In the hotel sector, investment activity closed 2023 as the second strongest year in the historical series, reaching about 4.1 billion euros. This level sits just behind 2018 when roughly 5.0 billion euros were invested, according to data published recently by the consulting firm CBRE. The figure accounted for roughly 40 to 45 percent of total real estate investments last year, a notable shift in a year that contrasted with 2022.
The year proved challenging for real estate investing due to higher borrowing costs and adjustments in asset valuations. Although figures from consultancies carry some approximation, total spends by investors approached 9 billion euros, about half of the prior year. Yet this did not significantly ripple through the hotel sector, which has drawn a wave of international capital and attention.
Laura Hernando, director of Hotels at Colliers, described 2023 as historic for hotel investments. She noted that hotels have emerged as a leading asset class in the country, even surpassing markets like the United Kingdom, France, and Germany for hotel investment activity. The surge was driven by a small number of large operations undertaken by institutional funds. The standout deal was the purchase of 35 percent of HIP by the Singapore sovereign fund GIC, the nation’s largest hotel owner with holdings in Portugal and Italy. This single transaction represented nearly a third of the year’s total investment. Abu Dhabi’s ADIA also completed two significant acquisitions, paying 600 million euros for 17 hotels across Spain and contributing approximately half of Proyecto Calviá Beach, a major hotel complex in Majorca for about 250 million euros.
Enrique Losantos, CEO of JLL, observed that institutional and sovereign funds made up around half of all investment volume, with private equity funds accounting for about 11 percent. Hernando explained that these capital sources were not heavily impacted by rising financing costs. She added that strong hotel performance and favorable tourist demand forecasts for the short and medium term will continue to attract liquidity to the sector in 2024. The pandemic era is also seen as a turning point for investor and operator confidence in leisure-oriented hotel assets.
Offices and commercial assets present a very different picture from hotels. Real estate investment in offices and related properties, particularly centers, slowed in 2023 due to the rise of e commerce and a shift toward remote work, which reduced appetite for such properties on the market. Investments in offices totaled around 1.0 billion euros, about half of the previous year, aligning with broader market trends. Institutional investors and private equity funds have largely retreated from the space, leaving more room for private investors. An uptick in middle-market investments and renewed domestic capital activity has become evident as liquidity remains relatively tight. CBRE’s Adolfo Ramírez-Escudero highlighted a notable concentration of activity in Madrid and Barcelona with substantial portfolios in the capital and in Catalonia.
Retail investment, encompassing stores, supermarkets, shopping centers, and parks, closed 2023 near 1.2 billion euros. The decline contrasts with a blockbuster 2 billion euro deal in 2022, but it still signals potential resilience for the sector. Industry leaders suggest strong fundamentals, healthy occupancy, and rising rents, along with ongoing portfolio and shopping center sales negotiations that could drive growth in 2024. Borja Ortega of BNP Paribas Real Estate emphasized the sector’s higher growth potential as market conditions improve.
Logistics shows a mixed state, positioned between weaker sectors like offices and stronger areas such as housing. The sector benefited from the ecommerce boom and the pandemic, fueling demand for warehouse space and contributing to lower yields as prices rose. However, recent monetary policy shifts tempered demand. In some regions, including Catalonia, rental demand has remained subdued while supply levels show little change. Catella reported a near 70 percent drop in investment through the third quarter of 2023, down to about 675 million euros. Yet rental activity recorded a historic year, with expectations for 2024 remaining steady at similar levels to 2023. Savills reported around 950,000 square meters leased in Madrid and 550,000 in Barcelona.
Investors are increasingly looking beyond traditional hubs. Cushman Wakefield notes that funds moved away from major cities in 2023 as new entrants enter the market. The 2024 outlook in logistics remains optimistic, with expectations for volumes surpassing 1.2 billion euros, according to Savills and Colliers. This shift points toward a broader geographic diversification and a continued appetite for industrial space that can absorb evolving logistics needs.
Housing and alternative asset classes also drew strong interest. Residential rental activity rose significantly in 2023, with Savills projecting higher volumes for 2024 as supply tightens and rental demand grows. Investor appetite extended to affordable rental housing and other flexible living formats, including care homes and student housing, which together attracted substantial activity in 2023 and are expected to rise further in 2024. Data centers emerged as a particularly compelling segment within alternatives. Market participants note consolidation in the data center sector following a boom period, as established operators pursue growth and plan for future asset transactions that could capture a larger market share moving forward.
Cited assessments from industry researchers confirm that hotel assets will continue to attract liquidity and that other property types are recalibrating to the new cost reality, with strategic shifts shaping investment flows across Spain, Portugal, and beyond. The ongoing recalibration across real estate markets underscores a broader trend of capital seeking resilient assets amid shifting macroeconomics, with the hotel sector positioned at the forefront of international investor interest for 2024 and beyond.