UK hotel investment volumes have risen by 15% year on year, according to new CBRE data comparing 12-month figures at the end of the first quarter of 2019 with the same period in 2018.
Hotel deals in the UK accounted for 35.5% of capital deployed in the country in the year to Q1 2019, reaching €8.2 bn and reflecting a 15.1% year-on-year increase, CBRE said. This growth was largely a result of a particularly strong start to 2019, with Q1 up 24.5% on Q1 2018.
The key deal of the quarter was Queensgate's €1.2 bn purchase of four London properties from privately held hospitality group Grange Hotels.
The figures reflect a bouyant period for the asset class across Europe in general, with European hotel real estate investment volumes reaching €23 bn in the year to the end of Q1 2019.
'Following a record year for hotel investment, 2019 is off to a strong start,' said Paul Collins, head of hotel investment properties UK & Ireland CBRE. 'Growth, in key European markets such as the UK and Spain, is a testament to the strength of the hotel sector and demonstrates continued demand for alternative investments and operational real estate.'
Spain remains Europe’s second largest hotel investment market since Q3 218. Deals amounted to €4.2 bn in the 12-months to Q1 2019, up 17.5% on the previous year. Germany experienced modest growth in hotel deal volumes. Over the last 12-months, investment reached €3.9bn, up 7.1% on the preceding 12 months and representing 17.0% of total European hotel investment.
Hotel investment in France amounted to €1.3 bn through the last 12-months. While this represented a decline of 6.0% year-on-year, the performance elevated France to Europe’s fourth largest market. Other notable risers include the Czech Republic (560.7%), and Switzerland (208.9%).
Hotel yields remained flat across the majority of European markets in the first quarter of 2019, reflecting steady investor demand. Exceptions to this trend were in Iberia, Amsterdam and Helsinki, where an increase in investor demand resulted in falling yields for hotels operated under operational lease agreements.
'A significant amount of investment has come from Israeli and Asian capital which is a trend that we have seen over the past 12 months and one we anticipate to continue,' Collins concluded.
