Rapid Recovery in Investment Volumes in EMEA Hotel Market
Hotel investment volumes in EMEA during the first 6 months of 2011 have reached €3.37 billion, a significant 73% increase on the same period last year (€1.94 billion), according to Jones Lang LaSalle Hotels. Demonstrating the recovery and strength of the EMEA hotel market, compared to volumes recorded for the same period in 2009, this marks a 123% increase. Jones Lang LaSalle Hotels now estimates year end volumes will reach €9.5 billion – a 14.5% increase on the forecast prepared in January of this year.
Mark Wynne Smith, EMEA CEO of Jones Lang LaSalle Hotels, said: “The market witnessed a very strong first quarter with over €2.1 billion worth of deals transacted as a series of sizeable portfolio deals completed. The average single asset deal size has risen by 27% from €36 million to €46 million. The most dominant buyers to have emerged are high net worth individuals and institutional investors, led by Predica and their acquisition of two large portfolios. Investment funds and private equity, the drivers of investment last year, are currently playing a less significant role but they will be increasingly active through the second half as more stock is brought to the market.”
During H1 2011, France has emerged as the most liquid market with €594 million transacted, including the significant sale of the Marriott Champs Elyees and a portfolio of Campanile Hotels. The UK moved into second place after dominating 2010 with €442 million, followed by Russia (€400 million), Germany (€380 million) and Spain (€172 million).
Mr Smith continued, “The majority of investment this year has originated within Europe as investors continue to feel more assured about cross border deals. In 2010 unencumbered properties and lease contracts were the most popular transaction conditions. However, as a result of a notable growth in investor confidence and an increase in deal flow, buyers are now more positive about fair priced management contract hotels, which have accounted for most deals so far this year – including the notable sale of six Intercontinental assets across Europe and the Ritz Carlton in Moscow.
Debt levels remain limited in EMEA but more parties are willing to enter the lending space for hotels, actively looking for the best deals, as well as the hope of a revival of Europe’s commercial mortgage-backed security market. As banks speed up their workout programmes significant product is expected to come to the market during the remainder of the year, including some notable portfolios, and we are confident of an even stronger second half of 2011.”