Investment in UK hotels from overseas capital increased by 30% from Q1 to Q3 when compared year-on-year, according to new data from Savills.
Capital from the Middle East accounted for the lion’s share in value terms, totalling £867m (34.4%).
This was closely followed by investment from European buyers, which accounted for £847m (33.6%).
The total invested into UK hotels in the year to the end of September reached £5.3bn, with heightened deal activity largely driven by portfolio deals.
International investors accounted for £2.5bn of deals during the quarter, representing 47.8% of all transaction volumes in the sector so far in 2018.
UK spending
Savills also noted UK property companies have increased their spending by 38.5% in the hotel market, accounting for £1.1bn – or 20.6% – of total investment volumes.
Overall, the UK hotel market has been driven by portfolio sales, which have made up 59% of total deal volume this year, compared to 17% in the same period the year before.
London investment
Savills said the third quarter was a bumper period for investment into London’s hotels with £1.4bn invested in the capital.
The volumes are significantly up on the £535m and £381m invested in Q1 and Q2 respectively.
Over the third quarter there were 16 individual deals in London, with highlights including the sale of the Hilton London Kensington, the acquisition of The Curtain by the Reuben Brothers and the sale of The Beaumont to the Barclay Brothers.
Richard Dawes, hotels director at Savills, said: “The dominance of portfolio transactions in the UK hotel market has meant investment levels have remained buoyant throughout the year.
“Portfolios often allow exposure to both London and regional markets in one swoop, making them attractive to those investors looking to enter the market.”
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