Research undertaken by Colliers International’s hotels team has revealed that the average price of a central London hotel bedroom has increased from £500,000 to £550,000 per room over the last two years, making them more expensive than the average price paid for a property in Streatham.
Colliers’s hotels team analysed the sale of over 3,000 London hotel bedrooms in the two-star to five-star categories that have changed hands since early 2015.
A similar exercise undertaken two years ago revealed an average room price then of £500,000.
In the branded budget sector in central London, the growth in prices has been more pronounced, shifting from £177,000 per room to £218,000 per room, an increase of 23 per cent over the same period.
Colin Hall, London hotels agency director at Colliers International commented: “Most of London knows that house prices are continually increasing, but not many will be aware that the same is happening in the hotels sector. Transaction volumes are not performing well, with only around 20 single asset sales taking place in Central London during this two-year period, which has led to the average price of rooms increasing. In addition, while the pound remains subdued, this is creating further headroom on prices.
“Stock in this sector is tightly held despite the ever increasing demand from buyers. We have reached a point though where yields have fallen to around four per cent in some cases, which is now limiting further price growth. With higher interest rates potentially on the horizon, it is difficult to see how prices can be driven much higher, at least in the short to medium term.”