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28 December 2015 | Hoteles

2015 Spain Hotel Investment Review, by Christie & Co

Christie + Co, Europe’s leading hotel property specialist, looks over the most outstanding transactions of 2015 and talks about what lies ahead.

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Reaching the Christmas Season, it is generally expected to take stock of what happened in the previous year, and at Christie & Co, we want to join in with this trend, noting that 2015 was definitely the year of consolidation of economic recovery for our country.
In the hotel sector, this is reflected mainly in the growing interest among national and international investors. Tourism has proven its resilience in the most difficult years of the Spanish economy and has demonstrated its strength in a country that enjoys many favourable factors for the tourism industry.
All these factors, along with the start of the expected economic recovery, have favoured the appetite of many types of investors, especially institutional funds and foreign investment funds. REITs have also joined and they, after the last reform of this new investment vehicle, have been particularly active in the beach and sun sector (coast tourism). Moreover, in 2015 investment capital from Asia began to stand out, which we believe will continue to grow in the coming years, given the interest that our country generates among Asian investors.
In relation to 2016, once the political landscape is clear after the recent general elections, we are convinced that the market will continue as it is now or become more active. Most domestic and foreign investment groups have defined their investment strategy in Spain in both resort and urban product. Given these factors, if the expectations created during the second half of 2015 are fulfilled, 2016 may again be a record year in hotel investment where cities such as Madrid, Barcelona, Malaga, Bilbao, San Sebastian and Valencia, will once again be the main protagonists, together with more holiday destinations such as the Balearic and Canary Islands.
At our company, we make a brief review of some of the relevant hotel transactions that have taken place in Spain during 2015. More than 50 asset transactions have been carried out in our country, apart from the investment in many buildings in order to be converted into hotels. This shows, once again, that the sector is in full swing.
Around the 70% of these transactions have been of high category assets: 4-star (60%), 5-star and 5-star GL (10%). The most notable operation of the year starred in the Hotel Ritz in Madrid, for an amount of €130 million (approx. € 780,000 per room). In the last months of the year there have been other luxury asset transactions, such as the Sheraton Mirasierra in Madrid or the recent one for the Sandos San Blas Hotel (5*, 331 rooms) in Tenerife for €36.8 million (approximately € 111,000 /bedroom).
Madrid and Barcelona remain the main focus of hotel investment in Spain. The capital is generating a growing interest from investors, both domestic and international, after years of neglect in contrast to the city of Barcelona. Furthermore, a significant number of transactions of buildings to be converted into hotels have taken place during this year  as the recent purchase of the buildings in the Jacometrezzo street, for an amount of €23 million, for its conversion into a 4-star hotel by the Asiatic investment fund Platinum Estates, which last year bought the legendary Hotel Asturias.
In the meanwhile Barcelona, despite the uncertainty generated after the moratorium from the City Council, remains one of the preferred choices for both investors and hotel operators. The latest outstanding operation in the city has been the Hilton Barcelona Hotel, purchased by the National Investment Fund of Oman for €60 million.
The deals mentioned above show the growing interest from international investors, particularly from China and the Middle East, a trend that began a few years ago and that are currently being consolidated. However, the role of national investment is also remarkable, both by hotel operators, highlighting Hotusa (with the acquisition of major assets such as the Sheraton Madrid Mirasierra and Maria Elena Palace Hotel) or H10.
At the same time, the activity of the REIT Hispania Real Estate Assets is also highlighted within the sector. It appears that it has put its focus on the Canary Islands, with major acquisitions such as the luxurious Gran Hotel Atlantis Bahia Real Suite (5* GL, 242 rooms) together with the Hotel Atlantis Fuerteventura Resort (4*, 383 rooms) for EUR 105 million (168,000 Euros / room), the aforementioned Sandos San Blas Hotel in Tenerife and the Dunas Don Gregory Hotel in Gran Canaria (4*, 241 rooms) for EUR 75 million (63,400 Euros / room).
These transactions also reflect the growing interest in the Canary Islands, where many operations have taken place. Some of them are the acquisition of the Hotel Catarina (4*, 402 rooms) and the Hotel Altamanera (4*, 238 rooms) for €32 million and €15.8 million respectively, by the German group IFA Hotel & Touristik AG. Another important transaction has been the acquisition of six apartments in Lanzarote and Tenerife carried out by the Spanish operator Onagroup for an amount that has not been disclosed.
Finally, there have been a significant number of transactions of hotel assets in Mallorca too. Especially regarding 3* and 4* hotels. The most relevant ones have been the purchase of Sumba (4*, 280 rooms) and Borneo (4*, 200 rooms) Hotels for the amounts of €36,4 million and €26 million respectively (€ 130,000 / room) by the German Company Allsun.