EUROPE - The hotel sector's centre of gravity has lurched away from Europe, according to Martin Armitstead, DTZ'S managing director of EMEA hospitality.

In a presentation given in Amsterdam last week, Armitstead pointed out although the US's sub-prime woes dragged hotel transactions down 13% to $24.6bn (€15.9bn) towards the end of 2007, global transactions for the year increased 56% to $113bn. In contrast, European transactions fell 13% to $24.5bn.

With yields on hotel transactions at 6.5-7.5%, he suggested "hotels are now an accepted asset class" adding "it's a very diversified market".

Rampant private equity activity, an increase in sale-and-leaseback deals and the strength of international hotel brands were among the factors driving the industry.

However, Armitstead said market conditions, including strong Asian growth, could lead to brand compression.

Chinese hotel transaction volumes, in particular, have reached $1bn over the past two years, compared to $200m in 2005.

More broadly, Hans Op 't Veld senior portfolio manager at PGGM - the asset management arm of PFZW pension fund - forecast a strong future for alternatives, during the same session of the PROVADA Real Estate Investors' Debate in Amsterdam.

"Not all alternatives become core investments," said Op't Veld.

Robert Jan Foortse, senior portfolio manager at ABP pension fund's APG Investments, also claimed alternative real estate yet comprised too small a market to impact the mainstream.

However, he suggested greater transparency would increase investors' appetite for alternatives.

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