A new report from Savills has shown that 2014 was a great year for the UK’s hotel sector, with total transaction volumes reaching £6.1 billion – up 55% when compared to the previous year.
According to the report, total transaction levels reached their highest levels since 2006.
Renewed investor confidence in the regions has been cited as a key driver behind the flourish in activity, with 71% of deals taking place outside of London.
London remains a key market for hotel investment, with Savills reporting that 60% of single asset transactions took place in the city in 2014.
Savills also noted that a renewed appetite for portfolios, with deals involving multiple assets accounted for 53% of hotel investment in the UK (equating to £3.2 billion).
And the forecast is set to remain strong for 2015.
“Investor demand returned with gusto in 2014 and we expect it to remain strong in the year ahead. In London, the demand and supply imbalance will put downward pressure on yields while regional activity is likely to be fuelled by the breakup of portfolios purchased in recent months,” Martin Rogers director of Savills Hotel Agency stated.
The outstanding performance of the sector in 2014 will no doubt spark further investor interest in the UK’s hotel investment sector.
Jones Lang LaSalle Alternative Property Survey 2014, which looked at investors’ plans to increase allocation to alternative investments, showed that 69% of respondents are looking to invest in the Hotel and Hospitality sector over the next 5 years.
As sector grows and the profile of the asset class becomes mainstream, the UK’s hotel sector may see further investment from those looking to diversify their portfolios.