Swedish Hotel Assets Gaining Popularity

According to Jones Lang LaSalle's Hotel Intelligence report for Sweden, the country's stable economy and "robust operating conditions in Stockholm" are driving investment interest, enabling the city to enjoy hotel asset yields of 5.9 per cent...

According to Jones Lang LaSalle's Hotel Intelligence report for Sweden, the country's stable economy and "robust operating conditions in Stockholm" are driving hotel investment interest, enabling the city to enjoy hotel asset yields of 5.9 per cent - one of the lowest yield requirements in Europe.

Transaction activity in 2012 at year-to-date June has already generated over GBP 62 million, with four hotels changing owners, including the four star, 128 bedroom Renaissance Malmo, which sold for 45 million euros (GBP 36.6 million, approx) to Fastighets AB Balder. However, the market is currently underexploited by foreign investors, despite its favourable position. Some 76 per cent of total quality bed stock in Stockholm is owned by Swedish companies and domestic travellers are currently staying loyal to national brands.

According to the report, European investors in the country's hotel assets are mainly from Norway, which own 18 per cent of Stockholm's hotel rooms. Global ownership only accounts for six per cent. Jon Hubbard, chief executive officer UK and Northern Europe Jones Lang LaSalle Hotels, explained: "The hotel investment market in Sweden is dominated by domestic investors and only a limited number of foreign acquisitions have been witnessed in recent years.

"Despite the presence of a number of foreign operators, Sweden is likely to stay predominantly in the hands of Nordic brands, which are well known to domestic visitors, who continue to account for the Lion’s share of demand.  This type of asset will continue to attract interest from domestic investors; however, they may struggle to raise the interest of international capital, which tends to focus on international branded hotels."

Despite the positive performance of Swedish hotel transactions in 2012, they still have some way to go to reach the 2009 volume peak of 279 million euros (GBP 227 million, approx). Transaction activity has slowed over recent years, as it has across Europe. However, in Sweden the market is one of the most opaque and deal information is not always disclosed.

- Thursday 06 December 2012

*This page is provided for information purposes only and should not be construed as offering advice. Flex Profit Hub is not licensed to give financial advice and all information provided by Flex Profit Hub regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.