As Britain braces itself for the possibility of Brexit, Germany is set to overtake the UK as the world’s most attractive destination for hotel investment.
Despite a number of large trophy deals in the UK’s office market allaying fears of a pre-EU referendum hiatus, a recent survey conducted by CBRE Hotels showed that Germany was the most attractive market for hotel acquisitions.
If confirmed, this would knock the UK off the top spot for the first time since 2004, when the CBRE Hotels data series began.
Last year more than €9bn (£11.4bn) was spent on UK hotels, with transaction volumes rising by 134%, a figure that Joe Stather, senior analyst at CBRE Hotels, describes as “staggering, considering the maturity of the market”.
Portfolio sales have driven the rise, particularly trophy deals, with Middle Eastern money targeting luxury assets and Asian investors looking for a foothold in the western Europe hotel arena buying assets from private equity funds.
Stather adds: “Private equity funds are now recycling their capital in warmer Iberian climes.”
UK’s largest deals of 2015
The Maybourne Hotel portfolio in London
• Three hotels consisting of Claridges, The Connaught and The Berkeley
sold to Constellation Hotels (Qatar Investment Authority).
Price: £1.4bn (2.65% yield)
LRG Portfolio C in regional UK
• 19 Holiday Inns and 3 Crowne Plazas
sold to Apollo.
Price: £1bn (approx 6.5% yield)
Kew Green hotel portfolio
• 44 hotels
sold to Hong Kong CTS.
Price: £400m, (approx 6.3% yield)
Jupiter Hotels portfolio
• 26 hotels
sold to FICO Corporation and Singha Corporation in a JV.