Hotel investment levels up 53% year-on-year in Q1 2010 (EU)

The global hotel investment market experienced a strong start to the year with first quarter transaction volumes reaching $2.8 billion, (€2.10 billion) a 53% increase on the $1.8 billion transacted in Q1 2009, according to Jones Lang LaSalle Hotels.

Europe, Middle East and Africa (EMEA) remained the most active region recording $1.1 billion of hotel sales, a 46% year-on-year (y-o-y) increase for the same period, while the Americas and Asia Pacific regions recorded Q1 sales worth $991 million (+70% y-o-y) and $736 million (+43% y-o-y) respectively. In EMEA the UK accounted for $324 million of hotel sales, the highest level recorded in the region for the period and marks a significant year-on-year increase compared to the $92 million transacted in Q1 2009.

Arthur de Haast, Jones Lang LaSalle Hotel's Global CEO, said: "With a more positive investor sentiment for hotel real estate assets, transactional activity has accelerated significantly since the start of the year. As the global credit markets have begun to ease there is a greater weight of capital targeting the market for acquisition opportunities. We have also witnessed a noticeable increase in stock being offered to the market with increased sale activity from banks and other lenders who have taken control of more assets over the last year in an attempt to reduce their hotel loan portfolios."
Maintaining the trend from 2009 institutional investors have remained the most prolific investors across EMEA, seeking assets in secure Western European markets with stable incomes, and were responsible for more than a third of buying activity in the region.

In the Americas investor interest remains strong from domestic buyers but also international groups, who accounted for 34% of all transaction during Q1 2010. With the recovery in public markets, US-based REITS are also becoming increasingly acquisitive and purchased more than $441 million worth of hotels during the first three months of the year.
Asia-based conglomerates and high net worth investors continue to dominate activity in Asia-Pacific, accounting for almost half of all transactions undertaken during Q1 2010. Investor interest is very strong in Australia and Japan within the region – in the first three months of the year both countries recorded more than $350 million worth of hotel sales.
De Haast concluded: "The global hotel investment market during 2009 was plagued by a deficient debt market and a lack of quality stock, but the start of 2010 is already showing healthy signs for transactional activity, which should set the tone for the remainder of the year. While buyers and lenders remain cautious, funding is increasingly available for the right deals and coveted prime assets in key gateway cities are becoming more available driven partly by the sale of individual hotels by the banking industry, but also a better balance between buyer and vendor expectations on pricing."

Source: Jones Lang LaSalle Hotels

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