UK Hotel Investment Volumes Reach €1.85 Billion in Q1 2018

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European Hotel Investment Trends

Continental Europe Slows from Shortage of Stock

The first quarter (Q1) of 2018 saw UK Hotel investment volumes reach €1.85 billion, a surge of 81% year-on-year, continuing the trend evident over the last 12 months, according to leading global real estate advisor, CBRE.

Growth in the UK was driven by several significant nationwide hotel portfolio deals in Q1 2018, including the sale of £135 million sale of seven hotels to US-based Starwood Capital Group, the sale of the Grove London Travelodge portfolio for £72.3 million.

Despite continued high investor demand, overall European hotel investment volumes slowed over Q1 2018 with investment volumes for the quarter totalling €4.02 billion, representing a 9% decrease compared to Q1 2017.  This has been largely due to a shortage of hotel stock for sale in markets such as Germany and Spain as opposed to a lack of buyers.

In addition to the UK, Ireland, Italy and the Netherlands all saw an uptick in Q1 2018.  €241 million was invested into hotels in Italy, representing a 198% increase year-on-year. The Netherlands saw hotel investment volumes reach €187 million, mainly due to significant single asset sales such as The Hague Marriott Hotel and Hilton Rotterdam. Ireland also saw four deals transacted in Q1 totalling €190 million, almost half the volume of spend recorded in the sector in 2017.

Kristen Kozlowski, Senior Director, CBRE Hotels, commented: “Whilst a shortage of stock has caused a slowdown in overall European hotel deal activity, continued investor demand is generally holding hotel yields at a three-year low. Notwithstanding the impact of the future interest rates rises, appetite in the fixed-income and long-leased space in the UK and Germany could compress yields further in the short-term and is fuelling investment in secondary markets.”

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