Commercial property in Scotland has had its best half year for investment volumes since 2018, according to analysis from Knight Frank.

The commercial property consultancy found that £1.2 billion of commercial property deals were agreed in Scotland between January and June 2022, up 54% on the same period last year.

The figure is also 21% ahead of the five-year average – although this was skewed by lower investment volumes during 2020 and 2021.

Overseas investors represented 68% of the total investment figure — equivalent to £843 million — with UK property companies the second most active buyers totalling £296 million.

Offices were the most popular asset class with £410 million-worth of deals, boosted by the sale of HFD Group’s 177 Bothwell Street in Glasgow.

Edinburgh saw £400 million of investment, while Glasgow accounted for £329 million. Deal activity in Aberdeen continued to pick up, reaching £189 million.

Alasdair Steele, head of Scotland commercial at Knight Frank, said, “The first half of the year has underlined a couple of key trends that have emerged over the last two years: retail warehousing and industrials remain in high demand, while prime offices are highly sought after – underlined by the deal for 177 Bothwell Street.

“Similarly, overseas investors accounting for such a high share of investment during the last six months also highlights the strength and depth of the buyer pool for Scottish commercial property.

“An uncertain macro-economic outlook will likely cool deal activity over the next couple of months.

“However, commercial property has typically acted as a hedge against inflation for investors and, with yields in Scotland’s main cities comparatively good value and supported by strong occupier markets, we expect interest to remain strong in the second half of the year.”

Investment in retail assets increased by more than 55% on 2021 to £230 million, with retail warehousing accounting for £165 million of the total figure.