Hungary’s Adventum Agrees to Purchase Wola Retro in Warsaw

Office Market

The Wola Retro office building in Warsaw, purchased by Adventum.

The Hungarian Adventum Group has agreed to purchase Wola Retro, a prime office building in Warsaw, from Develia. The settlement price is around EUR 69.8 million, with the deal expected to close by the end of April, according to Avison Young, who co-represented the vendor with JLL. The buyer was advised by CBRE.

The property provides around 26,000 sqm of space in three buildings, one of which was built in the 1930s. The plan is for them to be redeveloped into offices that merge with the historical surroundings.

The prominence of local capital has become a notable trend in the Central and Eastern European region.

“Investors from the Czech Republic, Hungary, Romania and Slovakia, in particular, [have] proved that local market knowledge and presence are the keys to success. Approximately 35% of the investment volume in 2022 came from CEE-based investors,” comments Colliers.

Last year, Adventism’s acquisition of the 273,000 sqm Tesco portfolio, including 13 Hungarian assets, was seen as a significant deal in Hungary in terms of magnitude.

Rarely Seen

“We rarely see such large ticket deals happen in Hungary, and the complexity of the deal (14 multi-tenanted assets at various locations in Hungary and additional Czech properties) makes it even more significant,” comments Rita Tuza, head of capital markets at JLL Hungary, on the deal.

In an earlier significant CEE cross-border acquisition previously reported by the Budapest Business Journal that is evidence of that domestic capital trend, the Hungarian investor Indotek Group purchased GTC’s Belgrade office portfolio for EUR 267.6 million. The agreement covered the sale of 11 buildings within five business parks with a total of 122,000 sqm of gross leasable area. The portfolio is located in the New Belgrade area, the Central Business District of the city.

Despite a few high-profile deals closed by international buyers, local capital remains the driving force in the Hungarian market. The weight of home capital remained dominant, with about 65% of investment activity for 2022, compared to 68% in 2021.

Dry H2

A dry second half year limited the total transaction volume to EUR 900 mln. That compares with EUR 1.6 billion in 2021 and EUR 1.2 bln in 2020, according to Benjamin Perez-Ellischewitz, principal at Avison Young Hungary. The consultancy estimates current prime yields at 5.75% for office, with industrial at 6% and shopping centers at 6.5%. 

“In terms of yield, it is not a general move. Prime assets are not significantly repriced, but on the riskier end of the spectrum, development and value-add opportunities are clearly moving out by more than 100 basis points,” comments Perez-Ellischewitz.

Experts say that price corrections are now expected across all asset classes and have already started to materialize.

“We expect this adjustment phase to take shape in the first semester of 2023 with subdued volumes. Whilst Hungary has been a strong issuer of capital towards the CEE region (and beyond towards the U.K. and EU markets) until now, inward investments have been limited, with CEE money accounting for 9% of the total volume in 2021 and 4% in 2022,” Perez-Ellischewitz comments on prospects for the Hungarian investment market this year.

“It will be interesting to see the evolution in the different markets in the context of 2023. The importance of ESG will keep growing for investors and occupiers in 2023 and will become a more critical element in the pricing of assets,” he concludes.

This article was first published in the Budapest Business Journal print issue of February 10, 2023.

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