The EMEA hotel investment market has demonstrated strong growth in the first three quarters of 2010, reaching €3.97 billion. Investment volumes across EMEA now represent a 55% year-on-year increase against the €2.5 billion transacted between Q1 and Q3 in 2009. As forecasted by Jones Lang LaSalle Hotels growth accelerated further during Q3 2010 with €1.8 billion transacted across EMEA, a significant 70% increase on Q3 2009 levels (€1.056 billion).
Mark Wynne Smith, CEO for Europe, Middle East and Africa at Jones Lang LaSalle Hotels commented: “Sellers are now more realistic about their pricing expectations and this has helped kick start the market following a very quiet period. We currently have a reasonable balance between the number of buyers and the stock of hotels on the market. We have also seen a number of distressed sales complete which has given us a good sense of how buyers price when they have a highly motivated seller. Acquisition debt is however is still scarceâ€.
The UK has been the most active market so far this year, with over €1 billion of investment transacted, followed by France with approximately €505 million invested. Spain comes third with €291 million transacted.
Although confidence and activity in the hotel investment market has started to return, some levels of uncertainty remain with investors continuing to concentrate their activities on domestic deals subject to lease agreements. Nevertheless, an increasing number of hotels with a management contract have transacted during the year, currently representing a share of almost 28%, compared to only 5% in the full year 2009.
We also saw US investors return to the EMEA hotel investment market – they currently represent a 20% share of volumes, compared to 6% for the full year 2009. Domestic investment remained dominant, although its share fell from nearly 59% in the full year 2009 to 36% in the first three quarters of 2010.
Wynne Smith continued “Jones Lang LaSalle Hotels predicted a marked rise in EMEA investment levels in the second half of the year and this is now clearly in progression. As a result, we have adjusted our 2010 transaction volume projection by €1 billion to €5.5 billion, which would represent an increase of more than 76% compared to 2009 (€3.12 billion).
