The newly opened Hotel Indigo Dundee
Investment into Scottish hotels in the first half of 2018 reached £389.67m, according to international real estate advisor Savills, doubling the total annual investment volumes recorded in 2017 (£195m).
Investment was spread across 10 individual transactions and components of seven portfolios. Savills says the 10 individual sales that occurred in the region were principally focused in the £1-10m price bracket, with the Caledonian Waldorf Astoria Hotel in Edinburgh being the only transaction above this bracket, achieving a sale price of £85m. 67% of investment value was accounted for in the region by portfolios
UK buyers were the biggest buying group, accounting for 41% of activity, followed by Middle Eastern investors (22% of transactional volume), Israeli investors (16%), US investors (8%), Canadian Investors (7%), Singaporean investors (5%) and German investors (1%). Collectively non-domestic investors continue to be the dominant player in the market.
Steven Fyfe, associate director in the hotels team at Savills in Glasgow, commented, “Investment volumes continue to build on the strong level of appetite we witnessed last year as we find ourselves already surpassing last year’s total annual volume at the half year point. The spotlight is still firmly fixed on Scotland for hotel operators and investors. Existing brands are looking to increase their representation in the country and new entrants are seeking to secure a foothold in the market.”
Looking at the UK as a whole, Savills research shows a total of £3.2bn has been invested into hotels in the first six months of the year, with Scotland accounting for 13% of investment in terms of value.
Martin Rogers, head of UK hotel transactions at Savills, added, “This year has got off to a strong start, driven by several high profile portfolio transactions. The UK hotel market remains attractive to both domestic and overseas investors, providing something for everyone due to the range on offer from single regional hotels to trophy assets in London.
'Looking ahead we expect the market to remain active and predict the total for 2018 investment to reach around £5.4 billion.”