Property

Hotels, latest operations reward redevelopment

In the nine months of 2024, investments of 1.2 billion, up 152% on 2023. In Rome, 26% of the total volume was realised. From June to September, 80% of acquisitions were made with foreign capital.

4 December 2024

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Roma, una veduta della Capitale. Le terrazze romane di hotel di recente inaugurazione sono luoghi di ritrovo. (Adobe Stock)

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A market that has been performing well since before Covid and has experienced a further acceleration after the pandemic.

Now that interest rates have come down in two cuts by the European Central Bank, the sector will certainly find additional ideas for new deals. The interest stretches across the Peninsula, between tourist and business cities and resort areas. The latter are interesting enough to attract even fashion brands that not only lend their names to designer beaches, but also open new boutiques to intercept international customers. In the meantime, one of the most eagerly awaited transactions has closed, that for the Bauer hotel in Venice. The tender that ended this week saw the acquisition by Mohari in partnership with Omnam group. The hotel put up for sale by King Street was sold for EUR 300 million: by value the richest single deal of the year. If it is not sold by December for an even larger sum, Villa Certosa, about which much has been rumoured in terms of a transformation into a super-luxury hotel, will be sold.

The figures to the third quarter 2024 are approximately EUR 400 million investment volume in hotels for a total in the first nine months of EUR 1.2 billion (+74% over the same period in 2023). These are the figures from Cushman & Wakefield. The sector continues to account for around 20% of the total commercial real estate investment - excluding residential for private individuals - in the first nine months (overall around EUR 6.5 billion) and demand is strong and growing.

In the third quarter, the hospitality segment raised investments of EUR 415 million out of the total three billion invested, an increase of 48% on a year earlier.

According to Dils, it is precisely the hospitality sector that is driving the recovery of the European investment market, with Italy following this trend. "In the first three quarters of 2024, investments in hospitality in Italy reached 1.2 billion, a 152% increase compared to the same period in 2023, with 2024 already surpassing the total investments of the entire previous year," the company reports. Over the past three years, an average of around 330 million has been invested in the hospitality sector on a quarterly basis; therefore, the third quarter of 2024 saw an increase of around one-third compared to the average.

Operators are unanimous in recognising that the last two years have been particularly favourable for the tourism sector, which has been able to increase rates - sometimes in a way that is difficult to sustain, some add, especially for luxury hotels in large cities - and maintain attractive returns for investors, recovering pre-pandemic levels of visitors.

Dominating the market are Value Add investments, focused on redeveloping and repositioning existing structures. Leading the market are luxury brands, with Rome being the most attractive city for several semesters now. Rome accounts for 26% of the total volume year-on-year. But an emerging trend is still to create luxury camping facilities. This is not new, but it is attracting big investors such as the Americans of Pgim and the colossus Hines. Then there are new formulas such as that represented by the BZar chain, which merges ownership and management (read article on page).

The sector has established itself as a solid, countercyclical opportunity.

The latest deals include the acquisition by Kryalos of the Via delle Vergini building in Rome for EUR 80 million and by Sandaya of a camping portfolio.

According to advisor Cushman & Wakefield while domestic investments dominated the first two quarters, the third sees the massive presence of international investments (80%). A race, that of hotels, which still has a lot of room because in Italy most of the structures remain family-owned. This is also a limitation of the Italian market: the scarce availability of structures, resulting precisely from the fragmentation of ownership and a low presence of international brands and real estate groups, requires investors to compete for a limited selection of prime (high-end) assets.

"Historically, net prime yields in the hospitality sector have hovered between 4 and 5 per cent," Dils says. "After again touching the 5 per cent mark following the general rise in financial rates, the recent increase in activity has paved the way for stability and the potential start of a new downward trend.

Paola DezzaCaporedattrice del Lunedì e responsabile del settore real estate per tutto il gruppo
- @24paoladezza
Lingue parlate: inglese, francese
Argomenti: mercato immobiliare, architettura, finanza immobiliare, lifestyle, turismo, hotel e ospitalità
Premi: “Key player of the italian real estate market” di Scenari Immobiliari
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