In Q1 2023, international real estate consultancy firm Cushman & Wakefield (C&W) recorded a total hotel transaction volume of EUR 200 million in Germany. This was 56 percent below the previous year's figure and around 70 percent below the 10-year average. Only single-asset transactions took place. The average transaction size was EUR 15 million.
German investors accounted for around 40 percent of transaction volume. This was followed by investors from the UK (36 percent), Israel (21 percent) and Cyprus (3 percent). The most active investor group were hotel operators, who contributed 47 percent of transaction volume. They were followed by institutional investors (20 percent) and private equity firms (13 percent). Other investor groups such as family offices and real estate companies were responsible for about 20 percent of the total.
Equity and value-add properties determine market activity
Activity was concentrated almost exclusively on smaller and operator-free properties with value-add potential. As a rule, buyers were equity-strong hotel companies or opportunistic investors. Buyers continue to focus on value-add and core-plus properties in good locations, while there are only very selective purchases in the core segment due to the interest rate turnaround and the resulting price adjustments, according to C&W.
"We expect an increase in market activity in the second half of the year. There are numerous hotels, including portfolios, for sale, which will probably lead to a higher transaction closing rate and investment activity from Q3 onwards. The fact that the gap between purchase price expectations and willingness to pay is slowly closing should also be beneficial. In addition, the market recovery in the hotel sector is continuing. The performance in many markets is already above the pre-pandemic level," commented Josef Filser, Head of Hospitality Germany & Austria at Cushman & Wakefield.
The largest transactions in Q1 2023 included:
- The sale of the 136-room Mercure Heilbronn hotel to the British Whitbread/Premier Inn group. The seller was hotel investor and operator Investhotel. In the course of the takeover, the property will be renovated and partially reconfigured from May onwards.
- The sale of the 149-room Holiday Inn Express in Offenburg to the open-ended mutual fund Quadoro Sustainable Real Estate Europe Private. The seller was a joint venture of Oxalis REIM, Zeitgeist Estates and the Property3 Group. The property is leased to the franchisee Tristar on a long-term basis.
- The purchase of a 257-room hotel development project in Treptow-Köpenick in Berlin by the Premier Inn Group. The seller and developer is Project Immobilien. The opening is planned for 2025.
- The sale of the 177-room “stays by friends” Hotel Bochum by the Anter Group to ASHG, an investment platform of Alchemy and Step Partners. The operator-free hotel is being repositioned in the market.