UK hotel investment surpasses expectations to hit £6bn in 2019 [Infographic]

by | 02 Mar 2020 | General News

London’s skyline will see more new hotels in the near future.

£6bn in 2019 – that’s how much investors put into the UK’s hotel market in 2019 and caused a surge in new projects.

Despite Brexit and conservative expectations, the UK hotel market had a solid year in 2019 and the outlook for 2020 is also rosy.

We find out more about investment in the Kingdom’s growing hotel market.

A record year for hotel investment

In their recent UK Hotel Capital Markets: Investment Review 2020 report, global property adviser Knight Frank reported that in 2019, the UK hotel market surpassed all expectations and saw investment volumes reach £6bn. Part of this is due to a whopping 26% uplift in investment by institutional investors.

This came after an ‘exceptional level’ of portfolio activity in 2018, compared to which last year’s hotel transaction volumes slowed by £1bn.

Compared to a 5-year average, this represents a 3% decline which is likely due to Brexit-related uncertainty and the UK’s chaotic political landscape. However, transactions remain 5% above 2017 numbers.

Shaun Roy, head of hotels and specialist property investment at Knight Frank, said: “We have continued to see a strong demand for secure, long-term fixed-income assets which has meant that despite uncertainty within the general investment market, investment into the hotel sector has remained strong, particularly driven by institutional investors.”

London still an attractive destination

Despite recent turbulences, London is still popular among hotel investors, with around £2.7bn being put into the capital’s hotel market in 2019. This brings London’s share of total UK hotel investment up to 43%.

While this represents an 11% decline year-on-year, it’s in line with the city’s 5-year average investment volume and beats 2017 by 10%.

“Both London and the regions continue to offer attractive propositions and returns for global and domestic investors, who recognise the growth prospects available, whilst significant opportunity exists for investors to take advantage of long-lease ground rents deals which continue to evolve and further strengthen the investment market,” Mr Roy elaborated.

According to the TOPHOTELCONSTRUCTION online database, the city of London is looking forward to get more new hotels within the next couple of years: