Hotel investment market checks out 2017 with 60% leap
● Property experts predict continued strong activity levels throughout 2018
Edinburgh underpinned hotel investment activity last year as the total value of deals struck jumped 60 per cent, new figures have revealed.
Property experts have also pointed to a strong start to the new year, in a period that is traditionally very quiet for buyers.
According to property consultancysavills,investmentin Scottish hotels in 2017 reached £195 million across 23 deals, marking a sharp increase on the £119.7m transacted the year before.
In terms of geography, the firm said Edinburgh saw the highest volume of hotel investment last year, accounting for almost two-thirds of all Scottish transactions and with a 58 per cent increase on 2016 levels.
That placed the Scottish capital ahead of both Birmingham and Liverpool to become the second largest target city outside of London in 2017 – in terms of hotel investment volumes – after Manchester.
Investment into Glasgow more than doubled last year – rising from £16.8m in 2016 to just under £35.8m – while both Dundee and Aberdeen saw “encouraging” increased year-on-year investment volumes.
This year’s result will be boosted by the recent sale of Edinburgh’s iconic Caledonian Hotel to the Abu Dhabibased hospitality investment outfit Twenty14 Holdings for some £85m.
According to the Savills research, overseas investors dominated 2017 transaction volumes in terms of buyer type, totalling £57.4m – more than seven times the level of investment by international buyers the year before. US investors took the lion’s share of activity, followed by those from Singapore, India and Hong Kong.
Steven Fyfe, associate in the hotels team at Savills Scotland, said: “2017 marked a year whereby the operational and investor sentiment of hotels were both at strong points in the cycle. The momentum has continued and the first quarter of 2018 looks set to deliver in excess of £110m in transactions in a period that is usually notoriously quiet. The improved performance is expected to offset the 9 per cent increase in supply anticipated throughout 2018.”
Key deals included The Scotsman Hotel in Edinburgh selling to G1 Group and the £33.3m sale of Premier Inn St Enoch Square in Glasgow.
Savills said the level of interest in Scottish hotels highlighted a wider national trend that has seen the asset class at the top of the investor’s wish list, with strong appetite among both domestic and overseas buyers.
According to the firm’s research, investment into the UK hotel market reached £5.4 billion across 219 deals in 2017. This total represents an increase of 32 per cent from 2016, in which levels totalled £4.1bn and is 51 per cent above the ten-year average of £3.6bn.
Martin Rogers, head of UK hotel transactions, said: “The popularity of the UK has been boosted in 2017 by the rise of the staycation.”