DUBLIN, May 2nd, 2019
The opening quarter of 2019 welcomed a significant boost in hotel transaction activity. Turnover in the first three months of the year amounted to €106.7m, across six transactions. This compares to just €24m in the same quarter last year and sits just above the five-year quarterly average of approximately €99m.
Commenting on the market, Isobel Horan, Associate Director, Trading Assets, Cushman & Wakefield, said:
"It is encouraging to see transaction activity increase in the first quarter of 2019, after a somewhat slow 2018. We envision this activity to continue rising with a pipeline of notable assets due to come to the market in the coming months"
Of the six hotels which transacted in the first quarter, the most notable was that of the 5-star Powerscourt Estate in Co. Wicklow. The hotel was sold to the MHL Group for €50m as a trading asset sale. 5-star hotel sales accounted for half of the transactions which closed between January and March, with The Heritage Hotel & Spa, Co. Laois and Sheen Falls Lodge, Co. Kerry also transacting.
Irish buyers were active in the market in the opening three months of the year, accounting for four of the six transactions. Singaporean investor Dr. Stanley Quek purchased the remaining two transactions, Sheen Falls Lodge, Kenmare, and Dublin Citi Hotel, Dublin 2 for €17m and €11.9m respectively.
Transaction activity in the opening three months has been largely focused outside of Dublin, with just one sale closing in the city. Sales outside of the capital totalled €94.8m. The East and Midlands accounted for a large proportion of this, with sales in the region totalling €58.3m.
Development activity continues to expand at a pace in the hotel market. Over 4,000 rooms were under construction nationally at the end of the first quarter, a record high for this data series, which began in 2015. The majority of these rooms are to be delivered in the capital, 88% overall. New builds remain the key feature, accounting for 64% of rooms to be delivered, while extensions and redevelopments will account for 17% and 18% respectively.
52% of the rooms under construction are expected to complete in 2019, with a further 1,143 rooms to be delivered to the market in 2020. These rooms will be delivered across 40 hotels and will be a welcome addition, particularly in Dublin, where occupancy levels and average room rates continue to rise.
There were two hotel completions in the first three months of the year. Aloft Dublin City, a 4-star 202 room hotel opened in Dublin 8, and Avalon House Hotel, a 4-star 30 room boutique hotel opened in Kilkenny.
While construction activity will continue to be the focus of the hotel market, the first quarter of the year did see four hotels brought to the market, which should stimulate transaction activity further. The most notable addition is that of the 5-star Conrad Hotel, Dublin 2 which is guiding €115m. The three others are the Tullamore Court, Co. Offaly, Carna Bay Hotel, Galway, and the Hilton Kilmainham, Dublin 8. These add to some very large hotels already on the market including the 5-star K Club Resort in Co. Kildare, which is guiding approximately €80m and the 5-star Druids Glen Hotel & Golf Resort, Co. Wicklow, guiding approximately €45m.
Lastly, on a positive note for the industry, latest CSO data reveals that the number of visitors to Ireland continues to grow. Trips to Ireland by overseas visitors totalled 1.24 million in January and February 2019. This is an increase of 7% when compared to the same period last year. North American visitors saw the largest increase, growing by 10.7% in the first two months of the year. Furthermore, despite the uncertainty surrounding Brexit and exchange rate concerns, British visitors increased by 3.9% when compared to the same period last year and accounted for 36% of visitors to Ireland in 2018.
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 51,000 employees in 400 offices and 70 countries. In 2018, the firm had revenue of $8.2 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.ie or follow @CushWakeIRL on Twitter.