Germany’s hotel sector stood out in 2016 with transaction volumes reaching up to $4.7 billion, according to the European Hotel Transactions report from HVS. Portfolio assets rose 30 percent from 2015 to nearly $2.6 billion, while single asset transactions reached a value of almost $2.1 billion thanks to deals including the sales of the Hyatt Regency Dusseldorf and the Grand Hotel Taschenberpalais Kempinski in Dresden.
Overall, hotel transaction volumes in Europe dropped 25 percent in 2016, reporting $18.8 billion for the year. While portfolio activity fell to $7.6 billion, single asset transactions remained robust with a nearly 17-percent year-over-year increase to $11.2 billion.
The UK came in behind Germany with a total volume of $3.8 billion, despite a 70 percent drop in transaction levels and an 83 percent dip in portfolio transactions. London maintains its position as Europe’s leading transaction market with a volume of $1.9 billion.
“The new normal, in a period of political uncertainty, Brexit, and low interest rates seems to be a race for fixed income hotel assets, as a variety of investors reach to hotels as an alternative in the search for yield,” says the report’s co-author HVS London analyst Peter Szabo. “Despite the lack of stock, appetite for hotel assets will likely be strong in 2017 until interest rates turn and pricing levels adjust across the spectrum.”
France and Spain both showed gains in 2016 with transaction volumes of $2 billion and $2.2 billion, respectively.
