Growth in interest in London hotel market from foreign investors

London’s position as a leading global business city is highlighted in the growth in interest in the hotel market from foreign investors, according to Jones Lang LaSalle’s latest UK Hotel Intelligence report.

Only just over half (53%) of the capital’s four and five star hotels are owned by UK residents, with Asian owners now holding 18% of the assets and European ownership accounting for 12%. Owners from the Middle East account for 7% of London’s bed stock, having completed a number of notable transactions in 2011.

Jon Hubbard, chief executive, Northern Europe at Jones Lang LaSalle said: “The fundamental strengths of London as a leading business city globally, together with continued growth in leisure tourism, have created stable operating conditions which have made London a magnet for foreign capital and we have witnessed a growing interest from Asian and Middle Eastern investors.

"These equity rich investors, often high net worth individuals or sovereign wealth funds, have focused predominantly on four- and five-star hotels and, supported by growing profitability, have driven prices in the market segment back to pre-crisis levels”

The value of hotel acquisitions  in London during 2012 totalled £1b, accounting  for 56% of the total UK investment volumes of £1.8b.

Hubbard added: “Despite the economic challenges it faces, the UK remains Europe’s most active hotel investment market and interest remains in key assets in prominent locations.  Notable sales in 2012, such as the four-star Cavendish Hotel which sold for £159m, have shown that for the right assets in the right location, investors continue to pay high prices.”

Hotel developers favour sites next to attractions and other businesses >>

Sales of hotels weaken during first half of the year >>