Spain was the second hotel investment market in Europe during the first quarter of 2021, with an investment of 400 million euros, after the United Kingdom, with 746.5 million euros, according to the latest European Hotels Trends report prepared by Savills Aguirre Newman.
According to the report, hotel investment figures in Europe have reached 2.16 billion euros in the first quarter. While national coastal markets continue to dominate in terms of number of operations, assets in city centers lead total investment volumes. The United Kingdom had a 34.6% share of the volume of transactions, followed by Spain as the second most liquid market in the first quarter of 2021, with a share of 18.6% of the volume of transactions. According to the Savills report on hotel trends in Europe, this is due to investor confidence that our market will be a key travel destination for the pent-up demand for international travel. The third market with the highest participation in investment was Germany, with a volume of 241.1 million euros during the first quarter of 2021.
The international real estate consultancy indicates in this study that prices in the prime market are being maintained for the moment in Europe, largely due to the significant volume of capital in search of suitable opportunities in hotel assets. Juan Garnica, executive director of Hotels in Savills for Southern Europe points out in this regard, that "in the second semester we expect to see a greater alignment of the expectations of buyers and sellers that will result in an acceleration of transactions in the sector."
According to the report, interest in prime assets is evident in the main operations of the first quarter of 2021. For example, the Zetter Group, which included three prime hotels in London, was acquired by Orca Holdings in March, and the brand seeks to expand in the main European markets, such as Paris, Madrid and Amsterdam.
Prime returns in rental hotels in Paris (3.5%), Amsterdam, Berlin, London and Munich (all 3.75%) continue to be the tightest, in line with the strong level of demand from of investors focused on long-term fundamentals. The non-prime segment is likely to experience further expansion in yields due to tough financial and market conditions, widening the return differential between both types of assets and generating potential value add opportunities.
According to the report, 2021 will mark the start of recovery for many European hotels, with promising long-term prospects for the sector. Vaccine rollout in Europe suggests that as countries begin to ease restrictions, we can expect the vacation market to benefit first, followed by short-haul international leisure destinations.