Hotel investment market delivers another record result for the seventh year in a row

  • New record result of €5.1 billion in 2016 – up 15% in a year-on-year comparison
  • Year-end rally generates €2.2 billion in the fourth quarter
  • Large number of single transactions and growth in property developments
  • Stronger interest shown by international investors

With a record result of €5.1 billion, the record volume achieved in 2015 was outperformed by 15%. Despite falling transaction figures (down 29%) compared with the previous year, the transaction volume was exceeded due to the higher average transaction size, thus rising for the seventh time in a row. This is the conclusion drawn in a current analysis prepared by commercial real estate services company CBRE.

“Demand for hotel property, which continues to run at a high level, is determined above all by the consistently good performance figures of the hotel business. Moreover, Germany is considered a safe haven in an economically and politically unstable market environment. This is the reason for rising investor interest in hotel properties as an asset class despite sustained pressure on yields,” says Jan Linsin, Head of Research at CBRE Germany.

Strong year-end: 43% of the overall volume in the fourth quarter

As in the previous year, the final quarter of 2016 made a significant contribution to the record result. In the months from October to December, 60 transactions took place, a year-on-year increase of 13%. The 214-room Grand Hotel Taschenbergpalais Kempinski in Dresden, for example, was acquired by RFR Holding in a joint venture together with Essener RAG-Stiftung. In addition, Art-Invest Real Estate bought the Dorint-Kongresshotel, a hotel with more than 287 rooms in Mannheim. The seller was a closed real estate fund of E&P Real Estate. In addition, Pandox acquired a portfolio of seven hotels in Germany, Austria and the Netherlands for €415 million. The seller is Invesco Real Estate. The four properties in Germany comprise the Radisson Blu Cologne, the NH Collection Hamburg City, as well as NH Hotel München Airport and the NH Hotel Frankfurt Airport.

Every tenth euro is invested in hotel real estate

In 2016, 154 hotel transactions were reported in total, bringing the average deal size to around €33 million, up some 63% compared to 2015.

“We have seen a steady rise in the interest in so-called alternative property investments in recent years, especially with institutional investors. Meanwhile, every tenth euro is invested into the German hotel investment market,” says Armin Bruckmeier, Head of Corporate Hotel Brokerage Germany & CEE at CBRE. The share of the hotel segment in the overall property investment volume increased from 8% in 2015 to 9.7% in 2016.

Berlin overtakes Munich with the highest transaction volume

A good 47 percent of the overall hotel investment volume was attributable to the Top 5 locations of Berlin, Düsseldorf, Frankfurt, Hamburg and Munich. At around €696 million, Berlin reported the largest investment volume, followed by Frankfurt and Düsseldorf with €651 million and €376 million respectively. “Compared with the previous year, the Top 5 cities reported a 12% decline in transactions while the full-year volume rose. Secondary locations are increasingly come into the focus of investors and are considered an attractive investment opportunity,” says Olivia Kaussen, Head of Hotels Germany at CBRE.

Large-scale individual transactions dominate

2016 was dominated above all by large-scale individual transactions. All in all, 112 single transactions with a transaction volume of €3.1 billion were recorded, which corresponds to a share of 60% in the overall transaction volume and an increase of 25% compared with 2015. The average value of a single deal stood at around €27 million, up 25% (2015: €22 million). The largest single transaction in 2016 included the five-star Hyatt Regency Düsseldorf, which was sold in the third quarter for more than €100 million to Primeotel Europe, a European hotel fund, and Algonquin. CBRE advised the seller during this transaction. Another large single transaction was the sale of the Nikko Hotel in Düsseldorf. The 386-room hotel was sold to the British investment company Benson Elliot. The Maritim Hotel Dresden with 328 rooms also changed hands in the second quarter of 2016. Internos Global Investors, who were advised by CBRE, sold the hotel to Frasers Hospitality Trust for €58.4 million.

All in all, around 42 hotels worth €2 billion in total were sold in the context of portfolio transactions, including the acquisition of the Interhotel Portfolio by Foncière des Murs, advised by CBRE, in the second quarter from a syndicate consisting of Brookfield Asset Management and Starwood Capital. The portfolio, comprising 4,131 rooms in total, is made up of nine hotels in Eastern Germany. In addition, the HR Group bought seven Arcadia- and Dorint-branded hotels in the same quarter, with some 1,130 rooms in total in Germany and in the Netherlands.

With a share of 54% in the overall transaction volume, the 4-star category proved to be particularly attractive.

Involvement of international investors on the rise

In 2016, the share of international investors in the hotel property market rose to 60% of the entire transaction volume compared to only 50% in 2015. A major part of foreign capital comes from France accounting for some 30% in the overall investment volume. Over the year as a whole, open real estate funds/special funds were the most active buyer group, contributing €1.2 billion to the transaction volume, followed by property companies/REITs (€1.1 billion).

At 30%, property developers were one of the most active seller groups. “In comparison with 2015, this is an increase of 36%. This development is a clear sign of the strong momentum in the hotel investment market which is responding to the ongoing increase in demand with new property developments,” Bruckmeier says. Commerz-Real, for instance, bought two hotel developments of the Novum Style brand in Frankfurt am Main, in the first as well as in the second quarter. The two hotels are said to have around 369 rooms in total. Furthermore, the Holiday Inn City East and the Holiday Inn Express City East developments in Munich, with some 307 hotel rooms in total and located in Neumarkter Strasse, were acquired by Deka Immobilien.

Sustained pressure on yields

Given the strong demand, yields remained under pressure in 2016, falling to 4.50% in the core markets for prime core products in the fourth quarter. “The current yield compression in the hotel property market reflects the general development in other asset classes as well in the German property market,” explains Linsin. “Since a growing number of investors are discovering alternative asset classes, demand outweighs the supply of suitable hotel property, above all in the core segment. As a result, even more pressure on the price front is likely in the coming year.”

Outlook: hotel property market to maintain momentum

“In terms of the increase in the average transaction size, it can be assumed that, against the backdrop of the high liquidity available in the market, high-value core properties at commensurately high purchase prices will be targeted, especially by foreign investors,” predicts Bruckmeier. “At present we do not see any signs of the growing importance of property development diminishing again.”

“Alongside business hotels in the top locations, we assume that investor demand for holiday hotels will also accelerate. Despite the ongoing momentum in the hotel market, the precise market development in 2017 is not yet foreseeable.We are therefore unable to say whether this year will also deliver a record result. On the buyer side, the demand for hotels in Germany remains at an unabatedly high level. Whether we have enough property in the market remains to be seen,” Kaussen says.

Hotel market transaction volume in Germany from 2009 to 2016













Source: CBRE Research, Q4 2016

Top 10 investment transactions in the German hotel market (single transaction and portfolios) 


Source: CBRE Research, Q4 2016

Most active buyer groups in the German hotel market in 2015 and 2016




Source: CBRE Research, Q4 2016

Most active seller groups in the German hotel market in 2015 and 2016


Source: CBRE Research, Q4 2016

Olivia Kaussen 
Head of Hotels Germany 
+49 (0)89 24 20 60 25 

Armin Bruckmeier
Head of Corporate Hotel Brokerage Germany & CEE
+49 89 24 20 60 44

Dr. Jan Linsin
Head of Research Germany
+49 (0)69 17 00 77 663


About CBRE

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at