Reports that output in Scotland increased by 2.6% in the year to the end of Q4 2006. Expected growth over the period 2007 to 2011 will average 2.4% per annum which is below the average growth forecast for the UK over the same period of 2.7% pa but is significantly above the 2001/2006 Scottish average of 1.9% pa. In the year to the end of 2006 all property rental growth in Scotland was 2.4% compared with 4.2% in the UK as a whole over the same period. It is expected that average rental growth in the Scottish office sector will increase to 4.3% pa by 2010 and then show a slight decrease to 3.9% pa in 2011. Rental growth in the retail and industrial sectors is expected to improve to 2.5% pa and 2.1% pa respectively by 2011. Investment demand in Scotland remains strong. Total returns is expected to continue to fall in the short to medium term and for rental value growth to remain important in institutional investment decisions as yields stabilise. In line with our previous report, total returns is expected to average around 8.1% pa for offices in the years to 2011, while returns for standard retail and industrial property are expected to average 5.3% pa and 7.6% pa respectively over the same period.