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Brexit uncertainty causes delay in hotel investment

15 November 2016

Transactions in the UK hotel market are likely to be subdued until the terms of Britain’s exit from Europe become clearer and business confidence returns. The latest Hotel Bulletin, published this week by HVS, AlixPartners and AM:PM, outlines the fact that hotel transactions in Q3 totalled £522m in value, nearly half of that recorded in Q3 2015. Total transactions for the year-to-date were also significantly below that of last year. Many industries have been affected by the ambiguity following June’s Brexit vote. The relocation sector is likely to be impacted with various banks already considering relocating to other EU countries and changes to the UK’s immigration system already being confirmed. Delay in hotel transactions caused by Brexit

“There is still no strong indication of what form Brexit will take and this uncertainty has led to indecision and delays in hotel property transactions,” said HVS London chairman Russell Kett. “While the sterling depreciation recorded since June will have materially impacted overseas investors, many will be looking to take advantage of favourable exchange rates, making it a good time to buy in the UK. However, economic uncertainties in the UK such as a rise in inflation and the potential of rising costs means that decisions are instead being delayed. “The other impact we have seen is that investors with existing portfolios in the UK will have recorded significant valuation declines when converted into their home currencies.”

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