With Europe undergoing a period of prolonged economic and political uncertainty, the CBRE Hotels European Investor Intentions Survey aims to give hotel property stakeholders useful insight into the capital deployment plans of investors in hotel real estate. In doing so, we hope to provide a clearer picture of the future shape of the regional hotel investment market. This year’s European Investor Intentions Survey was answered by 336 real estate investors, all of whom have a significant interest in the hotel asset class. We were encouraged to find that an overwhelming majority of survey respondents intend to invest either the same or more capital into hotel real estate in 2018, compared with 2017. With all indicators pointing to another strong year for European hotel investment in 2018, we seek to answer the key question: which European hotspots will come to the fore?
The CBRE 2018 Europe Real Estate Market Outlook provides insight on the key trends our experts think will affect the European property industry over the next 12 months. Key takeaways: Positive economic environment for most of Europe through 2018 to 2019 The prospect of higher long-term interest rates will start to pose a challenge to property pricing Continued strong growth in assets under management will put pressure on investors to deploy capital Another strong year for office-based employment growth in 2018 Growth in appetite for flexible offices will permeate across European markets Retailers increasingly focused on getting their city strategy correct. This will support rental growth at the prime end of the market Very strong demand growth has cut the availability of large-scale modern space, producing capacity constraints in some of the main European logistic hubs. Coupled with strong e-commerce relate growth this will support further rental increase The evolution of the residential sector will be supported by the sheer quantity of capital available for real estate investment in 2018, increasingly through development in order to build scale Stock shortages and premium pricing in gateway cities for the hotel sector will encourage investors to look further afield at secondary and niche opportunities A key feature in 2018 will be operator consolidation across Europe in the alternatives sector. This will present real estate investors with new partnership opportunities as well as enhancing covenant strength.
The 2018 CBRE EMEA Occupier Survey highlights a strong and growing focus by corporates on deploying technology, wellness and flexible space as core elements in an agenda focussed on enhancing the user experience. • Companies intend to invest more heavily in new real estate technologies over the short to medium term. Their reasons for doing so are increasingly shifting towards enhancing the user experience and also raising workforce productivity. This represents a clear move away from aiming real estate technology at purely operational goals such as energy management. • This shift of focus is reflected in the technologies of choice: wayfinding apps, connected sensors, wearables and personal environment control systems. Room or seat reservation systems and sensors are also being increasingly adopted to support improvements in space efficiency.
In 2017, the European hotel investment market achieved a record volume of €21.6 billion. This surpasses the previous peak set in 2015 of €21.2 billion. The Nordic hotel investment market doubled in size in 2017, with transaction volumes increasing by +101% y/y. Spain continued to see strong investment appetite, achieving a record-high volume of €3.7 billion. The United Kingdom experienced the highest actual investment volume of all European countries at €6.2 billion in 2017.
