Investment into UK hotels reaches £2b in first half of 2017

Investment into the UK hotel market reached £2b in the first half of 2017, according to international real estate advisor Savills.

The firm predicts that levels will reach £5.1b for the full year, up 28% on total 2016 volumes of £4b.

Savills notes the hotel investment market in the first half of the year was driven by London and individual sales as overseas investors continue to demonstrate considerable appetite for the sector. The capital remains the largest market, accounting for 55% of transactions by value (£1.1b).

Individual sales accounted for 92% of transactions by value (£1.8b), however a number of high-profile portfolios are expected to come to the market in the second half of the year. Overseas investors have been particularly active with an appetite for big ticket lots, accounting for £1.2b in the first half of the year in comparison to the £822m transacted by domestic investors.

Key deals for the first half of the year included the sale of the South Place Hotel in London, sold by its owner Frogmore to an international investor for a reported £67m; the sale of the Holiday Inn in Manchester City Centre by Dominvs Group to a controlled affiliate of Starwood Capital Group off a guide price of £55m; and the ongoing sales by Lone Star from its Project Solstice portfolio.

Lone Star sold the Imperial hotel in Blackpool to Singapore-based property and investment company Fragrance Group for £12.8m in January and Billesley Manor to an unnamed overseas investor off a guide price of £8m last month, leaving only Shrigley Hall golf and country club, which is believed to be close to being sold.

Larger single-asset deals have driven the market in the first half of the year and, as such, average price per key in the UK has risen from £119,317 to £147,077 over the last 12 months.

Martin Rogers, head of UK hotel transactions at Savills, said: "The UK hotel market has had a strong start to the year as the sector remains resilient to the headwinds of the last six months. The favourable exchange rate has attracted overseas buyers that are looking for stable, long-term income. The anticipation of a softer Brexit will provide further comfort, encouraging development and relieving pressure on staffing."

Overseas investors to drive UK hotel market in 2017 >>

Billesley Manor hotel sold off guide price of £8m plus >>

UK hotel transactions halved in 2016 >>

South Place hotel sold for £67m >>

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