German hotel group Steigenberger is to enter the UK for the first time when it takes over the management of the original Scotland Yard police station as a luxury 233-bedroom property in 2017.
Steigenberger's appointment as the operating company for what will be known as the Great Scotland Yard hotel was announced as the developer Galliard Homes completed a £110m deal to sell the 92,000sqft site to Abu Dhabi-based LuLu Holdings. The property, which has undergone 30% of its construction, will be handed over to LuLu Holdings, headed by Indian billionaire Yusuffali Kader, once the building is completed.
The agreement ends a period of speculation during which KSL Capital Partners came close to acquiring the property, with a view to convert it into a Malmaison hotel. However, the deal was called off when KSL sold Malmaison and Hotel du Vin to Singapore-based company Frasers Hospitality, last month.
The transaction by LuLu Holdings is just the latest by an overseas investor in the burgeoning luxury hotel market in London, which today numbers 49 five-AA-star hotels and many more that are ungraded and operate at the highest level. Further upscale hotels set for the capital include Admirality Arch, owned by Prime Investors Capital Investors; Ten Trinity Square, which is owned and being developed by Reignwood Group and will open as a Four Seasons hotel; and the Peninsular London, a joint venture from Grosvenor Britain & Ireland and the Hongkong and Shanghai Hotels.
Hotel consultant Melvin Gold said that London will continue to be an attractive proposition to overseas funds and high net worth individuals as long as occupancy levels remain over 80% as they have done for some time and room rates carry on growing.
"The market is showing no signs of overcapacity for the time being," he said. "The pipeline at both the upper and budget levels continues to be strong."
The Great Scotland Yard hotel is being developed over seven storeys with two basement levels behind the façade of the original Edwardian red-brick and stone building. An adjoining Grade 2 listed Victorian townhouse will be incorporated into the hotel and used to create one of three suites. It will be included within Steignenberger's Signature branded hotels and feature a restaurant, two bars, library and private dining rooms.
portfolio of Signature branded hotels
Martin Brudnizki Design Studio, which has recently completed the redesign of the Ivy restaurant, will oversee the look of the property which is described by Don O'Sullivan, managing director of Galliard Homes, as "synonymous with exceptional service and refined luxury and quality".
Founded in 1930, Steigenberger remained as a family company until 2009 when it was bought by Egyptian tourism entrepreneur Hamed El Chiaty, owner of Travco Group International. Today it comprises a portfolio of 92 hotels with a further 18 properties under development.
Puneet Chhatwal, chief executive of the Steigenberger Hotel Group said: "Our vision is to create an outstanding five-star hotel drawing on our reputation for quality and service combined with the outstanding central location, grand architecture and fascinating history of Great Scotland Yard."