Investment in the hotel sector takes off in Valencia

Investment in the hotel sector takes off in Valencia

According to CBRE the sales volume registered in the hotel sector in Valencia reached 110 million euro during the first semester of 2019, 57% higher than the entire year of 2018, for a total of 850 dwellings.

More than half the investment registered came from the sales of the Meliá Valencia hotel for 42.3 million euro and the 116 room Travelodge hotel, located next to the Valencia airport for 15 million euro.

Maite Bargues, senior consultant at CBRE in Valencia and the Balearic Islands, explained that «this increase in investment is generated mainly by REITs and investment funds and is due to the city’s positive tourist evolution and projection, together with the low yield within more mature urban markets such as Madrid and Barcelona». Both these cities closed the semester below 5%, which represents between 50 and 75 basic points when compared to the city of Valencia.

Furthermore, private investors have also been attracted by this sector due to yield compression in traditional segments such as retail and offices. They primarily look for hotels with fixed yields in prime locations and managed by prime operators.

The Valencia hotel sector has shown a significant improvement in terms of quality during the last few years and CBRE is expecting for this improvement to continue during the coming years with new acquisitions of mainly 4 star assets. The goal is to adapt to the current needs, as well as attract quality tourism which can generate a greater multiplying effect.

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