Favorable exchange rates drive spike in Scotland hotel deals

Bonham Hotel Edinburgh

With the fluctuating euro and progress of the Brexit casting eyes on the future of the UK’s hospitality sector, Scotland seems to be managing just fine. A new report from real estate advisor Savills found that £51.295 million has been spent in Scotland’s hotels market by overseas investors in 2017 to year date, more than six times the 2016 annual figure (£7.8 million).

“Hotels in UK regional cities are in high demand with overseas investors, fueled by the relative weakness of sterling, resulting in advantageous exchange rates, and the sharpness of yields in prime markets, providing owners with the opportunity to sell very comfortably just now,” Steven Fyfe, associate in the hotels team at Savills Scotland, said in a statement. “Whilst Edinburgh remains the most sought after hotel market in the UK outside of London, Scotland’s competitive tourism industry makes assets located elsewhere attractive investments also, highlighted by 2017’s spread of deals across Dundee, Nairn, Eriska and the Isle of Bute.”

This Year's Deals

U.S.-based investors have been the most prevalent, spending £35.3 million on Scottish hotels since January. Notably, all of these deals were for properties in Edinburgh. Key deals include PGIM’s acquisition of Safestay Hostel, International Hotel Properties Limited (British Virgin Islands) buying Holiday Inn Express Edinburgh City Centre—the largest single transaction by an overseas investor at £17.7 million—and a U.S. investor purchasing The Bonham hotel.
Indian investors have also been active in Scotland properties to the tune of £8.3 million. Major deal included MGM Muthu acquiring both the Highland Heritage Portfolio and Newton Hotel in Nairn. China’s Creation Gem International has acquired The Isle of Eriska Hotel and Spa while 7 Hospitality (Singapore) bought Dundee’s DoubleTree Hilton.