office investment hit £140m, industrial activity reached £30m – 63% below the five-year quarterly average – and investment into the hotels sector slowed from £50m in Q3 to £30m in Q4.
Oliver Kolodseike, director in the research and economics team at Colliers, said: “Across the board investment into Scottish commercial real estate was down on previous years as high interest rates and falling capital values created a lack of viability for debt buyers. As we look ahead to this year, we expect a rebound in confidence of both domestic and overseas investors, buoyed by the fall of interest rates and debt costs. We currently predict this will come into effect from May or June.”
Chris Lewis, head of UK office investment at Colliers, added: “In line with the rest of regional markets across the UK, Scotland has been impacted by low investment volumes with limited domestic and international institutional demand. However, well capitalised property companies and private buyers have been able to take advantage of the discounted marketplace securing core assets which were previously out of reach. We expect this to continue in 2024 and also see an increase in opportunistic buyers targeting well located assets for repositioning or alternative uses, particularly in Edinburgh where sites have traditionally been difficult to secure.”
