Europe’s hotel market experienced ongoing value growth and recovery in 2015 with hotels in many cities reaching record performance, according to our 2016 European Hotel Valuation Index (HVI).
 
The year was particularly good for hotels in Eastern Europe, which bounced back from declining values in 2014 to reach a 5% increase that matched the European average for 2015. Hotels in northern and southern Europe saw the biggest growth in value per room.
 
The city that saw the biggest rise in value terms was, for the second year running, Madrid, where hotels saw a 14% increase year-on-year.

CBRE Global Investment Partners (GIP), CBRE’s multi-manager, has raised $840m (€770m) from six UK, European and US pension funds for a new value-add fund.

The vehicle – the fund-of-fund platform’s first in Europe – is targeting assets in the logistics and retail sectors, both undergoing significant change as a result of e-commerce.

CBRE GIP chief executive Jeremy Plummer told IPE Real Estate that the UK, France and Spain are the fund’s main focus.

Natixis and La Banque Postale are negotiating a merger of real estate investment managers AEW Europe and Ciloger.

The proposed merger would create a real estate investment manager with combined assets under management of €23bn.

The Majestic, a luxury hotel in downtown Barcelona, is bumping up room prices by two thirds as delegates including Facebook Inc. founder Mark Zuckerberg troop into Spain’s second city for the annual Mobile World Congress.

“This is the biggest week of the year for hoteliers,” said Santiago Martin, communications manager for the Majestic Hotel Group, by phone. The hotel, which normally charges 300 euros ($333) a night for a standard room, will charge 500 euros as the annual gathering of the mobile industry draws almost 100,000 visitors to Barcelona, he said.

AEW Europe has purchased 240 Serrano, a 7,550 sqm office led property in central Madrid for approximately €26 million. The asset, which is the second acquisition for the Europe Value Investors fund in Madrid in as many months, has been acquired from Continental Property Investment, and brings the total value of assets in EVI to c. €430 million. 

Miguel Vázquez, managing partner of irea’s Hotels Division, has presented data and conclusions from the Spain Hotel Investment Market Report 2015, which the firm has produced annually over the past decade, at a press conference. Spain’s hotel investment has multiplied by 2.4 since 2014 and it soars to €2,614 million (taking into account existing hotels and investment in conversion properties), historic numbers which surpass by far the record high of €1,780 million registered in 2006. Last year, a total of 132 hotels and 29,081 rooms were sold while in 2014 only 50 hotels and 8,861 changed hands.  

The healthy performance of Spain’s economy in 2015 and the present momentum of tourism encourage investors to concentrate on the hotel sector, which sees rise in its annual investment volume and gains market share in the commercial real estate investment. The hotel sector is estimated to have bulked up its market share to 20% in 2015, compared to 11% in the previous year. 

European real estate markets are set to continue to benefit from their ‘safe haven’ status in the face of the emerging markets slowdown, global monetary policy divergence and increasing political tension in the Middle East, according to Savills Investment Management.

In its Outlook for 2016, Savills IM suggests that the Federal Reserve’s decision to raise interest rates is positive for real estate markets in Europe and Japan, whose central banks are expected to maintain their quantitative easing programmes for at least another 12 months.

CBRE Global Investment Partners (GIP), in joint Venture with IBA Capital Partners, has acquired two prime high street retail assets in Madrid – the ABC Serrano Shopping Centre on Serrano Street and a high street retail building located on Preciados Street. The seller was Zambal Spain Socimi.

The JV is repositioning ABC Serrano and undertaking extensive refurbishment works to the asset on Preciados street which will create prime, modern retail space in two of Madrid’s strongest retail locations.

There is currently more than €32bn in ongoing European loan portfolios transactions, according to KPMG, including as much as €17.5bn in commercial real estate-led transactions.

KPMG, in its annual European Debt Sales report published yesterday afternoon, reports that there are 25 pending CRE-related loan portfolios in the market.

The European self-storage market has experienced an unprecedented level of activity. Three transactions in the first quarter of 2015 signalled good news to a market that is rapidly establishing itself as an important alternative asset class in Europe. 

The largest deal was the acquisition of Blue Space in Spain by Fremont, consisting of 17 stores in the cities of Barcelona, Madrid and Valencia. The predominantly freehold portfolio provides over 80,000sqm of self storage – and provides the purchaser with an entry level platform to grow a dominant national operator as the economy improves. 

Rockspring Property Investment Managers LLP has acquired a substantial speculative development site on the Los Gavilanes estate in Getafe, Madrid on behalf of a separate account client. The site will be developed as part of a major logistics warehousing project.

Comprising circa 88,000 sqm, the site will be developed to provide approximately 60,000 sqm of
Grade A logistics stock. When complete, the property will have the capacity to be sub-divided into 8,000 sqm units, thereby providing maximum flexibility to cater for a variety of potential occupier requirements. Construction will commence in February 2016, with completion scheduled for early 2017 and the development will target a LEED certification. 

As changes in consumer behaviour polarise retail locations into winners and losers, investors need a granular approach to identify investment opportunities and to understand prospects for rents and property values, particularly when it comes to ‘squeezed-middle’ locations.

We have tackled this by developing a City Attractiveness model composed of 19 different indicators grouped into four main categories – city quality, population, economy and retail property market. These are weighted and then enriched with input from Redevco’s country teams to categorise locations into five baskets that rank cities from excellent to poor. This tool identifies some 200 European cities that we judge to be of investment-grade quality. As an investment manager specialised in retail real estate, it is an essential tool in benchmarking Redevco’s decision-making on investments and we share the findings in conversations with our investment partners and tenants. 

Around €55 billion was invested in commercial property across European real estate markets in the third quarter of 2015, according to Savills, taking the total turnover since the start of last year to €157.5 billion and representing a 20 percent increase on the same point in 2014.

But while, in the main, investors continue to favour core markets within the United Kingdom, Germany and France, which still account for 67.8 percent of total volume, the share of peripheral markets is rising.

In addition to lower levels of competition for assets, regional cities offer diversification that complements top-tier European cities, delivering more stable performance through the cycles with less volatility in rents. Furthermore, the ability of a portfolio to absorb market shock is increased when an allocation is directed at regional cities.

European hotel investment in 2015 burst through the €20 billion mark for the first time in the history of the asset class, demonstrating the increasing appreciation of hotel real estate as an institutionally-accepted and progressively mainstream investment class across the continent.

Over the past 12 months, the institutional appetite to invest in core real estate has heightened considerably thanks to low interest rates and the associated impact on bond yields, and Middle Eastern investors continue to target luxury assets in capital cities for the preservation of wealth and prestige.

A three way joint venture between Global Asset Capital (GAC), AGC Equity Partners y Cruz Capital is set to buy Banco Santander's Madrid headquarters in a €2.8 billion megadeal, making it one of the biggest single asset deals ever, according to Economía Digital.

Real assets – specifically real estate and infrastructure – are in much demand. Asset allocators are demanding more durable yield alternatives in a world of uncertainty. Tangible, hard real assets are in vogue for pension funds, insurance companies, sovereign wealth funds and family offices alike. 

Some in the market, however, are finding it increasingly difficult to underwrite transactions to a credible internal rate of return (IRR). Too much competition for certain deals is causing some alarm at the low level of yield on prime assets, with the backdrop of increasing interest rates and an uncertain geopolitical environment that is having a negative impact on listed asset classes. Real assets will not be immune to all of these and yet allocations keep on coming. 

ING has provided a seven-year term syndicated loan of EUR280 million to finance the acquisition of the Torre Espacio office building in Madrid. 

In November 2015, the Filipino HNWI Dr Andrew L Tan acquired the company Torre Espacio Castellana SAU from Grupo Villar Mir SA.

The Preqin´s 2016 Global Alternatives Reports find that alternative assets fund managers hold a record $7.4tnin combined assets under management (AUM) in 2015, up from $6.9tn a year before. The private capital industry in particular has grown over the past year, as almost every constituent asset class saw its AUM increase. The industry as a whole added $193bn in AUM through H1 2015, more than the $149bn growth seen in the whole of 2014. The aggregate value of the portfolios of assets held by private capital fund managers is continuing to rise as GPs put more capital to work.

Europe’s listed retail companies are growing in scale and confidence as they set about redefining shopping centres.

Size, it would appear, does matter. Europe’s listed real estate companies may have operated in the shadow of the market’s non-listed investment giants, but collaboration, consolidation and an appetite for redefining retail destinations is changing that perception. At the heart of the transformation are two French-Dutch mergers and a UK retail sector growing in confidence after years of moribund development activity and weak consumer demand.

Invesco Real Estate is investing €358m ($403m) in a portfolio of Spanish hypermarkets.

The investment manager exchanged contracts on the portfolio of 11 hypermarkets in northern Spain for its open-ended pan-European fund.

Gonuri Harizartean sold the portfolio in a sale-and-leaseback deal, with the 11 assets fully let to Spanish retail chain the Eroski Group.