The Scottish Development International and IPD reports have released new research showing that for property investment, Scotland has outperformed every other European country in terms of leased hotel sector investment returns. Returning 6.9 percent year-over-year, Scottish leased hotel returns are ranked second out of nine European countries, including Austria, Norway, Portugal, Germany, France, and Finland.
As the first study looking at leased Scottish hotels’ property investor return performance, the research will be conducted annually to uncover trends of these hotels over time. The main focus is to give insight for real estate investors considering Scottish hotels for a mainstream portfolio investment.
“Hotel leases have not been viewed seriously as property assets before now, primarily due to a lack of evidence on returns,” says Kenneth Clark, head of Tourism at Scottish Development International. “However, this report uncovers the actual investor returns on a lease and should help in making informed investment location decisions.”
Between 2009 and 2011, Germany’s leased hotels produced 4.4 percent in total returns and the rest of the UK achieved 9.5 percent. In 2011 hotels as a real estate asset class demonstrated total returns growth, from 9.2 percent in 2010 to 9.5 percent in 2011, although other real estate sectors slowed significantly that year.
The research included a hotel sample of 434 real estate properties, valued at 9 billion Euros at the end of 2011. The Scottish sample was valued at $184 million and contained 16 properties valued at $11 million.
