Investing to accomodate: hotel purchases up 50%, Middle East considered 'most active buyers'
Investment volumes in the hotel industry across Europe, Middle East and Africa (EMEA) surged 53 per cent to €8.2 billion in the first nine months underscoring the vibrant revival of the region’s hospitality industry, Jones Lang LaSalle said.
While single asset deals secured a 54 per cent share of transaction volumes overall, up 13 per cent compared to last year, yhe rest came from a number of notable portfolio deals driving transaction volumes up by more than 160 per cent, JLL said in a report.
The sale of the Grand Plaza Serviced Apartments in London which was sold to the Federal Land Development Authority of Malaysia for a reported €116.6 million, was among the most notable single asset transactions during the third quarter. Other transactions included the sale of First Hotel Amaranten in Stockholm for €114.7 million and the Hotel Eden in Rome to The Dorchester Group for €105 million.
The GCC region is witnessing a vibrant growth in hotel industry. A total of 150 hotels are slated to open this year in the region and a further 450 are in the pipeline, according to John Worsley, chairman of bench events of the Arabian Hotel Investment Conference.
In 2012, Middle Eastern investors were one of the most active buyers of hotel real estate, acquiring assets with a total value of $1.7 billion, about 15 per cent of total investment volumes in EMEA. The increased tourist arrivals to the GCC region have grown at a Compound Annual Growth Rate of 8.5 per cent over 2002–2011, significantly above the global growth of 3.7 per cent.
The JLL report said the UK remained the most liquid market in EMEA, with investment volumes exceeding €2.6 billion by September — a 32 per cent share of total transaction volumes — followed by France at €1.5 billion (19 per cent). The dominant investor groups included sovereign wealth funds representing 26 per cent of total investment volumes, followed by investment funds and private equity firms with 24 per cent share.
“Continuing their prevalent asset-light strategy of the past decade, hotel operators were the most active sellers during the first nine months of 2013, accounting for a 29% market share of disposals,” said the report.
The €2.3 billion worth of transactions by operators included the sale of 27 Principal Hayley hotels to Starwood Capital, while Fattal Group’s Leonardo Hotels led a consortium of international investors to acquire Queens Moat Houses (Germany) Holding GmbH.
The third quarter reported the strongest quarterly growth so far this year, with transaction volumes up almost 70 per cent compared to the same quarter in 2012, said Jonathan Hubbard, CEO Northern Europe for Jones Lang LaSalle’s Hotels & Hospitality Group.
“With just three months to go until year-end, transaction volumes across EMEA look likely exceed €10 billion for 2013, well ahead of initial expectations for the year, reflecting the increasingly positive investor outlook.”
“The UK and France continue to lead transaction activity across EMEA, with almost 40 per cent of the €2.3 billion of third quarter transactions occurring in these countries,” said Christoph Härle, CEO Continental Europe for Jones Lang LaSalle’s Hotels & Hospitality Group.
“Trading performance in Southern Europe is picking up pace, with countries such as Portugal and Italy posting robust RevPAR growth. This is good news for investors looking to purchase assets in these countries that were, just some time ago, struggling through the economic crisis,” said Härle.