Following the report preview on January 24th at FITUR, the international tourism fair in Madrid, and in collaboration with the Asociación Empresarial Hotelera de Madrid, Christie & Co has now published the full report, in which it offers the global figure of hotel investment estimated in 2018 in Spain. The report also provides the ‘Perspectives 2019-2020’, which predicts that Spain will continue to attract investment interest in a more volatile and competitive environment.
According to the data available to Christie & Co, the total hotel investment in Spain in 2018 was €4,860 million, in a total 223 transactions (surpassing the 185 transactions registered in 2017), which represents an average price per room of €128 and an increase of 24.6% of the total volume of investment versus 2017. This positions Spain in second place, behind the United Kingdom (where investment is estimated to be £6,500 million), but before Germany for the first time (where €4,000 million has been estimated for the total investment in 2018).
In terms of investor profile, the report highlights the importance of investment firms as the largest source of capital in 2018, representing 53% of the total investment, with more than €2,560 million (increasing its percentage versus 2017, in which they represented 42%). Hotel companies, with 24% of the total investment figures (vs. 20% in 2017) are in second place, and REIT companies are again in third position with 15% (vs. 16% in 2017). Furthermore, regarding origin, it is noted that investment from national origin has decreased in comparison to the previous year (35% in 2018 vs. 51% in 2017), surpassed by the increase of US investors (40% in 2018 vs 23% in 2017) and the entrance of new investors from Thailand (8%) and México (4%).
The report also emphasizes how the estimated investment figures have been greatly increased by portfolio transactions and significant assets, which represented more than 60% of the investment volume in the whole country. Blackstone, which was the main player in 2017 with the purchase of the HI Partners portfolio (€630 million), has been the main protagonist in 2018 with the purchase of 48 hotels from the Hispania REIT portfolio, for €1,900 million. Likewise, transactions like the purchase of the Atom Hoteles portfolio, the joining of the Chinese group Gaw Capital and the increase of the participation of Omega Capital in Hospes hotel chain, the nine urban hotels Silken portfolio acquired by CBRE Global Investment Partners and Pygmalion Capital Advisers LLP, the takeover of NH Hotel Group by Minor International, and the purchase of Hotel Villa Magna by the Mexican REIT RLH Properties for €210 million (with a record price per room of €1.4 million) caused the total volume transacted in Spain in 2018 to once againbeat all previous records.
Christie & Co, as in the report "Hotel Investment Overview - Spain 2017" published in February 2018, again highlights the interest aroused by secondary destinations, generating 23% of the total investment, with a 65% increase in comparison to 2017 (in which investment in secondary locations was 14% of the total investment volume). This percentage reflects that three out of ten rooms that changed ownership were not located in the main Spanish urban or holiday destinations.
With regards to the investment volume in primary locations (over €3,700 million), resort destinations continue to outstrip urban destinations as they did in 2017 (64% of investment in resort destinations compared to 36% in urban destinations). In 2018, investment both in the Canary Islands and the Balearic Islands represented more than 50% of the total volume (vs. 40% in 2017), causing a slight decline in urban destinations whose investment continues to be led by Madrid (12% of total investment in 2018 vs. 16% in 2017), followed by Sevilla (which enters the podium with 4.5%) which surpassed Barcelona (3.5% in 2018 vs. 9% in 2017), and Malaga (which in 2018 dropped to 2.9% vs. 4% in 2017).
Finally, the analysis shows how almost 93% of transactions carried out in 2018 (vs. 90% in 2017) were concentrated again in the same six Spanish regions than in the previous year: the Canary Islands (29.6%), the Balearic Islands (21%), Andalusia (16.5%), Community of Madrid (12.9%), Catalonia (6.8%) and the Valencian Community (6.3%). Regarding the average price per room per region, the Canary Islands led the ranking in the resort market, with €140 per room, while the Community of Madrid led in the case of urban destinations with an average price over €200 per room.
Inmaculada Ranera, Managing Director at Christie & Co Spain & Portugal, comments “The Spanish hotel industry continues to prove its resilience to the economic and political uncertainties that drive the global agenda and, despite noticing the effects of the recovery of Mediterranean resort destinations, the main coastal destinations in Spain maintain stable KPIs (occupancy, ADR and RevPAR). Urban destinations have proven to be solid markets resisting uncertainty related to security issues. Therefore, it is not surprising to see the positive evolution of a sector which remains key for Spanish economy and continues to attract investment appetite, especially from foreign investors.”