London hotel deals top £2bn and dominate the transactions’ market

london-transactions

London hotel deals reached £2bn in 2016, which accounted for just over half of all hotel transactions in 2016, according to Savills.

This was up from the 45.2% share of the market in 2015.

The findings showed that investment into the UK hotel market as a whole totalled £3.9bn in 2016 as robust demand continues to drive activity in the sector.

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The total number of seals reached 220, which was up on the 195 reported in 2015 and even ahead of previous peaks in 2006.

This proved that investor demand and activity remained strong across both the London and regional markets, in spite of the result of the EU referendum.

Savills highlights that London’s increasing share of the market was helped by a number of large lot size deals including the £350m acquisition of the former War Office by the Hinduja Group and Obrascon Huarte Lain for hotel redevelopment.

Post the referendum vote London’s appeal to overseas investors has been aided by the favourable currency exchange with deal activity by international buyers doubling in the second half of the year, with eight deals recorded post June as opposed to four in the first six months.

In terms of market share, overseas investors were the most active in the sector accounting for 29.2% of 2016 transactions with volumes at £1.1 billion, according to Savills.

Martin Rogers, head of UK hotel transactions at Savills, says: “Hotels continue to be a favourable option for investors looking to the UK. Even in a post Brexit environment the UK, and in particular London, will continue to be attractive to visitors meaning that hotels will be in demand, and this offer of long term income will therefore make them attractive assets for investors.

“For private investors and high net worth individuals the smaller lot sizes found in the sector are an added draw. 2017 will see continued demand for both London and regional hotels and we expect demand from Far Eastern investors to increase. In addition, we expect that further single assets will come to the market as a result of the break up of the portfolios purchased over the last few years.”

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