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Budapest Offices Attract American and German Investors

Jan 31st, 2017
Budapest Offices Attract American and German Investors

Total commercial real estate investment transaction volume in Hungary reached €270 million in the fourth quarter of last year, pushing the 2016 volume to above €1.7 billion, the highest annual figure since 2007, according to JLL Hungary’s latest preliminary statistics. 

Offices at Forefront

According to the JLL report during the final quater of 2016, the office asset class generated the largest share of the volumes with 65%, followed by logistics (16%) and retail (15%) asset classes. Here are at the most notable office transactions.

The largest office transaction of the period was the sale of the 26,200 sqm Nordic Light office complex. ERSTE Zrt purchased the property from Skanska. 

Váci Greens C

Another prominent deal was the sale of the 18,500 sqm Váci Greens C building by Atenor to the Slovak fund manager, IAD Investments, a new entrant on the Hungarian market.

The 17,000 sqm Office Garden I was sold to FLE, an Austrian private equity firm who is also a newcomer in the Hungarian office market. 

Váci 1

Another significant transaction of the last quarter of 2016 was the acquisition of Váci 1, a recently refurbished multi-purpose development by GLL Real Estate Partners on behalf of Bayerische Versorgungskammer.

Budapest Office Market Continues Its 2016 Roll in 2017

Benjamin Perez-Ellischewitz, Head of Capital Markets at JLL Hungary stated that in 2016 they had seen a hive of activity across every sector with a preliminary transaction volume of more than €1.7 billion. The upswing of the investment market was continuous throughout 2016 and the experts expect the momentum to carry on in 2017. Despite the uncertainty around global political developments and the moves of interest rates, the Hungarian real estate is foressen to hold its appeal in a low interest rate environment. Q4 prime office yields remained flat at 6.75%, whereas yields in logistics and retail dropped by 25 bps. quarter on quarter to 8.25% and 6.50% respectively. Experts forecast further yield compression across all asset classes in 2017.

New Entrants in the Hungarian Office Market

Office transactions generated roughly 48% of the annual investment volumes, followed by the retail (27%) and logistics (14%) sectors. Interest for portfolio and big-ticket deals was especially high as the largest 5 deals generated more than 35% of the total volumes. In 2016 JLL recorded more than 10 new entrants to the Hungarian commercial property markets mainly from the USA, Germany and Slovakia. Nevertheless, Hungarian investors generated the highest share of the annual volumes (30%) followed by US-based (20%) and German (14%) investors. Capital values in Hungary remain 20%-30% below the regional peers in every asset class, which in parallel with Hungary’s credit upgrade and the promising future market prospects convinced several investors to enter the office market.

Sources:

http://www.portfolio.hu/ingatlan/iroda/amerikai_es_nemet_befektetok_versengenek_a_budapesti_ingatlanokert.242040.html

http://bbj.hu/real-estate/commercial-real-estate-investment-reaches-270-mln-in-q4_126728

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