European hotel investment volumes have reached €3.74 bln in the first quarter of 2015, more than double Q1 2014 volumes of €1.73 bln, according to the latest data from global real estate advisor CBRE.
European hotel investment has seen year-on-year growth of 116% reflecting the strength in hotels as a growing commercial property asset class, this has been led by a number of factors including high investor appetite for consumer driven real estate asset classes in a time of low inflation and rising consumer spending.
Investment activity in nearly all European countries was significantly higher in Q1 2015 compared to Q1 2014. The UK, France and Germany presented strong growth in Q1 2015 with investment volumes increasing by 38%, 90% and 225% respectively year-on-year.
The UK will continue to see strong trading growth on the back of expected economic growth and limited supply risk. Whilst the German transaction market is likely to remain hot in the coming quarters as the availability of operational leases attracts a growing number of institutional investors at a time of low bond yields.
Southern Europe saw a substantial uptick in transaction volumes across the region in Q1 2015 reaching €878 mln and up 301% year-on-year. The increase was largely due to a notable rise in Spanish hotel transactions which has attracted interest from private equity funds who are seeking value-add opportunities with strong growth potential.
Central and Eastern Europe (CEE) and Austria has also seen a sizable increase in hotel transactions hitting €160 mln in Q1 2015. This is mainly due to a spill-over of capital previously looking at assets in Western Europe, based on attractive yields and healthy trading performance data.