European hotel real estate investment volumes reached €22.9bn (£19.9bn) in the year to Q3 2018, representing a 3% increase year-on-year.
According to the latest data from global real estate advisor CBRE, the total real estate investment volumes for all sectors in Europe was flat compared with the same period last year.
Q3 2018 European hotel investment activity was driven by continued growth particularly in the UK, Spain, and Benelux. UK hotel investment volumes reached €6.8bn (£5.9bn) in the 12 months to Q3 2018, reflecting a 15% year-on-year increase, and accounting for 30% of all capital invested into European hotels.
Transaction volumes in Spain also remained robust, registering the second highest hotel investment volume in Q3 and recorded an increase of 57% year-on-year. Similarly, Benelux posted strong performance, with an 8% year-on-year increase in the 12-months to Q3, which has largely been driven by activity in the Netherlands.
Colin Low, head of hotel investment properties at CBRE Hotels, said: “The growth in key European markets such as the UK and Spain has been fueled by private equity and institutional investors who had experienced yield compression in the maturing hotel markets.
“With the heightened investment interest and the threat of constrained supply, investors are starting to look beyond the core hotel markets for opportunities, with Central Eastern Europe (CEE) taking centre stage.”
He added: “In Q3, we saw a visible tightening of yields in key CEE cities where we anticipate further investment deals, both single asset and portfolio investment deals.”
Germany remains the third largest European hotel investment market with hotel deals totalling €4.09bn (£3.5bn) in the year to Q3, despite a 20% decline year-on-year.”