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Optimistic Forecast for EMEA Hotels Investment Market

Jones Lang LaSalle
Jones Lang LaSalle

August 18, 2010, 12:37 (PX Newswire)

The first half of 2010 has demonstrated that the EMEA hotel investment market is starting to pick up, with growth expected to accelerate even more in the second half of 2010 according to Jones Lang LaSalle Hotels. Transaction volume rose marginally to €1.6 billion at the end of H1 2010, representing a 6% year on year increase. There is strong sense that the latter part of 2010 will witness stronger investment activity, with expectations that the second half of 2010 could see transaction volumes double on H1 levels.

As anticipated by Jones Lang LaSalle Hotels EMEA forecast at the start of the year, the UK has been the most active market in 2010, with over €300 million of investment transacted which represents a 19% market share compared to 14% in 2009. Last year’s leader, France, is not far behind with just under €270 million invested.

Hotel operators, institutional investors and investment funds/private equity continue to display a strong appetite for investment, and together accounted for nearly 65% of all hotel investment in EMEA in H1 2010. This indicates that sophisticated investors believe it is a good time to buy and are enjoying reduced competition for assets, as many of the high leverage buyers have fallen out of the market.

Domestic capital remains the dominant source of investment accounting for 47% of total investment, with investors still focused on familiar territory. Investment from European sources has risen significantly from 18% to 34%, while investment from the USA continues to be weak. Middle Eastern interest remained relatively strong with a growing market share during H1 2010 moving to 14% from 8% in 2009; however there has been no significant investment from Asian buyers despite strong interest from this region, in particular South Asia. These types of buyers tend to look for good quality assets in London and Paris at discounted prices, which are hard to find in today’s market as buyers outnumber sellers by a considerable margin.

Mark Wynne Smith, CEO for Europe, Middle East and Africa at Jones Lang LaSalle Hotels commented: “The dynamics of the market have changed and deals are taking longer to complete, with both buyer and seller approaching negotiations with caution. However, we are starting to see sellers acknowledge that buyers’ pricing is acceptable given the current economic climate, which is likely to drive increased deal volume as the year progresses.”

Wynne Smith also notes the stock being marketed is of a substantial volume and that there are more deals in the pipeline than there were in H1 2009, many of which will materialise over the coming months. This will be supported by improved access to credit from lenders and increased certainty about underwriting projects.
Wynne Smith concludes: “The market conditions experienced over the first half of 2010 are reminiscent of what we saw in 2002. The second half of 2002 saw a doubling of transaction volume and I anticipate that we will see a similar outcome over the remainder of this year”.

About Jones Lang LaSalle Hotels
Jones Lang LaSalle Hotels, the first and leading global hotel investment services firm, is uniquely positioned to provide the depth and breadth of advice required by hotel investor and operator clients, through a robust and integrated local network. In 2009, Jones Lang LaSalle Hotels provided sale, purchase and financing advice on over $1.6 billion worth of transactions globally. In addition, advisory and valuation services were provided on nearly 800 assignments. The global team comprises over 200 hotel specialists, operating from 36 offices in 19 countries. The firm's advice is supported by a dedicated global research team, which produced 80 publications in 2009 in addition to client research. Jones Lang LaSalle Hotels' services span the hospitality spectrum; from luxury single assets and large portfolios to select service and budget hotels, resorts and pubs. Services include investment sales, mergers and acquisitions, capital raising, valuation and appraisal, asset management, strategic planning, operator selection, management contract negotiation, consulting, industry research and project development services. Jones Lang LaSalle Hotels' clients have access to the resources of its parent company, Jones Lang LaSalle (NYSE: JLL). www.joneslanglasallehotels.com

About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2009 global revenue of $2.5 billion, Jones Lang LaSalle serves clients in 60 countries from 750 locations worldwide, including 180 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 149 million square meters worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with approximately $40 billion of assets under management.
In Russia and CIS Jones Lang LaSalle have offices in Moscow, St. Petersburg, Kiev and Almaty. Jones Lang LaSalle, Russia was voted Consultant of the Year in 2004, 2006, 2007, 2008, 2009 and 2010 at the Commercial Real Estate Awards, Moscow and Consultant of the Year at the Commercial Real Estate Awards 2009, St. Petersburg.

For further information, please visit our Web site www.joneslanglasalle.ru

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