Overall hotel investment volumes in Europe decrease

Eloise Hanson By Eloise Hanson
05 November 2019 | Updated 05 November 2019

UK: According to CBRE, the total hotel investment reached €23.3 billion in Q3 of 2019 - a decrease of 30.6 per cent on the same period last year.

Data from global real estate advisor, CBRE, shows a decline of 6.7 per cent year-on-year, driven principally by the lack of stock in the market.

The UK formed the primary destination for investment in the region, capturing 27 per cent of capital deployed. Nevertheless, investment volumes were down 11.3 per cent on the same period las year, and 12.1 per cent year-on-year.

Despite investment volumes being down 18.2 per cent year-on-year in Germany, the country serves as Europe's second most invested hotel market. Compared to Q3 2018, investment was down 30.1 per cent, whereby pressure remains on property yields given strong investor demand, a shortage of stock for sale, and the low interest rate environment.

In Italy, investment volumes were up by 72.9 per cent year-on-year in the 12 months to Q3 2019. The Belmond transaction and acquisition of a 15-hotel portfolio by Oaktree in Q2 2019 helped to elevate Italy into the third-most invested European hotel market.

A number of single asset deals, including the forward sale of NH CityLife, further suggests that there are greater levels of liquidity in the Italian market.

France benefitted from 15 deals throughout Q3, resulting in 72.1 per cent increase in the transaction volume compared to last year and reflecting a year-on-year increase of 47 per cent. The Novotel Paris Centre Gare Montparnasse was the largest single asset transaction.

At large, yields for city centre hotels has decreased, driving investors to look at resorts which are becoming one of the most sought-after property types in the hotel sector.

Key resort deals in 2019 include two Italian properties: Capri Palace, selling for €105 million to Dubai Holding, Jumeirah, and Hotel Le Ginestre, selling for €32 million to Enma Capital.

Director and head of cross border hotels investment properties at CBRE, Paul Kapiris, said: "Despite the overall decline in European hotel investment volumes, investor interest remains strong, particularly in Spain, Italy and the Netherlands. The lower number of large deals have contributed to this fall in volume, however we are seeing increased interest in resort markets as they are now proving attractive to more traditionally conservative capital, who have become more comfortable with leisure markets in their hunt for higher returns".

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