First half UK hotel investor activity hit £1.5 billion, 65% higher than the last six months of 2013, according to analysis by Deloitte.
The first quarter of 2014 was dominated by provincial deals including the sale of the Four Pillars portfolio in January for £90 million and De Vere Venues in March for £232 million; both to Starwood Capital.
Two former Akkeron Hotel portfolios changed hands after entering administration – five leased hotels to West Register and the 14-strong Forestdale portfolio acquired by Somerston.
Single properties tended to dominate, contributing 70% of total transaction volume in the period.
London led in terms of deal size with the sale of the Edition by Marriott to ADIA for for than £150 million.
In April, US REIT Strategic sold the Marriott Grosvenor Square for £125 million to Joint Treasure – a private equity firm backed by Hong Kong-based Chow Tai Fook, the Singapore Wee Cho Yaw family and David Chiu of Far East Consortium.
Nick van Marken, global head of hospitality at Deloitte, said: “This is the second strongest start to a year since the peak in 2007.
“Macro-economic fundamentals have finally caught up with investment sentiment, which has further stimulated appetite for the hotel sector.
“We anticipate continued strong interest from investors but a potential lack of product given the substantial capital the market has to deploy.”
Activity outside the capital was bolstered by a number of factors – investors looking to consolidate, banks offloading assets, distressed sales, the scarcity of London deals and improved trading fundamentals and higher profit margins.
Looking at the prospects for the market in 2014, van Marken said: “We see many international buyers, especially from the US, Middle East and Asia, showing continued strong interest in London, and increasingly in the regions.
“We expect deals will close more quickly in the second half of 2014 with significant appetite on the part of private equity in particular. The UK hotel sector appears firmly back in favour.”
A number of transactions are set to close in the second half of the year, including the QMH UK estate, a five-hotel strong Hilton portfolio, a portfolio of LRG assets, a portfolio of De Vere Golf Resorts and Village Urban Resorts.
The possible sale of the Grosvenor House Hotel in London is also rumoured, according to Deloitte.
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