Foreign buyers take over half of 2018 investment in UK hotels

Overseas investment accounted for just over half of the £6.6 bn (€7.7 bn) invested in UK hotels last year, according to research from Savills.

Foreign buyers captured £3.4 bn (€3.9 bn) of deals, the highest level since 2015 when they purchased £4.3 bn worth of hotels.

The firm notes that 2018 levels are 87% above the long-term average for overseas investment into the sector (£1.8 bn). This significant uptick reflects large portfolio deals including Covivio’s £847 mln acquisition of Starwood Capital’s Principal Hayley hotel platform (London hotel pictured) and Israel’s Vivion Capital Partners’ purchase of both the £742 mln Project Ribbon portfolio and the £507.5 mln Project Zinc.

The largest increase in foreign capital between 2017 and 2018 came from the Middle East which increased its activity from £23.5 mln to £1.3 bn, driven largely by the Project Ribbon deal.

European investment volumes experienced a 64% increase, rising from £763.2 mln to £1.2 bn boosted by an appetite from a wider range of European markets and portfolio activity.

The biggest European spenders in 2018 were France (£859 mln), Spain (£171 mln) Sweden (£157 mln), and Germany (£42 mln). For France, Germany and Spain these investments followed a period of inactivity in 2017.

Rob Stapleton, director in the hotels team at Savills, commented: ‘UK hotels are an attractive proposition for a broad range of investors due to the ongoing strength of the occupational markets in spite of current political uncertainty. This is true not only in London but across key European markets and, when coupled with an abundance of equity sources and restricted stock availability, we expect to see investors continue their push into secondary markets as the hunt for yield continues.’



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