Whilst volumes have dropped from the final quarter of 2023 (£420m), the Q1 figure marks a 44% uplift on the same period last year.

The retail sector dominated, accounting for over half of all transactions, with a total of £190m invested, the highest in two years and well above the five year quarterly average of £114m.

The three largest Q1 transactions were all retail assets, led by the £111m sale of Union Square in Aberdeen to Lone Star. This was followed by the £44m sale of Tesco Corstorphine to ICG and the £20m sale of Princess Square in Glasgow to Lothian Pension Fund.

Additionally, retail yields for Scotland compressed by 21 bps during the quarter, compared to a 2 bps increase for the UK as a whole.

Oliver Kolodseike, director in the Research & Economics team at Colliers, said: “Despite slowing from a reasonably strong end to 2023, investment into Scottish commercial real estate has had a respectable start to the year, with the retail sector witnessing the highest quarterly total in two years.

“MSCI data highlights yield compression across the board, contrasting with further slight outward shifts across the UK as a whole.

“Looking ahead to the rest of the year, we expect investment activity to remain relatively subdued until interest rates are cut and the cost of debt comes down.”

Across other sectors, office investment slowed from £130m in Q4 to £80m in Q1. Whilst three assets achieved a sales price of more than £10m, most deals were attributed to lot sizes of less than £1m. The largest Q1 deal was the £16m sale of Farnburn Industrial Estate (192,837 sq ft) to David Samuel Properties. The building is occupied by BP.

Industrial investment activity rose slightly from £30m in Q4 to £40m in Q1, with six assets trading during the quarter and average sales prices rising from £3.5m to £7m. The largest transactions in Q1 were the £14m sale of a 139,650 sq ft warehouse at Edinburgh’s S Gyle Trade Park and the £4m sale of a 65,879 sq ft warehouse on Glasgow’s Springhill Parkway.

MSCI data suggests that net initial yields for industrial assets in Scotland compressed by 5 bps in Q1 while across the UK, average industrial yields remained stable.