UK Hotel Investment Up 28% In First Half Of 2017 To Reach £3.2 Billion

SavillsInvestment into UK hotels reached £3.2 billion in the first half of 2018, a 28% increase on H1 last year according to Savills.

The market was predominantly driven by portfolio deals which accounted for 71% of transaction volumes (£2.3 billion). Deal count hit 79 in H1 2018 compared to 107 in the same period last year as volumes were driven by large portfolio deals. The firm highlights key deals including Brookfield’s acquisition of the SACO portfolio for £430 million and the £750 million acquisition of the Project Ribbon portfolio by Vivion Capital Partners.

Overseas buyers continued their activity in the UK hotels market with Savills noting they accounted for 51% (£1.6 billion) of transactions. Israeli and Canadian investors were the most active with 24% and 14% of the investment total respectively. Despite domestic investors accounting for less investment in terms of value (£1.56 billion), they accounted for 71% of deal count (56 deals).

Savills figures show that London hotels attracted £1.23 billion of investment (38% of the H1 total) across 11 deals with key transactions including the sale of 5 Strand by Indian real estate developer ABIL Group for over £90 million and Crosstree’s acquisition of the RE Hotel in Shoreditch. The south east was the second most popular region, accounting for 23% of volumes (£22 million) followed by the north with 15% (£480 million) of the total.

Martin Rogers, head of UK hotel transactions at Savills, comments: “This year has got off to a strong start, driven by several high profile portfolio transactions. The UK hotel market remains attractive to both domestic and overseas investors, providing something for everyone due to the range on offer from single regional hotels to trophy assets in London. Looking ahead we expect the market to remain active and predict the total for 2018 investment to reach around £5.4 billion.”