Hotel investment activity in EMEA slightly weakened in the first 6 months of 2012 when compared to the same period in 2011 according to Jones Lang LaSalle Hotels. Hotel investment volumes totaled €3.7 billion, a 12% decline compared to sales volumes in the first half of 2011. The majority of transactions were single asset sales, accounting for 64% of total EMEA transaction volumes.
Jon Hubbard, CEO Northern Europe, Jones Lang LaSalle Hotels said: “The United Kingdom was once again the most liquid market in H1 2012 with hotel transaction volumes amounting to €1.4 billion, reflecting 37% of total EMEA transaction volumes. London accounted for 59% of UK investment volumes or €796 million, where activity was primarily driven by the acquisition of 8 upscale hotels in the capital, including the 4-star 208 bedroom Hoxton hotel which was sold for €81 million to private equity firm Ennismore Capital and the 5-star 62 bedroom Number 11 Cadogan Gardens that was acquired for €39 million by The Cadogan Estate.”
During H1 2012 France remained the second most active market with hotel transaction volumes totaling €401 million, 11% of total EMEA transaction volumes. Investment activity was strong in Paris and 9 hotels were sold with a total value of €328 million. In Germany, hotel transaction volumes totalled €177 million, 5% of total EMEA transaction volumes. Significant transactions included a portfolio sale of two hotels in Berlin, the 4-star 153 bedroom Hotel Indigo Berlin and the 4-star 242 bedroom Holiday Inn Berlin Centre both located at Alexanderplatz. Both properties were sold by the Azure Property Group to Invesco Real Estate for €60 million.
Christoph Härle, CEO Continental Europe, Jones Lang LaSalle Hotels said: “We observe continued growth in trading fundamentals in many key European hotel markets despite the economic turmoil and uncertainty in the Euro Zone. Leisure travel remains buoyant and is fuelled by continued growth in inbound tourism from emerging markets in Asia and South America. With demand growing and a decreasing number of hotels in the development pipeline, a further improvement in trading performance can be expected in the short to medium term. This should result in more attractive returns for owners and underlines the attractiveness of hotels as alternative real estate investments.”
Many hotel markets have seen a growth in in Revenue-Per-Available Room (RevPAR) in the first 5 months of 2012 including Paris (+7.3%), London (+3.1%), Munich (+3.4%), Barcelona (+5.6%), Copenhagen (+3.7%) and Prague (+13.5%) amongst many others, when compared to the same period in 2011.”
Härle concluded: “Hotel investment activity is expected to pick up in the third and fourth quarters of 2012, as various large European portfolios are likely to close in the coming months. Investor interest remains strong for hotel assets as equity markets remain volatile and yields on secure government bonds, such as those of Germany are too low. A further driver will be pending debt maturities that will encourage a number hotel real estate owners to put an increasing amount of hotels up for sale in order to free up additional cash flow. However, one of the major obstacles preventing a major uptick in sales activity are the persistent tight credit conditions, with only a limited number of senior lenders and only a few banks capable of advancing money in large lot sizes. Overall, Jones Lang LaSalle Hotels anticipates hotel transaction volumes in 2012 to be largely on par with 2011 at roughly €9.4 billion.”