Hotels are establishing themselves as one of the most sought-after assets in the real estate sector. The historically high RE investment level in 2015 boosted the hotel segment in particular, which accounted for 20% of total commercial real estate investment volumes during the year – excluding residential – compared with 11% in 2014.
Last year, 132 hotels were sold containing 29,081 rooms for €2,470 million, significantly more than the 50 transactions that were closed in 2014. Moreover, properties worth €144 million were sold for conversion into hotels. In total, the hotel investment market amounted to €2,614 million in 2015, compared with €1,091 million a year earlier. Spain was the third most active country in Europe, behind the UK and Germany, and accounted for 14% of all European investment, up from 7% a year before.
54% of hotel investment in 2015 was focused on the holiday segment, which reflects a return to normality for the Spanish market, where more sun and beach properties have traditionally been sold than city hotels. This trend will be maintained in 2016.
The Canary Islands was the most sought-after region in 2015, accounting for 28% of total investment. It exceeded Madrid and Barcelona, where political uncertainty put investors on alert. By category of hotel, 62% of investment in the sector was focused on four-star hotels, although unique individual assets, such as the Hotel Ritz in Madrid, were also sold.
40 of the 132 hotels sold were transferred through portfolio transactions – involving two or more assets – and the Socimis were the main purchasers, together with domestic and international hotel chains, willing to invest in strategic assets.
Another significant milestone in 2015 was the purchase of land in Málaga for the development of new hotels, which was seen for the first time since before the crisis. Nevertheless, land purchases will be few and far between in 2016: right now it is more profitable to buy a hotel and renovate it than to construct one from scratch and financial institutions are not ready to provide finance yet.
Debt portfolios
2016 will be a good year, but it will be difficult for the strong figures recorded last year to be repeated. Madrid will continue to be the preferred investment target and capital inflows there may have exceeded €582 million in 2015. Barcelona, where investors perceive more risk, will remain frozen to investment in new projects. For existing hotels, record figures in terms of price per room may be reached.