The hotelier starts the summer with good prospects, and not only because of the boom in visitors in the first summer without Covid-19. Hotel investment is picking up a run and from one region a large part of the largest investments of the year are being signed: the countries of the Persian Gulf. From Abu Dhabi and Saudi Arabia comes the capital that is driving some of the biggest deals in the sector so far this year.
The latest occurred this week by the Saudi investment group Tha Olayan Group: the purchase of the Mandarin Oriental in Barcelona. In the heart of Paseo de Gracia, the hotel was owned by Reig Capital, a company based in Andorra, which launched the Mandarin in Spain in 2009 with an investment of around 150 million euros. The amount of the transaction has not been made public, but various media point out that it is around 220 million euros.
For the Olayan, fund owners, the commitment to the Mandarin is not new and they are not strangers to the Spanish luxury market either. In 2015, the fund allied with the hotel firm to take over the Ritz Hotel in Madrid, until then owned by Alicia Koplowitz and Belmond. The first large luxury hotel in the capital is still in the portfolio of Saudi investors, along with other emblematic buildings such as the 550 Madison office building in New York, which last year completed a five-year renovation and with which they have repositioned the asset by adding green spaces. They also have in their portfolio multi-family buildings, retail spaces and other hotels such as the Temes in Greece, a list to which the Mandarin in Barcelona is now added.
The Saudis have also been encouraged to invest in Spanish companies. One of them is the Socimi RSR Singular Assets Europe, a vehicle owned by the Saudi Arabian family office Rashid Saad Al Rashid&Sons, which bought an office building in the center of Madrid to reposition it as a hotel. The socimi managed by Caler Advisory, a consultant for the brothers Carmen and Álvaro Escrivá de Romaní, invested 24.5 million euros in a 6,745-square-meter property near the Plaza Mayor. The objective of the socimi is to turn it into a four-star hotel, although the operator that will manage it has not been made public.
The Saudi family replaced Spain to promote a real estate investment vehicle that focuses its business on the purchase of hotels and tourist apartment buildings located in prime areas of the main cities of Spain and Portugal. With its latest acquisition in Madrid, the company’s portfolio exceeds 215 million euros and is distributed among seven assets, five of them hotels, located in Barcelona, where two are located, Madrid, Porto and Valencia, four of them operators by Vincci. In addition, the socimi has a tourist apartment building in Barcelona and another in the center of Madrid.
Although the major operation of an Arab fund in Spain in the first half of the year has been that of the Abu Dhabi sovereign wealth fund. The Abu Dhabi Investment Authority (Adia) closed the final June purchase of seventeen hotels owned by the Equity Real Estate fund. The operation was closed in just over 600 million euros and among the assets in the portfolio is the ME Madrid Reina Victoria hotel, located in the heart of the capital. There are also five other Meliá brand hotels in Madrid, Marbella (Málaga), A Coruña, Chiclana de la Frontera (Cádiz) and Baqueira Beret (Lleida). Finally, there are eight Tryp brand hotels (two of them on Madrid’s Gran Vía and three Sol brand establishments). This was the second operation carried out jointly by the sovereign wealth fund with Meliá. The first joint movement was the acquisition of seven hotels, until then owned by a company owned by the Avenue Capital fund and the Balearic hotel chain, which has made different movements in the last year to dispose of its assets.
The operation of the Abu Dhabi fund is the most relevant in the hotel segment in recent years. To find sales that are close to the volume of the one signed by the sovereign wealth fund, you have to go back to 2018, when hotel investment in the country reached maximums and achieved a historic 4,810 million euros. During the year, the Socimi Átom acquired a portfolio of fourteen hotels with an investment of 423 million euros. In a more recent past, the operation also exceeds the purchase of the Catalan group Selenta for 440 million euros by the Canadian fund Brookfield.
Gulf investments are increasing the hotel investment market. Along with housing, the repositioning of hotel properties is supporting the bulk of real estate investment activity in Spain, according to data from the real estate consultancy Savills. Hotel investment in the first six months of the year has climbed to 1,300 million euros, representing 29% of the total capital invested in Spanish real estate in the first half of the year.
In the hotel business in Spain, luxury is gaining more and more weight. In ten years, it is expected that the most prime hotel beds in Spanish territory have reached 67%, according to calculations made by the consultancy JLL. Specifically, Madrid will add 2,700 beds and Barcelona 4,200 beds, despite the hotel moratorium approved in the city. One of the pillars that sustain the growth of this segment in Spain, in addition to the increase in rates, is the inclination of institutional investors towards this sector, due to the good performance they report, according to JLL.