North dwarfed by South on hotel sales despite rise

Nine hotels have sold so far this year in Northern Ireland – a dramatic rise on 2014 when just one hotel, the Tower Hotel Derry at £4.4 million, was transacted.

The surge in transactional activity to £67.36 million has been due, in part, to the sale of some distressed assets, but agent CBRE also points to a rise in confidence among buyers.

However, the figures in the North are dwarfed by those in the South where 54 hotels with a combined value of almost €650 million have been sold in the first nine months of 2015. This compares with 64 sales last year, totalling over €422.5 million, and 33 transactions in 2013 with a combined value of €160 million.

At the nadir of the recession in 2009 and 2010, only five hotels sold in the South.

US buyers have accounted for 44 per cent of all hotel transactions by value in the North this year. Stateside investors bought the five-star Lough Erne Resort and Jury’s Inn portfolio, while southern Irish purchasers represented 47 per cent of the market with the remaining 9 per cent accounted for by local investors.

Extremely encouraging

“Activity in the hotel market has been extremely encouraging,” says Alex Speers of CBRE in Belfast. “Sales include the Lough Erne Resort; Holiday Inn, Fitzwilliam Hotel and Crescent Townhouse in Belfast; the Jury’s Inn portfolio; Ramada Portrush; the York Portstewart; Belmont Hotel Banbridge; and Kilmorey Arms Hotel in Kilkeel.”

Speers also points to the “significant pipeline of new hotels planned for Belfast”, where an additional 3,900 bedrooms could be developed – most of these to four-star standard. This would more than double the current stock in the city.

The most high profile of the planned new hotels for Belfast include the Scottish Mutual building, Windsor House and Lagan House. “While we believe that there is demand for an extra 1,000 to 1,500 new bedrooms in the city over the next three to five years, we would be concerned if all the bedrooms in the pipeline were built out,” says Speers.

Increased tourism in the North has raised the profile of hotels as an investment class. New routes in and out of the city’s airports have increased tourist traffic, as have a number of one-off events.