Italy achieved the second highest volume of single-asset sales (after the UK) of all European countries monitored in 2002 by Jones Lang LaSalle Hotels` latest European Digest. This is despite the inherently limited liquidity of the Italian hotel investment market, with few reported single-asset transactions exceeding €10 million (approximately US$11.5 million) taking place in any year of the last decade. The level of market activity in 2002, although somewhat skewed by the high value of the individual assets involved, demonstrates that international investor interest in the Italian markets remains strong despite a decline in trading performance and uncertainty about the timing of future recovery.



International investment has previously been restrained by many barriers, including the limited range of investment vehicles and the nature of a market that is dominated by family-run businesses, resulting in a dearth of suitable hotels for sale. However, we believe that as international activity increases in Italian office and retail markets, and bank finance becomes more readily available, investment activity should increase significantly, says Roberto Galano, Senior Vice President, Jones Lang LaSalle Hotels.

Of the four transactions that took place in 2002, three involved UNA Hotels and Resorts, a national chain that is expanding rapidly. The other sale, of the Four Seasons Hotel in Milan, was completed by a European private investment group, which paid a record price per key reflecting the exceptional quality of the asset, despite the prevailing economic climate.

In the short term, a further boost to investment activity should come from closed-end real estate funds. By comparing the level of penetration of these financial instruments in Italy with Germany and France, the potential market for this kind of investment appears to be vast. As a result, more sustained hotel investing activity is expected in the future. The possibility of further transactions in 2003 will be assisted by the availability of more high-quality assets from the CIGA and Le Meridien portfolios.