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European hotels outperform wider real estate market, says IPD

The European hotels sector continues to gain ground as an accepted property asset type with a total return of 6.6 per cent in 2013, outperforming the wider market total return of 5.9 per cent, according to the IPD Pan Europe Annual Hotels Index.

This is a stronger total return compared with 2012’s return of 5.8 per cent.
Encouragingly, the IPD hotel sample increased this year to 742 assets with a value of EUR12.6bn, compared with 505 assets and EUR11.4bn in 2012, highlighting its shift from an alternative property asset class towards a mainstream sector.
Hotels outperformed all property types in 2013 except industrial, and also outperformed over three, five, 10, 13 year annualised periods against retail, office, industrial and residential.
Split between income and capital, the return of 5.8 per cent was from income, with capital growth for the period at 0.8 per cent, up from zero per cent in 2012.
Of the 12 countries measured, the UK saw the strongest performance in 2013 with a total return of 11.2 per cent, more than double the 2012 figure of 5.2 per cent. The UK was followed by Austria at 6.4 per cent.
Italy returned the lowest again at -3.17 per cent, a fall from the 0.9 per cent registered in 2012.
Mark Clacy-Jones, vice president and head of core research, IPD, says: “Hotels continue to grow as an accepted property type within investment portfolios or as specialist portfolios. This is driven by outperformance in relation to the main property types over a multitude of time periods.”

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