Madrid has been crowned the most attractive urban destination for hotel investors in 2022. In fact, the region has broken its own investment record with €803 million earmarked for the purchase of its hotels, registering 72% more than in 2021, according to data provided by Colliers in its Hotel Investment in Spain Report.
The hotel investment identified in Madrid includes both hotels in operation and properties to be converted into hotels and land for hotel use. In total, 17 hotels and 2,547 rooms have been transacted, compared to 10 hotel assets and 790 rooms transacted in 2021, and two properties for hotel conversion.
Colliers states that 2022 has closed an extraordinary year in terms of hotel investment in Madrid, approaching the €1 billion mark and marking an all-time high. The capital has concentrated around 24% of national hotel investment, more than tripling the figure recorded in Barcelona, with 225 million euros.
Since 2018, the gap between the two main national urban destinations has been widening and Madrid has gained prominence over Barcelona, accumulating 2,454 million euros during that period and far surpassing the figures for Barcelona, which has registered 1,625 million euros.
According to the report, of the 19 operations registered this year in the capital, seven of them stand out for exceeding 50 million euros in volume. Thus, transactions as important as the acquisition by Sancus Capital of the 51% stake of the Mexican RLH Properties in the Rosewood Villa Magna and Bless Hotel Madrid hotels, the purchase of the Hard Rock Madrid Hotel by Arlaes or the Hotel Iberostar Las Letras Gran Vía by Millenium Hospitality Real Estate, have contributed to the achievement of this milestone.
Foreign capital, a leading player in hotel investment
International investors have positioned themselves as the clear protagonists on the buying side in Madrid, accumulating investments worth 554 million euros (equivalent to 69% of the annual total), including Sancus Capital, Brookfield and Eurazeo & PSP Investments and RoundHill, among others.
Hotel investment by segment
During 2022, 65% of the accumulated investment in the capital has been directed to the 4-star segment (518 million euros), following the transaction of numerous large hotels in this segment, including the Princesa Plaza, the Faranda Florida Norte and the Ayre Gran Hotel Colón, all of which have more than 300 rooms.
For their part, luxury establishments have come to represent 32% of investment, compared to 84% in 2021. According to the Colliers report, this is due to the fact that in 2021 there was high liquidity and less sensitivity to uncertainty, thus being the protagonists in the post-pandemic context.
Outlook for hotel investment in 2023
Looking ahead to hotel investment in 2023, Laura Hernando, Managing Director of Hotels at Colliers, explained that "after a record 2022, the outlook for hotel investment in the capital remains very positive for 2023. Excess liquidity in the market, the opening of new branded properties and strong appetite from international investors will continue to drive hotel investment levels over the coming years. The tailwind and strong momentum, coupled with an extensive pipeline of transactions currently at an advanced stage of sale, point to a positive outlook for 2023. In our view, Madrid's hotel sector will continue to be a prime target for investors". Translated with www.DeepL.com/Translator (free version)