The Iberian Peninsula has emerged as the most sought-after hotel investment destinations in Europe for 2024, in a hospitality investors survey.
Cushman & Wakefield’s Hotel Investor Compass survey for 2024 gathers insights from 60 prominent investors actively engaged in the region. The investors collectively allocated €18billion between 2019 and 2023 to hotel investments, with an average fund size of €233million earmarked for hotel investment in 2024.
Shift to southern Europe
The research highlights a significant shift in investor interest towards southern European markets, particularly the Iberian Peninsula and Italy. Madrid and Barcelona emerge as top cities with the strongest investment appeal, both with an investment score (out of 5) of 4.3.
Barcelona witnessed the most substantial increase in attractiveness compared to 2022 (+10%), with Lisbon and Madrid also experiencing notable rises of 8% and 7%, respectively.
The Iberian Peninsula showed a surge in interest of 17% from 2022, with a combined score of 4.1.
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Hospitality investment plans for 2024
78% of surveyed hospitality investors plan to allocate the same or more capital in European hotels in 2024 compared to pre-pandemic levels in 2019.
The focus remains on value-add opportunities, with 92% of respondents targeting assets necessitating repositioning or moderate capital expenditure.
Moreover, investors express a willingness to pay a premium for hotels with superior ESG credentials, expecting to shell out an average of 5.5% more for properties achieving the highest level of ESG certification, such as BREEAM Outstanding or LEED Platinum ratings.
ESG stands for environmental, social, and governance Companies implementing sustainable initiatives are likely to draw in customers, investors, and skilled professionals. This is because they are less susceptible to ESG-related risks, including regulatory penalties or harm to their reputation.
Upscale and Luxury hospitality are seeing a surge
Upscale hotel segments, including luxury and upper-upscale, are witnessing the most significant surge in investor demand compared to 2019, with increases of 53% and 46%, respectively.
In terms of accommodation types, resorts (74%) and serviced apartments (59%) are deemed the most attractive by investors.
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