Scottish hotel investment booming says Savills

Investment volumes in Scotland’s hotel sector for the first six months of the year came close to eclipsing total volumes for 2016, according to Savills.

Around £118m was invested in Scottish hotels in the first half of 2017, only slightly less than the £119.7m spent in the whole of last year.

Edinburgh accounted for 75% of all investment. Key deals included the forward funding of the Marriott Courtyard Edinburgh for £23.2m by M&G Real Estate in April and the ground lease sale & leaseback of Safestay Hostel Edinburgh at a net initial yield of 2.46%.

Overseas buyers have been particularly active this year, spending £46m in six deals, almost six times the amount of foreign investment seen in 2016.

Savills said this reflected a wider national trend which has seen investment by international buyers this year total £1.2bn, up 13.7% on the whole of 2016 levels. By comparison, domestic investors have spent a total of £822m.

Steven Fyfe, associate in the hotels team at Savills Scotland, said: “Hotels in UK regional cities are in high demand with overseas investors - fuelled by the relative weakness of Sterling, resulting in advantageous exchange rates, and the sharpness of yields in prime markets, providing owners with the opportunity to sell very comfortably just now. 

“The beneficial knock-on effect is that purchasers of regional and provincial hotels are encountering increased competition from foreign buyers which increases the focus on alternative hotel stock available.”

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