The Dunstane Houses has been sold on behalf of its private owner operator to Roseate Hotels for an undisclosed price - although the property was marketed at a guide price of £7.5m.
The five star hotel, dating from circa 1851, is situated in Edinburgh’s west end, with 35 guest bedrooms and suites set across two villas. The property also has a bar and restaurant, lounge, garden conservatory and private gardens.
Steven Fyfe, associate director in the hotels agency team at Savills Scotland - which carried out the sale - commented: “The Dunstane Houses is a prime investment opportunity that presented a luxury boutique hotel recognised as one of the finest in Edinburgh with significant potential for ongoing success.
“Edinburgh continues to outperform as a tourist and business destination that maintains a buoyant hotels market and we expect these robust fundamentals to support further transactions.
”Furthermore, the recent openings of the Gleneagles Townhouse and Virgin Hotel, as well as the upcoming entrants of the W Hotel and Roomzzz at St James Quarter will bolster the city’s hotels product and broaden the appeal of the city to travellers.
”However, against wider uncertainties in the investment market, it is essential to take advice at an early stage, whether considering an exit or further acquisitions for your portfolio - live sales are generating strong interest, but price the of debt will challenge higher lot sizes.”
The sale follows £25m of Edinburgh hotel transactions already traded in 2022, according to Savills, including the sale of Apex Haymarket, Fountain Court Apartments and Travelodge Edinburgh Learmonth.
Confirming the trend, property adviser Christie & Co has also completed the sale of No. 53 Frederick Street, a boutique hotel in Edinburgh’s New Town.
With 14 bedrooms and a one bed owner's flat, the guest house has been developed over the past 20 years by David Tweedie and came to the market as he felt the time was right to hand over the reins to a small corporate operator or private investor.
The new owner, Damien O'Looney, is an expanding private investor who recently bought a second site nearby.
He commented: “With the holiday market returning towards pre-pandemic levels, we are looking forward to many busy seasons ahead, welcoming guests to our new city centre guest house, which nicely complements our existing guest house around the corner at 45 Queen Street.”
Gary Witham, hotels director at Christie & Co, added: “We were delighted to get this deal over the line and demonstrate there is ongoing buyer demand for high quality lodging businesses with strong trading fundamentals in central Edinburgh, despite a challenging operating environment.“
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