Download CBRE Hotel European Investment figures Q2 2016

PRESS RELEASE
STRONG GERMAN FUNDAMENTALS PROVE HOTEL INVESTMENT
REMAINS ATTRACTIVE IN H1 2016
London, August 2016 – European hotel investment transaction volumes totalled €6,885 billion in
the first half (H1) of the year, a decline in deal volumes of 41% year-on-year (Y-o-Y) and in line
with the slow-down across all mainstream European commercial property transactions in Q2 of
2016, according to the latest data from global commercial property advisor CBRE.
In contrast, German hotel investment saw an increase of 34% Y-o-Y with transaction volumes
reaching €2.02 billion in H1 2016. The German hotel investment market has proven to be the
most attractive in Europe offering consistently high levels of liquidity and strong market
fundamentals, at a time of wider European political and economic uncertainty. The large number
of hotel assets encumbered by operational leases has continued to add to Germany’s appeal,
particularly with the growing number of European institutional investors seeking low-risk
investment opportunities.
The sale of the Hyatt Dusseldorf was the biggest single asset sale in Germany so far this year,
with the hotel being operated under a management agreement, a relative rarity in the
predominantly lease-focused German hotel landscape. This deal highlights the strong demand for
assets offering upside exposure through management agreements and franchise opportunities in
markets with solid fundamentals and good potential for performance growth.
Joe Stather, Information and Intelligence Manager EMEA, CBRE Hotels, said: “Germany remains
a hot market for hotel investment and has taken the long-standing mantle from the UK which has
dominated investment volumes in the last decade. The strong growth has been driven by over ten
notable deals in Q2 including a significant portfolio transaction. Interest is coming from a diverse
array of investors, including REITs, institutions, private equity and dedicated real estate
investors.”
CBRE Press Release
Y-o-Y, the UK hotel real estate investment volumes saw a decline of 76% but in spite of this fall,
fixed-income investment remained buoyant as investors continue to be attracted by the security of
income. The UK leased hotel environment includes a number of hotel operators with highly
regarded covenants and offering 25-year index-linked leases. Recent deals to reflect this trend
include the sale of the Travelodge hotel in Liverpool Street, London for £42 million which was one
of the few transactions post the UK’s EU referendum and demonstrates the high and resilient
demand for leased hotel assets. The hotel development pipeline expects that over £2 billion of
fixed-income stock is due to enter the regional UK market in the next three years.
France recorded 25% Y-o-Y growth in the second quarter of 2016 with deal volume totalling €508
million in the first six months of 2016. Transaction volumes were largely boosted by a number of
deals on assets outside Paris. Recent investment activity has been focused on resort locations
and the more leisure driven South of France region. The UEFA Euro 2016 football championship
which was held in France in June also gave an uptick to hotel cash flows in many cities, and
particularly in Paris.
Other notably deals which have taken place in H1 2016 include the sale of the Pullman Barcelona
Skipper hotel, CBRE advised AXA Investment Managers – Real Assets, on behalf of its clients, to
a Luxembourg based investment fund.
CBRE Press Release
- ENDS –
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