Hotel Investment Reaches 1.1 Billion

02/01/2015 – El Mundo

Investment in the Spanish hotel sector has reached 1.1 billion euros, according to a JLL Hotels & Hospitality Group report, which states that economic recovery and increasing confidence among international investors have caused investment levels to soar in Spain.

The year will be remembered as one of the best in the last 20 years in terms of hotel investment in Spain and the odds are high that 2015 will show a similar or even better performance.

The phenomenon finds reflection in such deals as the Edificio España building, Madrid, which is set to house a high-end hotel and apartments, as well as a retail area. Another example makes the Deutsche Bank property located in Paseo de Gracia street, Barcelona, chosen by a multi-national brand for opening a luxury establishment.

Over the year 2014, investment targets have changed, looking mostly to holiday spots and secondary cities. To illustrate, in 2013 the beach & sun properties accounted for 18% of all deals and in 2014 they reached a 34% share. Not shy at all, the smaller cities boosted their popularity from 8% to 12% if compared to the previous year.

Finally, prime cities like Madrid or Barcelona concetrated 54% of the total investment in hotels, while in 2013 they accounted for one third of all transactions.

The report underlines high dispersion of the hotel deals seen across the country in cities like Valencia, Cordoba, Alicante, Huesca, Cadiz, Caceres or A Coruña.

Not only the change in preferable places has been noticed but also in origins of the investors. Many wished to expand their portfolios and obtain significant returns from consolidation of such markets as Barcelona or Majorca, or the better outlook for the industry displayed for Madrid, Marbella or Valencia.

Among the 2014 most important investments, we find the Intercontinental establishment bought by Katara Hospitality, abovementioned Edificio España in Madrid sold to Chinese group Dalian Wanda and the Deutsche Bank building acquired by a joint venture of KKH Capital Group and Perella Wienberg Real Estate. Furthermore, noteworthy were the sales of the old Banesto headquarters to Pontegadea, the Hotel Renaissance in Barcelona to QAFIP, the Blau Mediterraneo to Hipotels, and the Majorcan Hotel Valparaiso Palace bought by GPRO.

Apart from the purchases metioned before, Madrid saw its another jewel, the Asturias, changing hands in 2014.

Asian Buyers Warming to Madrid & Majorca

Asian investors were the main players in 2014, snatching the Spanish properties from under the European and the Arab noses.

Spanish buyers have increased their share from 49% to 58%, partly because of the Socimis (REITs), especially Hispania.

Private equity firms accounted for 10% more than the previous year, boosting the percentage from 1% to 11%. For example, Cerberus and Orion Capital bought the Sotogrande complex including two hotels.

Also, the real estate companies raised their share from 20% to 30%, while investment funds and private purchasers reduced their contribution. Hotel operators´ investment practically stagnated.

Original article: El Mundo

Translation: Aura REE