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Commercial Property Investment Review May 2019

HOTELS RESIST WIDER INVESTMENT TRENDS Savills recent UK Commercial Property ‘Market in Minutes’ report has revealed that in 2018, all sector investment property volumes totalled £62.4bn, a decrease of 4.8% on the previous year. The trend has continued this year, with volumes to the end of April down 15.7% on the same period last year. Interestingly, UK hotels have avoided this wider trend, with total hotel transaction volumes reaching £7.8bn last year, up 45% on 2017 data. The sector has been boosted by the acquisition of a number of large investment portfolios.
So far, the UK hotel sector has experienced more modest growth in Q1 2019; a 2.7% year-on-year increase on Q1 2018, boosted by the acquisition of the Grange portfolio by Queensgate Investments for £1bn. Queensgate acquired the Grange’s upmarket hotels at St Paul’s, Holborn, Tower Bridge and the City.

In total the portfolio comprises 1,345 rooms and 930,000 sq. ft of real estate.
This appetite for hotels has led Savills to expect some potential downward shifts in yields going forward.

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