Retail assets have led investment in the Scottish commercial property through the first quarter of the year, accounting for over half of total real estate spending, according to Knight Frank.
Glasgow
Of the £387m of real estate investment so far this year, £216m has been on retail deals, according to the firm’s analysis of Real Capital Analytics data.
Notable recent deals have included NewRiver REIT’s sale of Cuckoo Bridge Retail Park in Dumfries to an institutional investor for £26.5m.
Major deals in other sectors include the sale of The Hanover Buildings on Edinburgh’s Rose Street to the Lothian Pension Fund for £23.4m and the Bond building on Queen Street in Glasgow for more than £15m.
Continuing the flight-to-quality trend of the past two years, the average deal size reached its second highest point for the first quarter of the decade, at £16m, compared to the 2020-2026 average of just over £11m.
REITs and listed property companies accounted for 60% of investment volumes, with private investors accounting for another 25%. International buyers represented just 11% of the market.
Alasdair Steele, head of Scotland commercial at Knight Frank, said: “Uncertainty is always the enemy of transactions and that’s been reflected in what we’ve seen in the first quarter of 2026.
“While the year began with optimism, the conflict in the Middle East has undoubtedly had an impact on the market, with investors delaying decisions as they gauge the implications of higher energy prices, shipping disruption and wider geopolitical risk.
“At the same time, the rising price of oil has shifted expectations around rates cuts this year – five-year SONIA swap rates have moved up approximately 80 basis points over a month, and the Bank of England has held interest rates at 3.75%.
“All of these factors feed directly into property pricing and financing costs and, as these keep moving, reaching a price that both buyers and sellers can commit to becomes more challenging.”
He added: “Nevertheless, deals are still being done – particularly at the higher end of the market, which the average transaction size shows. Activity is increasingly focused on prime assets, with a good level of demand for properties offering strong fundamentals, value potential, or opportunities to drive performance through active management.”
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