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Investor Sentiment Improving Across Region

Investor sentiment towards Hungary is continuing to improve as investment volumes in 2017 reached around EUR 1.7 billion according to CBRE. JLL have traced EUR1.84 bln worth of investment for 2017.

Eiffel Palace.

“This is the highest level for the last ten years. The outstanding weight of capital clearly signals the returned and strengthened confidence of investors towards the Hungarian market and increased liquidity in every asset class,” commented Benjamin Perez-Ellischewitz, head of capital markets at JLL Hungary.

The most notable investment deal at the top of the market is seen as the purchase by the Germany-based asset manager Corpus Sireo of the 14,500 sqm Eiffel Palace for circa EUR 54 million from the National Bank of Hungary at a reported yield of 5.25-5.4%. The turn-of-the-century building was redeveloped into a landmark office building by the Hungarian developer, Horizon Development.

The leading CEE investment destinations continue to be Poland and Czech Republic, with 39% and 27% shares respectively last year. These were followed by the resurgent Hungary at 14%, Romania (8%) and Slovakia (4%).

Investments into CEE reached a total of almost EUR 13 billion for 2017, representing a 3 % increase on the 2016 total according to JLL and for the second year running a new record transaction volume for the region. 

Solid Pipeline

“With a solid pipeline of transactions set for 2018, we expect another strong year. Our forecasts for the full year suggests CEE regional volumes will reach in excess of circa EUR 12 billion, which could challenge the new record set in 2017,” said JLL.

Mark Robinson, CEE research specialist at Colliers International, argues that the escalation in economic growth momentum through 2017 has taken the CEE-6 (Bulgaria, Czech, Hungary, Poland, Romania, and Slovakia) real estate leasing and investment markets closer to a cyclical peak. 

“Sentiment indicators are still pointing towards a further expansion in CEE-6 investment volumes in 2018 over and above 2017’s cycle high at EUR 12.9 bln. Solid GDP growth in Europe (2.5% year-on-year in 2017) is a support for CEE exports. Increased general investment in the CEE-6 from local sources and the EU, as well as consumption, should see the region approach peak economic growth. The cycle may top out in 2018,” Robinson said at the EU Property Briefing for Hungary and CEE.

Based on indicators for the first quarter, investment volume for 2018 could reach a record EUR 2 billion with multiple bids for available products according to Bence Vécsey, head of investment services at Colliers International Hungary.