Colliers Market Report Denmark 2023

Hotel - Colliers Market Report 2023

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Hotel I ndustrial & logistics Retail Residential Office I n t i tics i l

Investors returning to the market Following a year of favourable hotel market trends, inves tors have gradually regained their investment appetite. However, the supply of hotel properties for sale remains low, with rising interest rates causing a market imbalance, in the process reducing the number of transactions. We expect more stable interest rate levels to accelerate hotel transaction activity in 2023. However, investors are expected to raise their yield requirements on hotel property investments, in the fore seeable future widening the spread to office yields and residential yields. Among other things, this ties in with the fact that it has become more difficult to procure financing and that the hotel investment demand of pen sion funds has weakened. Before the outbreak of the pandemic, domestic pension funds were active net buyers of hotel properties. Pension funds do not apply gearing when making investments and are therefore not challenged by tighter loan require ments. However, following a plunge in stock prices as well a bond prices throughout 2022, several pension funds are overweight in real estate assets, including hotels. But then, international investors with specialist knowledge of the hotel industry are increasingly zooming in on the Danish market.

Bednight figures have been soaring, with favourable KPIs for both business travellers and tourists. For instance, room rates and occupancy rates are uptrending. The sub stantial new supply of hotel rooms added in the corona years is expected to be absorbed by the market within a matter of a few years, with Copenhagen occupancy rates then stabilising at a higher level than today. Overall, this raises the prospect of high revenues, which could rekindle investment demand in the hotel segment. At the same time, banks and mortgage credit institutions will probably again sharpen their focus on hotels, offer ing satisfactory mortgage financing once interest rates stabilise, all the while the hotel market and operations are getting back to normal.

AC Hotel Bella Sky, Ørestad, Copenhagen S

Emil Helmsøe-Zinck Senior Director & Head of Valuation & Advisory | Valuation & Advisory emil.helmsoee-zinck@colliers.com