Global Highlights: Investors’ outlook decreases from one year ago as more hotel investment markets reach a plateau in performance.
Hotel investors’ outlook for the next two years shifts from 39% positive one year ago to 23% positive, according to the survey.
With investors generally making less bold plays due to the mitigated growth outlook, hotel transaction volumes are slated to end 2016 down about 40% from the extraordinary levels posted in 2015. That said, large transactions continue to reach completion and the proportion of cross-border transactions is at an all-time high.
Initial yields (cap rates) have marked a nominal increase from our last survey, driven by investors’ expectations that interest rates will rise in a number of mature markets, investors’ outlook for slower growth in hotels’ operating income, and an overall less liquid transactions environment.
The upward push to cap rates is expected to result in a narrowing in seller and buyer expectations and underpin continued healthy levels of transactions.
Despite headwinds inherent based on the survey data, real estate private equity funds and institutional investors continue to raise a significant amount of capital and hotel real estate investment trusts have posted a recent recovery in share prices.
What are the hot markets? Where are investors planning to develop or acquire? Find the answers in our latest Hotel Investor Sentiment Survey.