European hotels attract investors for stable values
Real estate investors will invest more money this year in the purchase of hotels in Europe than in the U.S. because European hotels managed to maintain its value due to poor construction, writes Bloomberg.
Acquisitions of hotels in Europe will amount to a total of about 5.5 billion in 2010 compared with 4.5 billion in North and South America, predicted by the consulting firm Jones Lang LaSalle Hotels. The transaction is expected to form in the U.S. about 90 percent of all purchases in the Americas, cited by London-based company for services in the field of investment in hotels.
Last year prices fell hotels in the U.S. than in Europe, as new buildings have increased the number of properties on the market, according to Real Capital Analytics Inc. However occupancy levels and room rates in Europe rose faster than America, led by Germany and France.
"In most American cities, if you can not get a hotel you want, you just have to wait 12 to 18 months and will be able to buy one that is being built now and is exactly what you want," said David Mongo, President and Founder of London-based investment banking company Avington Financial Ltd.
In Europe under way are projects to build 587 hotels with a total of just over 100 thousand rooms, according to analysis from December 2009 to STR Global. The U.S. plans are to be built hotels with a total of 3829 just over four hundred and one thousand room.
"The properties in Europe are more expensive, but tends to lose its value less because it is much more difficult to find a replacement asset," says Mongo.
Transactions this year is expected to grow more rapidly in the U.S. than in Europe because investment in the U.S. in 2009 were much less. The total cost for the U.S. is projected to increase more than twice that 2.1 billion dollars last year, while Europe is expected rise 25 percent to 4.4 billion dollars.
Employment in Europe increased 61% to 58% in the U.S. - 56% to 54%, according to the company in Tennessee based on studies in the field of hospitality Smith Travel Research Inc. The price per room per day in the U.S. fell 2 percent to 97.18 dollars, while Europe has registered a growth of 1.9 percent to 97 euros.
Greatest American Trust for investment in hotel properties by market capitalization - Host Hotels & Resorts Inc., In July announced the purchase of hotel Le Meridien Piccadilly in London, which has 266 rooms, 64 million pounds. 95% of the rooms of the company in the U.S..
"Many European markets have a very high barrier to entry for new construction, explains Gregory Larson, Executive Vice President Corporate Strategy at Host Hotels. "This limited growth in supply in the future. Such asset markets tend to retain high value, which in terms of the owner of the hotel is perfectly obvious. "
Chain Hyatt Hotels Corp., Controlled by Chicago Pritsker family, expected to have a higher share of rooms abroad than in the U.S. within the next 10 years, announced in January, its chief executive Mark Hoplamazyan. Company is looking for acquisitions in Italy and Spain.
Listnatata London company for real estate investments Redefine International Plc, formerly known as Ciref Plc, announced last month that it had bought five Holiday Inn hotels in London by the British operator Splendid Hotel Group for over 106 million pounds. Redefine considering other properties in London and other European cities.
As another advantage of Europe shows that markets are more diverse and less susceptible to overall economic crisis in December said Arthur Haas, CEO of Jones Lang LaSalle Hotels in July. Properties in countries such as France and Germany as well as in cities like London, has done "reasonably well" even when global economies shrugged last year, he added.
Many U.S. hotels, bought in 2006 and 2007 peak years were financed with a high percentage of debt, which has an additional pressure on the value.
"The European market fell so much in 2008 and 2009 and remained in liquidity from the U.S.. Also in Europe there is more capital. Overall debt levels in Europe are lower, "says Haas December.