Why Mediterranean investors are looking outside of Spain for yield


Miguel Casas is the senior director of CBRE Hotels in Spain, and participates in investment, operator selection, consultancy, asset management and valuation projects both nationally and internationally. 

He currently plays an active role in brokerage and buy-side strategic advice, where he maintains a constant connection with international investors seeking to deploy capital in hotel real estate in Spain, providing solutions that add value for buyers and sellers.

At the Mediterranean Resort & Hotel Real Estate Forum, Oct. 17-19 in Athens, Casas will participate on panel focused on reimagining leisure hospitality for today’s market. As consumers’ habits are changing, hospitality groups need to review their strategies to meet their changing needs. Cases and the other panelists will discuss ways that hoteliers can innovate, differentiate and create a unique experience in Mediterranean resorts; identify the right brand for a resort; and how they can maximize resort ROI given the multitude of amenities, seasonality and traveler trends. Ahead of the conference, Casas discussed the top markets for Mediterranean investment and the challenges facing would-be developers.

1. How would you characterize the overall state of hotel investment and development in the Mediterranean region?

The Mediterranean has seen a large shift in the profile of hotel investors, from being a local and fragmented investment market to a more international and institutional one. New brands and concepts are pulling investors to diversify into the leisure component of the hotel market, which has shown more resilience than the business segment in the last 10 years.

2. In what markets are you seeing the most amount of investment activity and why?

This year investors are looking at Greece, Italy and Portugal. Spain has had a huge run in the past two years and it is still considered the largest and most liquid leisure market for investors within the Mediterranean, but the investment volume is lower than last year due to the tightening of expected returns as a result of higher asking prices.

Miguel Casas
Miguel Casas, senior director of CBRE Hotels in Spain
Photo credit: CBRE Hotels

3. What is the biggest obstacle for a foreign investor searching for a project to invest in?

Institutional quality stock is the biggest barrier for hotel investment volumes not to be higher in the Mediterranean. Foreign investors seek good locations, solid operators and repositioning business plans to upgrade properties through CapEx and management turnaround strategies.

4. What are the types of hotels and resorts being built and what has the best ROI? Branded? Select- or Full-Service? Multi-use Developments?

There is still little hotel development in the Mediterranean Coast but we are seeing a number of distinctive hotel projects, such as Ikos and Six Senses. AM Resorts coming to Europe through its joint venture with NH Hotels is good news, too!

5. How do you compare hotel development in the Mediterranean versus other classes of real estate? Is it a safer or riskier bet?

Development of hotels always depends on a few variables: expected return for the investor/developer and exit price. The risk currently is on the exit—knowing if you are building an institutional-style hotel that can later be sold or not.

6. What are you most looking forward to at MR&H this year?

I am looking forward to meeting an even more international community of investors, operators, developers and lenders from the hotel and resort market in Europe, and learning from their experience in different parts of the Mediterranean.