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July 25, 2012

Hotel investment volumes in EMEA decline by 12% in H1 2012

Hotel investment volumes in Europe, the Middle East and Africa (EMEA) in H1 2012 declined by 12% against sales volumes in H1 2011, totalling €3.7bn, according to Jones Lang LaSalle Hotels.

By Srivani Venna

Hotel investment volumes in Europe, the Middle East and Africa (EMEA) in H1 2012 declined by 12% against sales volumes in H1 2011, totalling €3.7bn, according to Jones Lang LaSalle Hotels.

The hotel investment services firm said the majority of transactions, which accounted for 64% of total EMEA transaction volumes, were single asset sales.

Jones Lang LaSalle Hotels Northern Europe CEO Jon Hubbard said the UK was the most liquid market during the period, with transaction volumes of €1.4bn, 37% of total EMEA transaction volumes.

"London accounted for 59% of UK investment volumes or €796m, where activity was primarily driven by the acquisition of eight upscale hotels in the capital, including the 4-star 208 bedroom Hoxton hotel which was sold for €81m to private equity firm Ennismore Capital and the 5-star 62 bedroom Number 11 Cadogan Gardens that was acquired for €39m by The Cadogan Estate," Hubbard added.

During the same period, France had hotel transaction volumes totalling €401m, representing 11% of total EMEA transaction volumes, including nine hotels sold in Paris with a total value of €328m.

Volumes in Germany totalled €177m, accounting for 5% of total EMEA transaction volumes. Significant transactions included a portfolio sale of two hotels in Berlin, the 153-room Hotel Indigo Berlin and the 242-room Holiday Inn Berlin Centre, by the Azure Property Group to Invesco Real Estate for €60m.

"In the first five months of 2012 many hotel markets have seen a growth in revenue per available room (RevPAR)."

Despite the economic downturn and uncertainty in the Euro Zone, Jones Lang LaSalle Hotels observed continued growth in trading fundamentals in many key European hotel markets.

In the first five months of 2012 many hotel markets have seen a growth in revenue per available room (RevPAR), including Paris, London, Munich, Barcelona, Copenhagen and Prague with growths of 7.3%, 3.1%, 3.4%, 5.6%, 3.7% and 13.5% respectively, when compared to the same period in 2011.

As quite a few large European portfolios are expected to close in the coming months, it is expected that hotel investment activity will pick up in the third and fourth quarters of 2012.

Hotel transaction volumes in 2012 are expected to be largely on par with 2011 at approximately €9.4bn, according to Jones Lang LaSalle Hotels.

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