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Hotel Investment Market in UK remains the most liquid27th February 2013

Even though declining, the UK remains the most liquid hotel investment market in Western Europe, according to research by BNP Paribas Real Estate, the leading international property adviser.

With €6 billion invested during 2012, the hotel investment volume in France, Germany, Italy, Spain and the UK suffered a combined 5 per cent drop compared to the previous year. Looking ahead, 2013 is expected to be a repeat of 2012.

In H2 2012, the UK continued to dominate the hotel investment market at 41per cent of overall investment amongst the top-five markets. Hotel investment volume in the UK totalled €2.5 billion in 2012, reflecting a 31 per cent drop compared to the same period a year ago. The regional markets’ activity remained quiet, so London stayed the main target of investors, in particular overseas investors. These cash-rich investors continue to focus on prime assets regardless of their high cost per key and low yields.

As with other types of assets, the hotel investment market is running at two speeds. In high gear is the investor focus on prime hotel assets; in low gear are the poorly performing hotels that are finding no takers.

Elsewhere in Western Europe, France showed great resilience and remained one of the most buoyant markets in Europe for hotel investment, with €1.8 billion invested during 2012; a year-on-year increase of 59 per cent. German hotels stood out with a 5 per cent rise of their revenue per available room, while Spanish hotels’ performances deteriorated over 2012, weighed down by a sluggish domestic tourism. Similarly, revenue per available room in Italy declined, though average daily rates remain high, above €100. 

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