Attractive prospects for regional investors as Scottish hotel lease returns outperform all European countries

30 January 2013: New research unveiled today from Scottish Development International and IPD reports that, for property investment, Scotland has outperformed every other European country when it comes to investment returns in the leased hotel sector.  Scottish leased hotel returns are ranked second out of nine European counties, coming second only to the rest of the UK as a whole.

This new research is the first of its kind to look at the property investor return performance of leased Scottish hotels, primarily in the budget market.  The research will be conducted annually and will uncover the characteristics and trends of these hotels over time.  Its main aim is to provide insight for real estate investors to consider hotels in Scotland as a mainstream investment within their portfolio.

Over three years, between 2009 and 2011, Scottish leased hotels produced total returns of 6.9% year-on-year, compared to Germany which achieved 4.4% and the rest of the UK with 9.5%, and outperforming Austria, Finland, France, Norway and Portugal.

During 2011, hotels as a real estate asset class demonstrated total returns growth, from 9.2% in 2010 to 9.5% in 2011.  Other real estate sectors significantly slowed down in the same time period, with total returns for retail and offices falling from 14.7 % year-on-year to 6% year-on-year for retail, and from 9% to 1.4% for office.

Anne MacColl, Chief Executive of Scottish Development International, said: "The European hospitality sector has long been an attractive destination for Middle Eastern investors seeking to diversify their portfolios. While Europe on the whole has continued to deliver stable returns, the research clearly highlights Scotland's outperformance within the sector, providing a unique opportunity for investors to secure significant returns year on year within a flourishing investment portfolio."

Scotland's travel and tourism sector attracts investors from all over the Middle East, including Dubai World who owns the luxurious Turnberry Resort near Glasgow and MBI International who owns the Scotsman Hotel in the very heart of Edinburgh City Centre.

The hotel sample included in this research included 434 leased real estate properties, valued at 9 billion Euros at the end of 2011.  In Scotland, the sample was valued at £138 million containing 16 properties at an average value of £8.6 million.

Please note that this research only examines the return on investment performance of leased hotels as a property asset, and does not examine any other performance indicators, for example hotel operating performance, tourism or destination performance.

For the full report, please visit http://www.sdi.co.uk/ipd

About Scottish Enterprise and Scottish Development International
Scottish Enterprise is Scotland's main economic development agency and aims to deliver a significant, lasting effect on the Scottish economy by identifying and exploiting the best opportunities for economic growth.

Scottish Development International (SDI) is a partnership between the Scottish Government, Scottish Enterprise and Highlands and Islands Enterprise, which works to attract inward investment to Scotland and helps Scottish based companies to trade overseas.

About IPD
IPD provides real estate benchmarking and portfolio analysis services to clients in over 30 countries around the world. These services incorporate more than 1,500 funds containing nearly 70,000 assets, with a total capital value of over USD 1.4 trillion. Each year, IPD produces more than 120 indices helping real estate market transparency and performance comparisons, as well as nearly 600 benchmarks for client portfolios. IPD is a subsidiary of MSCI Inc., a leading provider of investment decision support tools to investors globally, and clients include real estate investors, managers, consultants, lenders and occupiers.

For further information on IPD, please visit www.ipd.com.

Scottish Development International in the Middle East: The Middle East region is recognised as being a fast growing market which presents valuable opportunities for Scottish organisations and their international growth plans. In response to demand, Scottish Development International opened a Middle East office, in the British Embassy, Dubai in January 2010.  Initially the office was staffed by Regional Manager, Colin Crabbe and International Executive, Moira Bibb.  The team has recently been expanded to include energy expert Gary Soper and ICT and tourism specialist Sreenath Somanath, both of whom join resident food & drink and textiles specialist Moira Bibb. The role of the office is two-fold; Trade and Inward Investment.  Over the past 20 months SDI Dubai office has supported numerous Trade Missions who have visited the region and have helped many Scottish companies to set up offices here or assisted them with their plans to trade in the region.

For more information, please contact:
Scottish Government / Scottish Development International: For further information please contact:
Marcus Pepperell /Vadia Rai @ FTI Consulting marcus.pepperell@fticonsulting.com / vadia.rai@fticonsulting.com
Tel: +971 4 437 2100

© Press Release 2013