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Germany: Hotel Investment Q1-3 2020

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The German hotel investment market posted just under €1.7bn in transaction volume in the past nine months. That puts results down almost 25% yoy. The share in the overall German commercial real estate market generated by hotel assets was down to 4% compared to previous years where results came in at 6% and 7%. Following a decent start to 2020 and the drastic drop in activity triggered by the pandemic, the market has begun to revive over the past three months with hotel assets changing hands for just shy of €420m. These results indicate that the worst is behind us. Hotels located in German vacation destinations proved particularly popular. The situation for hotels in downtown locations that depend on events and trade fairs for business remains challenging in contrast. However, there have been a few deals signed in this segment for over €50m. Investors at the moment appear to be almost exclusively interested in core and core+ assets, which generated a combined market share of over 93%. 4-star hotels were the most popular assets by far, followed by 3-star hotels. Deals involving hotels in other categories as well as serviced apartments remained few and far between. Although foreign investors were behind the majority of transactions in H1, German investors accounted for more than 55% of transaction volume in Q3. A sign of the market returning to normalcy, however, can be seen in the fact that an increasing number of property developers have again begun placing their properties on the market in the past three months. Single-asset deals dominated market activity from July through September, causing the share claimed by portfolio deals to fall compared to the previous quarter. The financing environment around hotel transactions remains challenging with banks remaining quite hesitant. However, prime assets in excellent locations that also offer conversion potential will continue to meet with investor demand going forward. 

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Germany: Hotel Investment Q1-3 2020

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Susanne Kiese

Head of Market Intelligence & Foresight | Düsseldorf

Duesseldorf

Susanne joined Colliers International Holding GmbH in February 2016 as Head of Research Germany. Before, she worked as a Senior Research Analyst for Hypothekenbank Frankfurt / Eurohypo, a specialist bank for real estate and public finance for almost 12 years. Susanne was also Research Analyst with Deutsche Gesellschaft für Offene Immobilienfonds (DEGI) GmbH, the property related investment company of Allianz Dresdner Property Group (now part of Aberdeen). 

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