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Middle Eastern Capital Fuels Growth in EMEA Hotel Sector

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EMEA  Mandarin Oriental Hotel Group  Constellation Hotels Holding Limited  Starwood Capital  InterContinental London  Marriot Hotels  Groupe du Louvre hotels  Principal Hayley 

Middle Eastern Capital Fuels Growth in EMEA Hotel Sector

By - Tuesday 09 July 2013

A surge in Middle Eastern capital has fuelled a strong 38 percent year over year growth in hotel investment in the Europe Middle East and Africa (EMEA) region during the first half of this year according to the latest data from Jones Lang LaSalle.

According to the report some 5.5 billion Euros were invested into the region's hotel sector during the first six months of this year, mostly during the first quarter the data shows.

At the centre of the growth was Middle Eastern capital, which almost tripled from the 745 million Euros invested during the first half of 2012 to 2.1 billion Euros in the first half of this year. Wealth funds from Qatar and Abu Dhabi continued to dominate investment volumes with a focus on core European markets according to the report.  

The U.K. was the most active market, reporting Euro 2.3 billion in transaction volumes, representing 41 percent of total EMEA volumes. France was second at Euro 1.3 billion, 23 percent of the total; followed by Germany with Euro 642 million, 12 percent of the total.  

"This is being fueled by a strong pipeline of opportunities coming to the market and a closing of the spread between buyer and seller pricing expectations, not least driven by more readily available debt financing, both from traditional as well as new sources of debt," Christoph Härle, chief executive, continental Europe for JLL's Hotels & Hospitality Group said in a release.

"Trophy deals" executed in the first half of the year include the sale of the 447-room InterContinental London Park Lane, which was acquired for Euro 359 million by an affiliate of Constellation Hotels Holding Limited, a Middle Eastern private investment group; and the sale of the 138-room Mandarin Oriental Paris which sold for Euro 290 million to the Mandarin Oriental Hotel Group, including two retail units, reflecting "an impressive price per key of Euro 1.5 million, excluding the retail units," JLL reports.

Portfolio deals of 42 UK Marriott hotels, four Groupe du Louvre hotels in France and the Principal Hayley portfolio of 27 UK hotels totaled Euro 1.8 billion, representing 33 percent of the total transaction volume in EMEA. 

Global investors including Westmont, Starwood Capital and Morgan Stanley made up 20 percent of invested capital. 

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