Cross-border investment to continue in 2019

According to JLL’s Hotel Investment Outlook 2019, strong levels of cross-border investment into the European hotel market is set to continue in 2019.

In 2018, investment reached £3.8 billion (€4.9 billion) and this new report suggests that despite political uncertainty, tourism and business fundamentals in the UK will remain solid. Strong infrastructure developments in the region will continue attracting international investors.

The UK and Germany account for 60% of pipeline rooms currently under construction, and due to strong tourism growth forecasts, these are expected to absorb additional supply.

As the report suggests, single asset deals are set to drive the European hotel market. Portfolio trades are expected to reduce, given the significant volumes of these types of transactions seen over the past few years. Across Europe, the Middle East and Africa, overall investment volumes are expected to soften down to £16.3 billion ($21.2 billion) from £17.6 billion (€22.9 billion) last year.

The report also predicts the sector will see the emergence of new investors. Diverse sources of core and core-plus capitals are increasingly considering investing in the hotel market, and an increase in hotels showing interest in the flexible workspace market, will see hotel lobbies transformed into communal workspaces.

Philip Ward, EMEA CEO, JLL Hotels and Hospitality Group, said: “Political uncertainty and the volatility in equity markets will test investors’ sentiment throughout the year. However, we expect hotel investment volumes to hold steady on 2018 levels owing to hotels’ attractive yield profile compared to other sectors.”