European hotel investment volume bucks the trend

London, 14 August 2019 – Despite the total commercial real estate investment in Europe declining 7.8% year-on-year in the twelve months to Q2 2019, hotel investment saw an increase of 5.3% over the same period, totaling €24.3bn, according to the latest data from global real estate advisor, CBRE. 

The rise of hotel investment is a result of the increase in demand for operational and alternative property types, given the expectation of continued growth in this area.  In Europe, all major markets saw an increase in transaction volumes except the UK, Germany and Benelux.

Investment volumes in the UK in the twelve months to Q2 2019 were down 26% on the same period of the previous year, yet it remained the largest hotel investment market in the region, capturing 26% of capital deployed. Single asset sales soared by 44.5% but portfolio sales saw a volume decline of 53%.

Spain remained the second largest hotel investment market in Europe. In the twelve months to Q2 2019, deals amounted to €4.3bn, up 67.2% on the same period last year, with Madrid and Barcelona remaining stable and accounting for 4.5% and 4.6% of activity respectively. Investment in provincial Spain increased by 75.5% on the previous year, mainly resulting from transactions in leisure and resort markets.

Another key market that saw a substantial increase was Italy, with the volume up 133.2% year-on-year in the twelve months to Q2 2019. Hotel investment totaled €3.1bn, elevating Italy to Europe’s fourth largest hotel investment market. Single asset sales typically dominate Italian investment activity; however, the sale of the Belmond portfolio in Q2 was a notable exception.

Germany has experienced supply constraints in portfolio deals and large asset deals, resulting in a reduction in volumes. Deal volumes across the ‘big five’ cities were down from 68% to 46.3% from the previous year. This suggests that investors are turning to secondary locations and regional cities for opportunities.

In Q2 2019, strengthening investor demand in Italy resulted in a fall in hotel yields in Milan and Rome. However, hotel yields across all other key European markets remained stable compared to the previous quarter amid sustained investor demand.

Miguel Casas, Head of Investment Properties, Continental Europe at CBRE commented: “European hotel investment volumes have remained strong despite the slowdown in wider commercial real estate. Operational and alternative property types remain in high demand, and there is expectation that this trend will continue due to sustained income growth. Investors have notably become more active in secondary locations when availability of large asset deals and portfolio deals have been scarce, and single asset sales have especially been a driver in this successful quarter for the hotel market.”

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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue).  The company has more than 90,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 480 offices (excluding affiliates) worldwide.  CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services.  Please visit our website at