Investment in EMEA hotels fell by over 50 percent in 2009, according to new research from Cushman & Wakefield Hospitality. Total investment volumes totalled €3.2 billion in 2009 (against €6.4 billion in 2008) with 50 percent by value being distressed sales. The 2009 total was an 85 percent fall on 2007’s record figure of €19.8 billion. 

The largest European deal in 2009 was the purchase of the 560 room Radisson Blu Hotel in Hamburg by Invesco Real Estate from the Azure Group for €155 million. This was closely followed by the purchase of the Aviemore Highland Resort in Scotland by MacDonald Hotels from administrators PricewaterhouseCoopers for €153 million. The year ended on a high with the purchase by a subsidiary of BBVA of a hotel development on The Strand in London for circa €125 million. 

2009 has been characterised by decline in foreign buyers to the benefit of domestic investors. US investment has fallen 68 percent or €790 million to stand at €252 million (a 93 percent fall since 2007). Middle Eastern investors have dropped slightly to 14 percent of 2009’s total but are expected to grow further from 2010 along with Far Eastern buyers fuelled by faster economic recovery. 

Distressed sales accounted for 50 percent of the volume transacted with the number sold under administration increasing significantly at year end. C&W Hospitality expects to see a further increase in distressed sales in 2010 with large portfolios acquired in 2005 coming to market as senior debts mature. 

Nick Pattie, Managing Director of Cushman & Wakefield Hospitality, said: “The need to re-finance hotel loans that were originated when the market was bullish may cause resurgence in transactions within the next 12 months. We have a substantial number of well-funded investors impatiently awaiting just such opportunities” 

Philip Camble, Director of Cushman & Wakefield Hospitality, said: “The nationality profile of investors buying in Europe has changed significantly over the last five years. US buyers have largely fallen away with the proportion of European buyers increasing very significantly. UK buyers also took advantage and were therefore much more active and although Middle Eastern activity fell slightly, we expect them to be much more active this year and into the future.”

Alexander Zinkovski, Senior Analyst, Research Department, Cushman & Wakefield, commented: “For many years foreign investors were the main buyers on the hotel market. The market has significantly compressed after their leaving. In 2009 there were no investment deals in hotel real estate. It is obvious that during the crisis the buyers were ready to invest only into the properties with the least risk (with the income that will not be much affected by the crisis). Such landmark properties with well-known operators didn’t appear on the market last year (delays in construction, some projects were put on hold and several properties were closed for reconstruction). Taking into consideration deficit of quality hotel projects landlords were not interested in their selling at prices offered by the potential investors. Investing into hotel development is currently more risky considering hospitality market specifics (hotel operator choice, first years’ occupancy) Hotel market development in Moscow is dependent on the environment. One of the drivers for hotel real estate in Moscow can be prohibition for office buildings construction in the central part of Moscow. Thus, developers will likely think of the middle market hotel development.”  

See also:

Back to Main News Page

EuropaProperty’s Back to Business Investment Forum to be opened by Warsaw’s Vice President

A new beginning for Warsaw’s Próżna Street

Dvintsev Business Center welcomes United Bakers