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Investors look closer at CEE hotels

Anna Pakulniewicz 29 March 2019

EUROPE Strong demand has led to higher hotel yields in a number of Eastern European markets, making them more attractive for those prepared to accept more risk.

“Our latest research shows that the European hotel market is now a much more mature and liquid asset class than a decade ago with one of the broadest buyer pools in the real estate industry,” comments Richard Dawes, director in the Savills hotels team.

European hotel transaction volumes remained high in 2018, exceeding those of 2017 according to data from RCA. Cross-border investors made up the lion’s share of transactions, accounting for 65.4 pct of total volumes in 2018, outstripping the 10 year average of 54.9 pct.

According to Savills, while well-established tourist cities such as London and Paris account for a sizeable share of international arrivals it is the smaller emerging cities that are reporting the strongest growth. Lisbon, Bucharest, Budapest and Prague have all reported strong growth in airport arrivals over the last three years alongside increasing interest levels as indicated by travel-related Google searches.

According to Savills associate Crosspoint Real Estate in 2018 in Romania accommodation stock rose by 1.6 pct while the number of tourists grew by 6.7 pct y-o-y. The hotel industry had an estimated turnover of around EUR 1.2 bln.

By the end of 2020, the number of operational hotels should rise in Romania by 10 pct from 1,633 to 1,800. Among the most important deliveries will be the Courtyard and Autograph Collection hotels owned by Marriott International in Bucharest, a series of ibis hotels in Bucharest and Timișoara and the extension of the Mercure brand in cities such as Timișoara, Sibiu and Brașov. There is also a trend to refurbish, upgrade and reopen old hotels such as the Lido Hotel that opened in January this year built in the 1930s.

Codrin Matei, managing partner, head of capital markets at Crosspoint states: "The increased interest in this asset class can be seen through the number of developments started last year in Bucharest as well in secondary cities, given that more and more investment funds target a diversification of their portfolio.”


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