Hotel investment in the UK market fell dramatically by 53% to €4.37 (£3.7b) during 2016, compared with 2015, according to new data from global property group CBRE.
The figures were highlighted as CBRE announced that European hotel investment fell by 7% to €20.4b (£17.3b) in 2016, year-on-year. Investment activity, however, rallied during the final quarter of the year and increased by 19% to €7.4 billion (£6.3b), compared with the same period in 2015.
Despite the overall decrease in transactions last year, the figures for 2016 were considerably higher than the long-run average, accounting for the second highest number of annual deals for the European hotel sector since 2006.
While investments in the UK hotel market dropped, primarily due to the uncertainty surrounding Brexit, the German hotel investment market performed strongly, increasing 45% year-on-year in Q4 2016 and securing a record €5.1b (£4.3b) during the year. CBRE said the investment activity in Germany was largely attributed to “Germany’s strong market fundamentals and abundance of quality hotel assets”.
Joe Stather, senior hotels analyst, CBRE Hotels, said the surge in deal completions during Q4 2016 followed a sluggish third quarter as a result of “many investors deferring decisions and awaiting clarity” following the EU referendum.
“A positive end to the year and a strengthening deal pipeline across countries such as the UK, Spain, Germany and Italy would suggest that we are likely to see buoyant deal volumes for the first half of 2017,” he added.
CBRE noted that there had been a shift in the type of nationality of the investors into European hotels throughout 2016, with an increase in domestic investment and cross-border activity within Europe, while Asian and US investors were less active than they had been the previous year.