A new report shows that a strong level of investment activity in the market during the second half of 2017 contributed to total annual investment volumes of £5.5bn. This marks a 44% increase from 2016 that shows just how attractive the UK specialist property sector is to investors. It’s also a £2.2bn increase from the 11-year average.
Moving into more recent times and the upwards trend looks set to continue. A Savills report shows that investment into UK hotels reached £3.2bn in the first half of 2018 with a 28% increase on H1 in the previous year. There have already been a number of high profile portfolio transactions in 2018 with figures expected to stay steady and positive through to the end of the year.
As a solid way of providing longer-term income, both overseas and homegrown investors have contributed to these impressive figures as well as private equity and institutional investors. One likely reason is that a favourable exchange rate contributed to a solid influx of tourists to the UK; this is no doubt the same reason that many investors have been attracted to the region. Figures from 2018 show continued appetite from overseas investors with Israel the most active and taking 24% of the investment total.
Regional hotel investments are booming with their share of investment volumes increasing to 56%. As investors show a tendency to move away from the capital and into the regions, the number of deals transacted in the provincial markets in 2017 was four times higher than in London. But all is far from lost in London as the city witnessed a 70% increase in investment volume (excluding development) to £2.1bn in 2017.
It’s good news up in Scotland too, as hotel investment for the first half of 2018 reached £389.67 million, doubling the total investments recorded in 2017. 41 per cent of investors were from the UK with the rest coming from overseas.
This shows another reason why hotel investment activity is on the rise – because the UK continues to represent an attractive and solid investment for overseas buyers wishing to build a portfolio in a consistently robust marketplace.
Just like in the rest of the UK, the visitor economy in Scotland remains strong and provides a huge proportion of GDP to the economy. There is plenty of potential and a real focus on providing a top-quality guest experience across the board to provide added value and complement a strong market that is moving with the times.
The hotel investment market offers a robust risk-return profile with great opportunity for diversification. Strong fundamentals attract both new and seasoned investors with a sense of stability while the huge range on offer from regional bed and breakfasts to prime London real estate provides an investment solution for all.
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