As the financial crisis takes another bite out of Spain and threatens to project its fury into ending the world as we know it (well, ending the Euro anyway), we are all looking for safe investments. Property investment is known as a safe investment in such volatile times, and especially certain types of property in certain locations.
But not everyone can afford prime property in prime cities and for those who can't hotel investment is a very good choice, providing all the correct steps are taken. Rather than bore you with what those steps are, as all have been covered on this site before, let's take a trip around some of the world's hotel investment hotspots, both emerging and classic.
Classic Hotel Investment Areas
Right now London is a hotspot for all types of property investment. London is not in the Euro, and prime property is well out of the reach of speculators, as a result property prices have grown strongly since the first hint of recovery in 2009. This has made London property very attractive to wealthy investors from around the world.
London hotel rooms are an incredibly good investment, because they benefit from the same safe haven attributes as prime capital property, but within well structured and even safer investment models. You also have the 2012 Olympics being held in London which will massively boost occupancy of London hotels and other metrics including revenue-per-available room etc.
Earlier this year Savills predicted that Amsterdam was to become a hotel investment hotspot due to thousands of new rooms coming online and their prediction that occupancy would still increase to 75-80% despite the increased supply.
Clive Pritchard, Head of Savills in the Netherlands, said: "The hotel market is well supported by the Municipality of Amsterdam. Speaking to operators at the international hotel conference in Berlin earlier this month many are looking for opportunities to enter the Amsterdam hotel market or to increase their market share and we expect investors would be prepared to pay a premium for city centre hotels which rarely come up for sale. International banks are still cautious but will provide financing for viable hotel investments."
The Euro may be falling apart but a Paris hotel break will always be one of the most romantic holidays in the world. When did you see a rich guy wooing a girl in a film that didn't take her to Paris in his private jet at least once? Rich being the operative word. No matter what happens to the Eurozone it is unlikely that Paris will come out smelling of anything but roses, and in fact investors are still buying into prime Paris real estate as a safe haven asset. Prime hotel rooms are a safe haven asset at a lower price and often with a structure that makes them even safer as investments (attached to powerful brands, coming with guaranteed yields and guaranteed buy-back deals etc).
Emerging Hotel Investment Areas
Istanbul has been a hotel investment hotspot for around 2 years. In 2010 Marriot paid tribute to the potential of Istanbul when it chose the city as one of only 2 locations to trial its new edition boutique hotel chain. Since then the Carlton Rezidor group have built and/or opened 3 hotels in Istanbul and have plans for a further 20 across Turkey. Soho House, the trendy private-members hotel chain has recently announced an expansion of 5 new hotels in the world's top cities, including Toronto, Chicago, Barcelona, Mumbai and yes, Istanbul.
Istanbul is being developed and converted from one of the world's historic landmarks into a chic metropolis of the modern era, hopefully without losing any of its historical value. This makes it one of the ultimate hotel investment hotpots of the current decade.
Manama (Bahrain capital)
According to the STR Global report into the performance of hotels across the Middle East and Africa, Manama is the hottest performing market in the region. Hotel occupancy in the city grew a staggering 69.5% over the year ending April 2012, leaving occupancy at 42.5%. This followed the even stronger growth of 112% occupancy growth in March.
Manama also recorded the biggest growth in Average Daily Rate in April, up 30.4% to US$242.35, following growth of 14.6% to US$217.34 in March, which was also the biggest growth in the region. And as if that wasn't enough, Manama also recorded the biggest growth in RevPar in April +121.1 percent to US$103.10, following growth of +143.1 percent to US$97.96 in March, when again, it was also the best performer in the region.
- Wednesday 06 June 2012