24 February 2015, London: Hotel real estate was the star performer in Europe’s property market in 2014 with transaction volumes growing faster than other asset classes such as office, industrial or retail space.
According to the annual European Hotel Transactions report, published this week by HVS and its brokerage and investment services division HVS Hodges Ward Elliott, last year saw European hotel transaction volumes rise to a total of €14.4 billion, up 86% on 2013 – a new record since the onset of the global financial crisis.
Renewed interest in the hotels market has been driven by the comparatively attractive income returns hotels offer and their potential for improvement through clustering, management reorganisation or re-branding.
The UK was Europe’s most active hotel real estate market followed by Germany, then France. Together these three markets accounted for 59% of total European transactions during 2014.
“Demand for prime assets across Europe’s key gateway cities is still very strong,” commented report co-author Jill Barthel, analyst, HVS London. “Prices in capital cities such as London and Paris are very high, prompting investors to increasingly consider secondary and tertiary investment locations, particularly in the UK.”
The year saw the highest level of single asset hotel transaction volume on record, 72% higher than in 2013. Europe’s highest volume of single asset deals was in the UK, which recorded a total transaction volume of €2.5 billion, above France’s €1.4 billion and Germany’s €827 million.
Single asset deals in the UK were up 40% year-on-year with the country’s strong economy and good hotel operating results driving investment in both London and the regions. Significant deals included the sale of the London Edition to ADIA and Strategic Hotels & Resort’s sale of the Marriott Hotel Grosvenor Square for €151 million to Hong Kong-based Joint Treasure International.
Portfolio transaction volume across Europe grew faster than that of single asset deals. The year saw portfolio volume double year-on-year to €6.9 billion, 48% of total investment. This result was helped significantly by the largest deal of 2014, the Shanghai-based Jin Jiang’s acquisition of the 90,000-room Louvre Hotels Group from Starwood Capital for €1.2 billion.
“The hotels sector has once again renewed its popularity and is becoming something of a favourite with investors. This has been prompted and supported by strong hotel performance in key cities and looks likely to continue as long as the economy across Europe continues to grow,” commented report co-author Adrian Ruch, analyst, HVS Hodges Ward Elliott.
“We expect there will be further interest in the provincial markets from investors during 2015 as well as in key gateway cities such as Amsterdam and Barcelona.”
To download a copy of 2014 European Hotel Transactions by Jill Barthel and Adrian Ruch please click here.
