A wave of investment in so-called "distressed" properties is helping to inject funds into the sector.

Money stopped flowing into commercial property last year as investment returns plummeted into negative figures, but Douglas Hunter, partner at law firm Dundas & Wilson, said there is now a "cautious optimism" about recovery.

He said one of the biggest sources of investment bargains will be forced sales by borrowers who have breached their banking covenants with lenders and this will create a pool of distressed commercial properties.

A breach of covenant can be the result of debt no longer being serviced or the property's value dropping to such a level that the investor has borrowed more than it is now worth.

David Davidson, partner at property consultancy firm Cushman & Wakefield, said he expects the takeover of HBOS by Lloyds TSB to lead to more distressed stock coming on to the market.

He said HBOS has given both debt and equity support to commercial property firms. Although some of these clients may have broken their covenants, HBOS may have been reluctant to take action because of the personal relationships that have been built up.

Davidson said: "The new owner may be more objective and want to sell those assets."

Although this action will create investment opportunities, it is a "big worry" for Scotland, according to Davidson. "HBOS has equity stakes in high-profile companies, such as Miller and Cala. There are almost no property companies without exposure to the bank," he said.

Hunter expects most banks will take action against borrowers with broken covenants if the credit crunch continues.

He said: "At the moment, banks think that distressing the properties may result in them losing more money than if they hold on to them. They may not be able to maintain that view if the current turmoil in banking markets continues."

Another potential source of distressed properties is retail property investment funds. They experienced large outflows of money last year, leading to a number of firms, including Scottish Widows and Aegon, introducing redemption periods for clients wanting to withdraw their money.

The outflow has now stopped, but Hunter says if consumer sentiment changes again, funds may be forced to sell properties at a cut price to inject liquidity into funds.

Potential investors looking for bargains include institutional investors, sovereign wealth funds, property companies with existing finance or lines of credit, wealthy individuals and recovery or "vulture" funds.

Hunter said: "Recovery funds have been specifically set up to find bargains. They have the money in place, but there's been little action from them yet."

According to Hunter, the UK is attractive to investors because it was one of the first areas to go into a slump and will be one of the first to come out of it. It is also a mature market which does not come with the risks associated with emerging economies.