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Luxury hotels continue attracting capitals from abroad

04 February, Il Sole 24 Ore

Trophy assets and prime locations: these are the two main investment targets of international investors looking to invest in hotels in Italy. “The volumes in 2018 decreased from 2017 when the sector reported international investments for approximately one billion – says Roberto Galano, JLL executive vice president -. In 2018, the investments were limited to 600 million euro, considering the luxury sector only. The interest in Italy is still high. The reduction reported last year is due to the shortage of product available and the lack of big transactions. There weren’t portfolios for sale”.

The year has started with rather high volumes, as 2019 will see the conclusion of the sale of the Belmond hotel which will go to the French Lvmh. The preliminary agreement, in fact, was signed in 2018 but wasn’t officialised. The biggest part of luxury hotels of the brand is concentrated in Italy with a value amounting around one billion euro. For the Belmond acquisition, Lvmh had aggressively appreciated the asset. According to the rumours, the value set the returns around 4%.

Galano continues: “International investors, especially those from the Middle East, are particularly interested in the country. Investments in the luxury sectors and trophy assets are not expected t decrease. In the big cities, the pressure from international investors is definitely perceivable, as they are aiming at already existing hotels to rebrand them due to the lack of quality product”. The interest has recently shifted towards branded operational platforms since it’s difficult to enter the market directly.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi