The latest Hotel Investor Sentiment Survey from Jones Lang LaSalle’s Hotels & Hospitality team indicates high trading expectations for London and Paris, with highest investor interest directed towards key trophy assets in the UK capital. The survey highlights that investors are feeling more confident across the EMEA region than they did earlier this year, and investor sentiment is highest for German cities such as Munich, Frankfurt and Hamburg, followed by London.
Short term trading expectations are strong as the post-Olympic boom and a rise in consumer confidence continues to have a positive effect on hotel performance. High net worth individuals and Sovereign Wealth Funds are targeting acquisition of trophy assets in London. Cap rate expectations are at their lowest across the UK in the capital, standing at 6.0%. Edinburgh, Manchester and Birmingham remains above the regional average at 7.3%, 7.4% and 8.0% respectively.
Nearly half of investors (45.5%) will be focusing on acquisitions in the coming year, with Manchester ranking as the top acquisition market in EMEA next to Barcelona.
Adam Wilson, Vice President in Jones Lang LaSalle’s Hotels & Hospitality team, commented: “As key gateway cities continue to attract the bulk of investor interest, yields remain low for prime hotel assets in London. Secondary regional cities throughout the UK are witnessing an increase in investment activity as investors seek more attractive yields elsewhere in the country. The survey indicates that Manchester appears to be one of the main beneficiaries of this increased appetite, with seven buyers to every seller.
“Operational trading sentiment remains positive in London in the post-Olympic year despite a forecast 8% increase in new supply in the next two years, highlighting strong levels of confidence in the London hotel market.”