Sentiment among investors targeting the Europe, Middle East and Africa (EMEA) region for hotel investment has improved in the first half of 2012. According to the latest Hotel Investor Sentiment Survey from Jones Lang LaSalle Hotels, expectations for yields and the internal rate of return (IRR) have fallen since October 2011, to stand at seven per cent and 15.4 per cent respectively. Trading performance growth is predicted in almost half (46 per cent) of the 37 cities included in the report over the next six months, while the outlook is favourable for 84 per cent of locations in the medium term.
Chief executive officer for continental Europe at the firm Christoph Harle commented: "According to investors' perceptions, yield requirements are likely to increase over the next six months for EMEA markets where conditions remain difficult in light of tight debt markets and weak economic conditions." However, he went on to highlight London, Paris and Munich where yields are being forced lower, explaining markets such as these that are considered to have stable underlying economies are being targeted by investors looking for security.
The study also pointed to the relatively low levels of development activity in the EMEA hotel sector, although it did cite some exceptions, notably Warsaw in Poland, Zagreb in Croatia and Istanbul in Turkey. Investors may be especially interested in Warsaw, after a Jones Lang LaSalle Hotels report published last month described the city as one of the best performing hotel markets in Europe. Both average room rates and occupancy levels have improved significantly since 2009, with the UEFA European Football Championship - which is being hosted in Poland and Ukraine this summer - expected to boost the sector in the short term. Meanwhile, the country's strong economic growth is predicted to support the hospitality industry in the medium term, particularly in relation to business travel and conferences.
- Thursday 07 June 2012