European hotel investment is set to burst through the €20 billion mark for the first time in the history of the asset class, according to the latest research from global property advisor CBRE.
Investor appetite has strengthened with H1 European hotel deal volumes reaching €10.73 billion, 85% of the total level seen in 2014; a €4.77 billion and 80% increase year-on-year. Last quarter alone (Q2), transactions reached €5,709 million, up 39% on the same quarter last year.
Investment market values/volumes
| Investment market (€ millions) | 2015 Q2 | 2014 Q2 | Y-o-Y % Change | H1 2015 as % of previous full year |
| United Kingdom | 2,693 | 245 | +998 | 61 |
| Germany | 904 | 1,252 | -28 | 49 |
| France | 577 | 533 | +4 | 108 |
| Spain | 731 | 356 | +105 | 122 |
| Italy | 236 | 110 | +115 | 54 |
| Ireland | 14 | 0 | N/A | 686 |
| Nordics* | 104 | 592 | -82 | 19 |
| CEE** | 60 | 542 | -89 | 14 |
| Benelux*** | 370 | 284 | +30 | 104 |
| European Total**** | 5,709 | 4,103 | +39 | 85 |
| Source: CBRE, 2015 |
Joe Stather, Information and Intelligence Manager EMEA, CBRE Hotels, commented:
“Taking into consideration the figures to date, pipeline of activity and historical deal trends, we are set for a record breaking year. The €20 billion threshold seems within reach and would set an unprecedented benchmark for European hotel investment; a realisation that the asset class is becoming progressively mainstream.”
Institutional appetite
The institutional appetite to invest in core real estate has heightened considerably thanks to low interest rates and the associated impact on bond yields.Countries where the hotel landscape was considered to be further along in the cycle, such as Germany, France and the UK, continue to register mounting deal volumes, attracting significant institutional interest and a growing weight of Asian capital.
UK market popular
The UK investment market remains popular with traditional investors as well as new entrants. At €2,693 million, the Q2 deal volume for the UK exceeded the long-run quarterly average by over €2 billion.
Despite a relatively slower second quarter, Ireland’s H1 deal volume is already €442 million ahead of the total transaction volumes achieved in 2014. Irish hotel deals that seemingly monopolised the headlines over the last 24 months have centred around non-performing debt – some of these assets are now coming back to market as equity and thus making a mark on the country’s investment volume.
Yields continue to strengthen across most European markets and while confidence remains in trading performance growth, assets encumbered by a franchise agreement are achieving lower yields than those operated under a generally less-flexible management contract.
For more information click here
Follow us on Twitter @CBRE_EMEA
Hotels CBRE on Twitter: @CBREHotels
The post CBRE reports European hotel investment on course for €20bn in 2015 appeared first on Hospitality & Catering News.