Germany’s hotel investment market gains notable traction again in 2025

- Transaction volume of €1.9 billion over the four quarters of 2025, up 38 percent year on year
- Owner operators and private investors as the most active buyer groups
- Core transactions and institutional investors making a slow comeback

Germany’s hotel investment market delivered a transaction volume of €1.9 billion in 2025. With an increase of 38 percent, hotels recorded the strongest growth in terms of volume of all the asset classes and are playing an increasingly important role in the commercial real estate investment market. The share of this segment in the commercial real estate investment market advanced to eight percent, marking the highest level for ten years. Prime yield has remained stable at 5.25 percent since year-end 2023. These are the conclusions currently drawn from an analysis prepared by the global commercial real estate services company CBRE.

The core segment registered growth of 87 percent, equivalent to a market share of 31 percent. There are signs of a growing differentiation in favor of top locations and prime quality. Core plus and value-add transactions also increased by 35 percent and 41 percent respectively. Value-add deals constituted the largest segment in the overall market with a share of 44 percent, although the transaction volume per deal proved to be generally lower than in the case of core and core plus transactions.

“Capital mainly continued to concentrate on value-add strategies, with repositioning, renovation and operational optimization as the key value drivers of most operator-free properties. A growing number of core transactions with long-term lease agreements have nevertheless recently been observed, on occasion also with the involvement of German institutional capital.”
Helena Rickmers, Head of Hotel Investment at CBRE Germany

Owner operators with a strong equity position and corporates are currently especially active. Having captured a share of 25 percent, they proved to be the largest buyer group and are currently taking a strategic approach to the attractive purchase prices with a view to expanding their presence in the German market. Furthermore, private investors (17 percent) are compensating for still hesitant German institutional capital.

The largest German hotel transaction, namely the sale of the Mandarin Oriental in Munich where CBRE acted as an intermediary, is a prime example evidencing how global sources of capital currently consider the German hotel market an attractive and stable growth market. Around half of the volume was attributable to international buyers.

Large-scale deals were again more frequently successfully concluded in 2025. While, in the year before, only seven transactions exceeded the €50-million mark, 2025 saw a notable improvement in market transparency, producing a total of 13 deals in these dimensions, while driving the pricing process forward. Berlin was the most sought-after market with a share of 19 percent in the transaction volume, followed by Cologne (16 percent) and Munich (16 percent).

This scenario continues to derive support from the hotel market’s stable fundamentals. Following an uptrend in overnight figures that has held steady since 2021 and a new record year set in 2024, overnight figures have stabilized at a high level. Despite the comparatively low number of major events, such as the European Football Championship in 2024, accumulated overnight figures published so far through to September have settled exactly at the year-earlier level.

Outlook for 2026
The upbeat trend is likely to firm up further in 2026. “The hotel market’s stable fundamentals, combined with growing investor interest in traditional hotel properties, along with sub-segments such as serviced apartments, suggest sustained upward momentum,” Rickmers states. “If the combination of location, property quality, ESG compliance, operator and positioning comes together, core investments will feature more strongly on the radar again.”

Positive stimulus for operators emanates from Germany’s trade fair sector that is anticipating a higher number of events and exhibitors in 2026. Furthermore, following several years of economic stagnation in Germany, expansion is now on the cards again, which may well moderately boost both leisure travelers’ consumer sentiment and travel budgets in the business segment. At the same time, growth in the new hotels pipeline is below the historical average, which will determine positive supply and demand dynamics.

Despite this momentum, operators are having to deal with higher operating costs and also partly with a sharp increase in rents and indexation. This development has already triggered a market shakeout and is likely to be conducive to further consolidation and strategic partnerships in the operator environment.

“At the current point in time, efficient and digitalized operator concepts such as service apartments stand out through their strong and dynamic expansion, and the luxury segment is impressive with above-average room rates that are increasingly disengaging from the overall market.”
Sabine Lüftenegger, Head of Hotel Advisory and Development Services at CBRE Germany