However, a rebound is expected this year as some sectors perform well
Property investment volumes in Scotland totalled £1.3 bn last year, down from £2.1bn in 2019 and the weakest annual figure since 2012, largely due to the impact of pandemic lockdown measures.
But with some sectors performing well, a rebound is expected this year, according to new analysis from Colliers International.
Elliot Cassels, director for national capital markets at Colliers International in Edinburgh, said: There is genuine optimism in the Scottish investment market, in anticipation of restrictions being lifted.
A Brexit trade deal that looked very unlikely has been struck, which will calm nervous investors – and with mass vaccinations being rolled out across the UK there is finally light at the end of the Covid tunnel, he said.
Despite the overall drop in investment last year, the alternative sector had a record year, with volumes reaching £458m, more than double the five-year annual average of £221m.
Colliers explained this was largely the result of strong demand for residential assets. Its analysis found that investor appetite was also strong for distribution warehouses and business parks, both of which exceeded their respective five-year averages.
It stated that cross border capital accounted for 54% of all activity by value, while the share of institutional investors fell to a record low of 8%, against the five-year average of 19%.
The two largest deals by value in 2020 were office assets in Edinburgh, with Springside being sold for £215m and 1-3 Lochside Crescent being traded for £133.25m.
The Scottish capital attracted a total of £606m last year, down from £867 in 2019, while Glasgow accounted for £204m, down from £679m.
Office take-up in Edinburgh reached 534,000 square feet in 2020, down by around 16% on the previous year’s total and below the 10-year annual average of 807,000 sq ft. A highlight was Ballie Gifford’s move to pre-let 280,000 square feet at The Haymarket.