The industrial and business park developer, CTP is expanding its activities in the Hungarian industrial market: the company has made two land purchases in Biatorbágy and Dunaharaszti in the greater Budapest area. The acquisitions will increase the value of assets owned by the company in Hungary to EUR 320 million by the end of 2018, according to CTP.
The Hungarian industrial and logistics market is seen as recording high demand from automotive, retail and e-commerce companies for a limited supply of well-located, quality, contiguous space. Vacancy currently stands at a record low of 4%, against a Central European average of 5%.
Hungary has an estimated 8.6 million sqm of industrial space, 44% of which is leased and the remainder owner-occupied; around 70% of stock is located in the greater Budapest area.
CTP already owns 165,000 sqm of space in Biatorbágy where a further two warehouses consisting of around 60,000 sqm of space will be developed; in addition, two warehouses of 60,000 sqm of space are being developed in Dunaharaszti, an established industrial location.
“This year we will continue with our expansion activities. CTP will invest approximately EUR 60 mln into these new CTParks. These projects will create a variety of jobs, both direct and indirect, and we estimate that the number of new jobs could exceed 2,000,” said Rudolf Nemes, country manager at CTP Hungary.
Construction on both locations will begin in the second quarter and CTP plans to complete work in the first quarter of 2019. CTP defines itself as a long-term investor and industrial park owner. The company currently has 14,000 sqm under construction at CTPark Győr II, 10,600 sqm is being developed at CTPark Budapest West and, outside the capital, 1,7000 sqm is being constructed at CTPark Komárom.
“By developing in Hungary and Romania we have now extended the CTP network to the whole Central European region. We are long-term operators and therefore maintain ownership of our parks. Our development strategy is to follow our clients as two-thirds of our business is with existing clients. We develop in both capital and regional cities,” commented Remon Vos, CEO of CTP.
The full-service logistics and industrial park developer and operator currently has more than 4.5 million sqm of Class “A” properties in more than 82 strategic locations in Central Europe. This divides between around 50% light manufacturing and R&D and 50% pure logistics and distribution space. Most of the expansion is being undertaken in its newer Central European markets of Hungary and Romania, which constituted 66% of the overall portfolio growth in 2017. The company is now present in Czech Republic, Poland, Slovakia, Hungary and Romania and plans to develop up to one million sqm of space this year.
Despite the historically low vacancy of around 5% in Central Europe, CTP is continuing to develop on a largely built-to-suit basis with a small amount of speculative shell and core space. The company is in the process of acquiring a development plot in Serbia and also plans to develop in western Ukraine. The aim is to have a 7.3 million sqm portfolio by 2020.
The CTP portfolio is valued at EUR 4.3 billion. “Due to the strong overall economic performance of CEE markets in 2017, the industrial real estate sector posted the highest occupancy rates on record. CTP core occupancy hit 97.7%. Low vacancy, coupled with strong new demand, has resulted in total rental income rising to EUR 233 mln for the year, and we expect this to increase to 17% year-on-year in 2018,” said CTP.
The company retains responsibility for property management activities and all new BREEAM-accredited buildings include in-house facility management, grid sizes of 12x24 meters with a 10.5 meters clear height and LED lightning. According to Nemes, the usual construction period is around nine months.