The largest commercial property Expo in Europe returned to its traditional annual four-day event in March against a background of the implications of the war in Ukraine for the markets. The expo attracted more than 20,000 delegates from 80 countries, according to Reed Midem, organizers of the event.    

As has been the trend in recent years, the Hungarian Investment Promotion Agency organized a Budapest/Hungary stand in conjunction with the Property Developers Roundtable Association (IFK) and the Budapest Development Center (BFK).

Present at the stand, which had a series of cocktail receptions and roundtable discussions on the investment and development opportunities that Budapest and major cities in Hungary offer, were Atenor, Futureal, GLP, TriGranit, Liget Budapest and Wing, plus consultants, CBRE, Stay in Hungary and Revetas Capital. Further consultants such as Cushman & Wakefield and Avison Young had Hungarian representatives promoting Hungary to investors present at the event.    

“We forecast around EUR 1.2 billion-1.4 bln in investment volume for Hungary, with the office sector providing more product,” said Tim O’Sullivan, director of capital markets at CBRE Hungary, at a presentation on the investment possibilities in Hungary.

“Logistics is attracting significant interest from investors, although not much is being traded due to the low supply of product. Residential could become a popular investment asset as is the case in the Czech Republic and Poland,” O’Sullivan added.

Possible Compression

He sees office yields for Hungary at 5.25%, compared to 4.25% in the Czech Republic and 4.4% for Poland. There is a possibility for compression in the industrial sector, while office yields will remain stable and retail is expected to come back.  

Kevin Turpin, now regional director of capital markets in CEE at Colliers, has recorded total CEE investment (covering Bulgaria, the Czech Republic, Hungary, Poland, Romania and Slovakia) at around EUR 11 bln, with EUR 1.6 bln for Hungary compared to EUR 6.3 bln for Poland and EUR 1.8 bln for the Czech Republic.

He sees lower investment levels due to the lack of big shopping center and hotel deals in the region. Office transactions for CEE are expected to remain constant, while the number of industrial projects could increase.

The conventional wisdom is that, despite issues relating to the pandemic crisis and now the war in Ukraine impacting the commercial property market, there is still a large amount of capital to be invested, and Hungary and Central Europe are attractive investment destinations that offer an appropriate yield spread.

Notable by their absence were representatives of the Russian Federation, although Ukraine did maintain its presence, albeit with a more limited delegation.

“We have been working at MIPIM without a great Ukraine delegation, as was planned before. A total of seven of us were in Cannes. I feel very broad support for Ukraine at the level of exhibition organizers and city representatives,” said the architect Anna Nestulia at a public meeting in support of Ukraine.

This article was first published in the Budapest Business Journal print issue of March 25, 2022.