The first half of 2010 has demonstrated that the EMEA hotel investment market is starting to pick up, with growth expected to accelerate even more in the second half of the year, according to a forecast.

Jones Lang LaSalle Hotels, a provider of hotel investment, advisory and asset management services, said in its report that transaction volume rose marginally to 1.6 billion euros ($2.1 billion) at the end of the first half of this year, representing a 6 per cent year on year increase.

There is strong sense that the latter part of 2010 will witness stronger investment activity, with expectations that the second half of 2010 could see transaction volumes double on levels seen in the first half of the year, it said.

The UK has been the most active market in 2010, with over 300 million euros of investment transacted which represents a 19 per cent market share compared to 14 per cent in 2009. Last year’s leader, France, is not far behind with just under 270 million euros invested, the report pointed out.

Hotel operators, institutional investors and investment funds/private equity continue to display a strong appetite for investment, and together accounted for nearly 65 per cent of all hotel investment in EMEA in the first half of 2010.

This indicates that sophisticated investors believe it is a good time to buy and are enjoying reduced competition for assets, as many of the high leverage buyers have fallen out of the market, said Jones Lang LaSalle Hotels.

Domestic capital remains the dominant source of investment accounting for 47 per cent of total investment, with investors still focused on familiar territory. Investment from European sources has risen significantly from 18 per cent to 34 per cent, while investment from the USA continues to be weak.

Middle Eastern interest remained relatively strong with a growing market share during the first half of 2010 moving to 14 per cent from 8 per cent in 2009; however there has been no significant investment from Asian buyers despite strong interest from this region, in particular South Asia.

These types of buyers tend to look for good quality assets in London and Paris at discounted prices, which are hard to find in today’s market as buyers outnumber sellers by a considerable margin.

Mark Wynne Smith, CEO for Europe, Middle East and Africa at Jones Lang LaSalle Hotels, said: “The dynamics of the market have changed and deals are taking longer to complete, with both buyer and seller approaching negotiations with caution.”

“However, we are starting to see sellers acknowledge that buyers’ pricing is acceptable given the current economic climate, which is likely to drive increased deal volume as the year progresses,” he added.

Wynne Smith also noted the stock being marketed is of a substantial volume and that there are more deals in the pipeline than there were in the first half of 2009, many of which will materialise over the coming months. This will be supported by improved access to credit from lenders and increased certainty about underwriting projects, he said.

“The market conditions experienced over the first half of 2010 are reminiscent of what we saw in 2002.  The second half of 2002 saw a doubling of transaction volume and I anticipate that we will see a similar outcome over the remainder of this year,” Wayne Smith concluded. – TradeArabia News Service