Qatar tops European hotel investment league

Qatar has emerged as the top investor by volume in the European hotels sector in 2013 as the state's sovereign wealth fund expanded its network of luxury hotels.

The Middle Eastern state accounted for six of the top 25 single-asset and portfolio hotel deals recorded by PropertyEU from 1 January to mid-November 2013. Qatar racked up €1.7 bn of the total volume of €5.5 bn for the top 25 transactions.

SWF action
The state's sovereign wealth fund, Qatar Investment Authority, acting through its global investment house Qatar Holdings, was the largest single investor, accounting for almost €1.3 bn of the activity. All its deals were focused on the luxury hotels segment, a particular favourite among Middle Eastern investors.

Qatar's largest individual transaction was the acquisition of a portfolio of four French luxury hotels from Starwood Capital for €717 mln. Qatar Holdings carried out this transaction through its Constellation Hotels subsidiary in a joint venture with Egyptian real estate developer Talaat Moustafa Group.

The hotels were the Hôtel du Louvre and Concorde Lafayette in Paris; Hotel Martinez in Cannes and Palais de la Méditerranée in Nice.

Qatar, acting through Constellation Hotels, also acquired the Park Lane Hotel in London for €358 mln, and the W Barcelona in Spain for €200 mln via its Qatari Diar real estate unit.

Extending Qatar's network of luxury European hotels, Emir of Qatar Al Mirqab Khalifa Al-Thani picked up the Four Seasons in Florence for €192 mln.

Private money
Al Faisal, a privately owned Qatari company active in a range of business segments, focused on Berlin. It acquired the Maritim and Grand Hyatt from SEB Asset Management for a total of €270 mln.

Investment from the Middle East into European hotels accounted for a percentage in the high 20s of the total of more than €8 bn of deals recorded up to end-September, according to Christoph Harle, CEO of Continental Europe, Hotels & Hospitality at Jones Lang LaSalle.

However, Abu Dhabi and not Qatar was responsible for the largest hotel deal by volume. This involved Abu Dhabi Investment Authority (ADIA) completing the purchase of 42 Marriott hotels in the UK from the Royal Bank of Scotland for €734 mln.

While Middle Eastern interest in the hotel sector is not expected to wane, trading in the luxury space on which investors from the region are so keen, is relatively rare. This factor, combined with increased activity among US private equity players and Chinese investors, is likely to reduce the Middle East's dominance in the hotel sector in 2014, Harle said.

'We expect more capital from these two regions will likely bring down the percentage for the Middle East, which used to average between 10-20 percent, to the lower 20s next year.'

A special report on the European hotel sector appears in the December edition of PropertyEU Magazine.