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."

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