London has outpaced New York to become the most attractive city for hotel investment, according to new research.
Findings from Cushman & Wakefield show London is the top city for investment, after several large deals helped double its transaction volumes to $3.3bn (£2.5bn).
Investment in hotels in Europe was up 15% to $25.9bn in the year to Q2 2018 compared with the previous year, and up 28% in Asia Pacific to $14.89bn, driven by a rise in tourism and shifting consumer habits.
Overall investment in US cities fell by 21% as investment from Hong Kong and China cooled, after several years of strong capital deployment.
David Hutchings, head of investment strategy in the EMEA capital markets team at Cushman & Wakefield, said: “London has battled through political headwinds to charm both hotel investors and consumers. Its rich culture, history and leisure scene, alongside its business operations, is proving to be a solid bedrock for its hospitality sector, which continues to go from strength to strength.”
Jon Hubbard, head of hospitality EMEA at Cushman & Wakefield, added: “We are seeing an increasing diversity among the type of investors coming to play, including institutional investors, whose presence in the market is reducing the risk profile and driving a surge in liquidity.
“Their presence is encouraging a resurgence in operating leases and the continued expansion of white label companies. This, in turn, has encouraged some major operators to reconsider leases for strategic situations. There is also an increasing appetite from institutional buyers to consider leases with some element of variable income, to drive upside potential and high returns.
“An endemic lack of stock will see investors broaden their outlook to non-core locations with strong fundamentals for tourism. Paris, Amsterdam, Athens and Prague will be attractive European locations, as well as Tel Aviv, Tokyo, Osaka, Kyoto, Singapore, with some localised opportunities likely to emerge in Thailand and India.”
The number of international tourists globally grew by 7% in 2017 and is expected to continue to rise, bolstered by the silver economy, the millennial hunt for experiences, and the rise in tourism from a more prosperous China.
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