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Sun 31 Jan 2016 02:15 PM

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Middle East invests $5.2bn in European hotels – report

UK was top market for Mid-east hotels investment in last two years, says CBRE

Middle East invests $5.2bn in European hotels – report
The Connaught Hotel in Mayfair in London, England. (Getty Images)

Buyers from the Middle East invested a total of €4.79 billion ($5.22 billion) in hotels in Europe over the past two years, according to real estate consultancy CBRE.

The UK hotels sector received the largest amount of inward investment from the Middle East over the past 24 months, CBRE’s Check In hotels report said, with £2.72 billion ($3.87 billion) invested in assets such as Maybourne Hotels Group, which includes The Connaught, the Berkeley and Claridge’s hotels in London.

Italy and France followed, receiving €570 million ($617 million) and €566 million ($613 million) respectively, in to assets such as the Intercontinental Paris Le Grand.

The report found that total European hotel investment volumes in 2015 were triple that of the same period in 2007, and investor intentions point strongly to a continuation of this trend, according to CBRE.

It said Middle Eastern investors continue to seek hotel markets in which they can claim a stake, as five-star ‘trophy’ assets rarely hit the market.

The report noted that the “rich culture, heritage and architecture of Central Europe appears to have caught the imagination of the Emiratis” in particular, for example, Al Habtoor Group’s purchase of the InterContinental Budapest in 2014.

(Source: CBRE)

New direct flight routes from Dubai and Doha to Budapest could prompt a fresh Arab spending spree on the banks of the Danube, the report added.

Catherine Rawanduz, CBRE’s head of hotels France, Belgium, Luxembourg and Switzerland, said: “The Parisian market is experiencing an influx of international capital.

“As part of the Eurozone, Paris is seen as a secure place for investment and is the second priority, behind London, for international capital.

“We’re seeing a steady increase in interest from Middle Eastern investors in upscale and trophy assets, with a number of transactions taking place over the last 18 months.

“High net worth families and sovereign funds from Qatar are leading the pack.”

High profile Qatari investments into UK hotels include Qatar Airways’ acquisition of the four-star Sheraton Skyline at London’s Heathrow Airport in March 2015; and the airline’s subsequent purchase of the Novotel Edinburgh Park in Scotland.

“The latter suggest some Middle Eastern investors are now willing to consider opportunities further along the risk curve,” the report stated, adding that increased liquidity in the hotels market is likely to widen the spectrum of European targets for Gulf investors.

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