Flight to quality: Scotland’s property investors adapt to shifting marketplace
“There is a clear shift in preference among investors towards quality assets in the best locations - generally speaking, city centres” – Alasdair Steele, Knight Frank
Scotland’s commercial property market is seeing fewer, but higher value deals as investors opt for “quality over quantity”, a new report suggests.
During the first half of 2025 there were 59 investment transactions in Scotland, with an average deal size of £12.7 million, according to new analysis from property consultancy Knight Frank.
The firm said Edinburgh had seen the average deal size jump by 84 per cent during 2025 compared to the average for the previous five years - reaching £26.3m.
Glasgow has also seen a noticeable rise in the average deal size this year - up 38 per cent to £15.5m. However, the average for the previous five years includes the record sale of 177 Bothwell Street in the city during 2022, which skewed the annual average.
In Aberdeen, the change in average deal size has been less stark, with a 4 per cent rise in the average transaction, to £7.3m. Like Glasgow, though, this was slightly tilted by one major deal - namely the sale of Union Square shopping and leisure centre last year for £111m.
Meanwhile, the average deal size outside of Scotland’s three main cities fell by more than half - from £6.6m to £3.2m. Overall investment volumes beyond Edinburgh, Glasgow and Aberdeen also dropped from a five-year annual average of £341m to just £38m over the first six months of 2025, implying a much slower year overall, Knight Frank noted.
The firm’s recent Scotland Report 2025 highlighted similar trends were taking hold in the nation’s occupier markets. The report found that prime rents in Edinburgh and Glasgow had grown by 30 per cent and 28 per cent, respectively, to £46 per square foot and £41.50 per sq ft, as occupiers concentrate their interest on the best available space.
New or high-quality Grade A accommodation accounted for around two-thirds of last year’s take-up of space in Scotland, with a particular emphasis on “high-quality, amenity-rich, and well-located environments” with flexibility in both lease terms and space usage.
Alasdair Steele, head of Scotland commercial at Knight Frank, said: “There is a clear shift in preference among investors towards quality assets in the best locations - generally speaking, city centres. That very much reflects what we’ve seen in occupier markets, as businesses opt for well-located offices with strong ESG [environmental, social and governance] credentials in areas offering easy access to a range of amenities.
“The first half of the year was relatively subdued, with so much macroeconomic and geopolitical uncertainty. But there was still a reasonable level of activity for the right type of assets, which is borne out by the statistics.
“It’s a trend we expect to see continuing into the final few months of 2025; albeit, with a more stable global backdrop, we would also hope to see a broader pick up in activity too,” he added.
A separate report last month from rival Colliers suggested that Scotland had yet to see momentum fully return to the property investment market after a subdued second quarter for transactions.
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