Investors in Europe’s hotel market are still being cautious, keeping the value of hotels across the sector virtually unchanged compared with 2011 levels, according to the 2013 European Hotel Valuation Index (HVI) published by HVS London.
The HVI, which surveys 2012 hotel values across 32 markets, shows hotels in Paris still top the valuation chart with an average price of €660,000 (US$863,575) per room, followed by hotels in London (€625,000/US$817,780 per room), Zürich (€492,000/US$643,753), Geneva (€451,000/US$590,107) and Rome (€353,000/US$461,906).
Tallinn, Estonia, remains at the bottom of the index, with average room values of €98,000 (US$128,235) despite growth rates of 7.7%. Also at the bottom of this year’s chart are the Bulgarian city of Sofia (€100,000/US$130,850), Athens (€104,000/US$136,084), Bratislava (€111,000/US$145,244) and Bucharest (€111,000/US$145,244).
The average value of a hotel room across Europe is €240,000 (US$314,031), unchanged on 2011 levels but up from €215,000 (US$281,320) in 2010.
HVS does not expect 2013 to be the year when investors start to turn to secondary markets and somewhat more risky propositions. According to the consultancy, appetite for cities such as Paris and London will remain as healthy as ever, and steady, solid Germany will be perfectly suited for institutional investors and the generally more risk-averse pocket.
“As bank lending parameters further hardened in 2012, we expect the main investments to continue to come from cash-rich real estate investment trusts, institutional investors and high-net-worth individuals,” said Sophie Perret, director, HVS London. “This is likely to continue to fuel the acquisition of key assets in gateway cities, similar to 2012.”