German hotel market investment hits record high
We report elsewhere in this issue on the arrival of several Asian hotel operators on to the German hotel market. Inevitably they are draw by the need for expansion, but it’s also true that the market for investment in German hotels has hit a record high at the half-year point, as underscored by data from property advisors JLL and Colliers International.
Overall investment in the German hotel market touched somewhere between €1.36bln and €1.5bln as of June, higher than the previous historic high from 2007, and up 110% year-on-year. Only 38% of the transaction volume came from single investments, while the majority was attributable to packaged or portfolio deals. Ursula Kriegl, head of Hotels & Hospitality at JLL Germany, expects to see the €2bn investment threshold reached by year-end.
Reflecting the strength of the German hotel market, the joint stand of HospitalityInside at the upcoming Expo Real in Munich from 6th-8th October, which promotes the interests of the hotel industry, has greatly increased its floor area and for the first time is now a large island stand with four open sides (Halle C2, Stand 230). The “World of Hospitality” stand will feature 20 companies from 10 different countries, including 6 specialised consultancies and 13 major hotel groups, including such brands as Accor, InterContinental, Hyatt, Kempinski and Wyndham
REFIRE also noticed a report from the German Federal Office of Statistics recently detailing building permits granted for non-residential buildings across the country for the first six months of 2014. Overall a total of 92.2m cubic metres of building space was approved, 0.7% less than in the same period last year. The makeup varies considerably from last year, however. Many more hotels were approved, against many fewer office properties. The allocation for hotels and gastronomy rose by 29.4%, for light industrial buildings by 12.2%, and for retail and warehousing properties by 9.8%. Permits for office and administrative buildings fell by 6.2%, while institutional (government) buildings dropped off by 20.3%. Building permits for public sector development fell by 21%, while they rose for private sector developers by 1.5%.
Meanwhile, the prominent Frankfurt downtown Hilton Hotel recently changed hands in one of the largest independent hotel transactions in Frankfurt in the last 10 years. The seller is the UK-based London & Regional Properties, who bought the property in 2005 for €100m from the open-ended fund Grundbesitz-Invest. The new owner was identified by acting broker CBRE Hotels only as “new investors specialising in the luxury hospitality sector”. The lease and operating contract with Hilton will remain in place. The new buyer, or buyers, of the 342-room hotel (including 14 suites) is financing more than €50m of debt with HSH Nordbank.
CBRE’s Philipp Kraneis said the deal had been concluded in the very short time of two and a half months. “The Hilton Frankfurt is a state of the art building positioned at the heart of the city center’s financial district. Its location, the fact that it has a lease with a high profile branded operator and the current strength of the hotel market all made this transaction an incredibly popular investment opportunity.”