London Hotel Room Investments
London Hotel Room Oversupply?
With millions of domestic and international visitors flocking to the UK’s capital each year, buying a hotel room in London for investment purposes sounds like an attractive proposition.
As one of the world’s most visited cities, London saw record numbers of international visitors in 2017, thanks partly to the weak sterling against both the US dollar and Euro. As a result, UK hotel occupancy levels enjoyed an outstanding year. However, a report produced by Price Waterhouse Coopers suggests that any momentum maybe easing.
2017 saw London hotels enjoy occupancy growth of 2.6%, however the report slashes this to just 0.2% for 2018; with a decrease in inbound business travel being cited as a contributing factor.
In addition, what deserves far more attention for those considering the purchase of a London Hotel Room is that “new hotel room openings are running very high”.
The report highlights that the additional supply in the capital is forecast to grow by 7,000 rooms in 2018 - an increase of 4.6% (net supply).
This oversupply has the potential to diminish average daily rates, and suggests that hotel investments in other areas of the UK may be better positioned to offer higher yields.
One factor the PwC report does not consider with regards to hotel room investments is the potential for capital growth.
With London house prices seeing their first falls in eight years, and the Halifax Market Outlook for 2018 stating house price growth will be weakest in London and the South East; other parts of the country could hold the upper hand for hotel property investments.
Economic Growth & The Northern Powerhouse
Hotel room investments are a completely different asset class to residential housing. An area’s local economic growth should be a greater consideration for investors since this is likely to drive the demand for a hotel room.
Cities such as Bradford in the North of England are undergoing significant regeneration and expansion as part of the UK Government’s Northern Powerhouse initiative. As a result, there is growing demand for short-term, high quality accommodation in these lesser saturated cities.
This knowledge provides savvy investors the opportunity to break away from the cooling London hotel investment market, and adopt a more innovative and lucrative strategy by investing elsewhere.
Our fully managed hotel room investments are affordably priced and provide a high-yielding, fully managed property investment opportunity in strategic locations across the UK.
Alternatively, if you’re looking for other buy-to-let property investments in the UK, you may want to consider our student buy-to-let properties, UK care home investments or fully managed buy-to-let residential properties.