Investors and developers are still maintaining a cautious attitude to Hungary and require a significant yield premium due to the perceived country risk. Although from a more positive perspective, investors from Germany and Austria are looking at acquisition possibilities and developers are prepared to build office and retail developments with a view to an economic recovery in the medium to long term.
In addition to an image problem, there is also limited institutional-grade product available. “Hungary still has a negative image and investors will not invest in a country that is projecting negative images,” said Péter Számely, head of team CEE-SEE Real Estate Finance at the Austrian Hypo Noe Gruppe.
Investors have shown a clear strategic shift in their investment preferences in Europe in favor of Germany and CEE as the most attractive markets in which to purchase real estate in 2011. Around a quarter of investors have CEE as their top investment target this year, making the region second only to Germany – this is up from 16% last year, according to the results of a survey of almost 350 European real estate investors by CB Richard Ellis presented at the company’s annual Investment Briefing at MIPIM.
Core assets remain the primary focus for investors in 2011 and there are still divergent views among investors on the right time for investing in secondary property. With regard to sectors, more than a third (35%) of investors identified offices as their primary target sector for 2011. However, retail took over from offices in this year’s survey as the most attractive sector overall, with 43% of investors targeting all retail categories combined.
According to Charles Taylor, investment partner at Cushman & Wakefield who was promoting Hungary at MIPIM, the country is back on the radar for German pension funds and open-ended funds. However, caution is being exercised. “Investors will only look at the best locations and good quality product that is well let,” he commented.
From a development perspective, ECE is continuing to develop the Árkád Szeged and has purchased one-third of the Árkád Budapest for €50–55 million. “Árkád Szeged is a strong shopping center with a good catchment area. If the macro situation is weak this can change,” said Dr. Andreas Mattner, managing director of ECE.
Richard Redfern, from the investment department of King Sturge, reported a muted response to Budapest from investors. He was promoting Science Park to potential buyers and argues that if such a fully let quality product was in Poland or the Czech Republic, it would be snapped up. (David Lawrence)
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