UK hotel investment totalled £7.4bn in 2018

UK hotel investment totalled £7.4bn in 2018, with overseas investors representing 78% of total investment, according to new figures from real estate consultancy Knight Frank.

The firm said the figure equates to a £1.7bn increase in hotel transaction activity, compared with the previous year, equivalent of a 29% year-on-year rise in investment and 102% above the 12-year average of annual hotel investment activity of £3.7bn.

It added that despite the “uncertainty of Brexit”, growing confidence and strong demand from overseas investors, has outpriced domestic buyers, with overseas investors representing 78% of total investment activity (excluding developments) and 85% of all hotel portfolio activity exchanging hands with an overseas buyer.

The first half of 2018 saw the greatest share of deal volume, with £4.3bn of deals (59% of total transaction volume) completing during the first six months. This was driven by corporate portfolio activity with 90% of the total £3.1bn of portfolio transactions completed during the first six months of 2018.

Despite fewer portfolios transacting during the second half of 2018, hotel investment remained robust, (particularly so in the final quarter of 2018), with the second half of 2018 recording 73% of all single asset deals completing (both investment and going concern), equating to over £2.2bn.

A statement by the firm read: “In 2018, despite the share of regional UK’s transaction volume declining by one percentage point to 56%, total investment increased by some 27%, rising to over £4.1bn of investment and approaching the regional UK investment high achieved in 2015.

“The uplift in transaction volume can be largely credited to the scale of portfolio activity, which accounted for 53% of total regional investment, of approximately £2.1bn, compared with £1.5bn during 2017.”