Hotel investment in Spain reached EUR2.4bn in 2019

The total hotel investment figure in the hotels sector in Spain in 2019 was EUR2.4 billion, almost half of the investment volume of 2018, with a total of 114 transacted assets (compared to the 223 registered in 2018). 

That's according to Christie & Co's hotel investment overview for 2019, which highlights the limited offer in hotel portfolios, as well as substantial changes in both the origin of the capital invested and the typology of the assets.

This decrease in transactional activity is explained, among other reasons, by the comparative effect of the purchase of Hispania by Blackstone in 2018 (EUR1.9 billion euros).

Despite the decrease in the investment volume, the average price per transacted room increased again in 2019, reaching EUR142,000 (vs 128,000 euros in 2018), as a result of the high liquidity available in the market, the strong investment demand, the positive evolution of the main hotel KPIs and the continued compression of the yields.

The resort sector was the most affected, registering a total investment volume of 41 per cent, a significant change from the previous year (64 per cent). The main reasons for the decrease were; the recovery of the sector in the North of Africa and other Mediterranean countries, the evolution of Brexit, Thomas Cook’s bankruptcy, the crisis of some airlines and the absence of large portfolio transactions. Meanwhile, urban destinations went from representing 36 per cent of the total volume in 2018 to 59 per cent in 2019, favoured by the increase in interest in core assets.

Unlike in 2018, the origin of the capital was mainly national, representing 63 per cent of the total investment volume (vs 35 per cent in 2018), followed by UK (11 per cent) and France (10 per cent). Investment firms once again represented the primary source of capital in 2019, with 37 per cent of the total, followed by hotel groups (32 per cent) and REITS (19 per cent). The report also includes an analysis of the hotel investment cycle from 2006 to 2019, differentiating between the different periods and their main challenges.

Christie & Co concludes its study by analysing the current macroeconomic landscape, the operational expectations of the sector and the investment outlook for the next few years with the expectation of future consolidation of the hotel market and a stabilisation of investment levels

Inmaculada Ranera, Managing Director at Christie & Co in Spain and Portugal, says: “Hotels are no longer considered an alternative option in the real estate investment sector, and have become assets with attractive returns. The key players in this market have become more professional, which has led to an increase of the capital invested in the sector, both in urban and resort hotels.”