The UK hotel investment market has been the most liquid in Europe over the last decade, according to Jones Lang LaSalle Hotels (JLL Hotels).
A new study of UK and Italian hotel investment reveals that during this period, UK investment volume accounted for 39% of total European single asset transaction volume; while for Italy, the world’s second largest market in terms of hotel rooms, it was just 6%.
Roberto Galano, senior vice president at JLL Hotels, Milan said: “The total investment volumes peak for Italy was in 2002 when hotel transactions soared to €259m (£178m), which was 15% of the European market.
“The UK on the other hand saw its investment volume peak much earlier in 1995, with transactions worth €611m (£420m), 75% of the European market.
“In 2004, the rest of Europe took a greater proportion of the market, but the UK still accounted for 30% while Italy claimed 4%.”
Galano added: “The UK is dominated by private and public hotel operators and since 1998 this investor group accounted for 39%.
“High net worth individuals represented 20% of all single asset investment volume.
“In Italy we see a similar pattern but domestic hotel operators are mainly private.
“Institutional investors accounted for 16% of total investment volume from 1998-2004 and were dominated by domestic funds.
“Deka, the German open-ended fund was the first international institutional investor to enter the Italian hotel market in 2003.”
Vacant possession transactions have been the most common type of deals both in the UK and Italy. Sale-and-leaseback deals have been more common in the UK than in Italy and in the current economic climate, expansion through debt finance is more cost-effective than funding through sale and leaseback structures.
JLL said it expected the investor base in Italy to grow in the medium term with an expected influx of foreign investors.
“Overall we expect improved liquidity in the hotel market boosted by the sale of high profile assets,” said Galano.
“The expectation is driven by the large number of portfolios in the market which will have a strong impact on the UK as well as restructuring plans by a number of hotel companies divesting non-core or non-strategic assets.”
References: EGi News 01/04/05
