July 11, 2012, Munich – “Germany’s hotel investment market still has not got back into full swing.” This is the conclusion drawn by Andreas Trumpp, Head of Research at Colliers International in Germany. This in spite of the fact that, at € 122.6 million, a higher volume of transactions was attained in the second quarter than in the first three months of the year.“ Overall, however, the first half year’s result with Euro 207 million was not only considerably below the previous year’s value of roughly Euro 601 million, but also considerably below the expectations of most of the players in the market“, Andreas Trumpp states. One explanation for this situation is that there have been very few large-volume transactions in 2012. Whilst at the end of the first half-year in 2011, ten individual or portfolio sales with a volume of € 20 million and more had been recorded, in 2012 only one single sale exceeded this level. Invesco Real Estate purchased the two hotels carrying the Indigo and Holiday Inn brands belonging to the Parkside Alexander complex with a total of 395 rooms for approximately € 60 million as part of a sale-and-lease-back deal. “During the first half-year of 2012, only roughly € 27 million was achieved as part of package sales, which also had a restraining effect on the volume of transactions“, Andreas Trumpp emphasises.
Investors focussed on medium-category hotels
The hotels that changed owners in the months from January to June were principally in the three to four star categories. Roughly € 168 million or 81 % of the investment volume was accounted for by these categories of stars. Whilst low-budget hotels still managed to achieve sales of € 23 million or a market share of 11 %, so far there has been virtually no demand for luxury hotels and hotels without any classification. “Newly-built hotels were able to achieve a share of 32% and projects approximately 16% of the volume of transactions, due mainly to the major sales of the two Berlin properties”, Andreas Trumpp says. “The largest share of the volume of transactions, but also in the number of total registered sales was however reported by existing properties with 52 per cent or some Euro 108 million” he added. The regional distribution of invested capital was undoubtedly dominated by top locations. Roughly 60 % of the volume of transactions was achieved in the Top 7 locations (Berlin, Düsseldorf, Frankfurt/Main, Hamburg, Cologne, Munich and Stuttgart).
Asset managers and private investors are the largest investor groups
The strong reluctance, chiefly on the part of institutional investors, is seen above all in an analysis of purchaser groups. Some 32 % (€ 66 million) of the volume of transactions was accounted for by asset managers (asset and fund Managers), followed by private investors with roughly 20 % (€ 41 million) and corporates und owner-occupiers with at least 18 % (€ 38 million). Open-ended real estate funds, which also have a market share of 18%, only managed fourth place. Approximately € 93 million of the sales of German hotel properties were accounted for by international investors, corresponding with a market share of 45%.
Outlook: the pipeline of deals raises expectations that the knot will be cut in the second half-year
Even though the mood in the hotel investment market tends to be positive at the moment, many investors, above all institutional investors, are noticeably holding back their investment decisions. “But due to an absolutely full deal pipeline, we anticipate that the knot of hotel investments will be cut in the third and fourth quarters “ says Andreas Erben, chief executive at Colliers Hotel. Attention is concentrated above all on hotels in central locations in the Top 7 cities. “Due to the stable economic situation, the German real estate market continues to be regarded as a safe haven” is how Andreas Erben describes the current situation. “We know through close cooperation with our European Colliers partners that there is increasing demand for German hotel real estate on the part of international investors. Since we assume that this trend will strengthen still further, we will intensify cooperation with our colleagues in the United Kingdom, the Netherlands and Poland“, he added. One of the driving forces behind this development is owner-occupiers with strong capital backing.