UK hotel transaction volumes reached a total of £6.6bn in 2018, up 25% on the 2017 total, according to global real estate services provider Savills.
The group said the amount is 75.7% up on the long term average of £3.78bn, and has been driven by an “active portfolio market” and “increased activity from overseas buyers”.
Overseas investors accounted for 54% of total transaction volumes, up 20.5% on 2017 to reach £3.3bn in 2018. This is the second highest amount ever invested in the sector by the group, beaten only by 2015 volumes which reached £4.3bn.
The top three by country were Israel (£1.1bn), France (£860m) and Canada (£420m). On average, international investors spent on average £76m per deal; 3.4 times more than domestic purchasers. UK purchasers accounted for the lion’s share of deal count at 75%, however this amounted to only 46% of volumes at £2.99bn.
Additionally, portfolios accounted for 53% of the annual investment volumes for 2018 at £3.5bn over 21 deals, which Savills said is “significantly up” on the 16 portfolios traded in 2017 for a total of £1.5bn.
Of the top 10 portfolios that transacted in 2018, the average value stood at £332m, 123% higher than in 2017, and the increased transaction volumes in the sector were combined with larger portfolio sizes. The top 10 deals averaged 2,000 keys per portfolio – a 119% increase on 2017.
Major deals included the sale by Starwood Capital of its Principal Hayley hotel platform to Covivio (formerly Foncière des Régions) and LRC Group’s acquisition of Lone Star’s Amaris Hospitality group.
Tim Stoyle, head of UK hotels at Savills, said: “The investment of overseas capital into UK hotels is testament to the strength of the sector even when facing Brexit uncertainty. This is further echoed in the popularity of portfolios which accounted for the majority of volumes, pointing to a positive sentiment in the market, buoyed by strong occupancy levels from leisure visitors.”