Hotel investment shows highest return amongst property sectors for 2012
The European hotel sector has shown a 5.8% total return for 2012 in terms of local currency, according to the?IPD?Pan-European Hotel Performance Report released today. This is a stronger return compared with European all property (4.3%) and mainstream property sectors such as retail (4.3%), offices (3.9%), and industrials (3.1%).
Encouragingly, the hotel sample increased this year to 505 assets with a value of ?11.5bn, compared with 475 assets and ?10.2bn in 2011, moving it further from an alternative asset class into a mainstream sector. The Netherlands and Switzerland are also contributing to the overall number of the hotel sample this year (although small), representing 1% and 3% respectively.
Annualised over a ten-year period, hotel investment also returned the highest with 7.2%pa, closely followed by retail (7.0%pa), industrials (6.2%pa), all property (5.8%), and offices (4.9%pa).
Invesco?s Marc Socker, said, ?The index provides further evidence that the hotel sector is a very attractive asset class when compared to other real estate asset classes, offering investors a relatively secure and stable income, both in the short-term and long-term.?
Split between income and capital, the return of 5.8% was from income, as capital growth for the period was 0%, down from 0.8% in 2011. On the income side, the return fell slightly from 5.9% in 2011. Rental growth was negative at -0.8%, also down from last year for the first time.
Of the twelve countries measured, France saw the strongest performance in 2012 with an impressive 14.6% total return, way in front of Austria, which showed the second highest return of 9%. Italy returned the lowest again at 0.9% for 2012, however this is an improvement from the
-4.9% in 2011.
Peter Hobbs, IPD Head of Research, said, ?The hotel sector has shown relatively strong returns over the short and long-term, particularly during times where the European market is as weak as it is. The steady growth of this sector over the last ten years has shown little volatility, driven perhaps by its tendency towards the fixed leasing structure and therefore the emphasis on income. Against the other sectors, it is only industrials that unsurprisingly showed a higher income return in 2012.?