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European hotel real estate volumes reach €22.9b in Q3 2018
Research - NOVEMBER 14, 2018

European hotel real estate volumes reach €22.9b in Q3 2018

by Andrea Zander

European hotel real estate investment volumes reached €22.9 billion ($25.9 billion) in the year to third quarter 2018, representing a 3 percent increase year-on-year, according to CBRE.

“The growth in key European markets such as the U.K. and Spain has been fueled by private equity and institutional investors who had experienced yield compression in the maturing hotel markets,” said Colin Low, head of hotel investment properties at CBRE Hotels. “With the heightened investment interest and the threat of constrained supply, investors are starting to look beyond the core hotel markets for opportunities, with Central Eastern Europe taking center stage.”

Third quarter 2018 European hotel investment activity was driven by continued growth, particularly in the United Kingdom, Spain, and Benelux.

U.K. hotel investment volumes reached €6.8 billion ($7.7 billion) in the 12 months to third quarter 2018, reflecting a 15 percent year-on-year increase, and accounting for 30 percent of all capital invested into European hotels.

Transaction volumes in Spain also remained robust, registering the second-highest hotel investment volume in third quarter and recorded an increase of 57 percent year-on-year. Similarly, Benelux posted strong performance, with an 8 percent year-on-year increase in the 12 months to third quarter, which has largely been driven by activity in the Netherlands.

“In third quarter, we saw a visible tightening of yields in key CEE cities where we anticipate further investment deals, both single asset and portfolio investment deals,” said Low. “Germany remains the third-largest European hotel investment market with hotel deals totaling €4.09 billion [$4.63 billion] in the year to third quarter, despite a 20 percent decline year-on-year.”

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