Emea hotel investments rise 55% to Dh20.35bn

Hotel investment volume in the Europe, Middle East and Africa (Emea) region rose 55 per cent to €3.97 billion (Dh20.35bn) in the first three quarters of 2010 against €2.5bn (Dh12.81bn) in the corresponding period last year, according to industry tracker Jones Lang LaSalle Hotels.

Investments accelerated further during the third quarter with €1.8bn transacted across Emea, a 70 per cent increase on third quarter 2009 levels (€1.056 billion), said a report.

“Sellers are now more realistic about their pricing expectations and this has helped kick start the market following a very quiet period.  We currently have a reasonable balance between the number of buyers and the stock of hotels on the market.  We have also seen a number of distressed sales complete which has given us a good sense of how buyers price when they have a highly motivated seller. Acquisition debt is however is still scarce,” said Mark Wynne Smith, CEO for Europe, Middle East and Africa at Jones Lang LaSalle Hotels.

The UK has been the most active market so far this year, with over €1bn of investment transacted, followed by France with approximately €505m invested.  Spain comes third with €291m transacted.

Although confidence and activity in the hotel investment market have started to return, some levels of uncertainty remain with investors continuing to concentrate their activities on domestic deals subject to lease agreements. Nevertheless, an increasing number of hotels with a management contract have transacted during the year, currently representing a share of almost 28 per cent, compared to only five per cent in the full year 2009.

“We also saw US investors return to the Emea hotel investment market. They currently represent a 20 per cent share of volumes, compared to six per cent for the full year 2009. Domestic investment remained dominant, although its share fell from nearly 59 per cent in the full year 2009 to 36 per cent in the first three quarters of 2010,” he said.