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UK: Data published by global real estate advisor Knight Frank shows that investment into UK hotels has increased by nearly 200 per cent YOY to £6.3 billion.
Sitting 31 per cent above the 10-year average, 2024 follows three consecutive years of declining investment volumes. Overseas buyers accounted for more than three-quarters of total capital deployed.
Activity was driven by portfolio transactions which accounted for 57 per cent (£3.6 billion) of investment volumes. More than 20,000 hotel bedrooms were acquired by private equity or overseas buyers.
A total of £1.2 billion was deployed in single asset transactions, up seven per cent YOY. London accounted for 63 per cent of single asset activity, with just nine hotels across the UK regions transacting for more than £10 million.
Hotel development transactions exceeded £500 million in 2024 but remain down on pre-pandemic levels due to high construction and financing costs. There continues to be strong interest in repurposing office and retail buildings into hotels.
There was a strong rise in fixed income investment deals, which accounted for 26 per cent of total UK hotel investment. Ground rent deals have also featured more strongly than in recent years, including simultaneous tri-partite deals whereby capital from the ground rent is used to finance the acquisition.
Overall, activity has been weighted towards London, with 50 per cent (£3.1 billion) of capital deployed into hotels in the capital. Aside from portfolio deals, some of the largest hotels to change hands in 2024 included Six Senses London (£180 million), The Standard (£185 million), Hyatt Place London City East (£84 million) and Motel One London Tower Hill (£56 million).
Henry Jackson, partner and head of hotel agency at Knight Frank, said: “We have seen a strong rebound in hotel investment activity in 2024 underpinned by robust operational performance, fierce demand from overseas private equity buyers and institutions selling assets due to redemptions.
“Whilst the steady flow of portfolio transactions is likely to continue, we expect the normal market equilibrium to return in 2025, with greater momentum and opportunity for single asset deals.
“Capital from private equity is expected to continue to dominate, but we anticipate a greater volume of diversified capital to be deployed into the sector in 2025, particularly as the cost of borrowing reduces.”
Appeared first on: boutiquehotelnews.com
