The Caterer

Overseas capital drives London hotel investment to £1.1b in first half of 2018

23 August 2018 by
Overseas capital drives London hotel investment to £1.1b in first half of 2018

Overseas capital drove investment in London hotels to £1.1b in the first half 2018, the biggest proportion seen in any UK region according to new data published by Savills.

Total investment in UK hotels reached £3.2b for the same period, the property adviser said.

International investment was the primary driver of the capital's hotel market, making up 62% of deal volumes, mainly deployed through portfolio purchases.

The majority (20% of total volumes) was Cypriot money involved in LRC Group's acquisition of the DoubleTree by Hilton hotels in Islington and Chelsea.

The acquisition of Project Ribbon, a portfolio of UK Holiday Inns and Crowne Plazas, by Vivion Capital meant that Israeli capital accounted for 19% of London's total hotel investment with key assets such as Holiday Inn London Bloomsbury and Holiday Inn Regents Park included.

The total volume was made up of 11 single transactions - of which seven were worth more than £40m - as well as the disposal of assets as part of six portfolio sales.

Key individual deals included the sale of RE London Shoreditch Hotel to Crosstree Real Estate Partners, the sale of Kings Cross Central Travelodge by Travelodge to a UK pension fund for £36.3m and the acquisition of 5 Strand by ABIL Group for more than £90m.

Gary Witham, director in the hotels team at Savills, commented: "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."

Hot summer boosts July performance of London hotels >>

Boost for UK hotels as ‘staycation summer' increases demand >>

Average daily rate in UK hotels falls for first time since October 2016 >>

Get The Caterer every week on your smartphone, tablet, or even in good old-fashioned hard copy (or all three!).

The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.