Despite the slump, Scotland proved its resilience as the most popular UK destination for overseas investment outside London and the south east of the England.
The total investment figure of £1.2 billion for 2020 compares to just under £2.1bn in 2019, with offices seeing volumes drop from £759 million in 2019 to £347m last year.
Analysis from Knight Frank, the commercial property consultancy, found that international investors accounted for £654m of investment in Scotland’s commercial property last year – just over half of the total figure.
Excluding London and the south east, which account for the lion’s share of overseas property investment in the UK, Scotland represented 21 per cent of investment by overseas investors, the firm noted.
Alasdair Steele, head of Scotland commercial at Knight Frank, said: “Given the unprecedented nature of 2020 and the many barriers that emerged to making deals happen, last year’s investment volumes in Scotland proved resilient.
“A number of trends took hold relatively early during the pandemic and were borne out as it evolved, namely a flight to quality stock and the rise of the industrial and logistics sector, which you can see in the major Scottish deals concluded last year.
“While activity is likely to be constrained early in the year with lockdown measures still in place, there remains a weight of money waiting to be deployed by investors.
“We expect that to support a rebound when vaccination programmes are more widely rolled out and restrictions on movement begin to lift, with deals already being talked about for later in 2021. Of course, the situation is changing all the time, but we continue to be cautiously optimistic.”
Last year’s total was buoyed by several significant transactions, including the £65m acquisition of Amazon’s Dunfermline fulfilment centre – the largest-ever logistics deal in Scotland – as well as Apache Capital Partners and Harrison Street’s £215m funding of the Springside build-to-rent scheme in Edinburgh.
In the offices sector, German fund KanAm bought Edinburgh’s Quartermile 3 for around £45m, while Singapore-based Elite Partners Capital acquired 150 Broomielaw in Glasgow for £40m.
Steele added: “Quality offices, along with the industrial and logistics sectors, were in demand throughout the pandemic and that looks likely to remain the case. So too does Scotland’s attractiveness to overseas investors and the insatiable appetite for secure, long-term income, which commercial property can provide.”
Earlier this week, property experts said a return to some form of blended working would become the norm for office workers, after the latest snapshot of activity in Scotland’s two biggest cities.
While the pandemic continued to impact take-up activity during the final three months of 2020, the outcome was not as bad as expected.
Property firm CBRE’s latest research showed that over the final quarter of 2020, office take-up in Edinburgh totalled 103,444 square feet. Take-up for the Glasgow office market totalled 108,069 sq ft during the closing three months of the year.