Skanska has sold the 14,000 sqm Nordic Light Trio office building to JR AMC, a South Korean real estate investment trust. This is the first office investment in the country by the trust after transactions in Vienna, Dublin and Paris.
The close to fully leased property is valued at EUR 41 million and the transfer is scheduled to be completed in the second quarter of next year. JR AMC is a Seoul-based asset manager with a current cumulative total of EUR 3.4 billion in assets under management.
“Nordic Light Trio is Skanska Commercial Development’s second CEE transaction with an Asian investor, but its first with a South Korean buyer,” says Adrian Karczewicz, head of CEE divestments at Skanska.
“This is further proof that Asian investors have a positive sentiment towards Europe and are actively searching for new investment opportunities on our continent,” he says.
“On the one hand, they find CEE countries attractive thanks to the political and economic stability that they offer, which is additionally guaranteed by being part of the EU. And on the other, prospects for the region are also promising with return on investment being higher than in Western Europe. Asian investors are mostly interested in class ‘A’ properties developed by institutional developers,” Karczewicz adds.
According to Colliers International Research, Asian investment capital is beginning to spread widely in Europe. The CEE region is attracting Asian investors with its favorable yield premiums and higher returns on investments.
Between 2017 and 2018, the inflow of Asian capital investment into the CEE-6 (Bulgaria, the Czech Republic, Hungary, Poland, Romania and Slovakia) amounted to around EUR 2.6 billion.
“With yields in Western Europe breaking historic records, our interest is to constantly explore new markets whereby we can achieve high yields, simultaneously minimizing any trade-off in building quality or macro risk profile,” says Hyon Suk Jang, executive managing director of foreign investment at JR AMC.
“In the case of Budapest, we have been following the market for the past year-and-a-half with high interest. Considering both macro and micro economic figures and also the trend of the real estate market in Hungary, we are convinced of the significant potential for further growth,” the executive adds.
JLL have also noted an increasing number of Asian investors showing interest in class “A” assets in the core Central European cities. This was initially in Prague and Warsaw but now also includes Budapest.
The South Korean Shinhan Investment Corp has purchased a KPMG-leased office building in central Prague for EUR 65 million. In Bratislava, the London-based investor Valesco and the South Korean AIP Asset Management have purchased the Twin City Tower from HB Reavis for EUR 120 million.
Korean investors accounted for a third of the EUR 1.7 billion in investment transactions in the first half year in the Czech Republic, according to JLL.
“Competition for core real estate in major European cities is high, so the move towards Eastern European markets is an inevitable one,” comments Mike Atwell, head of CEE capital markets at JLL.
The consultancy puts prime office yields in the Budapest office market at 5.75%, compared with 4.5% in Prague and 6% in Slovakia, although deals at the top end of the markets are known to be concluded below these levels.
The area around Nordic Light will offer 2,400 sqm of landscaped multi-activity gardens open to tenants and neighboring communities, bicycle storage facilities with changing rooms and showers, as well as parking with charging stations adapted for electric vehicles.
The complex was designed by Paulinyi-Reith & Partners and is planned to be the first WELL-certified Skanska building in Hungary, in addition to achieving LEED “Gold” certification.