The first half of 2010 has demonstrated that the EMEA hotel investment market is starting to pick up, with growth expected to accelerate even more in the second half of 2010 according to Jones Lang LaSalle Hotels.
Transaction volume rose marginally to €1.6 billion at the end of Q1 2010, representing a 6% year on year increase.
There is strong sense that the latter part of 2010 will witness stronger investment activity, with expectations that the second half of 2010 could see transaction volumes double on Q1 levels.
As anticipated by Jones Lang LaSalle Hotels EMEA forecast at the start of the year, the UK has been the most active market in 2010, with over €300 million of investment transacted which represents a 19% market share compared to 14% in 2009. Last year’s leader, France, is not far behind with just under €270 million invested.
Hotel operators, institutional investors and investment funds/private equity continue to display a strong appetite for investment, and together accounted for nearly 65% of all hotel investment in EMEA in Q1 2010. This indicates that sophisticated investors believe it is a good time to buy and are enjoying reduced competition for assets, as many of the high leverage buyers have fallen out of the market.
Domestic capital remains the dominant source of investment accounting for 47% of total investment, with investors still focused on familiar territory.
Investment from European sources has risen significantly from 18% to 34%, while investment from the USA continues to be weak. Middle Eastern interest remained relatively strong with a growing market share during Q1 2010 moving to 14% from 8% in 2009; however there has been no significant investment from Asian buyers despite strong interest from this region, in particular South Asia.
These types of buyers tend to look for good quality assets in London and Paris at discounted prices, which are hard to find in today’s market as buyers outnumber sellers by a considerable margin.
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