Slow start to 2025 for Scottish investment

Scotland’s commercial property sector got off to a sluggish start this year, as macroeconomic and geopolitical uncertainty left investors hesitant to invest. It saw deals totalling £315m in the first quarter of 2025 – a third below the £475m Q1 average for the past five years, according to data from Knight Frank. However, this figure was skewed by an exceptionally active first quarter in 2022, when deals delayed by the pandemic helped take the total transacted to a bumper £900m. Excluding that year, the four-year average came to £369m, roughly 15% higher than this year’s. The office sector had some cause for celebration, accounting for its highest share of deals since 2021. With a total of £112m, it made up 36% of the total, with retail just behind at 35% and hotels at 24%. The most active investors in the market were private investors, who accounted for 42% of investment volumes, while international buyers made up 37% and REITs and listed propcos took 18%. Alasdair Steele, head of Scotland commercial at Knight Frank, said: “The market has been resilient, but the strong news flow at the start of the year has inevitably had an effect oninvestors’ decision-making. Given the events of the past few weeks, it seems likely that the uncertain backdrop will continue into the second quarter, which may make for another challenging few months.” He added: “More interest in offices, after a challenging couple of years, suggests that the green shoots we saw in the sector last year are taking hold. At the same time, private investors being so active demonstrates there is an active pool of buyers beyond the international investors that dominated the market in the late 2010s. “ Image from Knight Frank