The Scottish hotels market saw investment volumes in 2018 reach £902m, according to the latest research from Savills – a three-fold increase on 2017 investment volumes (£195m) – across 25 individual transactions and components of 10 portfolios.
Savills data shows 69% of the total investment spend in Scotland was accounted for by portfolios (c. £621m) while individual transactions accounted for close to £281m, with the average size of transaction of £11m. The firm names the largest transaction in the region in 2018 was the £85m sale of Edinburgh’s Caledonian Waldorf Astoria to Twenty14Holdings.
International parties remain the dominant investor group in Scotland’s hotels market, representing 76% of the market, says Savills. Within this, French investors were the most active, with £279m of deals across a mix of individual transactions and assets within a wider portfolio (predominantly the Principal Hayley Portfolio) to account for 31% of total spend. Israeli investors were also key players, accounting for £109m of sales (and 12% of total investment). Other non-domestic nationalities all transacting in Scotland in 2018 include Middle Eastern (9.4%), US (4.3%), Sweden (4.3%), Canadian (3.8%) and Indian (1%). Savills says UK investors accounted for 24% (£217m) of all hotel investment activity.
Other key deals in 2018 include the sale of Jurys Inn, Edinburgh, to Fattal Hotels for £52m, and Swedish investors Pandox AB buying the Radisson Blu in Glasgow for £39m. Savills notes hotels including Principal Edinburgh George Street, Hilton Edinburgh Carlton and DoubleTree by Hilton Hotel Glasgow Central all changed hands as part of wider hotel portfolio sales.
Steven Fyfe, associate director in the hotels agency team in Scotland, comments: “Buoyed by strong occupancy levels from leisure tourism, the ongoing inward investment of both domestic and overseas capital into Scotland’s hotels market demonstrates the strength of the sector despite ongoing Brexit uncertainty.
“Looking ahead, there is a positive outlook for Scotland’s hotels market. In Edinburgh the W Hotel, Edinburgh St James is nearing completion, complimenting a number of smaller hotels due to open in 2019/20, and there are plans for two significant hotel developments at Haymarket. Meanwhile in Glasgow we are seeing the arrival of evermore developers and hotel brands such as Motel 1, Radisson Red and Dalata.”
Scotland accounted for 14% of all UK hotel investment transactions in 2018 (£6.6 bn).