Government of Singapore Investment Corp (GIC) is one of the cash-rich buyers eyeing to purchase a London landmark — Grosvenor House Hotel — from the Royal Bank of Scotland Group PLC, sources said.
The Grosvenor House Hotel is expected to fetch around £500 million ($727.1 million), which is thought to be the highest amount garnered for a single European hotel, according to consultancy group HVS.
However, the sale progression may be extended in the coming months if the crisis in the eurozone deepens, causing bidders to delay over paperwork in the hope that the price will fall.
The sovereign-wealth fund of Singapore is one of the final bidders for the hotel, said the source. GIC has collaborated with US real estate company Host Hotels & Resorts Inc. The real estate investments of GIC include the UK’s Bluewater Shopping Centre and Chicago’s Franklin Centre.
In 2009, the slowdown of the global economy prompted a cutback in investment by sovereign-wealth funds, though the spending pace recovered at the end of the year, according to the recent reports conducted by Fondazione Eni Enrico Mattei in Venice and Massachusetts’ consultant firm Monitor Group. Among the highest-spending funds in 2009 were the China Investment Corp and Qatar Investment Authority.
Typically, hotels bounce back more quickly compared to other commercial property in an economic recovery.
“The sale could help unblock the current impasse in the European high-end property market and release some hotel stock,” said Russell Kett, managing director of HVS London.
But, Mr. Kett tipped off that it was still too early to celebrate a full-blown recovery and he did not expect to see the loan-to-value ratios seen in the previous years any time soon.
Opened in 1929, the Grosvenor House Hotel is a five-star hotel with 494 rooms over eight floors located at Mayfair, London overlooking Hyde Park.
The hotel is owned by the RBS, and CB Richard Ellis Hotels Group is running the auction.