The flow of Asian capital into European hotel and living real estate is expected to increase over the coming years, according to industry experts.
Ed Fitch, head of hospitality UK & Ireland, Cushman & Wakefield, sees a definite trend of Asian capital targeting prime European hotel assets.
That said, post-pandemic, the focus has been on single assets, and we are yet to see a return of the portfolio deals that were so significant from 2015 to 2019.
In 2024, Singapore investors CDL and Sun Venture acquired the Hilton Paris Opéra and the Hyatt Place London respectively, and South Korean investor Sono Hospitality bought the Dame des Arts hotel in Paris.
The percentage of Asian capital, compared to total capital, invested in European hotels remains relatively small, said Fitch, at 2 per cent over the last three years, and 4 per cent over the last decade, pointing to the opportunity for further growth.
However, this low percentage does not include investment in adjacent living sectors like student accommodation and build-to-rent.
CDL, one of Singapore’s largest real estate companies and the owner of Millennium & Copthorne Hotels, made a £215m acquisition of UK student housing.
Lian Beng, another Singaporean real estate group, is also making sizable investments in build-to-rent in the north of England, said Fitch.
One should not forget too that hospitality as an asset class has grown considerably over the last decade, said Lily Wecker, development director, EMEA & North America at Mandarin Oriental Hotel Group.
The growing hospitality pie
One illustration of the increasing size of the hospitality pie comes from Mandarin Oriental itself.
In 2015 the group operated 29 hotels and 5 branded residences. Today it’s 43 hotels and 12 branded residences, and 26 private homes.
In 2024, 53 percent of Mandarin Oriental’s total revenue came from EMEA operations, compared to 13 percent for Asia and 34 percent for the Americas.
Heeton Holdings, a Singaporean group, makes something of a mockery of the 2 per cent statistic because 60 per cent of its capital is invested in the UK.
Edwin Lui, the group’s chief investment officer for UK & Europe, explained the reasons: “Firstly, for us, opportunities in Singapore – a very small market – are quite limited and there is a lot of competition. Secondly, the familiarity of the legal jurisdiction and the language drove us to start investing in the UK ten years ago.”
And thirdly, while the UK’s planning regulations are often criticised, Lui said that compared to Hong Kong, Singapore and other Asian cities, the UK offers much more flexibility when it comes to change of use, permissions for extensions, even to historic buildings, and value-add opportunities.
Armand Steinmeyer, VP business development at The Ascott Limited, echoed many of Lui’s sentiments. He said: “We have been in Europe for 30 years since our acquisition of Citadines. We have offices in London, Paris, Amsterdam and Frankfurt so we are very local, and I think that trust in the institutions, the systems, the markets, and the transparency is really what makes Europe very attractive.”
A safe haven
He added: “In the current situation, wealth preservation is top of mind and I think hedging, especially for currency depreciation in Asia, is something the investors look for today.”
As markets strengthened and liquidity increased during the recovery years after the Great Financial Crisis, there was a series of European portfolio acquisitions fuelled by Asian capital.
Chinese investment firm HK CT Metropark Hotels bought Kew Green Hotels (2015); Frasers Property bought Malmaison and Hotel du Vin (2016); Chinese investment firm Cindat Capital Management bought Q Hotels (2017).
In 2019, Indian group InterGlobe bought the K+K portfolio of ten boutique hotels across Europe and today has an operating agreement with Cycas Hospitality.
In today’s tougher economic climate, Lui sees diversification into serviced office space in London and build-to-rent in Leeds as sensible strategies for Heeton. He added that his company had attempted to expand into continental Europe in the past and said that now was probably the right time to try again.
Steinmeyer said that The Ascott is starting to look beyond its historical focus on gateway cities like London, Paris and Amsterdam: “We are reviewing a lot of deal flow, but I think that sometimes it's really a question of the gap between expectations and return. We are looking a bit more at Spain and France where we have a very strong presence already, and Ireland and the UK are also very much on the radar.”
Mandarin Oriental has a pipeline of 32 hotels and 18 branded residences including conversions and re-brandings in Paris, Amsterdam, Rome, Cortina, Vienna and Budapest, and new builds in London, Madrid and Athens. Wecker added that France generally is a key focus: “We see a lot of opportunities there.”
All quotes taken from the IHIF EMEA panel ‘Inbound investment: Why Asian capital is flowing into EMEA markets - Powered by IHIF Asia’