Half-done hotel on the hill up for sale
The following article, by David Lawrence, was originally published in the Budapest Business Journal print publication on August 1.
A blot on the Budapest landscape for years, the 23,000 sqm Rose Hill site known as the SZOT (National Committee of Trade Unions) Hotel in one of Budapest’s most exclusive residential areas overlooking the Danube from the Buda Hills, has been put up for sale by the current owner, CIB Group.
The proposed sale arguably reflects the increasing interest being shown by investors and developers in the Hungarian commercial property market as it slowly recovers from the post-2008 downturn.
CIB Group is now marketing the unfinished grey concrete structure – clearly visible to tourist boats on the Danube and bathers in the Lukács thermal baths – along with the land at the site. The building is located in Budapest’s second district and boasts a panoramic view overlooking the Hungarian Parliament, Margaret Island and the historic bridges spanning the Danube. The four-story building was constructed in the 1970's and functioned as an exclusive “medical” hotel for around 20 years. Some additional parts were added to the structure and the concept and development plans were changed several times by different owners and the hotel closed in 1991. Since 2007 there has been no activity at the site and it has remained a symbol of how the commercial property development and financing market can malfunction and the extent to which it is hostage to the wider economic environment, leaving the grey structure an ugly stain on an otherwise stunning landscape.
“Everyone living in Budapest is familiar with the former SZOT hotel. It is in all our interests that this landmark site, which is such a defining feature of the cityscape, should be developed and finally take pride of place in the Rose Hill panorama again. We trust that with the expert help of Cushman & Wakefield the site will soon find a new owner and will once again be the jewel in the crown of the district and of Budapest as a whole,” said Michael Clark, Deputy CEO of CIB Group.
Mike Edwards, Head of Capital Markets at C&W, who have been appointed to sell the property, commented that: “We are confident that the right purchaser is out there who can see the potential vision of acquiring this site and the opportunity of putting their own mark on it. On the back of a recovering investment market in Budapest, we are confident that CIB will enjoy decent interest in this site and look forward to formally bringing it to the market in the short-term.”
A sign of recovery in the Hungarian property market is the growing number of participants in the on-line auctions that are being held for “distressed assets” by CIB Group that can provide potential developers and investors with value-add development and investment possibilities. Under the system potential bidders are able to download details of a building and arrange a visit to the property if required. They then have the option of making a preliminary bid and participating in a public on-line auction.
The SZOT Hotel site is seen by commentators as offering possibilities for the development of residential health care and hotel space. Both private individuals and Hungarian and foreign investors have shown general interest in redeveloping the site.
Although the major Austrian and German institutional investors have not returned to Hungary, at the top end of the hotel investment market the Dubai-based Al Habtoor Group has recently purchased the InterContinental Hotel in Budapest for an undisclosed fee. The group, which is active in hotel and hospitality development, bought the Le Meridien Hotel in 2012.
C&W says it is expecting written offers and queries up to September 15.
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.