South East hotel investment levels up 190% on H1 2017

Investment into hotels in the south east and home counties reached £724m in the first half of the year, up 190% on H1 2017 levels, according to Savills.

Savills said the market has been driven by a number of high value portfolio deals and consistent appetite from domestic investors.

According to the firm 96% (£695m) of transaction volumes were portfolio deals, with 13 deals taking place in the first half of the year. There were six individual transactions in H1 which were predominantly in the £1-£10m bracket, with the Bedford Swan Hotel being the only exception, selling to Distinct Group for £11.75m.

Savills said the region’s close proximity to London and the coastline ensure hotel occupancy levels stay strong and above the UK regional average of 76.1% in key markets with Norwich at 80.3%, Southampton at 80% and Brighton at 77.8%.  

Key deals in the region include the sale of Project Sail to Young & Co’s Brewery Plc for £11.6m and Mercure Banbury Whatley Hall Hotel to Serani Hotels for £4.25m.

Savills notes that domestic investors have driven activity in the first half of the year in 2018, accounting for 77% of transaction volumes in the south east. International investors remain active in the market but have a preference for large lot sizes.

All international investment into south east hotels was in the form of portfolio deals that included assets from the region such as the acquisition of Project Ribbon by Israeli investors and the purchase of the SACO portfolio by Canadian investors.

Georgie Liggins, associate in the hotels team at Savills, said: “As we enjoy a hot summer, seaside hotels in particular are  set to benefit from the much improved weather that earlier this year had hampered operational efficiency and staycations. We anticipate that the south east will enjoy increased investment into its traditional British hotels and destinations as the staycation remains popular.”