Economic Trends

Reports paint differing pictures of EMEA market

31 Jan, 2012 By: Jena Tesse Fox

---

Jones Lang LaSalle Hotels' latest Hotel Investment Outlook report was recently released, and the EMEA news seems divisive. According to the analysis published in World Property Channel, hotel investment activity is expected to remain stable across the EMEA market during 2012 with $11 billion worth of deals forecast for the year, reflecting transaction volumes similar to 2011 levels of $10.9 billion.

Much of this activity will be driven by debt restructuring deals. Jones Lang LaSalle Hotels' anticipates that single asset transactions will continue to drive the majority of activity for 2012. With development slowed due to a lack of financing, hotel operators are expected to become more active buyers on unencumbered assets in 2012, jointly investing with other investors. As these operators move away from an "asset light strategy" to an "asset right strategy," they will continue to purchase hotels in key locations to gain market entry, increase their market share or establish new brands.

The UK is expected to remain the most liquid market and is predicted to see a slight increase in transaction activity in 2012.  This will be driven by distressed capital structure deals as banks have to meet stricter capital requirements and uncertainty increases around the pace of a recovery in capital values causing the hold option to become less attractive.

Conversely, following the sale of the Ritz-Carlton Moscow by Jones Lang LaSalle Hotels, the report suggests that Russia will suffer from "a lack of trophy sales" which will reduce total transaction volumes compared to last year. 

Countering that, RT.com notes that investment in Moscow real estate is increasing, and notes that the Lasalle report says that the city has seen $8.4 billion of commercial real estate investment in 2011, bringing it into the top twenty of investable cities. The figure is almost double 2010’s total of $4.8 billion.

“Many deals planned in 2010 were completed in 2011,” Olesya Cherdantseva, Head Analyst at Jones Lang La Salle, told the site. “The share of foreign investment in Moscow grew to 40 percent as investors returned to the Russian market after the crisis”. She added that Moscow and St.Petersburg are the most developed markets in Russia as they have a lot of valuable assets with high profitability.

Dubai is expected to benefit from being a safe haven and attract some investor interest. The report notes that its occupancy has recovered to 2008 levels this year. Albawaba.com is reporting that the emirate has more than 13,300 hotel rooms in the construction pipeline, more than the combined total of the next four largest markets. Latest data from STR Global shows that the emirate has a total of 13,349 rooms in the pipeline while Abu Dhabi, the next largest market for hotel construction, had 5,298 rooms.

Topic : EMEA, Trends, Reports
External Source : RT.com, World Property Channel, Albawaba