Germany: The German serviced apartment market is set for a record year, with a transaction volume of €235 million in 2018.
Luxembourg-based bank Catella said: “The serviced apartments market has been fed by widespread investor demand in recent years, and transaction volumes have increased accordingly. This hybrid niche – structurally located between hotels and residential – is heterogeneous and largely has higher user charges. It differs from traditional residential by offering fully furnished individual apartments with services like weekly cleaning, reception and catering. The average tenancy is around five weeks.”
The latest Catella Market Tracker research presents the following structural observations:
• The European pipeline is 10,500 units, with 3,500 in Germany alone. Germany ranks second in the expansion plans of national and international investors, with a clear gap to the next ranked countries Switzerland and Ireland.
• The yield corridor in the past 12 months was between 4.6 per cent and 5.2 per cent.
• The majority of serviced apartments are in urban environments (central locations close to transport hubs, trade fairs, commercial centres, event centres etc) and are primarily visited by long-term users.
• Important locations are currently Munich, Berlin, Frankfurt, Hamburg and Düsseldorf. Catella has identified Cologne, Stuttgart, Hanover, Leipzig and Nuremberg as cities with large future potential.
Catella Research forecasts the transaction volume in Germany by the end of 2018 at approximately €235 million, and in Europe at €525 to 575 million.
“All in all, we assume that the overall market will continue to grow, primarily fed by a change in the labour market,” said Dr. Thomas Beyerle, head of group research at Catella. The share of serviced apartments in the hotel market will rise to 10 per cent by 2030. “Co-working, project structures and an increasing number of business travellers are push factors for this development,” added Beyerle.
