Condo-Hotels: A New Hotel Concept Set to Sweep Europe

The emergence of the condominium hotel sector is becoming ever more apparent in the European hotel investment landscape. This alternative investment vehicle is already well established in the U.S. and Asia and is set to become a part of the European hotel scene.

Interest in the European condominium hotels sector has increased significantly in the past two years following many years of intermittent development and association with other shared ownership vehicles, says Jones Lang LaSalle Hotels in its recent research report: “Condominium Hotels-Europe´s Latest Hotel Phenomenon.”

“A condominium hotel is a hotel operating unit which is sold to individual equity investors, where each owner acquires a room, suite or studio whilst the whole enterprise is managed as a hotel operation under a single brand,” explained Ian Chappell, Senior Vice President, Investment Sales, Jones Lang LaSalle Hotels

Condominium hotels are significantly less developed in Europe than in the US, in part owing to Europe´s timeshare focused market and similar products, as well as the large market share of tourist accommodation held by privately operated serviced apartment and hotel groups.

Alternative hotel ownerships are featuring more and more in the hotels sector, with the rise of condominium hotels and a shift in investor strategy, thus creating a new investor profile.

At the moment, the European condominium market is being targeted and driven by private retail purchasers, typically high net worth individuals attracted by a city centre or a resort investment foothold. London and Paris are particular favorites as an investment destination.

There is room for a wider pool of institutional and real estate investors to invest in a portfolio of condominium units or the establishment of an investor-developer partnership.

Part of the success story for this sector will be the education of a whole new investor base previously accustomed to buy-to-let residential schemes or conventional commercial real estate investments, together with the emergence of a secondary market to demonstrate transparency and liquidity.