Despite some losses, 2017 is ranked in the top 3 - There have never before been so many individual transactions on the German hotel investment market


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​Press release including chart [PDF]


FRANKFURT, 10th January 2018 – A record volume from individual transactions, a significant reduction in the number of portfolio deals, on the whole falling short of expectations - these are just some of the facts. 
It is, however, also a fact that even despite a year-on-year decline of 15%, the transaction volume* of €4.1 billion was still enough to secure third place in statistics recorded over many years. What is also encouraging here is that the transaction volume is 40% above the 5-year average and double the 10-year average. Stefan Giesemann, Senior Vice President of the JLL Hotels & Hospitality Group, said: “Despite the losses, this is unquestionably a very good result. Three months before the end of the year, we had expected the transaction volume in 2017 to be closer to the previous year's top result. Several transactions were in the pipeline and appeared to be on the home stretch, but there was not enough time to complete them last year. On the other hand, the backlog is, of course, good for the year ahead.” He added: “The level of demand was not to blame; it was unremittingly high throughout the year. And no wonder, given the excellent conditions that still prevail on the market: the strong performance of many hotels in most German cities; the very high pressure to invest on the part of investors; and an increased willingness of foreign buyers to invest in the lease structures that are common in Germany. In particular, offshore investors from Asia and the Middle East stepped up their level of activity and were able to secure some large-volume transactions.”
In 2017, German investors accounted for 61 sales, representing 60% of all transactions and 48% of the total transaction volume (individual transactions and portfolios). Foreign market participants thus generated a slightly higher transaction volume (€2.1 billion) with a significantly lower number of deals (38). The reason for this is that they were very active in large-volume portfolio sales. Due to the IHG portfolio sale to Invesco Real Estate, most of the foreign capital came from the United Kingdom with a volume of approximately €810 million, spread over eight transactions. France (€215 million, 6 transactions), Singapore (€215 million, 3 transactions) and the Middle East (€140 million, 3 transactions) followed suit.
Most of the investors were once again institutional investors. At €2.3 billion, corresponding to a 55% share (with 55 deals), their transaction volume was three and a half times that of the group in second place: €640 million for family offices/individuals with 13 transactions, followed by hotel operators (16), property companies/developers (8) and private equity companies/REITs (7) with a combined investment of around €1.2 billion in hotels.
In 2017, a total of 83 individual transactions with a volume of around €2.6 billion (2016: €2.0 billion with 69 transactions) were recorded. This represents an increase of 35% compared to the previous year. The average transaction size increased by €2 million to around €32 million.
Examples of hotels that changed ownership in 2017:

  • The sale of Motel One Berlin Upper West with 582 rooms, part of the “Upper West” high-rise building, to Signa Prime Selection in the fourth quarter. Upper West is one of the tallest and most prominent buildings in Berlin and was completed early last year. The hotel was part of a portfolio comprising five prestigious properties of RFR Holding. The total volume of the portfolio amounted to €1.5 billion.
  • The sale of the Pullman Hotel in Munich in the second quarter to CDL Hospitality Trust, a listed REIT from Singapore, with JLL acting as adviser. The sales price for the property including the associated office and retail spaces, which account for 15% of the total space, amounted to €104.7 million. The seller NKS Hospitality, a joint venture of the Event Hospitality Group and investment company Redwood Grove International, retained the minority share.
  • In the fourth quarter, the sale of Le Méridien Frankfurt for €79.4 million by Art-Invest Real Estate. The buyer was a joint venture of the First Sponsor Group Limited and two of its shareholders, City Developments Limited (CDL) and Tai Tak Estates Sendirian Berhad. JLL advised the buyer on this transaction.
  • The acquisition of the planned Moxy Hotel in Hamburg in the fourth quarter by Bayerische Versorgungskammer. The seller was project developer GBI. The hotel is scheduled to open in mid-2019. A 20-year lease agreement has been signed with the SV group.
  • The sale of the Ruby Lilly in Munich city centre by Art-Invest Real Estate to the Patrizia Hotel-Invest Deutschland I fund managed by Patrizia. The building was converted from an office block into a design hotel in 2016. A 25-year lease agreement was signed with the Ruby Hotels & Resorts Group.
  • The sale of the Stue Hotel in Berlin to the German investor Christian Elleke. The luxury boutique hotel with 78 rooms will be operated by Accor in future. The hotel is situated in the prestigious building of the former royal Danish embassy.

The transaction volume in the portfolio segment fell by almost 50%. With 16 transactions in 2017, capital of just under €1.5 billion was invested in such investments — significantly less than in the previous year with 22 transactions and a volume of just over €2.8 billion. "Repeating it does not make it better, but it remains a fact: portfolios are not ten a penny. In recent years, the larger ones have been sold and now there is something of a lull. And of course the 2016 Interhotel deal, which accounted for around 25% of the portfolio volume at that time, has stirred up the statistics somewhat," said Giesemann.

Examples of portfolio sales

  • In the largest transaction, 13 Hotels of the InterContinental Hotels Group was sold to three funds of Invesco Real Estate for a converted amount of around €530 million. The seller of the portfolio, comprising 11 German and two hotels in Amsterdam, was the American private equity company Apollo Global Management. For the operative management, Invesco established a joint venture with the Cologne-based hotel operator Event Hotels. 
  • The sale of 11 hotels of hotel chain Vienna House to the Thai U City PCL as part of a larger pan-European portfolio (36 hotels as well as the management platform). JLL advised on the purchase.
  • Two hotels with the Holiday Inn and Super 8 brands in Hamburg were sold by UBM subsidiary Münchner Grund to Union Investment for approximately €90 million. Lease agreements with 20-year terms were signed for both hotels. Completion is scheduled for 2018.
  • The sale of Hampton by Hilton and Hotel Indigo as part of the Mercedes Platz district development in Berlin to Amundi Real Estate (RE). The seller was Anschutz Entertainment Group Real Estate GmbH & Co. KG, a subsidiary of the leading global sports and live entertainment company Anschutz Entertainment Group (AEG) based in the USA. JLL advised the seller during the transaction.
  • The sale of two NH-branded hotels in Berlin and Hamburg (NH Hamburg Mitte (city centre) & NH Berlin City Ost (city east)) to French investor Foncière des Régions. The hotels formed part of a portfolio comprising four establishments with two further NH Hotels in Amsterdam. The sales price of the total portfolio amounted to around €111 million with a yield of approximately 5.7%. The lease contracts with NH each run for a 20-year period.


Stefan Giesemann concluded: “The conditions are there for another strong hotel investment year in 2018. The macroeconomic forecasts for Germany are excellent and we expect a very positive performance in the tourism sector. The loose monetary policy does the rest, and capital will be invested. As a result, the transaction market remains dynamic and liquid, with a heightened level of activity by foreign players. Product shortages could be mitigated by increased sales activity, encouraged by very low returns, although these are still higher than yields in other investment and asset classes. We are optimistic that the hotel transaction volume will remain at a high level in 2018. The 5-year average of approximately €3.5 billion should be exceeded.”


*The Hotels & Hospitality Group of JLL, Germany includes individual transactions with an investment volume of at least €5 million and portfolio transactions properties only in Germany. Also included are German hotels that are sold as part of cross-border portfolio sales.