The independent real estate consultancy said that, despite the challenges and investment caution brought about by the virus, the Scottish property market is in much better shape than it was during the global financial crisis, and there is still an opportunity for transactions to be conducted on an off-market basis. 

Data from last year showed that deals for £457 million of Edinburgh offices – representing 87% of the total value of transactions – were agreed off-market or by a targeted approach, a figure Knight Frank said could increase in 2020. Off-market or targeted deals are transactions completed privately between a buyer and seller, rather than advertised openly.

Among the commercial property assets to trade hands in this way last year were the Leonardo Innovation Hub at Crewe Toll; 4-8 St Andrew Square, home to Aberdeen Standard Investments; and Gyle Square, which is let to NHS Scotland. In 2019, more than £2 billion worth of commercial property deals concluded, with Edinburgh offices representing £527.8m of the total figure.

Euan Kelly, capital markets partner at Knight Frank Edinburgh, said: “There is no doubt that Covid-19 will have a significant impact on the commercial property market this year. However, while the initial shock of the outbreak took many people by surprise, there are signs of the market beginning to thaw. Deals can still happen within government guidelines through video tours and inspections which were conducted prior to lockdown. If willing sellers and purchasers can take a pragmatic view and find a price that reflects where we are, transactions can be concluded.

“Off-market deals became the norm last year and we expect that trend to continue until the market normalises. Vendors are cautious about openly marketing an asset when there is so much uncertainty on how it will be received. Yet, buyers are still looking for quality, well-let buildings and know they have a better opportunity to acquire in an off-market scenario. However, not every asset is for sale at the best of times and that is even more the case now – you have to have a level of confidence that a reasonable deal can be reached.

“The success of off-market purchases in 2019 shows that investors are increasingly looking to do business this way, particularly during tough times like the current situation in which we find ourselves. At a time of low returns and volatility in other assets, property could be considered even more attractive.”

• Read all of our articles relating to COVID-19 here.