Spain has emerged as the top performer in Europe’s Hotel market, recording the greater year-on-year growth in investment.

According to Cbre, European hotel investment totalled €3.8 billion in the third quarter of 2016, down 6 per cent on the same period in 2015. The firm describes it as a “testing” year, with investment down in the first nine months of 2016 compared to the same period 12 months earlier. Nonetheless, Spain has enjoyed a positive quarter, with investment surging 162 per cent year-on-year, the best in Europe.

Spain’s positive performance arrives as Barcelona prepares to host the Mediterranean Resort & Hotel Real Estate Forum at the end of November. The country’s hotel sector saw €537 million in transactions, which CBRE attributes to demand from investors to buy and capitalise on the improving economy. Indeed, the IMF forecasts economic momentum will continue in 2016, with growth of around 3.1 per cent at the end of December.

“Current GDP growth of double the Eurozone average is having an indisputably positive impact on the country’s hotel market,” says CBRE. Tourism is, as ever, blossoming, with foreign arrivals predicted to top 70 million for the first time this year. Improving employment figures at home have also helped to boost domestic leisure demand for accommodation.

Transactions spanned the country in the third quarter, including gateway and secondary cities and resort locations. While resort locations are generating the greatest yields, Spain’s primary city performance is rippling into the regions, says CBRE. One notable transaction was the five-star Pullman Barcelona Skipper, which was sold off a guide price of €90 million.

Jorge Ruiz Andres, CBRE Hotels, Spain, says: “Investor appetite for Spain is soaring on the basis of strengthening economic fundamentals, performance growth across the country and attractive asset pricing relative to other consolidated European destinations. The liquidation of non-performing loans will heighten transaction activity in the market over the coming months and we also recognise a number of value-add and core opportunities for more conservative sources of capital.”