Some Central & Eastern Europe cities are showing stable yield requirements for hotels in the medium-term indicating continuing investor interest in the region, according to the latest Hotel Investor Sentiment Survey (HISS) published by JLL Hotels. Meanwhile, the current turbulence in the market has affected hotel investors' yield requirements for new acquisitions across the rest of Europe.
Some Central & Eastern Europe cities are showing stable yield requirements for hotels in the medium-term indicating continuing investor interest in the region, according to the latest Hotel Investor Sentiment Survey (HISS) published by JLL Hotels. Meanwhile, the current turbulence in the market has affected hotel investors' yield requirements for new acquisitions across the rest of Europe.
'Although the knock-on effect of the credit crunch has continued to spread through the property market, we are seeing hotel investors, developers and occupiers affected to a lesser extent across Central & Eastern Europe. There are investment opportunities in CEE, ' said Mark Wynne-Smith, CEO Jones Lang LaSalle Hotels EMEA.
The report highlights Warsaw, Budapest and Istanbul as showing stable yield requirements in the medium term.
'Investors expect Istanbul and Moscow to experience strong trading performance in the short to medium term. We note that both cities have shown exceptional growth in recent years, although room yield growth in Moscow might start to suffer from the city’s high average room rates.'
The intention to build hotels remains largely stable across the region, with highest build sentiments for Moscow and Zagreb. Buy intentions remained dominant in Europe - despite a decrease - with Istanbul taking the lead.
Similar to the findings in June 2007, investors indicated they were focussing mainly on the upscale hotel market. However, in the CEE region, investors said they were considering alternatives such as the mid-scale hotel segment, which is currently underrepresented. Strengthening preference was also reported for budget hotels. Various developers and hotel operators expressed plans to build budget hotels in the region.
Wynne-Smith concluded: 'With buy intentions weakening and sell sentiments increasing, Europe as a seller's market is starting to lose momentum. However, interest to buy is still high across Europe and investment activity in the CEE will remain strong as activity in Western European markets slows.'
