Office-Hotel Conversions Increase

The German hotel investment market remains strong with a lack of high quality assets available for sale. This trend is likely to continue. The German hotel market currently has some interesting characteristics, namely the significant number of unbranded hotels (although many of these hotels are burdened with material capex requirements), a strong German economy, a robust business travel market as well as an increasing attractiveness of German cities such as Berlin and Munich for international tourists.

This is resulting in an increasing number of investments being made into office properties but with potential for subsequent conversion into hotels. Just as there is a strong demand for hotel space there has been a decreasing demand for office space in some areas (particularly non-central CBS locations) as tenants are opting for "home office" solutions, shared office space and other ways to minimise the need for office space.