European Hotel Investment Spikes 17 Percent Annually, London Top Target
According to global real estate advisor CBRE, total European hotel investment volumes increased by 33% year-on-year, for the third quarter of 2017. This contributed to a 16% year-on-year increase on the year- to- date, with hotel transaction volumes exceeding €14 billion ($16.6b USD).
The UK and Germany remained the largest markets in the first three quarters of 2017, accounting for 55% of the transaction volume. Deal volumes in both the UK and Spain - the third largest hotel investment market - are already ahead of their respective full-year 2016 volumes.
International investors continued to show strong appetite for the UK hotel sector despite ongoing political uncertainty. The UK recorded the highest investment transaction levels, which saw volumes reach €2.6 billion in Q3 2017, up by 195% on the same period last year. Although last year was impacted by the referendum. The growth was largely driven by various high-profile hotel portfolio sale in London and the regions, including the sale of the 1,059-room Hilton London Metropole and the long-leasehold interest of the 790-room Hilton Birmingham Metropole, to Henderson Park for £500m. UK hotel yields remained mostly stable or fell marginally post the EU referendum.
Paul Collins, Head of Hotel Investment Properties, UK & Ireland, at CBRE, commented, "The UK hotel market has seen strong growth which has been supported by favorable exchange rates. Buyers have comprised of UK and international parties, which have included existing players and new entrants to the market."
Transaction volumes in Spain also remained robust and recorded an increase of 112% year-on-year in the year to Q3 2017.
Hotel yields for key German cities continued to decrease, highlighting the strong investment appetite in the market. Italy, Benelux and the Nordics also posted strong growth in comparison to year-on-year.