Property investment in first half exceeds last yearʼs total
The value of commercial real estate transactions in Hungary during the first half of this year tripled compared to the same period in 2015, exceeding €910 million, which is more than last yearʼs total, according to a press release issued by JLL today.
Out of the total amount, investment deals accounted for roughly €830 mln, with retail assets representing the main share of this volume (39%) followed by offices (34%), logistics (26%) and hotels (1%), JLL said. The balance of €80 mln consists of plots and vacant buildings.
The main transactions included large ticket, standalone buildings and portfolios, according to JLL. Blackstone acquired the Immofinanz logistics platform across the CEE region (and Germany) with more than 100,000 sqm located in Hungary. Diófa Real Estate Fund was the most active buyer across the office and retail segment, with the acquisition of the Inforpark G office building, Europark shopping center and Zala Park. CTP was also active building up their Hungarian portfolio during the period with now more than 200,000 sqm owned in the country, JLL added.
New investors also entered the market in the first half, JLL noted. In March, Zeus Capital Management completed its purchase of the newly delivered Váci Corner from HB Reavis while in June KGAL acquired Eiffel Square from Europa Capital and its JV partners. Other new entrants on the market are currently in exclusivity on a number of office deals.
The underlying factors supporting the trend remain at play, and JLL said it foresees no change in the coming months. JLL expects market fundamentals to remain robust, with solid occupier demand, declining vacancy rates and a recovering development activity. In parallel, the increasing pool of equity targeting Budapest and the increasing appetite of banks to finance deals is dramatically raising liquidity, the press release notes. Moreover, the yield spread with Western European and other leading CEE markets guarantees the attraction of the market, according to JLL. Finally, as anticipated Fitch has upgraded its sovereign debt rating of Hungary from junk level to investment grade (BBB-) in March 2016 and a similar move is anticipated from Moody’s later in the year, JLL commented.
“Prime yields have fallen to 7% for offices, 6.75% for shopping centers and 8.50% for logistics. On a relative basis and bearing in mind that some core western markets are now getting close to 3.00% yields, this appears reasonable”, Benjamin Perez-Ellischewitz, Head of Capital Markets, JLL Hungary said. “Further compression is expected over the next 12 months. Domestic buyers – e.g. local real estate funds and the National Bank of Hungary – and international investors will drive the activity and liquidity should remain high in every asset class. ... We expect further portfolios as well as landmark buildings to be sold in H2, which will push the 2016 volumes towards the €2.0 billion level. The strong pipeline we have built over 2015 is now transforming in transactions and the momentum remains very strong across all asset classes and all lot sizes.”
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