THAT Aberdeen is leading Scotland when it comes to investment in commercial property is interesting amid concerns over an oil and gas industry that appears to have an uncertain future.

All the same, the fact that the Granite City accounted for nearly one-quarter (24%) of total commercial property investment in Scotland during the first six months of 2024, according to new figures from a leading independent commercial property consultancy, is surely very welcome news.

Property firm Knight Frank’s findings that £181 million was invested in commercial property in the city in the first half of the year – more than double the £78m recorded during the same period in 2023 and well above the £99m average of the past five years – is admittedly skewed by Lone Star Real Estate Fund’s £111 million purchase of Union Square.

Scotland sees major upsurge in commercial property deals

The global private equity company’s acquisition of Union Square, home to an assortment of shops and dining establishments as well as Leonardo Hotels and a 10-screen Cineworld multiplex cinema venue, was headline news and a vote of confidence in Aberdeen.

Aberdeen and the north-east has seen recent heavy investment in services, facilities, and infrastructure – which has surely influenced investors. “No. I think it’s a lot more simple,” said Euan Kelly, capital markets partner at Knight Frank Scotland. “Aberdeen is in a position to offer investors the returns they are looking for.”

He accepts that the sale of Union Square has “slightly skewed” the figures but reiterates that interest in Aberdeen, particularly from international investors, is on a par with other major cities at the moment. “There is availability in Aberdeen, and it is offering investors the high yields and returns that they are seeking,” he said.

Mr Kelly added: “The issue in the central belt is lack of stock so yield-hungry buyers are looking to Aberdeen where more deals are available. There is availability in Aberdeen, and it is offering investors the high yields and returns that they are seeking.”

Recent developments in the city include P&J Live, the multi-purpose indoor events arena adjacent to Aberdeen International Airport, and the new South Harbour at the Port of Aberdeen which has brought an influx of cruise ship visitors to the region.

Figures show Aberdeen leads Scotland in commercial property investment

Chris Thornton, associate at another property firm, Lismore Real Estate Advisors, in April said that Aberdeen is experiencing improved liquidity, with a significant uptick in office and industrial volumes attracting yield-hungry buyers.

He added: “Key themes are emerging in various sectors, with logistics and multi-let sheds continuing to lead the way, with strong demand and limited supply driving genuine rental growth and underwriting investment rationale.”