UK hotel investment volumes are down by 54.4% to £1.63bn over the first three quarters of the year compared with 2019, according to Savills.
Nearly £1bn of this derived from Israeli-backed Vivion acquiring London hotels the Sanderson and St Martin’s Lane in January and Qatari-based investors buying the Ritz from the Barclay brothers.
However, since April more than 77% of UK hotel investment deals done have been outside London, including Dalata and Topland’s recent agreement to develop a new 221-bedroom Maldron Hotel in Brighton, reflecting the demand for staycations due to limits on overseas travel as a result of the coronavirus pandemic, Savills has reported.
“As a result, we expect robust operational performance in these locations to continue, with well-situated regional assets continuing to attract strong investor demand,” said Tom Cunningham, a director in the hotel investment team at Savills. “For regional assets currently on the market, we are receiving multiple offers above guide price.”
Richard Dawes, also a director in the hotel investment team at Savills, added: “While the immediate operational headwinds in the hotel market will be a cause for concern for some investors, the longer-term outlook for the sector continues to bode well for prime assets and development opportunities.
“We expect the number of distressed sales to increase and investment volumes to be driven predominantly by a handful of London sales as we move into 2021.”
Rob Stapleton, a director in the hotel investment team at Savills, said: “While volumes are down, there remains substantial dry powder in the market, albeit the debt markets are considerably constricted at the moment, limiting corporate investor activity in the sector and impacting overall investment volumes.”