London hotel investment expected to boom in 2021 as vaccine roll-out whets investor appetite
Investor appetite for central London hotel assets is expected to boom in 2021 due to the roll-out of Covid-19 vaccines, strengthened by opportunities presented by the pandemic and Brexit.
Analysis by estate agent chain Knight Frank predicted strong demand for hotel investment this year once the pandemic eases and borders and airways reopen, with the sector benefiting from a diverse and global investor base.
The real estate advisor told City PM that it is already advising on a number of high-value, off-market transactions in London.
Investor optimism has been buoyed by the UK’s vaccination programme, despite the introduction of a new nationwide lockdown.
This week Dominvs Group announced it had secured £48m in funding for a new Hampton by Hilton hotel in Aldgate – scheduled for completion in 2023 – in an early vote of confidence in the capital’s recovery.
The hotel group’s director Preeptal Ahluwalia said “confidence in the hotel industry is returning” and the development is “well-placed to benefit from the gradual return of both domestic and overseas visitors to London”.
Henry Jackson, head of hotel agency at Knight Frank, said: “Historically, there has always been strong demand for London hotel assets and the pandemic has not changed this.
“Knight Frank is currently advising on a number of high value, off-market London hotel transactions which are attracting strong appetite from investors.”
Total UK hotel investment plummeted 70 per cent to £1.8bn in 2020 due to the Covid-19 crisis, however London deals accounted for 77 per cent of the total UK volume.
The market was weakened by a drop-off in international and domestic tourism amid coronavirus lockdown restrictions.
The capital suffered a 49 per cent drop in investment capital, with the sale of The Ritz contributing £750m to London’s total £1.4bn investment volume.
However the average value per room sold jumped 33 per cent compared to 2019.