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16 January 2019 | Hotels

Hotel Investment Market Austria 2018: Local private investors increase activity

Vienna. The first six months were exceptionally strong with a transaction volume in excess of €230 million, and the second half of the year was not far behind. An approximate transaction volume of €420 million was reported for the year as a whole – in long-term comparison, the third best result in regards volume. Notably, private investors in Austria have emerged as prominent buyers over the past year.

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“The trend we saw in the first half, whereby fewer transactions were recorded but those transactions were larger, continued into the second half of 2018. Although there were only half as many transactions as we had seen in 2017 overall, the volume of those transactions was significantly greater. Following on from two record years in a row, the total volume of €420 million made this the third strongest annual result since our records began,” reveals Simon Kronberger, Associate Director at Christie & Co. “Interestingly, the total volume for the second half was below that of the first six months for the first time.”

As a consequence of the high number of transactions in previous years, there were relatively few hotels on the market at the start of 2018, particularly in cities. That said, several transactions were initiated in 2017 but held over to 2018, including the 400-room Motel One at the Westbahnhof, which was sold to Real I.S. as part of a mixed-use property. Christie & Co also assisted the sale of the Gartenhotel Altmannsdorf and the 7 Days Premium Hotel Vienna, transacted on behalf of the SPÖ. Also in Vienna, the Falkensteiner Schottenfeld was sold; having closed its doors in October 2018, the establishment will reopen as the Max Brown Hotel in May 2019. Towards the end of 2018, a conference hotel with nearly 200 rooms in one of the city’s most important business locations was sold to a private investor; once again, Christie & Co oversaw the process on behalf of the seller. Vienna therefore accounted for more than 40% of the total volume, contributing in excess of €170 million.

The situation in the other states was relatively quiet in 2018. At the start of the year, UBM sold a 50% stake in the 175-room Hotel park inn Linz to co-owner the List Group. A number of transactions were also confirmed in Salzburg, with all hotels forming part of mixed-use properties. In addition, the 64-room Romantik Hotel Post in Villach was sold in mid-year while Christie & Co sold the 44-room Hotel Landskron in Bruck an der Mur to a private investor in Austria.

There was more movement in the holiday hotel sector this year. For example, the Beneco private foundation sold the 81-room Hotel Grand Tirolia in the well-known skiing resort of Kitzbühel to a private Austrian investor very early in the year; this will be the first hotel in Austria for Hilton’s new Curio Collection brand. The two Hunguest hotels in Heiligenblut (the Hotel Heiligenblut with 113 rooms and the Hotel Post with 50 rooms) also transferred to a new owner, a Hungarian private investor, this year. Meanwhile just under €100 million was raised from the sales of holiday hotels from Lech, Zürs and Obertauern to Bad Gastein, Sölden, Galtür and Tamsweg; alongside the private investors, the Valamar Group of Croatia gained its first Austrian site in the process.

“The type and the origins of investors has been a very interesting development this year. Although we were involved in a number of these transactions, we were surprised to find private individuals in Austria making up a big proportion of buyers and accounting for 60% of all deals this year,” remarks Kronberger.

In terms of the transaction volume, private buyers in Austria were responsible for around half of the total volume of €420 million (just over €200 million). Moreover, the List Group took full control of the park inn Linz and UM Bau secured the Gartenhotel Altmannsdorf in the district of Meidling in Vienna. Taking all investor types (not just individuals) into consideration, Austrians accounted for 60% of the total volume. This group was followed by investors from the neighbouring country of Germany, which were responsible for large takeovers such as Motel One at the Westbahnhof and various holiday hotels; next were buyers such as the Valamar Group from Croatia and a private investor from Hungary.

“There are several hotels on the market right across Austria just now. If we also consider the various new projects and the portfolio hotels about to be marketed, the signs are promising for a strong start to 2019,” concludes Kronberger.