Research from international real estate advisor Savills reveals that the UK hotel investment market experienced a slower start to 2025, with transaction volumes reaching approximately £1.59 billion in the first half of the year.
This subdued performance follows a record surge in portfolio activity during early 2024, and while H1 levels were muted by comparison, investor sentiment remains positive, with signs pointing to a more active second half.
Notably, Scotland played a leading role in several landmark deals, underscoring the country’s growing appeal among institutional investors.
Single asset transactions across the UK totalled £1.35 billion in H1 2025—an 8.4% increase year-on-year and 1.7% above the 10- year H1 average of £1.33 billion.
This increase reflects a strategic shift in investor focus toward individual high-performing assets, particularly in key regional hubs such as Edinburgh. The standout transaction of the period was Nuveen Real Estate’s sale of the W Edinburgh to Schroders Capital for over £100 million, with Savills advising on the deal. This deal is the largest single-asset hotel transaction ever recorded in the Edinburgh market.
Another significant deal was RE Capital’s sale of the Ruby Stella Hotel in London to LaSalle Investment Management for £48 million, again advised by Savills – illustrating continued investor interest in high-quality urban hotel assets.
Savills notes that if the full pipeline of marketed hotel assets – estimated at £6 billion, including both portfolios and larger single asset opportunities – completes this year, the market could surpass the 10-year UK annual average of £4.85 billion.
The largest portfolio transaction in H1 2025 saw the Alchemy Group acquire a stake in Barons Eden, a luxury UK hotel and spa group, again advised by Savills. Another key portfolio deal was Tristan Capital Partners’ acquisition of easyHotel’s €400 million pan-European portfolio, including several UK assets.
Regional markets continue to gain momentum, with activity increasingly shifting beyond London and the South East. While the South West recorded £147 million in deals (a 95% increase from 2024), and the West Midlands reached £153 million (up 60%), Scotland’s capital stood out as a hub for trophy transactions and long-term investor confidence.
Richard Dawes, Director, Hotel Capital Markets at Savills, commented, “Although fewer portfolio deals in the first half have weighed on overall volumes, the market is primed for a stronger second half. Scotland, and particularly Edinburgh, has emerged as a focal point for significant capital deployment, and with more than £6 billion in live opportunities across the UK, we expect a strong full-year performance.”
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