Transactions were expected to increase in the UK in 2021, according to a study from Christie & Co.
The group said that with government support initiatives phased out at the end of the first quarter next year, individual assets and small portfolios may to come to market, acceleration in the second quarter.
The company said that there was a shift in focus towards regional assets and domestic buyers.
The study said: “Since the start of the first lockdown, the transactional market has faced significant challenges, due to limitations on travel for international buyers, and access to properties for due diligence purposes which led to a hiatus of deals and limits on access to financing. The market became more active from June onwards, and whilst volumes were still limited, there was a significant improvement on Q2.
“There is a notable shift towards regional transactions, where buyers tend to be more domestic and in many cases able to complete the transactions without bank financing. Financing for new deals from the high-street lenders remains more limited than pre-Covid as they are focused mainly on supporting existing customers, but we understand some are still open for new business with modifications and additional protections in place on the loan structures. Alternative lenders and a growing number of debt funds are another option which is expected to become more important to the sector.
“Buyer appetite for hotels remains strong despite the uncertain outlook for trading in the short to medium term, but so far limited new stock and opportunities of size have been coming to market. Much of the stock that transacted over recent months was already on the market pre-Covid. Many sellers remain reluctant to put their properties on the market either due to lack of awareness that there are still buyers in the market, or due to an anticipated discount on pricing expectations from buyers.
“The ongoing government support, constructive approach of lenders, suspension of lease forfeiture and creditor’s winding up petitions and, in some leisure destinations, record levels of demand over the summer months has enabled hoteliers to survive thus far. Whilst these factors have impacted distressed sales coming through in volume, we have seen some consensual sales processes, led by the lenders, coming to market.”