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.
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