Europe’s debt crisis throws up bargains

The Le Royal Monceau, Raffles Paris is QNH’s latest acquisition

OPPORTUNITIES for Middle East investors in core Western European markets will come into focus at the annual Arabian Hotel Investment Conference 2012 (AHIC) taking place on April 28-30 at Madinat Jumeirah.

“Europe’s worsening debt crisis will tempt investors from oil-exporting Gulf states, flush with petrodollars, to broaden their search for bargains. The capital markets in Europe are extremely tight, banks are struggling to raise enough cash to cover their own liabilities let alone lending to others,” commented Richard Thompson, editor, Meed.

“This is naturally leading to an increase of distressed real estate assets in Europe and in the case of hotels, many offer yields that outperform other property investments and are coming to market well below their peak market values, as prices remain subdued,” added Thompson.

A good example of that was the recent purchase of the prestigious Carlton Hotel in Cannes on the French Riviera, which was sold for €450 million ($597 million) to Qatar based investor Ghanim Bin Saad Al Saad.

That figure was significantly lower than the €634 million ($841 million) that Morgan Stanley paid for the Carlton in 2006. The Qatar investor is also interested in other properties of the Intercontinental chain including those in Vienna, Frankfurt, Budapest, Rome, Amsterdam and Madrid.

Speakers at this year’s AHIC event who will discuss investment opportunities outside the Middle East include Enrique Meyer, Minister of Tourism, Argentina; Tarik Senhaji, chief executive officer, Moroccan Fund for Tourism Development and Kevin Wallace, general manager, Hospitality Investment and Development Dutco Group and CEO, Jebel Ali International Hotels.

Other Middle Eastern investors have also made the headlines recently with a raft of high profile hotel acquisitions in London and Paris.

In the last two months alone, Qatar National Hotels Company (QNH) snapped up Le Royal Monceau – Raffles Paris, while late last year Middle East investors spent some $500 million buying luxury hotels The Sanderson, St Martins Lane and the W Hotel.

Global hotel transaction volumes will hold steady in 2012 to reach upwards of $30 billion in deals according to recent figures released by Jones Lang LaSalle Hotels, in line with 2011 figures, which were up 13 per cent from 2010.

Hotel investment activity is expected to remain stable across EMEA this year with $11 billion worth of deals expected, similar to 2011 levels, the real estate services company said. London and Paris will remain the primary drivers for investment activity, it added.

Outside the hospitality sector, Qatar’s investment portfolio includes luxury department store Harrods, and stakes in Barclays and the London Stock Exchange. Elsewhere in the Gulf, Abu Dhabi’s flagship carrier Etihad Airways recently raised its stake in Air Berlin to nearly 30 per cent as it continues its aggressive expansion plan. One of Abu Dhabi’s most high profile European acquisitions remains Manchester City Football Club.