Europe’s key investment markets unveiled

Fresh analysis of the investment climate of 20 European cities shows that Paris remains the number one hotspot for those looking to invest in the hotel sector.

Despite fears that investors and tourists would lose faith in the city due to political uncertainty and the perceived threat following various national security breaches, the French capital’s lead ranking is due to its high demand growth, strong hotel performance, high investment returns and market depth from 2012-2016, according to the study undertaken by Colliers International.

London and Barcelona came out as the second and third most interesting cities to invest in, closely followed by Amsterdam and Berlin.

Colliers’ inaugural Hotel Investment Attractiveness Index uses 12 metric components, weighted to give each of the 20 locations a score of up to 400, including population; GDP per capital; total workforce; commuting workforce; tourist arrivals; room occupancy; Average Daily Rate (ADR); Revenue per Available Room (RevPAR); Land site prices; Building costs; Valuation exit yields and investment volumes.

These scores were then consolidated into a single figure and ranked to show which markets are hot in terms of overall demand, their recent operating performance and how this ties into the attractiveness of each market with regards to the acquisition of existing hotels and for the development of new ones.

Dirk Bakker, head of EMEA Hotels, Colliers International, said: “Investors are regularly requiring the latest information on cities where they will receive high returns, which in a politically and economically uncertain world, is often difficult to predict. Our index provides us with something more than anecdotal evidence through which to advise our clients.

“According to our latest data, Paris scored highly in terms of valuation exit yields and hotel investment volume between 2007 and 2016. Paris also saw over 15 million international tourists visit the city in 2015 and witnessed average hotel occupancy levels of over 77% from 2012-2016.”

He added: “With the Hotel Investment Attractiveness Index, we were able to create a unique analysis of a very dynamic market.

“By combining the twelve variables, we can generate far more of an insight into the current hotel industry and even predict what could lie ahead.”

Top 20 City Score (max.400 )

1 Paris 269.8

2 London 257.8

3 Barcelona 202.8

4 Amsterdam 190.2

5 Madrid 182.2

6 Dublin 180.6

7 Vienna 178.9

8 Berlin 178.8

9 Zurich 177.7

10 Prague 168.9

11 Frankfurt 159.4

12 Lisbon 155.1

13 Milan 155.0

14 Warsaw 153.0

15 Budapest 149.0

16 Manchester 148.3

17 Istanbul 147.4

18 Stockholm 146.5

19 Brussels 141.8

20 Bucharest 132.6