EMEA hotel deals up 160% in Q1 2011: JLL

The hotel investment market in EMEA appears to be on the path to recovery as a result of improving investor confidence, according to Jones Lang LaSalle Hotels' latest Hotel Investor Sentiment Survey.

Recovering market conditions have prompted investors to explore hotel investment opportunities, particularly throughout Western Europe. Only the Middle East and North Africa (MENA) reported negative short term expectations, driven by political difficulties.

'Trading performance across the EMEA hotel market has strengthened substantially over the past six months,' said Mark Wynne-Smith, CEO of Jones Lang LaSalle Hotels in EMEA. 'Germany has taken the lead in EMEA on medium term performance expectations with Munich and Hamburg noting the strongest expectations. In the UK, the majority of growth is driven by London.'

While expectations for UK regional cities are currently subdued, investors expressed a more pronounced improvement over the next two years, with the top performer expected to be Edinburgh, he added.

Only a few cities in Europe are anticipated to face further hardship, the majority of which are located in Eastern Europe. Nevertheless, overall trading performance expectations for Eastern Europe improved notably compared to the last survey in October 2010, driven by Istanbul, Moscow and Warsaw, while results for MENA were more diverse. On a city level, strongest growth in the medium term is anticipated for London, Paris, Istanbul, Rome and Munich. Tourism in Istanbul, Moscow and Warsaw has expanded rapidly in recent years, encouraging international branded operators and investors to find a foothold in the market to benefit from the market's growth potential.

Mark Wynne-Smith added: 'While a level of cautiousness remains, buy intentions have once again become the key sentiment in investor's minds and this reflects the strong investment appetite during Q1 with EMEA investment volumes increasing 160% compared to Q1 2010.'

Improving market conditions and growing investor confidence have resulted in a more favourable position for sellers in the Western European market. The survey has shown that there is a significantly higher number of buyers to each seller for markets such as London and Paris but this trend does weaken markedly for the secondly cities. During the remainder of 2011, JLL Hotels expects to see a move towards secondary locations or outside of Western Europe in search of improved total returns.