European hotel investment volumes totalled €3.8 billion in the third quarter (Q3) of 2016, taking the total turnover to €10.3 billion since the start of the year. Q3 2016 was overall more positive compared to the first half of 2016 with the decline in deal volumes only by 6% compared to a strong Q3 2015.
In Q3 2016 the Spanish hotel investment market recorded the highest year-on-year growth of 162%, with transaction volumes reaching €537 million. This was largely driven by strong investor demand to buy and capitalise on the improving economic and performance recovery which has continued to gather pace. Transactions this quarter spanned the country, including gateway and secondary cities and resort locations. A notable transaction was the five-star Pullman Barcelona Skipper, 241-keys sold for €90million. Italy and Ireland have also seen a year-on-year increase of 135% and 106%, respectively in Q3 2016.
European hotel transaction volumes continue to reflect the challenging current climate and the decline is in line with the slowdown across all mainstream European commercial property market. However, the rate of the negative growth on the hotel market is slowing and a strengthening deal pipeline in the UK, Spain, and Italy suggests more buoyant deal volumes for the beginning of 2017.
Investors’ interest for Spain is on the rise on the basis of intensifying economic fundamentals and performance growth across the country, and attractive asset pricing relative to other consolidated European destinations. The sale of non-performing loans will increase the transaction activity in the market over the coming months.
