Hotel investment activity in Europe, the Middle East and Africa (EMEA) weakened in the first six months of 2012, compared with the same period in 2011, according to property agent Jones Lang LaSalle Hotels.
Sales volumes totalled £2.9b, a decline of 12% year-on-year, with the majority of transactions (64%) being single asset sales.
The hotel market in the UK was the busiest for property transactions across the EMEA region during the first half of the year. Sales of £1.1b, reflected 37% of all EMEA transaction volumes.
Jon Hubbard, chief executive, Northern Europe, Jones Lang LaSalle Hotels said: “London accounted for 59% of UK investment volumes or £622m. Activity was primarily driven by the acquisition of eight upscale hotels in the capital, including the four-star, 208-bedroom Hoxton hotel, which was sold for £63m to private-equity firm Ennismore Capital and the five-star, 62-bedroom Number 11 Cadogan Gardens that was acquired for £30m by the Cadogan Estate.”
Notable portfolio deals included the sale of six hotels by property fund AAIM to the Principal Haley hotel group for £189m. The hotel group immediately resold the freehold to Pramerica on 175 year leases. Britannia Hotels also bought two five-star hotels from the De Vere Group for about £19.6m.
While London has seen growth in revenue per available room (revpar) of 3.1% during the first five months of the year compared with the same period in 2011, other European cities have done better, including Paris (+7.3%), Munich (+3.4%), Barcelona (+5.6%), Copenhagen (+3.7%) and Prague (+13.5%).
According to Jones Lang LaSalle, hotel investment activity is expected to pick up in the third and fourth quarters of 2012, with a number of large European property portfolios likely to be sold in the coming months. However, while investor interest remains strong for hotel assets and a number of hotel owners are expected to put properties up for sale in order to free up additional cash-flow, completed sales may be held back by the lack of senior lenders and the fact that there are only a few banks capable of advancing large sums of money. The property company anticipates hotel transaction volumes in 2012 to be largely match those of 2011, at roughly £7.3b.