The UK remains a prime location for hotel investment, with new data highlighting the nation’s continued appeal and strong level of performance during recent months.
According to the annual European Hotel Transactions report from global hotel consultancy HVS, 2017 saw the UK reclaim its number one position for overall transaction activities in the sector, with sales volumes rising despite ongoing concerns around issues like Brexit.
An impressive period of growth across Europe
A total of $21.7 billion (£15.3 billion) was invested in the European hotel market last year, representing the second-highest annual figure ever recorded by HVS. It marked a 22 per cent annual upturn in investment volume across the continent and was surpassed only by 2015’s record result of $23.7 billion.
Across Europe, major markets have benefited from renewed investor interest and activities during recent months, with the favourable economic climate across the region having helped to boost confidence and bring more new developments to market, as well as increasing many people’s appetite for travel.
Co-author of the report Magalí Castells, an associate at HVS, said: “Stability in both exchange rates and interest rates and the availability of hotel stock has helped Europe become popular amongst hotel investors.”
The UK was able to regain its position at the top of the pile for positive hotel investment across Europe in 2017 – having briefly lost its crown to Germany in the preceding year. This came despite an ill-judged snap election that led to a weakening of the UK’s Conservative government, ongoing uncertainty surrounding Brexit and serious terrorist incidents in both Manchester and London.
Despite these issues, the UK moved ahead of its nearest rival Spain (securing 23 per cent of European investment volumes in 2017) and other leading nations, including Germany (18 per cent), the Netherlands (eight per cent) and France (six per cent).
Spain jumped significantly in the standings in the last year, rising from just an 11 per cent total in 2016. Meanwhile, levels of investment in the Netherlands also rose threefold during the year, while investors moved away from France and Germany – down from ten and 22 per cent, respectively.
However, the year did truly belong to the UK in terms of hospitality investment and spending in 2017 – it was a period of reaffirmed strength for the UK market and investors responded accordingly.
Investors in the UK recognise growing potential
Across the UK, all areas of the country are now benefiting from a blossoming focus on hospitality and tourism, with figures from the Tourism Alliance showing an eight per cent increase in overseas visitors during 2017.
It marks an upshift in appeal among travellers from around the world, with the UK ranked as the world’s eighth-largest tourism destination by visitor numbers, and fifth overall in terms of visitor spend.
This, in turn, is being translated into a burgeoning market for new hotel investment. Overall, HVS showed that last year was an impressive period for the UK in terms of single asset transactions, with the nation making up 25 per cent of the total European single asset volume in 2017.
London remains one of the largest markets for hotels investment in the UK, with HVS highlighting the capital as a major attractor to foreign visitors and investors. Indeed, the city made up almost two-thirds (63 per cent) of the nation’s single asset transactions last year.
Meanwhile, regional cities, including Manchester, Leeds, Newcastle, Liverpool and Birmingham, continue to prove highly attractive to hotel investors, with their relatively lower entry requirements for investment making them a perfect foil to London’s high entry costs.
Indeed, HVS revealed some of the UK’s largest and most high-profile transactions and investments were seen in regional cities last year, including the £61.8 million purchase of Manchester’s The Lowry by CDL Hospitality and the £36.2 million investment by UK Commercial Property Trust in the Maldron Hotel Newcastle.
Overall, a decade of growth has now been achieved in hotel spending volumes across Europe and the UK is leading the way in terms of new and exciting developments coming to the fore. It’s therefore an extremely positive time for anyone hoping to invest in hospitality at present, with transaction volumes continuing to surpass previous peaks.
At Experience Invest, we help UK and overseas investors to secure the best investment options to meet their long-term goals, and we’re proud to say that opportunities across the UK are now becoming stronger and more diverse than ever before.
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