UK London Hotel Investment, 30% Below Market Value, 11% Returns

OUR RATING

An excellent London hotel project with good returns and potential for capital appreciation

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Barking Hotel London

Principal International are delighted to announce the launch of this excellent investment opportunity within the London hotel market. The Barking Hotel is offered at a discounted price substantially below the RICS valuation. Investors are rewarded with a share of the Hotel’s net profit **which includes hotel rooms, bars, restaurants etc**, based on the room’s occupancy, which we believe will equate to 0.48% of that net profit. The lease provides that the occupancy has to be divided, as far as reasonably possible, on an equal basis.

Clients can take advantage of the non status finance offered at 70% of the purchase price and can reserve a room for only £5000. The rooms will be purchased similar to a traditional apartment with a 199 year lease and are projected to produce gross returns of over 10.6%. The developer for this project will pay the VAT, saving the investor a substantial outlay of almost £22,000. The purchase of these hotel rooms will also not attract any stamp duty. This hotel investment we are advised is also suitable for SIPP purchase subject to approval by the individual SIPP company. Investors can also be re-assured that the deposit for the purchase is protected by an insurance scheme.

This landmark building will be set over 21 floors and will offer 207 bedrooms in addition to a restaurant, bar, conference area, car parking, residents gym and roof garden. These properties represent a truly “hands off investment “ , purchasers will have peace of mind that their hotel room will be under the umbrella of the established major hotel brand brand and will be managed by a world renowned hotel company, being the one of largest hotel brand in the world. The hotel in Wakering Road will benefit from excellent access to rail and road links. Central London and the M25 are easily accessible. Indeed central London is merely 15 minutes away by tube and this hotel is targeted to provide excellent 4* accomodation with the London area at a reasonable price point

The location, branding and room rate of this hotel is important to its success. this superb hotel Barking will provide the market with a reasonably priced hotel within very easy access of the London business community and central London. The management company have identified this hotel will satisfy the demand for 4* accommodation in the sector. The hotel rooms are projected to provide gross returns of over 11.4% , after ground rent, service charges and estimated mortgage payments, the project is expected to deliver net returns of approximately 6%.

There is substantial demand for hotel accommodation from the local corporate hotel sector, which is expected to increase in line with the economy. The hotel will have the advantage of being located close to major local companies and also the settings, brand and surroundings will distinguish this hotel from the other hotels in the area. Recent findings have also identified some demand for good quality, affordable meeting and function rooms in the Barking area. The strong brand of the hotel company and facilities available should enable the hotel to achieve a reasonable share within this market. In a recent survey of the top 20 local companies, over 70% advised that they use local hotels in the market area. The location of these and other companies located around the Thames and A406 link road, demonstrates a good potential client base close to the site of this hotel project. In addition to the local businesses, London’s business district is very close by and this is expected to be a significant demand generator.

The survey also reported that some of these companies experience difficulty in finding accommodation in the area, this is particularly relevant when major events are taking place in London. Other factors such as events at the Excel Centre and the Greenwich 02 Arena can also result in a lack of accommodation and an increase in local hotel prices. The ease of access to public transport and parking indicate that this hotel will benefit from “overspill” demand during major events in the area. A number of corporate and leisure demand generators are located in the area and these include the Excel Centre, Canary Wharf and O2 Arena, National Maritime Museum, The Royal Observatory, The Royal Artillery Museum.

A recent professional report has indicated strong support for a hotel of this type and quality. The document also suggests, that some of the demand is currently not being met and potential clients are looking further a field to find suitable accommodation. London Hotels are regularly desired by short break and tour operators looking to provide a London experience, it is expected that this hotel will attract a fair share from the coach and tour market on the basis of the strong brand and position. The current hotel supply does not meet the requirements of this sector.