Hotels in London lure Gulf investors

'The UK hospitality investment market remains the most liquid and most attractive globally,' said Amr El Nady, the vice president of hotels and hospitality at JLL.

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London’s best-known hotels are increasingly attracting the attention of Gulf investors.

Now one of central London’s largest luxury hotels, the JW Marriott Grosvenor House Hotel, is back on the market five years after it changed hands.

JLL Hotels and Hospitality Group is marketing the 494-room Park Lane hotel overlooking Hyde Park, which is being sold by Bank of China as the owner India's Sahara Group defaulted on loan payments. The company's chief Subrata Roy is in jail for fraud.

Of the US$4.5 billion spent by Middle Eastern investors in the fourth quarter of last year on European real estate, more than $3bn flowed into London, according to a report released this month by JLL, the property consultants.

With the recovery of long-term growth prospects within the UK economy as well as the central London property market and consistent return on investments, the investor appetite for the hotels market is on the rise.

London’s average room rate, meanwhile, is expected to be £145.50 this year, a 3.6 per cent increase over last year, according to the consultants PwC.

“The UK hospitality investment market remains the most liquid and most attractive globally,” said Amr El Nady, the vice president of hotels and hospitality at JLL. “Location within London remains a key factor of attraction and therefore hotel properties located in areas such as Mayfair and Park Lane trigger a stronger sense of prestige.”

Earlier this month, the UK media reported that the Abu Dhabi Investment Authority had offered £1.6bn for Claridge’s, the Berkeley and the Connaught hotels in the West End.

It already owns London Lanesborough and a chain of Marriott-managed properties. It bought the 173-bedroom London Edition hotel early last year for $248 million.

Shareholders in Maybourne, the company that owns the three London hotels, are still believed to be considering the offer from Adia, but there has been little progress in the negotiations.

“I don’t think £1.6bn is enough,” said a senior source within the camp of the majority owners, the Barclay brothers. “These are absolutely rare assets in the hotel business; I think an offer would have to be a minimum of £1.8bn.”

The Barclays account for 66 per cent of Maybourne shares.

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