Austria tops €1bn deals value

Austria attracts growing numbers of visitors (Katherine Doggrel)

Transactional volumes in Austria reached €1.26bn last year, the first time the country had passed €1bn, and 40% higher than its previous peak.

Vienna led the increase, accounting for almost 80% of the volume, with investors from Asia the most active group.

Christie & Co reported that the second half of 2019 exceeded all expectations with transactions reaching a total value of €900m, breaking the record achieved over the entire year in 2016, with the billion-euro mark broken in September. In 2019, the transaction volume was ultimately around €1.26bn, three times the figure for 2018.

Performance has been strong. STR told us that, for 2019, occupancy was up 0.9 percentage points on the year, to 76.5%, with ADR up 6.6% and revpar up 7.6%. For Vienna, occupancy was up 1.1 percentage points to 78.6%, while ADR rose 7.4% and revpar was up 8.6%.

The sale of the Hilton Vienna am Stadtpark accounted for a significant share of the total volume, around €370m. In addition, the sale of the Radisson Blu Park Royal Palace, the Austria Trend Hotel Ananas, the Falkensteiner Margareten and the sale of the K+K Hotel Group, of which two hotels were located in Vienna, also contributed to the total volume.

Germany was replaced as the most active country of origin by investors from Asia. In the case of the acquisition of the Hilton Vienna am Stadtpark, Munich’s Wealthcore and Korean asset manager Mastern Investment Management, acted together to buy the hotel from two Austrian family offices represented by Vienna-based Invester United Benefits.

The property was the largest hotel in Austria and the third-largest Hilton hotel in Europe and was undergoing a renovation to take it from 571 to over 660 rooms. Sources close to this publication suggested that the investment was expected to yield an annual return of 6%.

Christoph Wendl, managing partner, Wealthcore, said: “With the acquisition of this landmark property we have been able to secure for us and the Korean investors a solid and high quality investment -- and this in a highly competitive market. Vienna as a hotel and congress location is prospering and continues to attract international companies, investors and tourists.”

There was also an increase in investments from France last year, with several French investors active at the same time. Institutional investors and real estate companies together accounted for over half of the transactions. Private hoteliers were also strongly represented with just under 20%.

Simon Kronberger, director, Austria & CEE, Christie & Co, said: “For a long time, many investors have perceived hotels only as a marginal phenomenon, but with the record volume of hotel transactions of €1.26bn last year, it has been impressively demonstrated that hotel investments are a sought-after and established form of investment. As we head into 2020, several significant transactions are already in the final stages of coordination. However, it remains to be seen whether the record result of 2019 will be reached again this year.”

HVS reported that benefited from the organisation of the EU Presidency in 2018, which resulted in a 6% increase in overall arrivals and nights. The main source market in terms of overnights to Vienna remained Germany, followed by domestic travellers. Additionally, Vienna has seen increased visitation growth of travellers from the US, UK and Middle Eastern markets in arrivals and overnight stays in recent years.

There were more than 5,000 rooms due to enter the Vienna market by the end of 2023, including a range of student accommodation, independent properties, and four- and five-star branded hotels. The largest project by room count was The Student Hotel Wien with 822 rooms expected to make its debut by early 2020; another large property, expected to enter the market by the end of 2023 was the InterContinental with 480 rooms.

 

Insight: Recent years have seen growing interest in Austria and, in particular, Vienna, indicating that it’s not longer just Ultravox which hoped to see a significant ROI in favouring the city. And why should this be? To coin a phrase; for the money.

Vienna has been booming as a destination and falls into that most-desirable of locations: it is on the edge of the frenzy of European transactions, where an investor is hard-pressed to find a yield, but, having enjoyed many a long year of trade and tourism, it actually has established room stock to trade. The glory. Although, as noted above, last year’s record is unlikely to be topped as stock is still limited - and now existing owners are wary of selling. Expect at least one decent transaction in the next month or so, however.

This year will see the performance of the city tested, with 27 openings adding 5,488 new rooms feeding demand for more urban, midscale four-star properties, featuring brands from Hilton, Accor, and at the top of the chain scale, Six Senses. But until then, the original fairytale city is proving just that.

 

 

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