The investment volume achieved in 2016 totalled almost €1.2 billion with 46 transactions recorded in core CEE hotel investment markets. In comparison, 2015 reached just over €700 million with 45 transactions. Austria was the star performer with almost €800 million transacted, which made up 67% of the total investment volume. In other CEE markets volume was lower than in 2015 with a particular decline in Poland which more than halved in volume. The Czech Republic accounted for 18% of total CEE investment share; most of the investment took place in Prague which saw 7 transactions including the Hilton Old Town, Park Hotel and Chopin Hotel.
The CEE hotel industry reported growth across all key performance metrics. Increasing number of tourists have chosen CEE destinations, thus occupancy rates returned or even surpassed the pre-crisis levels, reaching 72% on average up from 69%. As the cost of visiting CEE has gone up along with the increasing hotel room rates, profits have been soaring. The average price per room reached €76.6 up from €73.6 in 2015. While the Eastern markets achieved double digit growth in terms of revenue per available room, the more mature markets of Central Europe including Prague and Warsaw saw growth of around 6%.
Performance change over 2016
Money has been flowing in from Far East Asia, the Middle East, America as well as Europe. Hence the region has become truly international.
“In the last few years the region has seen important inflows of capital as wider groups of investors try to take advantage of the strong performance of the local hotel industry. Among the key factors driving performance are the continued strength of inbound international tourism into the CEE region, supported by Asian travellers as well as the re-focus of North African and Western European tourism. Moreover the willingness of banks to finance hotel acquisitions has significantly enticed high investor demand,” says David Nath, Head of CEE Hospitality Team at Cushman & Wakefield.
Banks’ appetite for lending is reflected in the return in hotel development activity with 2017 expected to deliver an additional 4,000 rooms across Central and Eastern European capital cities. The markets with the greatest development prospects are Warsaw and Budapest. Prague is an exception with a limited pipeline due to planning constraints and only a few sites suitable for hotel development.
“Although we expect growth to slow down slightly, during 2017, the investment market will remain robust compared to other more established markets in Western Europe. We will also see increasing capital invested in less mature hotel investment markets such as Bucharest and Sofia” says Frederic Le Fichoux, Head of Hotel Transactions - Continental Europe and adds “Average daily rate is expected to rise further, generating higher income returns for investors especially in more mature CEE markets, where the development pipeline is limited.”
In 2017, investors’ activity will be notable especially in Hungarian, Austrian and Romanian hotel investment markets, where significant assets are set to be put up for sale or about to be transacted.
The owners of the luxury patisserie chain DESEO Patisserie & Chocolaterie have extended their long-term lease at the Vis à Vis Wilanów retail park. The company occupies 93 sqm of stylishly arranged space within the building.
Funky Buddha, an international fashion brand part of the ALTEX S.A. group, is continuing its expansion into the Romanian market with the inauguration of its first store outside Bucharest, located in Iulius Town Timișoara. The new location, situated on the ground floor of the complex, marks the brand's second physical presence in the country.
HalfPrice has leased close to 1,600 sqm for a new store at M1 Radom centre, managed by EPP. CCC will also spend further years with M1, having renewed its lease agreement. The total area covered by the new and extended contracts exceeds 2,100 sqm.
New appointments
Daniel Orczyk has been named Senior Project Manager at the technical advisory department of Avison Young in Poland. He is a licensed structural engineer and building site manager with over 20 years of experience.
Łukasz Meisner has joined Peakside Capital Advisors as Head of Project Management. He will be responsible for the management of Peakside's investment projects in Poland, including overseeing the implementation of key investments within the City Point, Urban Parks, and Peakside Industrial logistics platforms.
Peakside Capital Advisors is strengthening its Polish structure, expanding its expertise in investment management and development project execution. Łukasz Meisner has joined the team as Head of Project Management. He will be responsible for the comprehensive management of Peakside's investment projects in Poland, including overseeing the implementation of key investments within the City Point, Urban Parks, and Peakside Industrial logistics platforms.
CTP has entered the Italian market through the €241 million acquisition of VLD S.r.l., a development company with a landbank in prime locations previously controlled by FBH Group. This marks the start of CTP's planned €1 billion investment in Italy over the next five years.
M Core has inaugurated M Park Orăștie, a retail park designed to strengthen the group's presence in regional markets and expand its national portfolio of convenience-led retail assets. Located on a 23,000 sqm land plot, the project delivers a built area of approximately 5,500 sqm.
Panattoni has acquired a 17-hectare plot near Grodzisk Mazowiecki and is launching a new investment in the Warsaw region. Panattoni Park Grodzisk VI will reach 80,000 sqm, with the first tenant being one of Poland's leading furniture manufacturers.
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