Italy, France report hotel-investment boost in Q3: CBRE

NH Collection Milan
Italian real estate developer IGEFI Group sold the under-development NH Collection Milan hotel to global real estate investment manager Invesco Real Estate during Q3. Photo credit: NH Hotel Group

Total hotel real estate investment in Europe reached €23.3 billion in Q3, a decrease of 30.6 percent from the 2018 quarter and a 6.7 percent decline year over year, according to the Europe Hotel Investment MarketView Q3 2019 report from real estate advisory firm CBRE. 

In comparison, hotel investment reached €24.3 billion in Q2, up from Q1's €23 billion

CBRE blames “the lack of stock in the market” for the decline, and noted the news isn't entirely negative. “Despite the overall decline in European hotel-investment volumes, investor interest remains strong, particularly in Spain, Italy [and] the Netherlands,” said Paul Kapiris, director, head of cross-border hotels investment properties at CBRE. “The lower number of large deals have contributed to this fall in volume; however, we are seeing increased interest in resort markets as they are now proving attractive to more traditionally conservative capital, [which has] become more comfortable with leisure markets in their hunt for higher returns.”

United Kingdom

The U.K. remained the primary destination for hotel investment in the region, attracting 27 percent of capital deployed. At the same time, the report pointed to “a notable absence of large deals throughout the U.K. in the last 12 months.” 

Related: Hotel investment grows in Europe

Investment volumes in the U.K. were down 11.3 percent from the same period last year and 12.1 percent year over year. As reported in late October, London’s asset sales activity grew 31 percent to £1.4 billion in the year through Q3, driven largely by a boost in portfolio sales, while transaction levels in the regions were down 37 percent to £2.1 billion.

The U.K. reported more than £1.1 billion of investment in hotel-development projects in 2018 owing to increased investor confidence and the desire for long-term secure income, according to a September report from Knight Frank, with London attracting 60 percent of investment volume.


Hotel-investment volumes in Italy increased “substantially,” the report claimed, up 72.9 percent year over year in the 12 months to Q3. At the same time, volumes were down 20.2 percent from Q3 2018. The Belmond Ltd. hotel company sale and the acquisition of a 15-hotel portfolio by Oaktree in Q2 helped boost Italy into the third most-invested-in European hotel market. 

A number of single-asset deals, including Italian real estate developer IGEFI Group's forward sale of the under-development NH Collection Milan hotel to global real estate investment manager Invesco Real Estate, suggests there are greater levels of liquidity in this market, according to CBRE. As noted during the quarter, Invesco is reportedly investing €160 million to forward-purchase hotels in Florence and Milan. 

Also, the report noted active institutional buyers are reinforcing the shift of the Italian hotel market from opportunistic to core.


France reported 15 deals throughout Q3, resulting in a 72.1 percent increase in the transaction volume from Q3 2018, the report noted, with hotel transaction volumes for the 12 months to Q3 at €2.6 billion, reflecting a year-over-year increase of 47 percent. 

The Novotel Paris Centre Gare Montparnasse was the largest single asset transaction, but the sale of provincial properties and nationwide portfolios accounted for 79.4 percent of the total investment volume for the quarter.


Germany regained its position as Europe’s second-most-invested-in hotel market, despite investment volumes falling 18.2 percent year over year in the 12 months to Q3 and down 30.1 percent from the same period last year. 

Over the quarter, hotel yields for the “Big Five” German cities (Munich, Berlin, Frankfurt, Hamburg and Düsseldorf) decreased 25 basis points across all operating structures. Pressure remains on German property yields given strong investor demand, a shortage of stock for sale and the low interest rate environment, the report noted.

Resort Appeal

Thanks to yields decreasing “quite considerably” at city-center hotels, investors are increasingly looking to resorts as a stable alternative. According to the report, this asset class is “becoming one of the most sought-after property types in the hotel sector.” 

Two notable Italian resort properties changed hands so far this year. The Capri Palace sold for €105 million to Dubai Holding (Jumeirah) and Hotel Le Ginestre sold for €32 million to Enma Capital.