Investment in hotel assets hit £3.4b in 2016

Hotels are fast becoming the investment of choice for investors seeking a source of long-term secure income.

According to property consultancy Knight Frank, £3.4b was invested in hotel assets in the UK in 2016, the second most transacted asset type amongst the specialist sectors in 2016 after the private rented sector.

Its Rest Assured Specialist Property report found that overall investment in UK commercial property dropped 35% to £46b, but 23% of that investment was in specialist property, representing a new high.

Knight Frank said it expected investment in specialist property such as hotels to reach £15b this year.

It believes that investors will be drawn to assets such as hotels that offer longer lease term agreements and index-linked rents, as growth slows elsewhere.

Knight Frank's head of specialist property Shaun Roy said: "The growing appetite for long-term secure investments with good covenants amid the current uncertainty has intensified, which is driving the demand for specialist property.

"Investors now regard the granularity of the income derived within the specialist sectors as a positive rather than a threat, and a facet that improves its durability of income. The outlook for the coming year is positive and increased liquidity should draw particular attention to specialist assets."

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