2018 hotel investment in Scotland doubles 2017 annual total in six months

Steven Fyfe

Investment into Scottish hotels in the first half of 2018 reached £389.67 million, according to international real estate advisor Savills, doubling the total annual investment volumes recorded in 2017 (£195 million).

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 £1-10 million price bracket, with the Caledonian Waldorf Astoria Hotel in Edinburgh being the only transaction above this bracket, achieving a sale price of £85 million. 67 per cent of investment value was accounted for in the region by portfolios

UK buyers were the biggest buying group, accounting for 41 per cent of activity, followed by Middle Eastern investors (22 per cent of transactional volume), Israeli investors (16 per cent), US investors (8 per cent), Canadian Investors (7 per cent), Singaporean investors (5 per cent) and German investors (1 per cent). 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, said: “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 £3.2 billion 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.”