Hotel room investment is a growing market within property investment. It can provide you with a passive income as well as an easy means to exit the investment with a potential profit when the time comes to sell up.
Is buying a hotel room a good investment?
Compared to other assets, hotel room investment offers an excellent potential return. They usually require a lower entry investment than the traditional UK based buy-to-let market. Hotel investment yields also benefit from not requiring the cost of regular maintenance to the property. There are no hidden or ongoing costs meaning that there are no deductions from the return you receive from the property.
Unlike the traditional buy-to-let market your investment doesn’t depend on trends in the UK housing market, nor does it rely on the student accommodation sector for returns. Property investment in hotels is regarded as commercial property rather than residential so it is currently exempt from stamp duty tax.
How investing in the hotel industry works
Investing in a hotel room is good for you, the investor and the hotel owner. You receive a high yielding rental income and at the same time the owner receives extra funds to invest in the running of the business.
Investment returns will come through rental income. Guests will rent out your room for their holiday or on a longer-term basis. You in turn will receive a percentage of the rental cost back.
Few management responsibilities
As the investor you will not be responsible for handling bookings, dealing with guests, advertising or taking care of maintenance. As an investment it requires very little of your time.
A good way to diversify your portfolio
A hotel room investment adds a different element to your investment portfolio alongside equities and perhaps the traditional buy-to-let market. It pays to have your eggs in a number of different baskets balancing out risk and reward.
Hotel investment in Dubai
Places across Europe, Africa, along with Thailand, Singapore and Malaysia are currently seeing a boom in hotel room investment. One place that is particularly popular with investors is Dubai.
The growth of the real estate market in Dubai was an incredible 20% in 2019. Government in Dubai have now decided to restrict the number of units that they will allow to be completed each year. This is predicted to have an inflationary effect on the housing market making now a particularly good time to invest.
Average yield for investors is between 7-12% with Dubai offering much more competitive returns than more mature real estate markets such as London. Compared to prices in the UK capital properties are 80% lower on average.
Find out more
Centasource specialise in finding high quality investment opportunities around the world. With over 25 years experience in the field we can advise you on the hotel property investment sector and help you make the right decision for you. To find out more get in touch today and speak to one of our hotel investment specialists.
