Many consider the Spanish economy to be fixed on a path of recovery; accounting for an extensive uptick in the investment volume of commercial real estate. Despite rising interest, Spain is still regarded as having opportunity for investors seeking large returns, more of which are becoming alert to the ability of hotels to lever on economic growth. Burgeoning international and domestic traveller demand is driving significant hikes in both hotel revenue and profitability. This paper highlights the expectations for future performance and how this will impact investor returns in the key Spanish markets.

  • Spain's 2015 economic output is expected to increase by up to 3.3% Y-o-Y.
  • 4.5 million Spanish citizens find themselves out of work, however, unemployment is falling and leading to further growth in consumer spending.
  • Hotel performance growth in Barcelona is related to the strength of international source markets.
  • Madrid's hotel market is further behind in recovery, however, profitability has increased by 17% Y-o-Y in the last 12 months.
  • Resort markets including the Canary and Balearic Islands are set to benefit from improving domestic leisure demand.
  • Spanish hotel investment volume is on course to surpass €1,600m in 2015.
  • Further debt trades are expected in 2015 as banks come under increasing pressure to clean up their balance sheets.
  • There remains a considerable hotel yield premium for Spanish cities in comparison to other key European markets.
  • Investors should consider the impact of future interest rate rises on hotel demand, the price of debt and returns offered by alternative investment vehicles.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world's largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

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