The combination of weak sterling and cheap debt means businesses with significant underlying bricks and mortar assets are becoming increasingly appealing to overseas investors.
At a local level we’re already seeing the impact of these factors at work. We’ve experience of an increase in foreign investors targeting UK hotels, not just in London and the South East but also further out in the regions. Typically, investors are looking for attractive assets with potential for further development. Not only does the weakness of the pound make the asset purchase more easily achievable but it also helps with refurbishment and redevelopment costs. And, with more British holidaymakers opting for a ‘staycation’, it’s a great time to be investing in the sector with a view to targeting this increasing demand.
Birmingham, one of Christie Finance's regional hubs, is booming following a slew of investment money, major infrastructure projects (not just HS2) and companies relocating from London. Investing in this market may also provide the added benefit of capital appreciation, as well as growing demand from increasing visitors to the region.
Joshua Sullivan, Senior Business Agent - Hotels comments “The hotel market continues to be an attractive asset class for a multitude of investors ranging from first time buyers to institutional investors and we’ve witnessed the full spectrum of that interest this calendar year. Whilst Brexit has had some impact on transactional volumes, it is very evident that with the low cost of debt, the attractiveness of the euro and dollar versus sterling for cross border capital flows, the UK continues to draw in overseas investors. As with most markets it’s a question of supply and demand and demand remains strong despite the socio-economic and political headwinds.”
Following recent high-profile money-laundering cases (and significant fines) banks have become more cautious when lending to overseas investors. As a general point they are prepared to lend to overseas clients, providing clients can make available the right documentation and their proposals clearly defined. This is where the services of a strong deal team come into their own. It’s not just about finding a reputable broker, who understands a lenders specific requirement but also ensuring other representatives, such as solicitors and accountants, understand the market and the regulatory red tape that comes with it.
Christie Finance has been arranging finance in the hospitality sector for over 40 years and each of our local offices has a network of professional contacts that can be deployed for the benefit of our clients. If you’d like to know more about how we could help overseas investors, please contact a member of the team today