The first half of 2013 saw a 38 percent increase in hotel investment volumes throughout Europe, the Middle East, and Africa compared to the same period previous year, owing mostly to a significant increase in Middle Eastern money. Jimmy johns
According to the most recent data from Jones Lang LaSalle, total hotel investment volume in EMEA was €5.5 billion in the first half of the year, with the majority of it occurring in the first quarter.
The amount of money invested in the region by Middle Eastern investors nearly tripled from €745 million in the first half of 2012 to €2.1 billion in the first half of 2013. According to JLL, investment volumes continued to be dominated by wealth funds from Qatar and Abu Dhabi, with a concentration on key European markets.
The most active market was the United Kingdom, which reported €2.3 billion in transaction volumes, accounting for 41% of total EMEA volumes. France came in second with €1.3 billion, accounting for 23% of the total, and Germany came in third with €642 million, accounting for 12% of the total.
"This is being fueled by a strong pipeline of opportunities coming to market and a closing of the spread between buyer and seller pricing expectations, not least driven by more readily available debt financing, both from traditional and new sources of debt," Christoph Härle, chief executive, continental Europe, for JLL's Hotels & Hospitality Group, said in a statement.
The sale of the 447-room InterContinental London Park Lane, which was acquired for €359 million by an affiliate of Constellation Hotels Holding Limited, a Middle Eastern private investment group; and the sale of the 138-room Mandarin Oriental Paris, which sold for €290 million to the Mandarin Oriental Hotel Group, including two retail units, were among the "trophy deals" completed in the first half of the year.
A total of €1.8 billion was spent on portfolio deals involving 42 UK Marriott hotels, four Groupe du Louvre hotels in France, and the Principal Hayley portfolio of 27 UK hotels, accounting for 33% of the overall transaction volume in EMEA.
Westmont, Starwood Cash, and Morgan Stanley were among the global investors who contributed 20% of the invested capital.
The firm's initial prediction of €8.5 billion for investment volumes for 2013 is projected to be exceeded.
Investors Have Faith in Commercial Real Estate Around the World.
According to the latest data from Jones Lang LaSalle, global real estate transaction volumes grew 11% in the first half of 2013 compared to 2012, indicating improved investor confidence in commercial real estate.
According to the firm, global direct commercial investment volumes reached $114 billion in the second quarter of 2013, up 4% from the previous quarter and 9% from the previous year. This is the fifth quarter in a row that worldwide commercial investment volumes have exceeded $100 billion.
"We expected that more capital would be dedicated to direct investment in core property assets over the next two to three years, and this is now materializing," Arthur de Haast, lead director of JLL's international capital group, said in a statement. "Globally, institutional, private equity, and high-net-worth individuals are now constantly bidding on prospects."
In the second quarter, transaction volumes in the Americas were $52 billion, up 39% from the previous quarter and adding to the region's $90 billion total for the first half.
With a year-over-year gain of 50%, Japan led the largest worldwide markets in the first half, followed by Germany (+43%), Australia (+10%), France (+6%), and the United Kingdom (+4%). China was the only market to show a 20 percent reduction in transaction volumes in the first half.
"The volatility in equities and bond markets over the previous quarter has added to the appeal of commercial property as an asset class," said David Green-Morgan, JLL's global capital markets research director. "Unless the cost of debt rises significantly, it is only likely to have a minor influence on transactional volumes for the rest of 2013."
According to the firm, commercial investment volumes are likely to remain between $450 billion and $500 billion in the final six months of the year, with overall yearly volumes above previous year.