Tourism: a growth market
At global level, Europe is the most popular travel destination of foreign tourists. Growing numbers of travellers from the USA and Asia in particular are being attracted to major European cities. The increasing networking of destinations by modes of transport, the global emergence of the Asian middle class in particular with a high willingness to spend, and changed social preferences in terms of exotic locations, length of holidays, entertainment and individualization illustrate the strong attraction of the tourism sector.
In addition to these structural factors, it is also apparent that political crises and terrorism can lead to intense tactical and temporary shifts among destinations. This effect is one of the main reasons why the numbers of visitors and overnight stays in Europe are rising further each year, although here too there are signs of changes between the countries. More than 2.8 billion overnight stays were recorded in 2016.
Even so, there are some differences within Europe: in particular, cities such as Paris, Brussels and Istanbul have experienced declining figures, whereas Mediterranean destinations like Spain, Portugal and Italy are enjoying growing popularity overall. Consequently, from overall perspective, the European hotel market continues to grow. This positive trend is also reflected in the context of the property sector: the documentable transaction volume in the hotel asset class reached €17.8 billion in 2016 (2015: €23.7 billion).
In this entire structurally growing market, the increasingly established hotel asset class is a progressively important element of portfolio diversification, putting it more at the focus of investors’ attention. However, distinguishing between properties is not always easy: overlapping concepts, lack of standardization, individual positioning and heterogeneous operator models make it harder to establish a clear structure of how the term “hotel” is commonly understood.
But how do people understand it? And how do the various “hotel types” differ from each other?
The basis is that not all “hotels” in Europe are classified according to a uniform model. Typing can be geared towards various criteria – based on the target group with specific styles, location, commercial purpose, level of services or individual criteria. This illustrates how complex the hotel property market is, and gives an initial indication of the structural risk positioning in the overall portfolio. Figure 1 gives an overview of common hotel terms as well as property types and positioning on the basis of various criteria. In this highly dynamic environment, the depiction is always a status quo analysis.
Alternative investment categories are experiencing an upturn in the real-estate industry. Beyond the conventional investment categories of office, industrial, retail and residential, investment levels in the niche sectors are rising. On examining these various alternative categories, it soon becomes apparent that student housing is attracting more attention than most. The investment market for student residential halls is now also growing outside the core markets of the US and UK. As an asset category, student housing is regarded as comparatively secure, and rising student numbers and a lack of affordable accommodation for students in many European cities mean that it involves low risk. The individual attributes of residential halls (and student housing markets) vary from country to country. Consequently, it is worth taking a closer look at the various types. Below is an overview of this up-and-coming non-core asset category by Catella Research.
Residential properties can currently be found in several investment profiles of renowned investors. This
renaissance is having an effect on local markets: increasing diversity, falling yields and further increasing rent
prices in urban centres is leading to a high level of appeal for investors. Demand continues to outstrip supply,
price effects are resulting from shortages, base price increases and the rising expectation of tenants.
Parking in Europe – investors focus on multi-storey car parks
The Northern European property market is increasingly featuring in the pan-European real estate portfolios of institutional investors. Compared with other European countries, the economic transparency and prosperity of the markets in the Nordic countries makes them a popular option. Also, the availability of capital opens up new investment opportunities. Catella foresees these opportunities, especially for investments in the office and retail markets.
Consolidation is coming to Europe’s retail sector
In order to evaluate the long-term advantages of the 18 analysed European investment locations, Catella Research draws on a large number of criteria, including economies, demographics, regulation, residential property markets and finance. No matter what country or city we look at, it is clear that investments in residential property are subject to increased levels of demand, leading to continuously rising prices.
An annual survey on the commercial real estate market in France, summarising the major trends of 2015.
Positive outlook for Spain’s real estate markets in 2016.
Real estate transaction volume still at record level in Finland.
Demand for residential property continues to rise in Germany.
Demand for office properties drives purchase prices in Germany
Micro homes examined – a solution to urban restructuring?
"Fintechs and other start-ups: their significance to commercial real estate markets."
An annual survey on the commercial real estate market in France, summarizing the major trends of 2014.
An annual survey on the commercial real estate market in France, summarizing the major trends of 2013.