CBRE: Hotel Investment Plummets by 55% in H1 2018 to €960M

6 July 2018 – Eje Prime

Investment in the hotel sector is dropping down a gear in Spain. Despite the significant growth in tourist rates, investment in the Spanish hotel sector fell by 55% during the first half of 2018 with respect to the same period last year, down to €960 million.

Assets for vacation use accounted for 78% of the total amount disbursed in the sector, which continues to be one of the most sought-after in the world, according to a report from CBRE.

Data from the consultancy firm also highlight that institutional investors are responsible for the majority of the market, accounting for 43% of the spending in Spain between January and June, followed very closely by the hotel groups themselves, with 40% of the market. Family offices only accounted for 12% of operations.

With respect to the first half of 2017, the main changes that CBRE has noted in its report about hotels is the decrease, of up to 90%, in terms of investment undertaken in Barcelona and Madrid. This fact has resulted from a significant decrease in capital investment in urban assets, which decreased from 54% last year to 22% during the first half of this year.

Moreover, three-quarters of the transactions that were undertaken during the first half of 2018 corresponded to the sale and purchase of individual assets, compared with 25% of operations that involved portfolios.

The main investments signed in the Spanish hotel market were Portfolio Alua, for an approximate sum of €165 million; the Ritz Carlton Abama and the Costa del Sol Princess, whose amount was not disclosed; and the €63 million that was disbursed for IFA Interclub Atlantic.

“Interest in the Spanish hotel market has not diminished but it is true that the increase in asset prices and the shortage of opportunities is shifting the focus of investors to secondary destinations, which, also, have performed extremely well in recent months”, explains Jorge Ruiz, National Director of Hotels at CBRE in Spain.

Original story: Eje Prime

Translation: Carmel Drake