Confirmation that the National Asset Management Agency (NAMA) is about to sell its final batch of hotel portfolios has prompted one Irish property expert to predict that 2015 will see hotel values reach a pre-recession high.
“Hotel trading and the tourism market as a whole has improved significantly throughout 2014 and this momentum is forecast to continue throughout next year,” said Kirsty Rothwell, head of hotel solutions at DTZ Sherry FitzGerald, Ireland’s largest commercial property advisor.
“In key tourist regions, particularly Dublin, the supply of existing hotels is limited, with low levels of new development in the pipeline,” she added. “Demand for hotels has also notably risen during the past year, both from Irish and international investors with foreign buyers continuing to dominate the market.”
In the year to the end of September, 63 per cent of all hotel property sales went to overseas buyers. Breaking down that share, 92 per cent of the foreign spend were based in the United States. European buyers accounted for four per cent, with just three per cent coming from Asia.
“Foreign buyers remain motivated by the potential to capitalise on poorer performing properties coupled with the improved tourism sector in the country,” said FitzGerald, adding that; “Both Irish investors independently and Irish investors partnered with international capital are increasingly active in taking on assets”.
Describing this year’s hotel sector activity as “exceptionally strong” she said the number of 2014 deals had accelerated with each passing quarter, resulting in a total of 43 hotels sales during the first nine months collectively worth almost €441m (£351m) — exceeding the whole of 2013.
The most significant hotel transaction of the year was the €120m (£95.5m) sale of The Shelbourne in Dublin to international real estate investment and fund manager Kennedy Wilson.
FitzGerald went on to say: “Activity is expected to remain strong in the final quarter, with the total volume of asset transactions anticipated to exceed €650m (£517m) , enticed by the Capital Gains Tax incentive which is due to expire at year end.”
In terms of location, Dublin accounted for the largest proportion of hotel spend in the nine month period, approximately 73 per cent across 10 hotels. Outside Dublin activity was strongest in the south west and east, accounting for nine per cent, and the midlands region with seven per cent.
Supply levels have improved consistently over 2014 and are expected to improve further in 2015, she said, boosted by NAMA’s announcement that it was readying its final hotel portfolios on the market in 2015.
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