Investment in London hotels reached £1.1bn in the first half of 2018 to account for a third of total investment in the UK commercial property market, new research has found.
UK hotels brought in £3.2bn investment altogether, according to a new report by Savills. The £1.1bn amount has remained broadly flat compared with its equivalent in H1 2017.
Eleven single transactions in the capital completed, in addition to disposals from six portfolio sales.
Activity was driven mainly by international investment capital, which accounted for 62% of deal volumes. This was deployed mostly through portfolio purchases.
LRC Group’s purchase
The majority of deal volume in the city (20%) was seen from Cyprus-headquartered LRC Group after it bought Lonestar’s Amaris Hospitality platform in July, which included DoubleTree by Hilton hotels in Islington and Chelsea.
Vivion Capital Partners’ acquisition of Project Ribbon, a portfolio of UK Holiday Inns and Crowne Plazas, meant that capital from Israel accounted for 19% of London’s total hotel investment. Key assets in the Blue Ribbon portfolio include the Holiday Inn London Bloomsbury and Holiday Inn Regents Park.
Key individual deals included Crosstree Real Estate Partners’ deal to acquire RE London Shoreditch Hotel, the sale of King’s Cross Central Travelodge from Travelodge to a UK pension fund for £36.3m and ABIL Group’s acquisition of 5 Strand for more than £90m.
Seven deals valued at more than £40m in total
Seven of the 11 single transactions in the capital represented a collective estimated value of more than £40m.
Gary Witham, director in the hotels team at Savills, said: “The London hotel market continues to provide an attractive investment option for overseas capital with the currency play supporting strong pricing.
“The city has a strong development pipeline balanced by high occupational demand. One potential headwind may be rising pressure on single-asset operators who will have to cope with increasing wages and business rates as well as the need to refurbish their properties to stay relevant.”
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