Are you from Abu Dhabi or Singapore? Of course your country’s sovereign fund wants to buy a hotel in Spain

They were closed between January and September real estate operations in the hotel segment value 2.2 billion eurosThat’s only 7% less than last year, according to data from consulting firm CBRE. 75% of this investment is managed by international investment funds, specifically 34% by the state and 27% by corporate. As of today, including October (with provisional data), Figures recorded in 2022 have already been exceededThe closing was at 3.279 million, according to data managed by consultancy firm Colliers. At least it will be 2023 The third best year of the historical seriesIt’s on the heels of 2018 and 2017, when the $2,000 million acquisition of Blackstone from Hispania closed, among other operations.

Until last week, there were three operations on this issue, two of which were carried out by the police. Abu Dhabi sovereign wealth fund ADIA: Paid 600 million euros 17 hotels So far, there are approximately 250 million units distributed throughout Spain, owned by the founders of the Tryp chain. 51% of Calviá Beach ProjectA complex of seven hotels in the Majorca town of Magaluf is owned by the Avenue Capital fund. The third operation was carried out in the luxury hotel segment. Saudi Olayan familyBuyer Barcelona Mandarin Oriental For a price of over 200 million. Three operations totaling more than 1,000 million, with Arab capital as the leading player.

But last week, another significant investment became known, in this case starring another state fund, Singapore GIC. This vehicle is one of the ones with the most presence in Spain due to its features. Acquired 35% of Hotel Investment Partners (HIP) from Blackstoneis the country’s largest hotel owner, with 59 assets, primarily in the Canary Islands and the Balearic Islands. Operation, as published by North American business journal Finance Timesround 1.4 billion eurosIncreasing the investment of state funds in the national hotel sector to over 2,000 million, according to this figure Laura Hernandogeneral manager of hotels at a consulting firm colliers“a natural trend” because “Spain is a market that has already reached maturity, with a good infrastructure, legal security and unique locations, with international approval as a safe destination.”

Why are state funds buying hotels in Spain?

Victor CasarrubiosPartner of an international law firm in the field of Real Estate Field Ficher, explains why this year’s government funds are the protagonists. “Spain has always been a country that receives investment from state funds. 2022 was a record year and we are on the right track this year. There are several reasons for this: They are implementing diversification strategies in real estate and technologies, in addition to this in a context of uncertainty and high financing costs, those who stick to their guns and take advantage They are investors.

According to this Jorge Ruizmanager of the consulting firm’s hotels division in Spain CBREArab funds are buying hotels because they “diversify their portfolios” fossil fuel depletion This situation “on the horizon” is “pushing them to invest in other types of assets,” including the real estate and hotel sectors. attractive returns“. In the case of Olayan, they have expanded their luxury hotel portfolio with the Mandarin in Barcelona, ​​the equivalent of the Ritz hotel they own in Madrid.

Regarding GIC’s investment, Víctor Casarrubios states: “In the context of their real estate strategy in Spain, their investment makes perfect sense. They are available in all types of assets, offices, residences and logistics as well as luxury hotels and It made sense for them to diversify into the holiday segment“. The Colliers board also underlines that HIP’s majority partner, Blackstone, is often a key ally in the investments of the Asian country’s sovereign fund. This is also not the first operation of this nature for GIC, having made its first move last year, Greek chain SIG’ With the purchase of .

State funds in general terms according to Víctor Casarrubios They are looking for investments worth 100 or even 200 million eurosSomething a CBRE spokesperson agreed. “These high-ticket players can only invest in very well-located luxury hotel complexes or asset portfolios. Moreover, being a resilient sector, it costs more because they are in the focus of all players in the market,” says the Fieldficher partner. . Jorge Ruiz notes that this type of capital is looking for four- or five-star complexes, “upper segment of the market”, urban or resort type.

Have hotel prices dropped due to interest rates?

Last year’s increase in interest rates by the European Central Bank created a mismatch in the real estate sector generally between the price expectations of asset sellers and what buyers were willing to pay. However, the three experts interviewed underline that there are no major price adjustments in the hotel segment, especially in the hotel market.

Laura Hernando notes: “Have prices fallen? There may have been some minor adjustments, but That’s not why there are so many transactions. There are headwinds in the sector at a macro and fundamental level. “Funds expect asset growth in value creation, not price declines.”

Jorge Ruiz points out: “The hotel market is the market with the least correction in price compared to other sectors. Investors are looking for diversification and benefit from the very solid foundations of the tourism sector in Spain.” In the same vein, Víctor Casarrubios concludes: “There was no change in hotel prices. and in general, the expectation gap between buyers and sellers continues.