© Dan Morar - Fotolia.com
Hotel
Last year, there were around €4b of hotel deals in Germany. ‘The only issue this year is the lack of supply but I expect to see a similar deal volume this year,’ Kaiser said.
The transaction volume in the German hotel market tumbled by 41% in the first quarter to €661m, according to CBRE, as demand continues to radically outstrip supply.
The y-on-y decline can largely be attributed to the smaller size of transactions and the lack of supply, coupled with an increased focus on secondary locations, Olivia Kaussen, head of hotels Germany at CBRE, told REFIRE.
‘Demand for hotel properties in Germany remains high, but there is a shortage of supply,’ Kaussen said. ‘Investors are sitting on capital and there is no loss of interest. The opportunistic and yield-driven international investors are now looking in other European regions such as Eastern and Southern Europe for better yields. In Germany, we are seeing mainly domestic German investors and some French and UK investors, who can buy at low prices. The low yield is not deterring them.’
Move away from ‘Top 5’
The move away from ‘Top 5’ cities is also reshaping the market. In the first quarter of this year, the ‘Top 5’ cities accounted for just 26% of deals, or €175m, down from 53% a year earlier. Single deals are also dominating the market: 27 of the 32 transactions (84%) in the first quarter were single assets, down from 64% a year ago.
As a result, the average investment volume per deal has fallen by 25% to to just under €21m. Honestis, a Cologne-based financial holding, took over the majority in the holding company of Herrenkrug Parkhotel, a first-class hotel with 147 rooms in Magdeburg, for an undisclosed sum. Hotel operator, Dorint, a unit of Honestis, will operate the property as part of the deal.
Cologne is climbing the charts, accounting for the highest transaction volume in the first quarter at almost €147m, a leap of 195% y-on-y, including the sale of the Maritim Hotel.
Hamburg took the number two spot with a transaction volume of €104m, which marks, nevertheless, a decline of 54% y-on y. Along with the sale of the Premier Inn development, a former administrative building belonging to Deutsche Telecom on the Kronsaalweg was also sold by Hamburg-based developer Sicon to Catella Residential Investment Management for €43.5m. It will be refitted to accommodate 347 long-stay apartments.
Portfolio sales wane
Portfolio sales have fallen considerably to just five in the first quarter this year, down from 13 a year ago, according to CBRE. The sale of the Dorint Hotel Main Taunus Zentrum in Sulzbach and Dorint Parkhotel in Bad Neuenahr-Ahrweiler were among the largest portfolio transactions acquired by the HR Group from Ebertz & Partner. The purchase was made at the same time as the acquisition of three more hotels by the HR Group: the Arcadia Hotel Hanover, the Best Western Hotel des Nordens and the Arcadia Hotel Bottrop, comprising 865 rooms in total.
The largest single transaction in the first quarter was the sale of the 454-room Maritim Hotel in Cologne that was sold to Art-Invest by Commerz Real’s closed CFB Fund 111 for around €120m. Also, as part of a closed fund managed by Balandis Real Estate, the SI Centrum in Stuttgart was sold to Brookfield Asset Management for a reported €145m. The property comprises two hotels offering 646 rooms in total as well as several restaurants and bars and conference and entertainment facilities. In addition, the British Premier Inn brand has said that it intends to expand further in the German market through two developments in Hamburg.
Four-star hotels accounted for 66% of deals in the first quarter, followed by their three-star counterparts, at 20%.
Domestic investors strengthen hold on market
Domestic investors have regained their hold on the market, accounting for 91% of sales in the first quarter, up from 50% a year ago, according to CBRE. Equally, domestic buyers accounted for 78% of acquisitions in the first quarter, up from 57% a year ago.
‘In the first quarter of the year, the focus of activity was clearly on domestic investors, which is explained by the high number of single transactions,’ Kaussen said. ‘Until larger portfolios are released onto the market, domestic purchasers will continue to dominate the market. The attractiveness is the safe haven and the long-term perspective. Sometimes, investors are looking at alternative use, such as conversion from commercial to residential. In comparison to some countries, capital values in Germany are still relatively low and some investors think that Germany still has a way to go.’ (ssk)
