New research shows that international investors are pouring money into Scotland.

The Scottish commercial property market has seen a major shift since the 2014 independence referendum, with overseas investors now the dominant force. This is a prime opportunity for UK developers to get in on the action.

International Investors Take the Lead

Research by Knight Frank shows that in the ten years leading up to the 2014 referendum, UK institutions were the biggest investors in Scottish commercial property, making up 36% of investment on average. However, in the decade since the vote, international investors have taken the lead, accounting for almost half (48%) of investment.

What’s Driving This Trend?

There are a few factors at play:

• Uncertainty after the Referendum: The lead-up to the referendum created some uncertainty for UK investors, who were unsure what would happen to their investments if Scotland voted for independence. This created an opening for international investors, who have been keen to capitalise on the opportunity.
• Scotland’s Growing Economy: Despite the uncertainty surrounding the referendum, Scotland’s economy has continued to grow, particularly in sectors like tourism. This has made it an attractive destination for international investors looking for stable returns.

Key Sectors to Watch

• Tourism: The number of international tourists visiting Scotland has boomed in recent years, rising from 2.3 million in 2013 to 4 million in 2023. This has led to increased investment in the hotel sector, which grew from 11% of commercial property investment before the referendum to 16% in the years since.
• Retail is Shifting: While the rise of online shopping has presented challenges for the retail sector, there are still opportunities for savvy investors. The key is to focus on properties in prime locations with a strong tenant mix.

Scotland: A Bright Spot in the UK Market

Despite a slowdown in the UK property market, Scotland is bucking the trend. Research by JLL shows that investment in Scottish real estate increased significantly in the first half of 2024, while the rest of the UK saw a sharp decline.

What This Means for You

This influx of international investment is good news for the Scottish property market and presents a unique opportunity for UK developers and investors. With a strong economy and a growing tourism sector, Scotland is well-positioned for continued growth in the years to come.