a&o Hostels announced the freehold purchase of a vacant office building on Rudi-Dutschke-Straße in Berlin’s Kreuzberg district for conversion into what it says will be Europe’s largest hostel. The property was acquired from PIMCO Prime Real Estate on behalf of Allianz.
The management-led acquisition of a&o at the end of 2023 was sponsored by StepStone Group and Proprium Capital Partners. Together they have invested about €500 million into the platform’s expansion over the past 18 months.
In line with its adaptive reuse strategy a&o will undertake a €40 million conversion program through its in-house development arm. The project is expected to deliver about 2,500 beds across 610 rooms, comprising 31 percent private rooms and 69 percent shared accommodations. Once complete a&o’s Berlin portfolio will total 8,000 beds across five assets.
“Offering a unique blend of history, culture, modern innovation, green spaces and affordability, Berlin is one of Europe’s leading leisure and tourism hotspots, welcoming 13 million visitors in 2024, a 7.5% increase on 2023,” said Oliver Winter, CEO at a&o Hostels. It’s also the city that is synonymous with a&o, having opened our first hostel in Berlin Friedrichshain over 25 years ago.
“We continue to invest in new opportunities at pace and scale, benefitting in particular from the increasing obsolescence challenge facing owners of secondary office and hotel assets.” said Philipp Westermann, partner at Proprium Capital Partners. “The European hostel sector remains highly fragmented, which presents a compelling opportunity to harness our proven model, strong digital booking engine, and institutional-grade management infrastructure to further establish our market-leading position.”
“This transaction, which will deliver Europe’s largest hostel, is another demonstration of how we are delivering on our growth strategy ahead of schedule, in one of our high conviction commercial real estate sectors.” said Josh Cleveland, head of EMEA at StepStone Real Estate.
The property is located a short walk from Checkpoint Charlie, which receives four million visitors annually, and about 15 minutes on foot from Berlin Central Station. Major landmarks including Brandenburg Gate, Alexanderplatz and Berlinsche Galerie are accessible from the area.
A building permit has already been granted. a&o has appointed ANES Bau as general contractor and is targeting a first quarter 2027 opening.
The transaction forms part of a&o’s initial €500 million investment program, focused on converting office and hotel assets that have reached the end of their natural life or require significant ESG-related capital expenditure. Over the past 24 months the company has added or advanced 11,000 beds across operational and development projects.
Berlin recorded 13 million visitors in 2024, a 7.5 percent increase compared with 2023, alongside an 11.5 percent rise in international visitors and a 7.3 percent increase in overnight stays. The hostel market is projected to reach €8.2 billion in value by 2029, according to JLL’s “Beyond Bunk Beds” report.
Founded in 2000 by Oliver Winter a&o manages 31,500 beds across Europe. In 2025 the company reported 2.8 million guests and 6.6 million overnight stays with an occupancy rate of 76 percent.