Hotels in Portugal, Austria and the CEE all saw major hotel transaction rises the year to Quarter 3, 2019, a new industry report reveals.
Portuguese hotel transaction volumes jumped 855% and reached €0.79 billion, Austrian volumes rose 464% to €0.87 billion and the CEE rose 108% to €1.24 billion, states the latest market snapshot from global agency, CBRE.
There were also strong gains in Italy, which was up 73% to €2.88 billion – moving it to third overall – and France, which was up 47% to €2.63 billion and was fourth overall.
In total, European hotel real estate investment reached €23.3 billion in the previous 12 months. A lack of listings was the main reason that the market fell 6.7% year-on-year.
UK tops European hotel transaction figures
The top region was the UK, with 27% of investment. However, Brexit took its toll and volumes were down 12.1% annually.
Next came Germany on €3.41billion, which was down 18% year-on-year. Over the quarter, hotel yields for the ‘Big Five’ German cities decreased by 25 basis points across all operating structures. Pressure remains on German property yields due to strong investor demand, a shortage of stock for sale and the low interest rate environment.
Paul Kapiris, Director, Head of Cross Border Hotels Investment Properties, explains, “Despite the overall decline in European Hotel investment volumes, investor interest remains strong, particularly in Spain, Italy 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.”
Various single deals, including the forward sale of NH CityLife, suggests that there are greater levels of liquidity in the market. Active institutional buyers are reinforcing the shift of the Italian hotel market from opportunistic to core, says the report.
France benefitted from 15 deals during Quarter 3, including the Novotel Paris Centre Gare Montparnasse, which was the largest.
As yields have dropped on city center hotels, investors are increasingly turning to resorts. Key resort deals in 2019 include two Italian properties; Capri Palace selling for €105.0m to Dubai Holding (Jumeirah) and Hotel Le Ginestre selling for €32.0m to Enma Capital.