2 December 2016 – Levante-EMV
Hotel investment has increased by 162% and profitability has soared by 17.5% in Valencia and by 27.5% in Alicante, driven by the tourist boom. According to sources in the hotel and real estate sector, the owners of buildings are aware of the increase in investor demand; and offers for buildings up for sale and rent in Valencia have multiplied. Specifically, three properties in iconic locations have come onto the market in recent weeks for €15 million and another three have been put up for rent. Several operations have also been signed, including the Valencian chain Casual Hotel’s purchase of the former Hotel Londres in the Plaza del Ayuntamiento for €6 million and the acquisition by the chain Myr of the Café Madrid building, in an operation amounting to €12 million.
According to the consultancy firm CBRE, the increase in the number of operations is due to “strong demand from investors to buy and capitalise hotel assets, and benefit from the clear recovery in the real estate sector in Spain and the strengthening of the economy, which is expected record GDP growth of 3.1% this year. Moreover, international tourism in Spain is expected to exceed the 70 million visitor threshold for the first time this year”.
Sources in the sector explained that one of the properties that has been put up for sale (for €6 million) is on one of the streets adjacent to the Plaza del Ayuntamiento; another, located on Calle Ballesteros is on the market for €3.5 million; and another one, next to the Palacio del Marqués de Dos Aguas, is up for sale for €9 million. In addition, the German property developer Ratisbona (linked to the Vice-President of Bayern de Munich, Rudolf Schels) has acquired an office building on Calle María Cristina (next to the Plaza del Ayuntamiento) for €3 million, which it plans to convert into a hotel.
Above all, hotel operators are interested in leasing properties as an alternative to buying them. Real estate sources state that there are three high-profile projects in the rental market at the moment: the property at number 1 on Calle Colón; the former headquarters of CAM on the corner of Pascual y Genís with Martín Cubelles; and the former Telefónica building on Calle Isabela Católica.
The building on Calle Colón 1 was the former headquarters of the Social Security agency. The Dénia-based property developer Enrique Pla and the Valencian-based businessman Enrique Ballester acquired the nine-storey property for €14.2 million a year ago and sold the lower three floors in the summer for €20 million (where a Pull and Bear store is due to be opened). The two businessmen have now decided to generate returns from the rest of the building and are converting it into a hotel with the aim of leasing it to a chain.
The former headquarters of the CAM is an office building belonging to employees of Banco Sabadell through their pension fund. The same real estate sources said that the building is not up for sale, but that the owners are looking for a hotel operator who may be interested in operating it (amongst other options). (…).
The former Iberdrola building on Calle Isabela Católica has been closed for years and its owners are also trying to turn it into a hotel. Iberdrola sold the building to a group of local real estate companies led by Gesfesa for €24 million before the collapse of the real estate market.
Original story: Levante-EMV (by Ramón Ferrando)
Translation: Carmel Drake