Northern UK Hotel Investment hits £482m in First Half 2018

Date: August 2018

Location: North of England, UK

Name: Report by Savills

Manchester Skyline at Dusk

Hotel investment volumes in the North of England reached around £482m in the first half of 2018, around 59% higher than the £304m total in the same period last year.

Real estate advisor Savills reports that portfolio sales accounted for approximately £320m of H118 transactions while individual hotel sales accounted for £162m.

The total spend was dominated by UK investors (67%), including the portfolio purchase of four Ibis Styles hotels from Carillion by Starboard Hotels.

This was followed by investors based in Israel (17%), Canada (9%), France (4%), the US (2%) and South Africa (1%).

In terms of individual hotel transactions, Savills highlights Lothbury Investment Management’s £44 m acquisition of Malmaison in York, Accor’s £20m purchase of Novotel in Liverpool city centre and Rockspring Property Investment Managers’ £15m acquisition of Holiday Inn in York among the North’s key deals in the period.

Tom Cunningham, hotels director at Savills Manchester, said: “Hotels in the North of England remain attractive to both UK-based and global investors looking outside of London thanks to the prices and returns available. Occupancy rates are also robust across the region, particularly in the larger towns and cities, and investment volumes look set to remain strong throughout the remainder of this year and beyond.”

And across the UK: Investment 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.”

THPT Comment: Thanks Savills, it confirms that the UK is looking strong this year, with great growth in not just London, but also in the North of the UK.

First Seen: The Business Desk