A strong tourist market, narrowing yields and a weaker pound have all boosted investment into the capital.
The firm said that net initial yields for prime freehold hotel investments in London are currently between 3.85%-4.25%, compared to the end of 2016 which saw them at 5.13%.
London capital values are currently 61.5% higher than at their 2007 peak according to data from Modern Index Strategy Indexes (MSCI).
London assets have proved popular with Asian investors as the most active investors for the first half of the year originated from Hong Kong, Malaysia and Singapore.
Increased demand for a foothold in the city is also being seen from Indian based operators.
Gary Witham, director in the hotels team at Savills, said: “London continues to remain popular with tourists and investors alike. We have seen significant interest in the first half of the year from overseas capital as the weak sterling creates a favourable market.
He added: “With capital values now standing so high and with growth relatively subdued we expect to see owners that purchased before 2015 starting to look to sell.”
Amy Farrugia, senior analyst in the hotels team at Savills, said: “There has been an increasing diversification in the origin of the capital being deployed into London as it continues to be seen as an investment safe haven.
She added: “We expect Asian capital to continue its high level of activity to the end of the year although there is a severe shortage of quality assets priced between £20 to £100 million in the capital.”
The company predicts that investment into the London hotel market will reach £2.8bn by the end of 2017 and the UK hotel market will transact circa £5.1bn for the full year, up 28% on the 2016 total of £4bn.