The Austrian hotel investment market in 2017: development projects highly popular with investors
After a quiet first half of the year in which the Austrian hotel transaction volume was just €130 million, the pace picked up in the second half of the year and hotel transactions topped half a billion Euros in 2017. Due to the small number of hotels on the market, demand has shifted towards the purchase of development projects according to specialist hotel property adviser, Christie & Co.
“The hotel investment market was characterised by several fairly minor transactions in the first half of 2017, but due to a number of larger deals materialised in the second half of the year, the overall result was above average for recent years, although well short of the record figure of 2016,” summarises Simon Kronberger, Associate Director at Christie & Co.
As a result of the high number of transactions in 2016, there were relatively few hotels on the market at the start of 2017, particularly in the cities. The biggest transactions included the 236 room Courtyard by Marriott hotel and the Steigenberger hotel (176 rooms), both of which are in Linz; Christie & Co acted as an adviser on the latter transaction. A number of small private hotels were sold to private investors in Vienna, including the 136 room Park Inn by Radisson Uno City. Other large and high profile transactions in the first half of the year included the Landhaus zu Appesbach by the Wolfgangsee (27 rooms), which was purchased by Dietrich Mateschitz.
The frequency and volume of transactions increased significantly in the last six months of 2017, as several hotels were being sold as part of mixed-use properties. DEKA acquired DC Tower, the tallest building in Vienna, which accommodates the 253 room Hotel Meliá Vienna, while in November Art-Invest secured the Millennium Tower with the 97 room aparthotel, Harry’s Home.
“Generally speaking, there is a trend towards mixed-use concepts in the development sphere and amongst investors. This means that large premises are being rented while investors are spreading their risk,” comments Simon Kronberger, who also identifies another trend: “Over the past year, there have been an incredibly high number of transactions involving hotel developments sold prior to completion, no doubt because of the limited number of portfolio hotels on the market at this time.”
Indeed, the number of forward deals increased in the second half. Signa Holding sold the new Hotel Roomz Prater (270 rooms), which includes a conference centre and forms part of the Bank Austria Campus, to PGIM Real Estate. Two of the GBI planned apartment buildings in Vienna and Graz were sold to Catella Real Estate AG in Germany as soon as construction work started. Research conducted by Christie & Co found two more hotel development transactions in Vienna. “Other hotel projects on the Viennese market at this time are either up for sale or due to be sold imminently,” notes Kronberger.
In the summer, two well known hotels south of Vienna were sold at a stroke; Conwert sold the 85 room Hotel Böck to Immovate, while investors Jürgen Hesz and Jamal Al-Wazzan acquired the 485 room Eventhotel Pyramide Vösendorf. Kronberger concludes, “According to market data compiled by Christie & Co, the total volume of hotel property transactions in Austria for 2017 comes to €510 million when we factor in other holiday hotels such as the Hotel AVIVA in Upper Austria, brokered by Christie & Co, the Austria Trend Alpine Resort Fieberbrunn (144 romms) and the Grandhotel Staubinger (200 rooms) in Bad Gastein, which has been vacant for years.”
“At €510 million, the total volume for 2017 was comfortably above the average level of €430 million for the past five years, despite the slow start to the year. This shows demand levels remain very high despite falling yields. The 7 Days Premium Hotel Vienna and Gartenhotel Altmannsdorf transactions, in which Christie & Co is involved, are nearing completion. Together with several other deals scheduled for the first quarter, 2018 is off to a great start.”