Scotland’s hotel sector has been boosted with investment of about £118 million in the first half of this year, according to new data from Savills.
The global property adviser said total transaction volumes are already in line with the £119.7m reached in 2016, and Edinburgh remains the key market, accounting for three quarters of year-to-date volumes.
Edinburgh remains the most sought-after hotel market in the UK outside of LondonSteven Fyfe
The firm cited key deals such as the forward funding acquisition of the Marriott Courtyard Edinburgh for £23.2m by M&G Real Estate in April, while it also highlighted particularly strong activity by overseas investors, with £46m spent across six deals – almost six times higher than the £7.8m seen in 2016.
In Edinburgh these include two purchases by American parties, namely PGIM’s acquisition of Safestay Hostel and a US investor buying The Bonham hotel.
Additionally, Savills noted that Chinese group Creation Gem International has bought The Isle of Eriska Hotel and Spa while 7 Hospitality
(Singapore) has acquired Dundee’s DoubleTree Hilton.
Furthermore, it said the Newton Hotel in Nairn and the Highland Heritage portfolio have been purchased by Indian investors this year,
mirroring a wider national trend seeing investment by international buyers in 2017 total £1.2 billion, up 13.7 per cent on full-year 2016 levels, and compared to the £822m transacted by domestic investors.
Steven Fyfe, associate in the hotels team at Savills Scotland, said there is a high level of demand by overseas investors for hotels in UK regional cities, due in part to the fall in the value of sterling.
“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.
“Edinburgh remains the most sought-after hotel market in the UK outside of London where occupiers and investors are keen to increase their presence by virtue of size, various brands and new concepts. In particular we expect the arrival of the W Hotel will trigger other high-end operators to do the same.”
He also touched on Glasgow’s hotel scene, highlighting developments like Motel One which, with 374 rooms will be Scotland’s largest hotel by room numbers, and the first Radisson Red in the UK, with 176 rooms, opening next to the SEC. Both are to launch in the first quarter of 2018.