Lack of CEE product slows 2018 hotel investment

Lack of CEE product slows 2018 hotel investment

Published at: 2018-12-11 10:54 | Author:
Hotel investment is expected to slow slightly across CEE to just over €800m thanks to a lack of product, but demand for the asset remains strong, according to Cushman & Wakefield. A full 74 percent of all transactions in 2017 were carried out by institutional and listed investors, while the number was just 54 percent over the first three quarters of 2018. In a study C&W carried out for the first time with CMS, the companies write that new consumer trends and a shift in accommodation concepts has led to a blurring of lines between traditional hotel classes. Investors continue to flock to the region thanks to strong performance growth and relatively low prices. As much could be transacted in the the final quarter of 2018 as was completed during the first three (€800m), a result that would be €100m short of CEE's record deal level in 2017.

“Hotels are currently moving from alternative to mainstream investments as investors get increasingly comfortable with the CEE becoming a maturing hotel market," says Bořivoj Vokřínek, Partner, Strategic Advisory, Head of Hospitality Research, EMEA at Cushman & Wakefield. " The main challenge of the region is the lack of quality and large hotel assets on the market. As price per room is exceeding pre-crisis levels and debt financing costs are increasing making us believe that yields are reaching the bottom, we should see more owners realizing it is the good time to sell and harvest their investment.”

“Due to historical and political factors, the CEE hotels market has faced a 30-year catch-up with the West,” says Lukáš Hejduk, CMS Partner and Head of Hotels & Leisure in CEE. “This pace of change has been reflected in the rate of sector development and investment across the region. Despite investment volume contracting slightly in 2018, growth across the sector over the last five years has been remarkable, with 2019 set to be another strong year. There are still large amounts of capital looking for healthy returns - and hotels in CEE offer superior yields compared to many other regions in Europe or indeed other asset classes.”

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