The value of hotels bought and sold in London has reached an all-time high during 1999, says a report from property agent Jones Lang LaSalle.
The volume of transactions hit £489m at the end of September, overtaking the previous high in 1996 and well above the same period last year (£291m), according to the latest European Hotel Property Digest.
Domestic investors were the main buyers, accounting for 65% of the total value.
Major transactions included the White House hotel (£52m) and the Hilton International Regents Park (£70.2m).
The level of activity remained high despite tougher trading conditions for hotels in the capital. Room yields in top central London hotels fell 4.3% in the first six months of the year to £161.66, although a recovery is expected towards the end of 1999 and into 2000.
"London's position as the favoured European hotel investment market is likely to remain unchallenged in the short term," said Arthur de Haast, European managing director at Jones Lang LaSalle Hotels. "This can in part be attributed to the national and regional hotel groups seeking representation in this key market."
London hotel values would continue to rise for the foreseeable future, he said.
Spain recorded the second-highest volume of hotel property sales in Europe, at £161m. Most of the investment was concentrated on the resort market.
Strong trading conditions in many other European countries meant owners preferred to hold on to their hotel assets and maximise trading, says the report.
Copies of the European Hotel Property Digest are available for £150 from Jones Lang LaSalle Hotels. Call Anna Town on 020 7399 5675.
by David Shrimpton