Property

UK hotel transactions halved in 2016

Hotel investment in the UK market reached €4.37bn (£3.7bn) in 2016, a decline of 53% compared with the preceding year.

However, whilst the level of transactions declined hotel yields in London remained stable despite the initial shock of the EU referendum result, according to latest data from global commercial property group CBRE.

Overall, European hotel investment activity in 2016 totalled €20.4bn (£17.3bn), a 7% decrease compared with 2015. Despite the decline, 2016 was still considerably higher than the long-run average and recorded the second highest annual deal volume for the European hotel sector.

Investment activity in Europe improve in the fourth quarter of the year, reaching €7.4bn (£6.3bn) – a 19% increase in transaction volumes compared with a strong fourth quarter of 2015.

The German hotel market proved one of the most attractive investment markets in Europe, achieving an increase of 45% year-on-year in the fourth quarter of 2016 and contributing a record €5.1bn (£4.3bn) of completed deals in 2016.

Joe Stather, CBRE Hotels, said: “The last quarter of 2016 saw a surge in deal completions following a sluggish third quarter. This was mainly down to many investors deferring decisions and awaiting clarity post the UK’s referendum on the EU membership.

“A positive end to the year and a strengthening deal pipeline across countries such as the UK, Spain, Germany and Italy would suggest that we are likely to see buoyant deal volumes for the first half 2017.”

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