Jones Lang LaSalle’s (JLL) Hotel Investor Sentiment Survey shows rising confidence from investors in the London hotel market sector and an expectation of strong trading prospects over the next six months to two years.
Investors have most confidence in short term trading conditions in London, with 93.8 percent of respondents believing trading will improve. There is also increasing expectation of investment profitability, with Internal Rate of Return (IRR) requirements standing at 10.1 percent, compared to 13.4 percent in JLL’s last investor survey.
The survey also shows that trading expectations throughout the rest of the UK remain promising. Strong business and leisure demand drives positive expectations in Edinburgh. Cap rates currently sit at 6.4 percent compared to 7.3 percent last year. This confidence is also replicated in Manchester with cap rates falling from 7.4 percent in 2013 to 6.8 percent this year.
Says George Nicholas, executive vice president in JLL’s Hotels & Hospitality team: “Improved economic conditions, falling unemployment rates, rising consumer confidence and an increasing number of hotel transactions at the start of the year all led to investors feeling very optimistic about trading expectations in London. Currently the demand for hotel investment product is outstripping supply with investment demand being driven from the U.S. and Asia.”
Of the 31 cities tracked across EMEA, all apart from Moscow are expected to show growth in performance over the next six months, with Moscow joining the rest of the pack when looking further ahead. After London, investor sentiment is highest in Munich, Amsterdam, and Copenhagen.​
