Interest rate warning as Scottish property investment volumes slump
Scottish commercial property investment fell to £360 million in the first quarter of 2024 amid warnings that activity is likely to remain subdued until interest rates come down.
The latest Scottish snapshot from property consultancy Colliers shows that investment volumes topped £360m in the opening three months of the year, down from £420m in the final quarter of 2023. However, the first-quarter total for 2024 marks a 44 per cent uplift when compared with the same period last year, with retail accounting for more than half of all investment activity for the quarter.
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Hide AdColliers reports that retail investment volumes rose to £190m in the first quarter of 2024, the highest in two years and well above the five year quarterly average of £114m. The three largest Q1 transactions were all retail assets, led by the £111m sale of the Union Square shopping and leisure complex in Aberdeen to Lone Star. This was followed by the £44m sale of Tesco Corstorphine to ICG and the £20m sale of Princes Square in Glasgow to Lothian Pension Fund.


Oliver Kolodseike, director in the research and economics team at Colliers, said: “Despite slowing from a reasonably strong end to 2023, investment into Scottish commercial real estate has had a respectable start to the year, with the retail sector witnessing the highest quarterly total in two years. Looking ahead to the rest of the year, we expect investment activity to remain relatively subdued until interest rates are cut and the cost of debt comes down.”
Across other sectors, office investment slowed from £130m in the final quarter of 2023 to £80m in Q1 2024. While three assets achieved a sales price of more than £10m, most deals were attributed to lot sizes of less than £1m. The largest deal was the £16m sale of Farnburn Industrial Estate (comprising almost 193,000 square feet) to David Samuel Properties. The building is occupied by BP.
Industrial investment activity rose slightly from £30m to £40m, quarter on quarter, with six assets trading during the latest period and average sales prices rising from £3.5m to £7m.
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