Complete Investor Update – 15 Latest Developments at The High Street Group

It has been a busy year for the High Street Group, with major milestones including construction at Hadrian’s Tower beginning to take shape, this being the tallest building in Newcastle, as well as over £1 billion worth of developments in the pipeline.

High Street Hospitality has further expanded with the recent acquisition of the Sea Hotel in South Shields and the Parkmore Hotel in Stockton-on-Tees. All Saints Construction continue to add to their ever increasing portfolio which includes at least four more projects coming in 2019.

HIGH STREET RESIDENTIAL

Hadrian’s Tower, Newcastle upon Tyne

Tolent Construction is continuing to progress well on Hadrian’s Tower. Level 4 of the structure has now been cast, level 5 is beginning to take shape and the stair and lift shafts of the building are now up to level 9. Sales are progressing well, with 57 out of the 162 apartments sold to date.

Kent Street Residence, Birmingham

Sales have recently been launched through IP Global on our Birmingham City Centre site. IP Global are a recognised and well received property agent selling internationally, and have thus far achieved 50% off-plan sales.

Silbury Boulevard, Milton Keynes

With a massive 15,000 metres of steel, weighing over 750 tonnes, High Street Residential’s £30 million development project in Milton Keynes is taking shape at a rapid pace.

Midlands Director for United Living, Richard Baker, said: “This is a milestone development for United Living as it is the first project we’ve undertaken for the private rental sector. The team has made fantastic progress and we’re pleased to see these much-needed new homes are taking shape for the benefit of the local community.”

Helen Gordon, CEO of Grainger plc, said: “We are pleased with the progress of our first development in Milton Keynes and look forward to bringing great quality homes combined with our expertise and commitment to great service to the city.”

Brett Wharf, Gateshead

Having recently taking ownership of the Brett Oils depot located in Gateshead Quayside, High Street Residential plans to build approximately 250 high quality apartments within the private rented sector.Discussions with the local planning authority are underway, and a formal application is soon expected to be submitted.

Group chairman Gary Forrest said: “The Brett Wharf scheme will add to our contribution to the regeneration of the Newcastle Gateshead Urban Core. The former oil depot site is perhaps the last prime development site in the heart of the Newcastle Gateshead Quayside with direct river frontage.”

 

Middlewood Plaza, Salford

Middlewood Plaza has just achieved planning permission and construction is scheduled to start in January of 2019. The project is located in a highly desirable location in Salford, Manchester and is going to deliver 127 houses, in an area which is currently part of the main regeneration of Manchester.

The project will consist of six and nine storey blocks and will include bicycle access, enabling better connectivity with the city centre.

 

Cheshire Junction, Warrington

Cording Real Estate Group have backed the project in Cheshire Junction, Warrington after investing £40 million into the project, with construction now due to begin this month.

Director of residential acquisitions at Cording, Charlie Miller, said: “The site’s location, opposite the train station and within walking distance to Warrington’s town centre, is very attractive for future residents and commuters to Liverpool or Manchester.”

HIGH STREET HOSPITALITY

Sea Hotel 52, South Shields

High Street Hospitality have recently taken over The Sea Hotel to bolster the companies portfolio in the hospitality sector. the hotel was purchased in a £1m deal, with further funding of £750,000 to be used to update the property to appeal to modern consumers.

Managing director, Phill Brumwell, said: “We are delighted to add such a well known, iconic hotel to our fast growing chain. We will improve the facilities to a very high standard, creating a boutique hotel with an array of food and beverage outlets”.

Rustica Trattoria & Inn (The Three Horse Shoes), Washington

In addition to Sea Hotel 52, the purchase of The Three Horse Shoes in Washington has also been purchased by High Street Hospitality. There are plans to construct a third Hotel 52 brand, with the hotel boasting 58 bedrooms. The purchase includes the Tavistock Italia restaurant, which the company plans to renovate.

Pending planning approval, construction aims to go ahead early next year, creating work for local contractors and within the hotel operation. Using a modular construction technique, the overall timescale for the project should be shorter than a standard build.

The Parkmore Hotel, Yarm, Stockton-on-Tees

The Parkmore Hotel has also been purchased by High Street Hospitality, with plans to invest £1 million to renovate and refurbish the hotel to facilitate for wedding and leisure purposes in the area. The renovation will improve the spa and function facilities, and will enhance the 55 bedrooms, targeting the boutique sector. Work is due to start on this development in early 2019.

Loca Bar & Kitchen, Whitley Bay

Nominated in the Leisure & Tourism category at the North Tyneside Business Awards in November, Loca Bar and Kitchen have a fantastic reputation in the area. With plans for opening a second chain imminently, and a third planned for early 2019, this brand encompassed by High Street Hospitality is soaring.

ALL SAINTS CONSTRUCTION

Student 52, Newcastle upon Tyne

With an ever increasing demand for student accommodation in the Newcastle area, this project will be converting Northumbria University’s former offices into 46 student apartments. Located in Newcastle city centre, the location for the development is hugely appealing to students. The project is expected to complete in March 2019 by All Saints Construction.

Amble, Northumberland

Work on the Roseate View project is under way, which will be delivering 13 three and four bedroom properties consisting of town houses and bungalows. Development is catered towards families and the older generation respectively, and will be carried out by award winning developer All Saints Living, delivering the £4 million project in Amble, Northumberland.

Managing Director of All Saints Construction, Kirk Thompson, said: “We are delighted to be able to showcase how our new Amble development will look. The townhouses will be ideal family homes with bi-folding doors opening to glass fronted balconies, enjoying sea views.”

Larbert House, Falkirk

Another development recently launched by All Saints Living are the properties that extend from Larbert House. All Saints have appointed Clyde Property, a leading estate agents in the area, to manage the sales of the units.

 

Morar House, Helensburgh

In addition to Larbert House, Clyde Property have been appointed by All Saints Living to manage the sales of the mansion house and extensions of Morar House in Helensburgh. With demand high for the plots, with two already reserved, the property looks set to sell out, and with good reason. The property is idyllic and boasts beautiful surroundings around the building and extension.

The Walled Gardens, Gosforth, Newcastle upon Tyne

Launching in January, the residential development of The Walled Gardens in Gosforth, Newcastle upon Tyne, has been progressing very well, with all units within the Southern Garden now sold.

 

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Introducing Our New Cheshire Office

It is with great pleasure that we are able to announce the opening of our new office in Bollington, Cheshire.

2018 has been a phenomenal year in which we have grown our UK client book several fold, and this naturally means we need to be well positioned in order to meet with our investors throughout the UK. We have identified Cheshire as a great hub for our business.

Bollington, Cheshire

The new office is located at Adelphi Mill, Grimshaw Lane, Bollington, Cheshire, SK10 5JB.

You are welcome to pop in for a visit, simply get in touch to schedule a meeting. For our international investors, we are located 25 minutes from the busy Manchester Airport if you wish to visit. Where possible, we do aim to meet our overseas clients on one of our various international trips.

The office is located by the idyllic waterside setting of the Macclesfield canal that runs alongside the office.

The Adelphi Mill, originally built in 1856 by a local cotton spinner by the name of Martin Swindells, is a Grade II listed building. During the Second World War, the mill contributed to the war effort by contributing to the production of parachutes. No longer a cotton mill, the building recently underwent a multi-million pound refurbishment and now functions as bespoke, modern offices.

The building is spectacular, and serves as a fantastic environment for our business.

The canal running alongside the mill is one of the most well used and indeed picturesque canals in the United Kingdom. When coming to the office, we will be sure to take you for a short walk alongside the mill. The location also benefits in that it sits right on the very edge of the Peak District.

FJP Investment is delighted with the location and the space in which we are comfortably able to thrive and deliver presentations for our investors. The opening of the new office also facilitates growth of our product range, since the vast majority of interest amongst developers is currently in the North of the UK.

 

 

 

 

 

 

 

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Hotel Room Investment – Ultimate Guide

Our guide to everything you need to know about investing in hotels.

Continuing our guide into property investments, we now turn our attention to a particularly attractive market – hotel investments.

Investing in hotels has never been so appealing. We are seeing the highest growth in hotel room rates since 2011, travellers are at an all-time high, and we are seeing massive demand from all forms of investors in the hotel property market as a whole, according to Statista.

A hotel investment differs from a standard property investment. We have prepared a simplified explanation for how this form of investment usually operates.

Why invest

There are many benefits to investing in hotels, the first of which being the accessibility of the investment.

With the ability to easily invest in just a single room within a hotel, the accessibility of hotel investments is significant. When compared to investing in other HMOs (houses of multiple occupancy), the capital required to enter the investment, like student accommodation, is far more achievable for many investors.

Hotel investments are largely considered low risk, too. Some of the largest hotel providers are often seeking investment for further developments. With near-perfect track records, you are almost guaranteed a return.

Most hotel investments offer a return of 125-150% on the acquisition price. As an investor, the contract will often stipulate a buy-back option for the developer at around this percentage. As an investor, you will be looking for a contract that has an optional buy-back, meaning that if the investment is providing you with good returns, you can hold this for a long-term profitable yield.

The investment is also entirely hands-off. Your investment in a hotel room is as simple as making the investment, sitting back, and collecting the income. Although this sounds too good to be true, it often is this easy.

Your investment becomes part of the hotels stock, and this is managed on behalf of the hotel. Depending on the investment type, the hotel either takes a percentage of the income from your hotel room(s), or you take a percentage of the hotel’s overall income.

Given you have researched a safe hotel investment, and you have used a reputable investment broker, there is little reason you will not get a return on your investment. For investment opportunities, we recommend checking out some of our current investment opportunities.

What hotel type

In 2016, we highlighted that it was safer to invest in luxury hotels. Where this does continue to be the case, lifestyle & boutique hotels go a step further and look set to be the future.

You may be asking what a lifestyle hotel actually is, and this question is shared by many. James Sabatier, CEO of Two Roads Hospitality, says that “Lifestyle, to me, is about experiences. It ́s about feeling a sense of place. It ́s what travellers want more and more…”

Although the definition itself appears to be losing some meaning, with many new hotels claiming to be ́lifestyle ́, the concept is essentially offering beautiful, uniquely designed hotels that also provide an intimate and personal service.

What sets a lifestyle hotel apart from the conventional luxury hotel is the appeal these hotels have to the younger generation. According to STR, millennials spend marginally less annually than older travellers on hotel stays, but they are far more likely to spend money on a lifestyle hotel than a luxury hotel.

Internationally, STR also report the lifestyle sector has an average room rate of $229, with occupancy close to 76% across the board. This room rate is significantly higher than the average of $131 across the hotel sector, and also boasts a 10% greater occupancy rate. Clearly then, lifestyle hotels are where the market is currently at, and something you should target when making a hotel investment.

Demand

The demand for hotel rooms are on the rise. According to Statista, we are currently seeing a 3.7% growth on average hotel rates in 2018, this being due to a rise in the economy and increased demand by travellers.

International tourists in the UK are on the rise, up 7% from 2017, and this is set to continue according to UNWTO World Tourism Barometer. The reasons for this being the upsurge in the silver economy, the continued appeal of travel to younger people, and the rise in Chinese tourists as the country continues to grow in wealth. These trends look set to continue, with the reasons for this rise looking unlikely to be temporary factors.

PwC reinforces this high level of demand, with forecasts by the end of 2018 calculated as a 2.3% rise in RevPAR from 2017. With 2.4% supply growth predicted also, investors are aware of this continued demand for hotel stays.

The rise of Airbnb

Naturally, you may be cautious of hotel investments with the rise of Airbnb. A recent report by STR highlights that in areas where the average review scores on Airbnb were above average, hotels charged a marginally lower rate, presumably to supplement these reviews and attract more travellers. This was also applicable to Airbnb rentals that posted below average prices for the area.

The results did show that Airbnb has had almost no impact on RevPAR (revenue per available room) in the hotel market though, with Airbnb accounting for just over a 1% decrease in RevPAR. This supports the leading argument that Airbnb is offering more of a supplementary service to the hotel industry. Airbnb in itself is proven to be very unlikely to have a significantly negative impact on a hotel room investment.

Where to invest

Investors eyeing London

A recent study by Cushman & Wakefield reveals that London is now the top city for hotel property investment worldwide. This is thanks to several large deals, doubling the transaction volume from the previous year. This highlights London as a strong investment market, and also the fall in American cities receiving lower investment than the previous year.

Head of Investment Strategy at Cushman & Wakefield, David Hutchings, says that “London has battled through political headwinds to charm both hotel investors and consumers. Its rich culture, history and leisure scene, alongside its business operations, is proving to be a solid bedrock for its hospitality sector which continues to go from strength to strength.”

The result of this may come as a surprise to some. London made the leap from seventh the previous year, narrowly edging out New York to top spot.

Investment has fallen in the US by 21% when compared to the previous year. This is cited to be due to new legislation enforced in mainland China and Hong Kong, resulting in a cooling of capital flow. This comes after several years of high investment in the US.

Head of Hospitality at Cushman & Wakefield, Jon Hubbard, says that “We are seeing an increasing diversity amongst the type of investors coming to play, including institutional investors, whose presence in the market is reducing the risk profile and driving a surge in liquidity”.

The result of this means that we are seeing an uptake in major operators considering leases for strategic situations, and the rising interest of institutional buyers to invest with potential for high returns.

Broaden your search

From an investment perspective, it is clear that there is demand in London for hotel property, but there is already supply in place to match it. You could argue that identifying areas of high demand, but low supply could result in greater yields. In addition, an investment in a hotel in London is likely to be higher than it would be elsewhere, so the capital you are willing to invest is something to consider.

You have to think long-term when it comes to investing also, and although London is currently top for hotel property investment, PwC global anticipate that this growth in London will not be sustained.

The report shows that investors should be looking at Europe for hotel investment, with Portugal leading the way for anticipated growth. With a 10% increase in RevPAR set to be achieved in Porto in 2018, and 7% in Lisbon, Portugal is seeing major economic growth. When compared to the anticipated 1% in London, the benefits of looking elsewhere are apparent.

Source: PwC analysis

With the result of Brexit fast approaching, it appears unlikely that London will remain as the top city for international hotel investment. London is, however, tried and tested as a fantastic option for hotel property investment, regardless of the fall in growth.

Seasonality

Something that can be overlooked when making an investment in a hotel is the effects of seasonality. You may be investing in an area that sees high traffic in the summer, but low traffic in the winter, and therefore you need to anticipate this.

Findings by Statista have found that December is the most profitable month for hotels worldwide, consider this when making a hotel investment. Choosing an area that has high demand all year round, although difficult, is not impossible.

Seville is a good example. Lonely Planet rated Seville as the best city to visit in 2018, and sees visitors flocking to the city all year round. The city hits its peak between the beginning of June to the end of September, but also sees high footfall in the month of December. The city is not hit with the impact of the low season when compared to other areas of Spain and is therefore a good investment location.

Potential drawbacks

Something to consider is that it can go wrong. Although this is not a common occurrence, your profits as an investor directly correlate to the success of the hotel itself. The RevPAR of an investment can be affected in many ways, some examples include the economy, terrorism fears in the area and even natural disasters.

These factors can positively affect your investment however. If you are investing in an area that is unlikely to draw any of these inherent problems, you could benefit from more traffic to your hotel investment.

When investing in hotels, you are at the mercy of any change of direction the hotel may choose to go in, even if you are not in agreement. For instance, the hotel may see an opportunity to target the luxury market. If this fails, the failure is shared with you as an investor.

You also have to take into account any management costs that the hotel will deduct from your income, something that is not included with other property investments. Ensure that management costs are explained, and that the contract clearly defines what this includes to avoid paying out large sums from your profits.

You may be investing in a future build. In the event that a developer liquidates, there is a reasonable likelihood that another developer will take on the project, though this cannot be guaranteed. As with any investment, you have to be aware that there is always an element of risk involved, even if this is usually small.

Conclusion

Investing in hotel property is a relatively straightforward and safe investment, with returns often provided over long periods. As with any property investment, it is important that you do some research into the development.

Get a realistic estimate on what the RevPAR is likely to be for the investment, taking into account location and trends in the market. Make yourself aware of the potential pitfalls of investing in a hotel and compare the benefits to other property investments, such as student housing or a different HMO. Ensure the contract you are signing is to your benefit and seek out an optional buy-back.

As with all property investments, a hotel investment could well be the investment for you, just be sure to do your own research.

Download: Hotel Room Investment Ultimate Guide

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