The German hotel real estate market achieved an increase in transaction volume of 22 percent in 2021 compared to the previous year. The 72 transactions generated a total turnover volume of around EUR 2.5 billion (2020: EUR 2.1 billion). On the basis of the preliminary figures Germany thus ranks second in Europe – after the UK - in 2021, which underlines Germany's position as a liquid and safe investment location. The average transaction size was EUR 35 million. The majority were individual property transactions, contributing some 87 percent of the total volume. Portfolio investments were the exception, contributing only 13 percent.
German investors were the most active and responsible for almost 80 percent of the transaction volume, followed by investors from the UK (8 percent), the USA (5 percent), Israel (3 percent) and France (3 percent).
The most active investor type was institutional investors, who were responsible for around 44 percent of transaction volume. This was followed by private investors / family offices (17 percent), hotel operators (13 percent), real estate companies (12 percent), private equity investors (8 percent) and developers (6 percent).
The largest transactions in Q4 2021 included:
- the sale of the 5-star "Königshof" development project in Munich to the Inselkammer Group. The seller was the Munich hotel group Geiselhotels. When completed in mid-2023, the hotel will have 105 rooms, 180 parking spaces and 1,860 sq m of retail space.
- the sale of the "Radisson Red" project with 265 rooms as part of the "Laurenz Carré" urban district development in Cologne to Corestate. The seller was Gerchgroup, which is renovating and expanding the listed Senate Hotel. Completion is planned for 2024.
- the purchase of the "Prizeotel" with 265 rooms in Münster by Hamburg Team as part of the "Hansator" .urban district development The seller and developer is Landmarken AG. In addition to the hotel, 313 apartments, almost 2,300 sq m of retail and gastronomy space and around 100 parking spaces are planned. Completion is planned for the 3rd quarter of 2022.
- the sale of the hotel duo B&B and Arthotel "ANA Amber" with a total of 258 rooms in Rostock as part of the hotel and office project "Hanse Tio" to Union Investment. The hotels already opened their doors last summer. In addition to the hotel, around 3,500 sq m of office space was built. The seller was the developer, List Develop Commercial.
Around 60 percent of transaction volume 2021 was contributed by operator-free sales. In most cases, these properties were older or requiring renovation, but also development projects that experienced trouble in the course of the Covid-19 crisis. Buyers included developers and private equity investors who favour a conversion. Especially in the major cities, conversion to office and residential space is being considered with increasing frequency. One of the most prominent examples is the planned conversion of the former "Ellington" hotel building in Berlin into an office building with additional retail and catering use.
Some financially strong operators also used 2021 to further advance their expansion. The Premier Inn Group, for example, has secured two development projects at Stuttgart and Berlin airports. The Park Plaza Group took over two existing buildings of the Maritim Group on Timmendorfer Strand and in Gelsenkirchen. For the majority of the properties, a continuation of operation, partly with a new operator and new brand, is planned.
"Investors are increasingly looking positively to the future and the potentially less dangerous Omicron variant raises hopes for an early return to normality. The largest challenges, however, remain the reluctance of banks and the general uncertainty regarding the ultimate effects of the pandemic. A mass of emergency sales is also not expected in 2022 however, thanks in part to extended bridging aid. Some of the major operators and franchisees have been re-capitalised and are in a much more stable situation than at the beginning of the crisis. Capital for hotel investments continues to abound, with investors focusing in particular on value-add and core opportunities. Private equity investors, selected institutional buyers, developers and new serviced apartment operators with strong capital partners are already in the starting blocks. In addition, we will again observe a lot of activity in the area of company and operator takeovers this year," comments Stefan Giesemann, Head of Hospitality Germany & Austria at Cushman & Wakefield.
