Savill’s UK Hotel Investment Report 2010 found prime budget and 5-star commanded the strongest yields. Prime yields started to harden during the last quarter of 2009 and is now standing at 6.75% for UK regional hotels. Further hardening is unlikely until 2011 as investor uncertainty improves.
Investors focussed on budget and ‘trophy’ assets dependent on covenant strength. Stronger GDP forecasts for the UK over Europe could help attract more investment to the UK but mixed fortunes are predicted for the UK hotel market with London expecting to outperform the regions due to its global position as a key financial centre. A recovery in overseas visitor numbers is expected this year and into 2011. Savills also said in its UK Commercial Development Activity Index that private sector investment continued to improve for the eleventh month running in June, but public sector development fell at the fastest rate since January 2009. Overall, the index posted -2.8% in June, down from +4.1% in May The net balance on average in the second quarter was up 1.8%.
See the full hotel report here: http://savills.info/ve/ZZPB6027589127Fer924
See the commercial development report here: http://www.savills.co.uk/news.aspx