Key Scottish property market sees sharp fall in deals

However, although the overall value of deals in Scotland fell, Edinburgh bucked the trend. Property firm Knight Frank, which analysed figures from Real Capital Analytics, said there was a 23% rise in investment in Edinburgh, where the value of deals increased to £686 million from £558m.

But the value of deals fell markedly in both Glasgow and Aberdeen, which saw drops of 72% (from £1.2bn to £330m) and 63% (from £229m to £84m) respectively, though Knight Frank said this compared with strong figures in 2022.

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International investors continued to be the most active buyers of Scottish property, and accounted for 62% of investment volumes in 2023, the analysis found. Private investors accounted for 15% of deals as opportunities opened up for cash-rich and ultra-high net worth individuals against an expensive lending backdrop. Real estate investment trusts (REITs) and listed property companies accounted for 2% of activity.

Interest rates in the UK now stand at 5.25% in the UK following a series of rises by the Bank of England to combat inflation, having been at a record low of 0.1% in December 2021. The base rate has been held at 5.25% since August.

Alasdair Steele, head of Scotland commercial at Knight Frank, said: “The last 12 months have seen a huge change in the investment landscape, with interest rates rising 14 times in a row between late 2021 and August 2023. That has inevitably had a big impact on the market and many property owners have decided to hold on to their assets – where they can – until there is a greater degree of certainty, while many buyers also paused until borrowing conditions improve.

“With signs that interest

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