UK hotels will continue to attract overseas investors in 2017

Last year £3.9bn was invested into the UK hotel market, more than half of which went into London. Deals also doubled in the second half of the year, meaning investors were not put-off by the outcome of the Brexit vote, said Savills.

Martin Rogers, head of UK hotel transactions at Savills, said investment was set to continue into 2017. 

“Hotels continue to be a favourable option for investors looking to the UK. Even in a post Brexit environment the UK, and in particular London, will continue to be attractive to visitors meaning that hotels will be in demand, and this offer of long term income will therefore make them attractive assets for investors," he said. 

“For private investors and high net worth individuals the smaller lot sizes found in the sector are an added draw. 2017 will see continued demand for both London and regional hotels and we expect demand from Far Eastern investors to increase. In addition, we expect that further single assets will come to the market as a result of the break up of the portfolios purchased over the last few years.”

Resilience ​

Looking back at 2016, Savills said resilient levels of demand resulted in its deal count in the hotel sector exceeding 220, above the 195 reported in 2015 and even ahead of previous peaks in 2006. Although investment volumes fell more than £4bn on the previous year, activity had remained strong. 

The year saw an increased level of activity from private individuals and property companies with transaction volumes by these groups increasing by 152 per cent and 65 per cent respectively. 

Marie Hickey, commercial research director at Savills, said: "We were always expecting 2016 volumes to be down due to lower portfolio activity. What is key is that deal count actually increased in 2016 proving investor demand and activity has remained strong across both the London and regional markets, in spite of the result of the EU referendum.”  

Savills highlights that London’s increasing share of the market was helped by a number of large lot size deals including the £350 million acquisition of the former War Office by the Hinduja Group and Obrascon Huarte Lain for hotel redevelopment and the £300 million purchase of the Hilton Double Tree Tower of London by Gulshan Bhatia.