Hotel Transactions Continues to Grow During Brexit

Hotel Transactions

Interest for inns has been high in the UK capital, Manchester, Birmingham, and Edinburgh. The total value of trade accomplished in the sector in H1 2018 was £3.2 billion, which is 28 per cent more than H1 2017 (as per Savills).  

The activities of Asian (China, Hong Kong), Indian and Israeli investors grew, and overseas buyers were responsible for at least 51 per cent of the total deals in the first half. Israeli made 24 per cent of the total investments, and Canadian held 14 per cent share. 

Indian buyer ABIL Group paid the highest for London hotels, where £1.23 billion was given for 11 deals, including the investment of over £90 million.

Birmingham is growingly becoming an alternative location for real estate buyers. The city will host a commonwealth in 2022, and it has proper transportation and train links, and several new public facilities are expected to start in the coming decades. Edinburgh and Manchester were popular in 2017 as substitutes for the capital city, and Manchester continues to grow.

The inflow of leisure travellers grew in some of the cities in the UK, and investors are looking towards opportunities in staycations and holiday homes at popular holiday locations. Leased investment and pension funds are funding leaseholds that are a competitive market.

Hotel Investment UK

Investors reported by MFS (Market Financial Solutions) claim the property sector remains a safe option, whereas 18 per cent of the surveyed said they would like to buy properties in the coming 12 months. 

Many believe the impact of Brexit will not be felt on long-term investments. Brexit is expected to conclude by March 2019, and many new investors want to grab opportunities in the current slowing market.

Currently, the government offers tailored solutions and higher flexibility, and the interest rates are supportive. But there are risks of a rise in rates in the coming years. Also, in the market where demand is more than supply, many local and foreign buyers seek deals before the end of Brexit. 

Investors believe in the post-Brexit phase; the government will impose tighter credit controls and strict regulations for real estate transactions.  

UK Hotel Investment Market

The average rate of homes in London is high compared to other regions, and Asian investors – South Korean investors are finalising deals before the end of the Brexit phase as there are concerns over the change in housing policy, which can restrict foreign investments. In addition, the government is preparing to introduce strict lending rules, making it difficult for buyers to acquire credit.

Not just in the UK and London, investors buy properties across many other European locations as the returns are attractive. An analysis by CEM benchmarking found the UK and Dutch pension funds are recording a growth of 10.4 per cent per annum from their listed real estate investment since 2010. 

The study on European properties forecasts double growth (as per Netherlands-based bank Kempen) where many new high nets worth institutional investors target healthcare, logistics and self-storage opportunities.

To know more about real estate deals in the UK capital and other growing cities of Europe, click Hamilton International Estates.