Savills: Southern European hotels continue to shine
Two particularly large transactions took place in Paris over the last few months which helped boost volumes, including Dubai Holding buying out their Joint Venture partner Henderson Park on the Westin Paris Vendome for a reported €650m. Meanwhile in Spain, volumes were supported by continued investor appetite for resort assets.
Marie Hickey, director Savills Research, comments: “While France and Spain continue to shine, considering slower activity in other markets and high debt costs prime yields have moved out. Savills prime European city yield average with a management contract operating structure moved out 16bps in Q1 2023 against Q3 2022 levels.
“Higher yielding city markets in the Iberian Peninsula and Central and Eastern Europe are showing greater resilience to upward yield pressures with prime management contract yields in those markets out by only 8bps on Q3 2022 levels.”
Richard Dawes, director in Savills hotels team, EMEA, says: “Investment volumes continue to drag and we expect that activity will remain a bit weaker through to late summer, with positive momentum shifting into Q4. At the same time, we should not forget that operational performance in Europe has and continues to be exceptionally strong across most key destinations which is underpinning the market.”
“As a result we think that 2024 is likely to be the year where investment volumes pick up in line with historical norms again because investor appetite for the asset class remains strong.”