"It is deeply regrettable that growing international concern at unilateral expansion of illegal Israeli settlements is not being heeded," Ban said in a statement. "Such actions seriously prejudice the possibility of a negotiated solution to the Israeli-Palestinian conflict."
He called for Israel "to take whatever steps are necessary to freeze settlement activity anywhere in occupied territory".
The Israeli government has rejected international criticism, saying that it is within the rights of Jewish people to buy and develop private property. The Shephard Hotel is situated in Palestinian-occupied East Jerusalem.