Hotel investment picks up in Germany: Colliers

Investment in the German hotel market heated up in the second quarter of 2011 and generated a total volume of EUR 325 mln for the period, according to data from Colliers International. The Q2 volume was higher than the previous two quarters, according to Andreas Trumpp, head of Research at Colliers International in Germany.

Colliers expects the volume for the full year to top EUR 1 bn.

'At the half-year mark, transaction volume had risen from EUR 320 mln last year to almost EUR 582 mln, an 82% increase that reflects the renewed confidence in more than just hotel properties,' Trumpp said.

Interest in hotel properties is, however, confined to a small group of specialized investors, which is reflected in the fact that this asset class makes up only about 5% of the total commercial transaction volume of EUR 11 bn posted in the first half of 2011.

International investors dominated the activity on the hotel investment market during the first quarter, but German investors were able to increase their share of the transaction volume from less than 20% in the first quarter to nearly one-third in the first half of the year viewed as a whole. The major factors contributing to this included two sales of five-star and luxury-class hotels.

A closed-ended real estate fund operated by Deutsche Immobilien Invest purchased the 177-room Grand SPA Resort A-Rosa Sylt, located in the town of List, for just under EUR 63 mln. This purchase represents one of the biggest individual transactions so far this year. The Handelshof, in Leipzig, was also purchased by a German family office. The former trade fair venue, located right near the old town hall in the city centre of Leipzig, is home to both retail space and the Steigenberger Grandhotel Leipzig, which also has 177 rooms.

Although only three of the 26 sales finalised in the first half of the year took place within the five-star and luxury hotel segment, those sales make up some 30% of the transaction volume, at about EUR 175 mln. Eighteen of the sales involved three-star and four-star hotels, which together amounted to EUR 371 mln, or nearly 64% of the total transaction volume.