Investment in European hotels falls 50% to €3.2 billion (EU)

Investment in EMEA hotels fell by over 50% 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% by value being distressed sales. The 2009 total was an 85% fall on 2007's record figure of €19.8 billion.

The Strand London

The Strand Hotel in London sold for circa €125 million.

Although the UK market has suffered the largest fall over the last three years, it remained the most active EMEA market with 29% of total volumes or €935 million invested despite falling 50% in 2009 alone. France and Germany were the next most active markets with 16% and 9% of total volumes invested respectively (€520 mln. and €300 mln.).

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% or €790 m to stand at €252 m (a 93% fall since 2007). Middle Eastern investors have dropped slightly to 14% 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% 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 a 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."

Source: Cushman & Wakefield

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