EUROPEAN HOTEL INVESTMENT RISES 42% Y-O-Y
Q3 European hotels investment volumes have risen 42% year-on- year (y-o-y), with the sector now accounting for 9% (€16.1bn) of capital invested into real estate compared to 3% (€5.2bn) in 2007, according to CBRE’s Q3 2015 European Hotel Investment MarketView.
During the last 12 months, European hotel investment has included a growing amount of institutional capital and Middle Eastern (28%) investors continue to target luxury assets in capital cities for the preservation of wealth and prestige.
Private equity funds have been recycling their capital and targeting opportunities in Southern Europe as they hunt for yield. With increasing competition to acquire assets in Spain and Italy driving up values, Greece could be the next target for opportunistic investors should they have confidence in economic and political stability going forward.
Hotel profitability in Greece’s capital, Athens, has grown by +6% y-o-y for the 12 months to September 2015 due to decreasing payroll costs and stable inbound international travel. Currently lack of product and debt present two major barriers to this development, however, successful recapitalisation of the Greek banking sector will hopefully re-open the lending market and could bring to the fore some non-performing loans with a hotel component.
Our Q3 figures demonstrate that low levels of liquidity in the sector is no longer presenting a barrier to the investment community when considering activity in this space. Stock availability has been a catalyst in the growth of hotel investment volumes, however allocation of capital into the space has ensured strong pricing and yield contraction against a backdrop of operator performance recovery.
To view the full report click here.