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UK is driving recovery in hotel investment

30 July 2010 by

The UK hotel sector is driving the recovery of the hotel investment market in Europe, the Middle East and Africa (EMEA), research has revealed.

Figures from property agent Jones Lang LaSalle Hotels show that transaction volume rose marginally to €1.6b in the first six months of 2010, representing a 6% year-on-year increase.

The UK has been the most active market in 2010, with more than €300m of investment, which represents a 19% market share (up from 14% in 2009). Last year's leader, France, is not far behind with just under €270m invested.

JLL said there was a "strong sense" that the latter part of 2010 would witness stronger investment activity, with expectations that the second half of the year could see transaction volumes double on first-half levels.

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 H1 2010.

This indicates that 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, JLL said.

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 the first half of 2010 moving to 14% from 8% in 2009.

Mark Wynne Smith, chief executive for EMEA at JLL Hotels, said: "The dynamics of the market have changed and deals are taking longer to complete, with both buyer and seller approaching negotiations with caution. However, we are starting to see sellers acknowledge that buyers' pricing is acceptable given the current economic climate, which is likely to drive increased deal volume as the year progresses."

Confidence returns to hotel market >>

What lies ahead in 2010 >>

By By Daniel Thomas

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