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News Release

London - Moscow

Turn back the clock - Leases are back in favour for Hotels

Hotel investment market EMEA – A Weak 1st Quarter 2009


London - Moscow, 30th April 2009 – The EMEA hotel investment market experienced a weak first quarter of the year with investment levels reaching only €700m. This represents a decrease of 81% compared to Q1 2008, although notably levels this time last year were still quite strong despite the low full year volumes.

Mark Wynne-Smith, CEO of Jones Lang LaSalle Hotels, Europe, Middle-East and Africa said: “We have been predicting that the 1st half of this year would be very quiet and the volumes are low but within the range.”
Looking at the source of investment in the first quarter of the year, domestic capital remained the dominant source, representing over 50% of the volume transacted. The strong activity of Middle Eastern capital (26.7% in 2008) did not continue in the first quarter of 2009 - no hotel transactions have been funded by this source of capital yet. Wynne-Smith continued: “Middle Eastern investors generally seek to acquire trophy assets which have not been offered in the market. Their current focus generally remains on distressed assets and we expect that whilst more distressed assets will come to the market in the second half of 2009, there will be very few cheap trophies”.

Also in line with the predicted trend, hotels with the benefit of a lease contract were in favour again. “Investors are looking for security and are sensibly not willing to buy a property where the income is expected to fall. We also saw vacant possession deals as hotel operators are the only groups who really need the properties in order for their business models to thrive.” 

In terms of Russia & CIS investment sentiment, Marina Usenko, Executive Vice President, Jones Lang LaSalle Hotels, added: “With only a limited amount of stock currently in the market and developments likely to be stalled or cancelled in the short- to medium-term, 2009 is expected to demonstrate further weakening of investment sentiment across all CIS markets, supported by continued softening of yields. Investment in Russia in recent years has to a large extent been driven by Western investors who are now returning home, to market they know and which are perceived less risky"
 
Clearly, the overall hotel investment volume will remain subdued in 2009 and is expected to end well below volumes achieved in 2008. “We have to accept that we are starting a new cycle. Peak years like 2007 - where we registered a volume of €8.6bn in the first quarter alone – are in the past” concluded Wynne-Smith.
 
 

About Jones Lang LaSalle Hotels
Jones Lang LaSalle Hotels, the first and leading global hotel investment services firm, is uniquely positioned to provide the depth and breadth of advice required by hotel investor and operator clients, through a robust and integrated local network. In 2008, Jones Lang LaSalle Hotels provided sale, purchase and financing advice on over $3.7bn worth of transactions globally relating to more than 120 assets. In addition, advisory and valuation services were provided on more than 600 assignments. The global team comprises over 240 hotel specialists, operating from 31 offices in 18 countries. The firm’s advice is supported by a dedicated global research team, which produced 87 publications in 2008 in addition to client research. Jones Lang LaSalle Hotels’ services span the hospitality spectrum; from luxury single assets and large portfolios to select service and budget hotels, resorts and pubs. Their services include investment sales, mergers and acquisitions, capital raising, valuation and appraisal, asset management, strategic planning, operator selection, management contract negotiation, consulting, industry research and project development services. Jones Lang LaSalle Hotels’ clients have access to the resources of its parent company, Jones Lang LaSalle (NYSE: JLL). www.joneslanglasallehotels.com.
 
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specialising in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2008 global revenue of $2.7 billion, Jones Lang LaSalle serves clients in 60 countries from 750 locations worldwide, including 180 corporate offices.  The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.3 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with more than $46 billion of assets under management.
In Russia and CIS Jones Lang LaSalle have offices in Moscow, St. Petersburg, Kiev and Almaty. Jones Lang LaSalle, Russia was voted Consultant of the Year in 2004, 2006, 2007, 2008 and 2009 at the Commercial Real Estate Awards (Russia). For further information, please visit our Web site, http://www.joneslanglasalle.ru