Aberdeen hits six-year high for commercial property investment

Knight Frank 'seeing much more interest' from budding investors.

By Keith Findlay

July 4 2024, 6:00 am

Aberdeen harbour view. Image: Knight Frank

Aberdeen saw its highest level of commercial property investment for the six months between January and June since 2018, new figures from Knight Frank show.

The independent consultancy’s analysis of industry data found £181 million was invested in commercial property in the Granite City during the first half of 2024.

This is more than double the £78m recorded during the same period in 2023 and well above the £99m average of the past five years.

Latest figure boosted by £111 million sale of Union Square shopping centre

Lone Star Real Estate Fund’s £111m purchase of Union Square shopping centre accounted for the majority of investment in Aberdeen, meaning retail accounted for more than two-thirds (67%) of the six-month total.

Industrials was the second most active sector (15%), while hotels were just behind in third (13%).

Investment in Aberdeen accounted for nearly one-quarter (24%) of total investment in Scotland during the first six months of 2024. International investors were the most active buyers, representing 62% of investment volumes.

Union Square shopping centre in Aberdeen. — Union Square changed hands earlier this year. Image: Lismore Real Estate Advisors.

Alasdair Steele, head of Scotland commercial, Knight Frank, said: “While the uncertainty of when interest rates will be cut has generally slowed deal activity, Aberdeen’s investment market has been comparatively strong – buoyed by the sale of Union Square.

“The city has also seen a reasonable amount of activity in the industrials and hotels sectors.

Alasdair Steele, head of Scotland commercial at Knight Frank. Image: Frame

“More generally, market sentiment remains cautiously optimistic.

“We would hope to see a rise in activity in the next six months, both in Aberdeen and across Scotland.”

Matt Park, partner at Knight Frank in Aberdeen, said: “The occupier market in Aberdeen has bounced back from the lows of the pandemic era and is settling into a much more consistent level of activity.

Matt Park, of Knight Frank in Aberdeen. Image: Knight Frank

“That is beginning to filter through into the investment market.

“Although the first half of 2024 may have been skewed by the sale of Union Square, we are seeing much more interest in other assets that are being put on the market – particularly where there is redevelopment potential or the opportunity to add value through strong asset management.”