Photo: Robert Agthe
Hotel transactions in Dublin and Berlin have soared, according to new research by Savills. Hotel deals by volume jumped as much as 94 per cent in Dublin to €234 million in 2014, closely followed by a 39 per cent rise in Berlin to €411 million.
The growth is driven by limited availability in London and Paris, as well as rising visitor numbers in the smaller cities, which helps to boost confidence.
Despite growth in the smaller cities, London and Paris continued to lead. with 45.5 per cent of total transactions in the former, equating to €2.3 billion, and 26.1 per cent of transactions in the latter, equating to €1.3 billion.
Nonetheless, hotel transaction volumes across seven European gateway cities, which also included Madrid and Amsterdam, rose by 2.3 per cent to just over €5 billion last year compared to €4.89 billion in 2013.
Domestic investors were most active in London where they accounted for 55.9 per cent of transactions and in Dublin they accounted for 41.9 per cent of transactions in 2014. Overseas investors also continued to be prevalent, spending €3.4 billion across the seven cities last year.
Marie Hickey, commercial research director at Savills, comments: “The troubles that faced Europe during the financial crisis and subsequent dampening of international travel within the region have well and truly subsided, with overseas visitor numbers rising last year in all of the cities we looked at. This will put further pressure on supply, particularly in the more constrained markets.”
Savills highlights London, Amsterdam and Dublin as the cities with the most constrained supply relative to average overseas visitor numbers, with hotel rooms per 1,000 visitors standing at 6.0, 5.5 and 4.9 respectively. All seven markets examined by the firm showed an increase in revenues per available room (RevPAR) during 2014, led by Dublin and Madrid with 11.3 per cent and 10.2 per cent respectively, largely driven by visitor numbers.
Tim Stoyle, hotels director at Savills, adds: “Improving operational performance is luring back investors and enticing them to look beyond the luxury ‘trophy’ assets that dominated activity in the early years of the financial crisis.”
Indeed, Middle Eastern and Asia Pacific investors are broadening their focus beyond London and Paris, with major deals including the Chinese Dalian Wanda Group’s €265 million purchase of the Edificio España in Madrid and Qatar Holding’s €110 million acquisition of the St Regis in Rome.