Investment activity in the Scottish commercial property market fell to just £330m in Q3 2023 – around 33% below the five-year quarterly average, according to Colliers’ latest Scottish snapshot.
Total investment for the year to the end of Q3 reached £1.1bn – 47% down on the equivalent period last year.
The largest transaction in Q3 was the £62m sale of Craigleith Retail Park to Realty Income Corporation.
Office investment slowed to £50m, significantly down on the £160m recorded in Q2 – the weakest quarterly figure since Q2 2020. Industrial activity doubled from £30m in Q2 to £60m in Q3. The £180m of industrial deals transacted between January and September was 45% below the corresponding 2022 figure.
Oliver Kolodseike, director in the research and economics team at Colliers, said: “Scotland has been hit by the same market forces as the wider UK and Europe; stubbornly high interest rates coupled with inflationary pressures. Whilst there are glimmers of hope including a 0.1% rise in Scotland’s onshore GDP in August and a steady level of business confidence, it is not expected that there will be significant GDP growth until 2025, although some positive movement will be seen by mid-2024 when interest rate cuts are expected to take place.”
Elliot Cassels, director in the Scottish national capital markets team at Colliers, added: “There has been limited product on the market during the summer. The sale of Craigleith Retail Park, Livingston Designer Outlet and the Gyle Shopping Centre, which accounted for almost 50% of the investment volume in Scotland, resulted in a more positive quarter than anticipated.
“Whilst time is running out to witness the usual annual Q4 bump in volumes, with the fall in both inflation and swap rates last week coupled with a significant increase in stock coming to the market we are anticipating much more activity in 2024.”
