London has been voted the most \u2018attractive\u2019 hotel investment destination in Europe for the second year running.\r\n\r\n\r\n\r\nA survey of senior hospitality figures from business advisory firm Deloitte found almost a third (31%) of respondents ranked the UK\u2019s capital as the number-one hotel investment destination in Europe.\r\n\r\nThis came despite over half of the respondents (57%) regarding the city as \u2018overvalued\u2019.\r\n\r\nIt came ahead of joint-second Barcelona and Madrid (27%), which were followed by Amsterdam (26%). Paris slipped to fifth place after being ranked second last year.\r\n\r\nNick van Marken, global head of hospitality at Deloitte, said: \u201cAlthough some investors see the city as overvalued, London\u2019s position as a proven destination for both business and leisure remains unparalleled. Investor appetite and its added status as a safe haven means we expect capital flows to remain strong.\u201d\r\n\r\nChina and North America were viewed as the primary source of investment in Europe over the next 12 months, largely driven by a weaker euro, attractive yields, favourable interest rates and economic recovery.\r\n\r\nDespite the optimism, senior hospitality figures also highlighted several risks facing the industry in 2016. More than half (54%) identified geopolitical instability in parts of Europe as a key risk, with the same proportion concerned by the threat of deflation and sluggish economic growth on the continent. A third (34%) feel the slowing Chinese economy is a concern.\r\n\r\nMore than half (54%) believed that the European hotel industry is less than 18 months away from reaching the peak of the current investment cycle, which could indicate a changing investment landscape for 2017 and beyond.\r\n\r\nOutside London, Scottish cities ranked in two out of the top three regional UK investment destinations.\r\n\r\nFor the second year in succession, respondents named Edinburgh (47%) as the most attractive investment destination in the regions, followed by a resurgent Manchester (40%) and Glasgow (23%).\r\n\r\nTwo-thirds (64%) of industry leaders expect regional revenue per available room (RevPAR) to grow in the region of 3 to 5% in 2016. The survey also found that recently arrived UK hotel investors are expected to focus on rebranding and repositioning (55%).\r\n\r\nMeanwhile, the rise in labour costs is also expected to be an issue or regional UK hoteliers in the next 12 months (53%). New hotel supply (42%) and the possibility of an interest rate rise (33%) were also cited as potential threats to the UK regional market.