First half dip

Property investor nerves easing as stability rises

Candleriggs Square
Investors have backed projects such as Candleriggs in Glasgow

Investment into Scottish commercial property fell in the first half of the year as uncertainty over interest rates and the general election dulled sentiment.

Analysis by Knight Frank found almost £750 million of commercial deals were concluded in Scotland between January and June.

That was down 19% on the £922m booked in 2023 and about 22% below the five-year average of £954m.

However, the general election result, a more positive view towards property development and the fall in inflation have given rise to improved sentiment in the sector.

Alasdair Steele, the head of commercial in Scotland at Knight Frank, said: “At the start of 2024, it looked likely that interest rates would be cut at least once in the first six months of the year and, as a result, we had a much stronger Q1 than 2023.

“However, a mixed set of inflation figures and economic indicators in the first few months, combined with the calling of the general election, meant many investors paused decision-making during the second quarter to see if a clearer picture would emerge.

“While that uncertainty has slowed transactions, there has still been a relatively healthy level of deal activity and interest – particularly in recent weeks.

“The headline figure for the last six months might not paint the best picture, but the reality on the ground feels a bit more positive.

“The spread of different types of investors in the last six months is also worth noting. Over the last decade international buyers have come to account for the majority of investment in Scotland.

“But in the year to date there has been a much more even share, with institutional investors buying as well as selling, alongside increased interest from private equity and property companies. A deeper pool of buyers can only bode well for the remainder of 2024.”

The data is consistent with analysis by Lismore Real Estate Advisors which said transaction volumes in the second quarter totalled £272m, down 15% on the same three months last year and 31% below the five-year average.

Lismore director Chris Macfarlane said there were signs of the market picking up and that interest rate cuts, forecast for the autumn, would lift sentiment.

New research from Lismore has shown that investors would consider investing in Edinburgh over the second half of 2024.

The city’s international appeal, vibrant culture and strong educational foundation make it a
highly attractive investment destination, according to respondents to a survey.



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