One Hyde Park, Knightsbridge, the luxury development owned by Project Grande (Guernsey) Limited, a joint venture between Sheikh Hamad bin Jassim bin Jaber al-Thani and the Christian Candy owned CPC Group has been singled out by Mayfair and West End estate agents Wetherell as having ‘a game changing effect’ on the London property market.
Wetherell’s ‘Sleeping in London Report’ on the property market in London highlights the emergence of so called ‘branded residences’ where residents have full access to the services and facilities of luxury hotels.
As the first European Residences at Mandarin Oriental, One Hyde Park offers residents the top-flight service of the Mandarin Oriental Hotel Group in the comfort of their own home. Over 60 full-time staff, including a 24 hour concierge, valet, housekeeping, and a discreet security team, ensure comfort and safety around the clock.
Other key branded residences are The Shard (Shangri-La) at London Bridge and The Residences at W Hotel (Starwood Hotels) on Leicester Square. The Shard is jointly owned by the State of Qatar and Sellar Properties, and W Hotel, Leicester Square, by Al Faisal Holding Company of Qatar.
Wetherell predicts that this concept of fusing luxury hotels with top end private residences is set to become a major niche sector of the London property/hospitality market. There is plenty of scope for growth as the market is currently undersupplied with less than a dozen branded residences across inner London.
Peter Wetherell, chief executive, Wetherell, said, “Branded residences are the ultimate synergy vehicle and are highly lucrative since they can tap into a range of revenue streams.”
He added: “Our report shows the astonishing strength of the recovery in values in the luxury hotel, serviced apartment and private rented markets in PCL since the global recession of 2007 to 2009. Since 2009, hotel and rented apartment rates have risen by over 25% and the cost of renting a room and sleeping in London is now at a record high.”
The luxury hotel market in London continues to draw international investors including companies such as the Abu Dhabi Investment Authority, Starwood Capital, KSL Capital Partners and Mount Kellet.
A number of luxury hotels are currently under development. Galliard Group’s 235-bed 5 star hotel conversion of the former Scotland Yard headquarters at 3-5 Great Scotland Yard scheduled to open in 2016; the 75-bed Beaumont Hotel in Mayfair (opening autumn 2014); the refurbished Lanesborough (scheduled to re-open by end 2014), and Admiralty Arch which is planned to become the 100-bed Armani London Hotel, is scheduled for opening in 2016.
The report gives an insight into the changing nature of the hotel industry in the capital. In 2000 the majority of hotel operators were owner-occupiers and there were a limited number of developers with the desire and ability to deliver quality hotel developments. There has been a greater degree of flexibility in investment, hotel construction and ownership, and a dramatic rise towards outsourcing hotel management or leasehold structures, which has also increased the sectors appeal with investors. Demand for rooms in luxury hotels far outstrips supply at the present time.
The report found that there are 129,000 hotel rooms in central London but just 12% (14,900 rooms) provide 5 star accommodation. These 5 star hotel rooms and suites are found primarily in just five Central London districts: Mayfair, Knightsbridge, St James, Whitehall/Strand and Kensington.
Average occupancy rates in this luxury sector are a robust 78%-80%, indicating a demand across the market. In addition, on an international comparison, London’s 5 star hotel occupancy rates are now amongst the highest in the world, outstripping Dubai (79%), Paris (78%), Munich (77%), Moscow (70%), Barcelona (69%) and Rome (69%).
At an average of £2,050 per night for a 1,038sq ft one bedroom suite and £497 per night for a 334sq ft superior room, 5 star hotel rates in Mayfair are the highest in the London luxury hotel market, with a 4% premium over equivalent values in Knightsbridge and a 60% over St James’s, Whitehall and The Strand.
Mayfair has the most expensive hotel suite in the capital – over £11,700 per night for a stay in the opulent Royal Suite in Park Lane’s Intercontinental Hotel. Mayfair also contains the largest number (4) of the top 10 most expensive hotel suites across the capital (HVS 2014).
The report finds that the average cost of renting a 1,038sq ft 1 bedroom 5 star hotel suite in Mayfair is £2,050 per night, which is eight times more expensive than the equivalent cost (£248 per night) of staying in similar sized private rented furnished apartment. The cost of a 5 star Mayfair hotel superior room at £497 per night is double the cost of private rented accommodation whilst a serviced Mayfair apartment averages £325 per night.
However, these differences in price need to be placed in context as hotels afford a high degree of flexibility in their terms.
The report highlights that the costs and viability of the different types of accommodation is also influenced by the length of stay at them; their availability and tenancy rules. Private rented furnished accommodation, although highly cost effective, normally requires a tenancy of six to twelve months or more. Source: Gulf Times