Interest in luxury hotel investment is growing in Spain, according to a report by Colliers. The luxury hotel segment has attracted investor attention in the first six months of the year, with a total of 8,316 rooms transacted in 62 deals, amounting to 1,383 million euros, of which 52% was allocated to luxury transactions.
Investors have continued to focus on high-quality assets, as observed since the beginning of the pandemic. The luxury hotel segment has proven to be highly liquid and resilient even during times of uncertainty. Prime destinations like Barcelona, Ibiza, Sitges, and Madrid are favored in these types of operations.
Five-star luxury hotels accounted for 21% of the total investment, and five-star hotels accounted for 31%, totaling 717 million euros, representing more than half of the total investment in the hotel sector during the first half of the year. This trend is a result of Spain’s strong positioning as a global tourist destination, its rapid recovery after the biggest tourism crisis in history, and the high appeal of Spain as an investment destination for international hotel investors.
Major transactions in the luxury hotel segment include the Hotel Sofia and the Hotel Mandarin in Barcelona. Other noteworthy transactions include the purchase of W Ibiza by the Italian group Statuto from Scala Capital, the acquisition of Dolce Sitges by Perial, and the sale of Autograph Collection Palacio del Retiro to Jon Riberas’ family office (Gestamp).
In urban areas, Barcelona has taken the lead with five transactions worth 459 million euros, surpassing Madrid, which experienced a slowdown in transaction volume after a record-breaking 2022. Madrid recorded six transactions totaling 123 million euros in the first half of the year.
In the vacation segment, popular destinations such as the Balearic Islands, the Canary Islands, and the Costa del Sol accounted for 49% of the investment, totaling 684 million euros. The Balearic Islands emerged as the clear leader, with 15 transactions, over 2,000 rooms, and 400 million euros in investment. The Canary Islands recorded seven transactions worth 174 million euros, while the Costa del Sol saw four transactions totaling 110 million euros.
International investors continue to dominate the market, accounting for 63% of the total investment in the first half of the year. Insurance companies and sovereign funds are also noteworthy players, showing a more long-term, patrimonialist approach with lower exposure to debt markets and more moderate return expectations.
The role of international investors as sellers has been significant, accounting for 71% of sales. As the life cycle of value-add investors’ funds (with an average duration of five to seven years) comes to an end, these investors are starting to rotate their asset portfolios.
Despite the economic uncertainty and its potential impact on the tourism sector, the strong fundamentals of the hotel industry, demonstrated investor confidence, and market appetite provide positive prospects for hotel investment in Spain for the remainder of 2023.
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