By Mia Hunt

Hotel sales boosted by weak pound

Investors largely ignore London in favour of regional buy-ups as Brexit brings in a swathe of hungry overseas buyers.

It isn't only the operational performance of UK hotels that has benefited from the weaker pound following the Brexit vote. As in other property sectors, volumes have been boosted by renewed overseas investor interest and activity.

Research by Savills predicts that transaction volumes for 2017 will reach £5.1bn by the year-end. This is 25% higher than the 2016 total of £4.1bn. The rise is driven in part by a 63.3% increase in year-to-date overseas transaction volumes, with overseas buyers accounting for almost half of all transaction volumes (48.1%) so far this year - significantly up on their 25.7% share in 2016.

"The real shift this year, however, as opposed to other periods of high overseas activity, is the increased activity by overseas buyers in the regions, particularly as portfolio activity has been more sparse compared with its last peak in 2014-15," says Marie Hickey, a director in the commercial research team at Savills.

"Examining overseas buyer activity, 49.9% of transaction volumes by this group have been focused on regional assets."

Wider pool of investors

Previous peaks in overseas buyer activity in the regions, such as in 2014 and 2015, were largely driven by US private equity portfolio acquisitions, says Hickey. US buyers have remained active this year, accounting for 16% of all international buyer activity in the regions on a deal basis. However, it is investors from the wider Asia region and Africa that have been the most active, accounting for almost 68% of all international deals in the UK regional market.

Investors from countries in the Asia-Pacific region have continued to dominate in 2017, with Singaporean buyers being the most active among this group, accounting for 42.1% of all transactions (based on deals completed by buyers from the wider Asia region and Africa).

South African and Thai investors maintained the momentum they established in 2016. Each accounted for 15.8% of all deals completed by Africa- and Asia-based investors in the regional markets in 2017.

Indian investors have also emerged as a force this year, spending a total of £20.3m and accounting for 21.1% of total Asia-Pacific and rest-of-the-world overseas buyer deals.

"The greater diversity in the buyer pool for regional assets, while supported by the weaker pound, is also a reflection of product and price constraints in London and investor confidence in operational performance," says Hickey.

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