London hotels investment set for ‘record’ high
Investment in London hotels is likely to reach around £1.5bn in the first quarter of this year, a new report has found.
This would mark a record high, according to the report by Savills. Transactions into London totalled £2.3bn in 2019, accounting for almost 50% of all UK hotel investment activity.
It comes after a dreary year for hotel transactions across the UK, which plummeted by 42% year-on-year in 2019 after totalling £4.6bn. However, this was 11% above a 10-year average.
Investment in London hotels is likely to reach around £1.5bn in the first quarter of this year, a new report has found.
This would mark a record high, according to the report by Savills. Transactions into London totalled £2.3bn in 2019, accounting for almost 50% of all UK hotel investment activity.
It comes after a dreary year for hotel transactions across the UK, which plummeted by 42% year-on-year in 2019 after totalling £4.6bn. However, this was 11% above a 10-year average.
Total volume outside of London tallied around £2.3bn, 16% of which was in the South East. A fifth (20%) of deal volumes were in the North, 9% were in Scotland, and 6% in the South West.
The number of transactions across the country declined by 47%, which was 6% below the average for the past decade.
Overseas investors amounted to 59% of market share. The top three by country were Hong Kong (c£1bn), Thailand (c£450m), and Israel (c£260m). Portfolio transactions accounted for 52% of investment activity in the UK, similar to 53% in 2018.
Key single asset deals included NH Harrington Hall, Sofitel London Gatwick, and Crowne Plaza Kensington. Key portfolio deals included The Grange Portfolio, Project Mauve, and The Hallmark Portfolio.
Rob Stapleton, director of Savills’ hotels team, said: “Investor confidence in the UK hotel market remains high and while political uncertainty in 2019 had an impact on overall deal volumes, yields remained low highlighting that, for the right assets, the UK continues to be a key focus for emerging hotel brands and international capital.
“We have already noted a marked increase in investor enquiries since the general election result and anticipate this to translate into increased investment activity across the UK hotel market in 2020, with several notable transactions expected to transact in the first half of the year.”
Tim Stoyle, head of valuations in the Savills hotels team, said: “Looking forward to this year we expect to see more stock coming to market across all grades of accommodation, but primarily driven by demand for the budget and four-star segments.
“Demand for these assets in London and in core locations across the rest of the UK will be underpinned by the operational performance resulting from the growth of the staycation market, as well as the continued growth in international tourist numbers.”
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