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Posts for uk-hotels



Hotel Investing In The UK

The British hotel industry is set for a record 2017 due to a substantial increase in both domestic and international visitors planning their holidays in the UK. According to Barclays, 63% of international tourists are more interested in holidaying in the UK compared to last year, with 31% of those being interviewed pointing to the weaker pound as an attractive reason. In 2017, despite more challenging economic conditions, a 2.3% RevPAR is expected. An increase in “Staycations” for domestic travel, attempts by the UK to boost tourism to the regions and the attraction of a weak pound to international leisure travellers will boost some cities. A forecast for occupancy rates are expected to hit a record 77% and remain there in 2017. In 2017 the price of a room in a regional hotel could reach £70 daily.

 

Knight Frank’s recent research, headed “UK Hotel Development Opportunities 2017”, states that 16,000 new rooms opened in 2016; that represents a 2.7% growth in total hotel supply and a 20% increase in the volume of new hotel rooms opening year-on-year. This growth is driven by the budget hotel sector, which  totalled 8,000 new rooms opened in 2016. The budget hotel sector now accounts for 25% of the UK’s total supply and will likely continue to drive growth, with 11,600 rooms due to open this year. Knight Frank has also launched its inaugural Knight Frank UK Hotel Development Index which identifies the UK cities considered to present the best prospects for hotel investment and development. Bath, Brighton, Edinburgh, Cambridge and Belfast are ranked as the UK’s top five most attractive cities for hotel development for 2017.

On The Threshold: Liverpool & Manchester building on the foundations of history

By Alessandro Pasetti, 31 May

The high turnover of the real estate portfolio of Inveztments testifies to the quality of the projects that have been marketed by its team in the past year.
But what’s the secret sauce?
In a nutshell, the ultimate choice between picking multiple real estate investments/projects and only the best projects/property investment available on the market always leans towards the latter.

Coming soon

As new investment opportunities are about to be announced – full details of three outstanding UK-based developments will be released shortly – Invezments managing directors continue to witness strong market appetite outside London. It is easy to argue that Liverpool and Manchester, in particular, continue to thrive is deeply rooted in their past achievements as well as in their reputation and bright prospects, regardless of the risk posed by Brexit.

To sum up where the portfolio stands, sold-out projects in the residential segment include:

– Salisbury Place, Liverpool

– Halifax House, Liverpool

– Downtown, Manchester

– Sir Thomas, Liverpool (pictured below)

– Reliance House, Liverpool

Attractive yields and strategic locations contributed to the success of most of these property deals, while student accommodation, another buoyant segment, also shone.

The projects that easily gathered interest were:

– Orme House, Newcastle-Under-Lyme

– Oakwood House, Sheffield

– Beaumont Square, Plymouth

– Phoenix Place, Liverpool

– QStudios, Stoke (pictured below)

Ancillary business

Outside the core competencies of the team, the hotels space also proved attractive. Eden Country (Cumbria), Afan’s land plots (Wales), Wyncliffe House (Wales, Fishguard), The Harland (Scarborough) and The Atlantic Bay (Woolacombe) are all sold out.

Clearly, market appetite spanned several cities, including Leeds and Sheffield, but Liverpool and Manchester remained the top performers.

If you want to know more about the competitive landscape and outlook there, it could be worth spending some time reading this research published earlier this year by Knight Frank, which also contains very useful data on the commercial property landscape and the development pipeline.

What is still available?

Focus is mainly on the residential segment, with the existing portfolio comprising:

– Fabric, Liverpool (please contact the team directly)

– 8 Water Street, Liverpool (please contact the team directly)

– Infinity Waters, Liverpool (this promises to be a gem; pictured below)

– Oxygen, Manchester

– North House, Liverpool

– Whitehall Road, Leeds

– Grapnel House, Manchester

As far student accommodation investments are concerned, One Islington Plaza (Liverpool) has recently gone, but elsewhere Afan Valley Resort (Wales, hotels) remains available, requiring different levels of commitment and returns.

Aside from the economics that each deal offers, which can be privately discussed with the team, we highlight below some news reports that should help you understand what kind of investment you might be undertaking, if you are not familiar with the history of either city.

Firstly, Liverpool.

1 of 3: Liverpool to Manchester railway: the first railway line to open in Britain

According to the BBC “the Liverpool to Manchester Railway, completed in 1830, was the first successful railway line to open in Britain”.

Why?

– It proved that a cheaper and more efficient alternative to canals was now available

– It was the first commercial railway line designed to carry paying passengers as well as cargo

– It made the trade and transportation of raw, heavy and bulky materials between Liverpool and Manchester easier

– It allowed fresh dairy and agricultural produce from rural Lancashire to be delivered to towns and cities

– It was a financial success and people suddenly realised that railways could provide huge profits

Over a decade ago, The Telegraph also noted that it “was the first successful passenger-carrying railway in the world. Trials for Stephenson’s Rocket were carried out at Rainhill in 1829.”

Liverpool to Manchester railway (Source: World on Trains)

2 of 3: The Queensway Tunnel … cutting-edge mobility

“On the 18th July 1934, over 200,000 people gathered at the Old Haymarket to watch King George V and Queen Mary, officially open the Queensway tunnel,” the BBC explains.

“Amongst those chosen to welcome the Royal party were Lord Mayor Councillor John Strong, Sir Thomas White, Chair of the Joint Tunnel Committee, Lord Sefton and Chief Constable A.K. Wilson. Liverpool City Police Band provided the music.”

The Queensway Tunnel (Source: Gutted Arcade of the Past)

3 of 3: Liverpool Streets

“The streets of Liverpool are fascinating, starting with the very early ones in the centre of the city – or borough as we should call it, because Liverpool wasn’t a city until the 1880s. Prior to that it was a town and a borough, the medieval borough was of course founded by King John in 1207, and the king’s representative, a bailiff or someone similar, laid out the first original streets of Liverpool – and those are still important thoroughfares…Chapel Street, Bank Street (now Water Street), Castle Street, Dale Street, Tithebarn Street (formerly Moore street) and Juggler Street (High Street).”

(Source: BBC, link here)

Water Street (Source: Streets of Liverpool)

“In addition to granting it a royal charter, King John designed Liverpool’s original street plan of seven streets laid out in a ‘H’ shape.”

(Source: Traveling with the Jones, click here for more details.)

Enter Manchester.

1 of 5: Great minds

Did you know that the atom was first split in Manchester?

“There are few discoveries in science that can be said to have changed the world but one must surely be the ‘splitting of the atom’ by Ernest Rutherford in Manchester.”

(Source: BBC, click here to read the full article.)

2 of 5: University of Manchester

You have heard about the first programmable computer, haven’t you?

“On June 21, 1948, shortly after 11am, the Small Scale Experimental Machine (SSEM) – nicknamed The Baby – executed its first program. The Baby changed the world and was the forerunner of all modern computers, iPods, mobile phones and other gadgets we take for granted today.”

(Source: The University of Manchester, click here for more details.)

Baby — The first programmable computer (Source: YouTube)

3 of 5: 25 Nobel Prize winners

“The University of Manchester has a rich academic history. We can lay claim to 25 Nobel laureates among our current and former staff and students.”

(Source: The University of Manchester, more here.)

Sir Joseph John Thomson was an English physicist and Nobel Laureate in Physics, credited with the discovery and identification of the electron (Source: ThoughtCo)

4 of 5: Chetham’s library: the oldest public library in Britain

“It’s the oldest public library in Britain, and is home to more than 120,000 books, maps and manuscripts, some dating back as far as the 13th century.”

(Source: Manchester Evening News, to learn more about this topic please click here.)

The Chetham’s library (Source: Trip Advisor)

5 of 5: Finally… it is listed among the 10 world’s greatest cities in 2018!

“After a tough 2017, locals said that the best thing about Manchester is that ‘We carry on, no matter what.’ It’s also the place with the most people who can’t get through the day without a cuppa, while its great drinking scene, live music and friendliness saw it end up ranked seventh,” TimeOut wrote earlier this year.

The most exciting cities in the world (Source: Time Out)

(This post was written by Alessandro Pasetti. Ale is the founder of Hedging Beta Ltd. He writes about investment strategy and assets valuation for European clients as well as Seeking Alpha, The Loadstar, Transport Intelligence and others. Based in London, he previously worked for about five years at Dow Jones/The Wall Street Journal, producing analysis for the IB community. Prior to that, he contributed to the launch of London-based Loan Radar, where he worked for three years. He had stints in equity research at Bear Stearns in London, HVB in Munich, and Unicredit in Milan.

It was edited by Gavin van Marle, managing editor of London-based The Loadstar. Gavin is also the author of the book Around the World in Freighty Ways: Adventures in Globalisation. He has won numerous awards, including the Seahorse Journalist of the Year 2011 and 2009, and Supply Chain Journalist of the Year 2010 and 2014. )

 

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On The Threshold: Real Estate Investment In The UK & Away...

By Alessandro Pasetti, 9 August.

As the debate over the direction of property prices in Britain continues, we find ourselves having to gauge if and how weakness in the domestic property market could affect our healthy pipeline of real estate projects 

Value 

There are pockets of value in the UK portfolio managed by Inveztments, regardless of the broader dynamics that can affect domestic property prices.

As co-founder and managing director Tonino Montesanti pointed out this week, the allure of investing “in student accommodation estates offering a 10% yield for 10 years”, is obvious, and aside from one of the company’s flagship projects – Q Studios, which requires capital investment of just under £70,000 – other residential and hotel properties up for sale should be considered by investors.  

“You might have to be careful, and surely you should be very wary about investing £2-£3 million in the real estate market in London, but our projects — given the full amount of commitment required — have those defensive characteristics that many yield-starved investors are looking for.” 

So, is it time to be greedy or fearful? 

UK and away 

There are some mixed signals in the UK market, and some could scare conservative investors (those who tend to keep their hard earned cash under the mattress) — yet despite all the doomsday headlines that pepper the financial market, the UK property market is still growing in most regions, albeit at a slower pace than in the past.

(Source: BT)

Meanwhile, other European markets and major cities could be on a bounce. Take the Spanish property market, for example, where we also have projects (here and here): half-way through 2017, a major Spanish bank such as BBVA is now projecting a 10% rise in sales for the year. 

PropertyWire recently wrote that the Spanish lender “is also predicting that sales will break through the 500,000 barrier for the first time since the downturn in the nation’s housing market prompted by the economic downturn a decade ago”. (Emphasis in bold is ours)

Meanwhile, in Portugal (a country where we have deep ties with a major real estate developer) Lisbon is basically bribing foreigners to help revive its housing market – and it’s working, with French investment boosting prospects there.

Bloomberg noted earlier this year that a growing number of French nationals are investing in Portugal’s real estate market as its economy accelerates and property prices rise. However, the news agency also noted that this group, looking for a fast buck in commercial properties, could find themselves in trouble, and it is a sector we have no interest at all in, for several reasons. 

“Inexperienced, yield-hungry French retail investors are pouring money into real estate funds, pushing up prices for the best European commercial properties to unsustainable levels, according to Fidelity International Ltd,” Bloomberg wrote. 

There remain tax considerations both in the UK — where a ground rent scandal has recently dominated the headlines — and in mainland Europe. “In the UK and Europe, there are tax considerations that have to be made on an ad hoc basis, but these should not prevent wise investors from scouting the right deal with our help after a careful round of due diligence,” Mr Montesanti concluded.  

(This post was written by Alessandro Pasetti. Ale is the founder of Hedging Beta Ltd. He writes about investment strategy and assets valuation for European clients as well as Seeking Alpha. Based in London, he previously worked for about five years at Dow Jones/The Wall Street Journal, producing analysis for the IB community. Prior to that, he contributed to the launch of London-based Loan Radar, where he worked for three years. He had stints in equity research at Bear Stearns in London, HVB in Munich, and Unicredit in Milan.

It was edited by Gavin van Marle, managing editor of London-based The Loadstar. Gavin is also the author of the book Around the World in Freighty Ways: Adventures in Globalisation. He has won numerous awards, including the Seahorse Journalist of the Year 2011 and 2009, and Supply Chain Journalist of the Year 2010 and 2014. )

 

 

 

 

On The Threshold: Property Hunters -- Time For Currency Arbitrage?

By Alessandro Pasetti, 6 August. 

One of the most challenging questions we usually receive from continental European real estate investors looking for solid property deals in the UK is when is the best time to be opportunistic and opt for currency arbitrage, borrowing in euros to invest in Sterling-denominated assets.

Take our promising portfolio of projects in the UK, for example: it is a bet on outstanding yield prospects as well as a rising GBP/EUR exchange rate, which currently hovers around multi-year lows of 1.11.  

Weakness 

The euro has appreciated swiftly since Brexit, “but quite frankly, I am not ready yet to bet on the British pound”, is one comment we heard recently, which sums up the mood of several bearish investors in Europe.  

However, it is worth considering that the correction of the British pound is not just a reaction to Brexit. It also has a lot to do with monetary policies in the UK as well as in the rest of the Western world since mid-2015, when it became apparent that the Bank of England would not follow the Federal Reserve in hiking interest rates from historical lows.

As a result, the domestic currency has struggled since last summer both against the greenback and the euro, but could that now change?

Mean 

Recent weakness in the GBP/EUR is understandable: the outcome of Brexit weighs on the exchange rate, and investors looking to bottom-fish for a bargain would do well to keep a close eye on British assets, and not just properties.  

Why so? 

The charts below are self-explanatory when it comes to gauging downside risk from these levels… 

(Source: Yahoo Finance UK)

(Source: Yahoo Finance UK)

… testifying to the opportunity of investing in GBP-denominated assets.  

Capital appreciation

This is a very simple approach, but if the British pound reverts to mean based on one-year trends, capital appreciation for those long the GBP/EUR exchange rate would be over 3%; and given its five-year trajectory, it could be almost 15% from these levels.  

Remarkably, the latest downgrade by the International Monetary Fund — which at the end of July lowered its GDP growth forecast for the UK from 2% to 1.7% based on “weaker-than-expected activity” — had no impact at all on the exchange rate in the immediate aftermath of the announcement, which means the currency is mainly influenced by political and inflation risks these days, rather than shaky fundamentals.

Source: Trading Economics

Bulls & Bears 

Equally important as understanding why the British pound is so low is acknowledging that there is no consensus around its future performance — analysts and economists are divided between bulls who argue the slump is almost over, while the bears insist GBP/EUR parity is on its way.  

It would seem that the one certainty is further confusion with headlines such as “super-Thursday key to trade against the euro and US dollar”, reflecting how divided opinion is amongst analysts and traders.  

While sentiment is likely to determine volatile currency trades through to 2018 and beyond, household indebtedness in the UK combined with the inflationary forces that have harmed confidence justify risk taking on the British pound, in my view, although the gap between growth in wages and property prices remains one variable to watch 

Of course, currency risk is just one side of the coin for those looking to invest in the British real estate market — many investors are also worried about tax hikes and the risk posed by little capital appreciation over the medium term, which will be discussed in a follow-up column, although it is worth considering that more aggressive monetary policies could surprise the bears as early as next year, particularly if core inflation remains under control and “hard Brexit” fears fade away.

(This post was written by Alessandro Pasetti. Ale is the founder of Hedging Beta Ltd. He writes about investment strategy and assets valuation for European clients as well as Seeking Alpha. Based in London, he previously worked for about five years at Dow Jones/The Wall Street Journal, producing analysis for the IB community. Prior to that, he contributed to the launch of London-based Loan Radar, where he worked for three years. He had stints in equity research at Bear Stearns in London, HVB in Munich, and Unicredit in Milan.

It was edited by Gavin van Marle, managing editor of London-based The Loadstar. Gavin is also the author of the book Around the World in Freighty Ways: Adventures in Globalisation. He has won numerous awards, including the Seahorse Journalist of the Year 2011 and 2009, and Supply Chain Journalist of the Year 2010 and 2014. )

On The Threshold: Going Wild - The Unique Appeal Of The Afan Valley Adventure Resort

By Alessandro Pasetti, 4 July 2017.

The stunning landscape of South Wales could become home to one of Europe’s most exciting adventure holiday destinations — for both holidaymakers and potential investors.

The upcoming Afan Valley Adventure Resort promises to be an unrivalled outdoor experience, and surely one that neither investors nor guests will want to miss, especially as it now counts world-famous survival expert Bear Grylls as one of its partners.

We spoke to Peter Moore OBE, chairman of leisure at project developer Northern Powerhouse Developments (NPD), to bring you the latest on a fascinating project that is firing on all cylinders and has received the encouragement of the Welsh government.

Supporting material

“The ultimate outdoor adventure is here” claimed the promotional material we sighted.

“Welcome to a resort where pushing the boundary comes as standard; where adrenalin-fuelled adventures are included; where a healthy lifestyle is delivered and exhilaration is guaranteed.

“Welcome to a holiday experience designed to leave you breathless from the minute you arrive to the minute you leave and where your wildest dreams come will come true. Welcome to Afan Valley Adventure Resort – home to Europe’s ultimate outdoor lifestyle experience.”

Planning permissions are expected to receive the green light by the end of this year, with completion due two years following that.

(A 60-page brochure and other supporting material can be had on request.)

An active kind of leisure

“I knew from the beginning that Afan is one of those projects that would fascinate me,” Mr. Moore told us in a recent call. “It is an active lifestyle resort that is perfect for its time.”

And that is why he decided to embark on this £150m development project, which is only slightly smaller in terms of capital expenditures compared to Center Parcs, where Mr. Moore acted as UK managing director in the past.

Peter Moore OBE, chairman of leisure at NPD.

 

It soon became apparent that Afan offered a variety of different identifying attractions, which are the key value-drivers of the project, because offering the guest the mere opportunity of “escaping from their daily routine is just not good enough” nowadays.

“It is about exhilaration, socialising and relaxation,” Mr. Moore explained, adding “this is scalable” elsewhere, although the focus is currently on the UK market.

Mr. Moore struck us as being not only a vibrant individual, who in his role at Center Parcs was previously in charge of one of the largest leisure projects in the UK, but also a manager who has proved himself adept at anticipating consumer trends in the marketplace: at Centre Parcs “we enjoyed a 97% occupancy rate for 365 days a year”.

He says there is demand for a project like Afan Valley because “there is appetite for an active kind of leisure”.

Empiric observation

Even though market research is much vogue these days, Mr. Moore abides by “empiric observation”.

To paraphrase his thinking, when it comes to judging the full potential of the projects he spearheads, experience, expertise and solid partnerships rule over other methodologies: “I’ve always applied my marketing instinct,” he says, explaining that it has been years since demand for the full range of outdoor activities from hiking to mountain biking has started to pick up considerably.

“The timing and the location could not be better, especially when you consider the good road connection granted by the M5 and M4, two of the best motorways in the UK.”

The location is already one of the most appealing places in the word for mountain biking, but Afan promises to be far more than just that.

When the guests reach their destination they must know physical action would be an essential mix of joy and pain during their stay. A variety of physical and mental activities — spanning the “Alpine” zone, “Forest” zone, “Xtreme” zone, “Trials” zone and “Zen” zone — have been carefully chosen to inspire guests as well as to encourage them socialise in the park and its facilities.

However, it is not just about the wild, sweet dream of finding yourself in one of the world’s most beautiful and challenging locations. There will be luxury too: “we are going to put in a Spa”, given that the appeal for these and other kind of facilities, Mr Moore continues, “has grown enormously since the mid-90s.”

Backing

Notably, “this project will create awareness for Wales” as well as some 1,000 permanent jobs.

“Of course, you need good political support, and we recently met Ken Skates, Cabinet Secretary of the Welsh government for economy and infrastructure.” Things are progressing smoothly on this front, we gathered.

Furthermore, the strength of the development team led by NPD’s chairman and chief executive, Gavin Woodhouse, should not be underestimated — and is another key highlight, which also applies to such core suppliers such as Neuman Aqua, Briton Engineering-Snowflex, and Schletterer Wellness & Spa Design.

The backing of the Bear Grylls Survival Academy, too, gives it a completely different marketing slant, given the huge worldwide following that his TV survival show has gained.

“Bear Grylls Academy will have one of the major academy centres in the resort.”

“So, we have put together a top-class team.”

Mr. Moore concluded: “the target audience will include families, with differing age children – except very young, as I mentioned. But the main target audiences will be couples or groups of friends who want the  exhilaration and the challenge of what we have.”

(Full financials details of this project, how and why to invest in the lodges and in the land plotscan be discussed in a follow-up call with our team.)

(This post was written by Alessandro Pasetti. Ale is the founder of Hedging Beta Ltd. He writes about investment strategy and assets valuation for European clients as well as Seeking Alpha. Based in London, he previously worked for about five years at Dow Jones/The Wall Street Journal, producing analysis for the IB community. Prior to that, he contributed to the launch of London-based Loan Radar, where he worked for three years. He had stints in equity research at Bear Stearns in London, HVB in Munich, and Unicredit in Milan.

It was edited by Gavin van Marle, managing editor of London-based The Loadstar. Gavin is also the author of the book Around the World in Freighty Ways: Adventures in Globalisation. He has won numerous awards, including the Seahorse Journalist of the Year 2011 and 2009, and Supply Chain Journalist of the Year 2010 and 2014. )