According to CBRE, Spain is now the preferred destination for hotel investors this year. This follows a number of large hospitality deals that have been made in the south European nation.
According to a real estate brokerage, the UK has fallen to second place in the list of top investors after being at the top for the past two years. According to the survey conducted by 2024, more than 60 investors, including hotel owner, developers, and private funds will reveal the top five places for capital deployment this year.
CBRE’s head of Europe hotels, Kenneth Hatton, said that Spain is flourishing because it has record tourism numbers as well as a robust performance by the hotel operators. Investors are attracted to Spain’s coastal and urban areas.
The survey highlights the generally buoyant mood that prevails in the hospitality industry, which has led to a return of dealmaking following the pandemic. CBRE reports that more than two thirds of the investors surveyed plan to increase capital allocated to hospitality deals due to good trading performance and an expectation of improved lending conditions if interest rates drop.
These findings are the result of a number of large transactions that took place in Spain during 2018. The total investments in Spain were €4.1bn or 30% more than the previous years and 70% higher from 2019.
Singapore’s sovereign fund GIC purchased from Blackstone Group a 35% stake in Spain’s Hotel Investment Partners, while Abu Dhabi Investment Authority (one of Abu Dhabi’s sovereign funds) bought 17 hotels from Equity Inmuebles.
In 2023, Spain welcomed 85.1mn visitors from abroad. This is a record number of foreigners. It’s 19% more than 2022. And it’s 2 percent higher than 2019 before the flu pandemic.
According to the survey, hotel investments now account for 36 percent of the total commercial real estate volume in Spain compared with 18 percent the previous year.
Hotel investment in the UK fell by 38 percent to €2.2bn last year, a decline of nearly 70 percent from levels pre-pandemic. London remained the top city in a survey of cities, but Madrid jumped to the second spot after surpassing Paris, the host of the Olympic Games this summer.
Hatton stated that the low hotel investment volume in the UK was “not due to a lack of interest”, rather “minimal products brought to the market”.
Investors were nervous about deals because of the volatility in interest rates due to inflation. They held off on selling properties until there was more stability. Fearing an increase in borrowing costs also made buyers cautious.
He added that “the long-term projections of tourism numbers in Europe indicate that the projected supply levels will not be adequate to meet this demand.”