Spiral Budapest by GTC.
The sale was concluded amid uncertainty over pricing in the office market in the current market environment, in the view of many analysts. The buyer has not been revealed, though several real estate websites said the deal would generate EUR 41 million in free cash.
“That being said, if you have an exceptional product because of its prime quality or a very long lease with a good covenant, core money is keen to secure such opportunities. Hungary has seen a significant supply of new offices this year so there is potentially more product than on the Czech market,” said Rita Tuza, now headof capital markets at JLL Hungary.
Office investment volumes for the first half of 2020 reached recorded EUR 400 million, driven by the acquisition in June by Optimum Ventures Private Equity Fund (owned by Optima, the fund manager of the National Bank of Hungary’s foundations) of a majority shareholding (61.49%) in GTC.
While the third quarter was moderate in terms of deals, there are several transactions still proceeding and expected to be closed in the remainder of 2020, Cushman & Wakefield says.
In a further development, the Belgian developer Atenor has placed Building “F” at its 123,000 sqm Váci Greens property on the market. The whole complex consists of six buildings, five of which have been leased and subsequently sold to various domestic and international investors. Atenor has a policy of developing, leasing and selling assets onto investors.
EUR 1 bln Ballpark
Colliers predicts the total Hungary investment volume turnover to be just below EUR 1 billion, in line with its conservative flash figure of EUR 800 mln. Given the current pandemic environment, JLL has adjusted downwards its estimate of annual investment volume for Hungary to EUR 1.3 billion.
For its part, CBRE argues that there is a lingering uncertainty as to how the COVID-19 situation will play out, although a late boost to the market could bring the annual Hungary investment volume for 2020 up to the EUR 1.2 bln-1.3 bln range.
In one significant deal for the year, GalCap Europe, a real estate asset and investment manager specializing in Austria and Central Europe, acquired the earlier generation Rumbach Center (Rumbach Sebestyén utca 19-21, in District VII) for the portfolio of a German pension fund.
The office class has proved to be the asset sector of choice in CEE, closely followed by industrial, according to Colliers International, who brokered the Rumbach deal.
Another notable transaction was the purchase by Allianz of the Eiffel Square office complex (Teréz körút 55-57, District VI), making it the largest office investment by a foreign investor sine 2016, according to CBRE. The 23,500 sqm complex was purchased in a deal structured off-market by JLL.
Colliers put yields at 5.25% for prime Budapest office. The theoretical yield level for prime Budapest offices is set to grow to 5.5% by the end of 2020, according to Bence Vécsey, head of capital markets at JLL Hungary.
This article was first published in the Budapest Business Journal print issue of November 27, 2020.
