The publication is recognised as a barometer of the wider Scottish economy as well as the most in-depth and longest running study of the Scottish property market.
Commenting on the findings in the 64th Review, Dr Mark Robertson, editor of the publication said: "The slowdown across Scotland's property markets has synchronised as the country's economy has entered recession.
"Occupier markets are achieving some levels of activity, but development market paralysis continues. While the investment market looks close to the bottom of its cycle, purchasers remain risk-averse and highly selective."
Muted economic growth in 2008 is now reversing into a sharp recession. Forecasts for 2009 and 2010 reflect ongoing concerns about the ripple effects of the 21-month old credit crunch into the wider economy.
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Scotland's city office markets are experiencing a market downturn. Take-up of offices has decreased, supply has increased and enhanced occupier incentives are required to sustain prime headline rents.
While the recession is undoubtedly affecting business confidence, the Scottish industrial market remains active with a good flow of transactions and some development activity.
Despite many retailers continuing their price discounting, it appears that there has been a significant drop in sales volume across the retail sector. Food operators remain the most active in the current market. This is a typical recessionary pattern.
Scottish commercial property recorded a total return of -21.9% in 2008 (UK: - 22.1%) according to the IPD Annual Index. Although values show signs of stabilising in respect of well-let prime assets, further value falls are anticipated in certain sectors as investors prioritise quality and sustainability of income.
With the prospect of an investment property demand/supply imbalance, better credit conditions and improved investor sentiment, there is a possibility of a relatively quick return to asset price inflation. There is cause for some optimism that the investment market may start its recovery during the course of 2010, but driven by capital appreciation as rental values may generally be flat or falling.
(GK/JM)
