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Report: €580 mln invested in commercial properties in 2014

Sustainability

Last year Hungary witnessed its second highest transaction volume since 2007 with a total volume of just over €580 mln, out of which income producing assets represented around €450 mln, JLL’s Q4 2014 Budapest City Report revealed yesterday.

“Among the various asset classes, the performance of the Hungarian office market was especially convincing as vacancy dropped to the lowest level of the past six years while gross take-up broke record volumes” JLL said in a press report.

The most popular asset class was office, generating 35% of the total volume, followed by retail with 29% and industrial with 13%, while the remaining share is accounted for by hotels and properties for redevelopment, the report shows. The total transaction volume in Hungary for Q4 2014 amounted to some €77 mln with €60 mln in investment deals. The most significant transactions were office assets with two large and two smaller properties sold.

Based on the latest transactional evidence, the prime office yield stands at 7.30%. Prime retail is at 7.25% and prime logistics now stands at 9.25%.

“In 2014 real estate markets across the CEE region – including Hungary - experienced outstanding performance. The annual investment volume of the region expanded by 27% y.o.y. reaching nearly €7.9 bln. In Hungary investment volumes increased by 80% on 2013, however we need to note that the 2013 base was relatively low with only €320 mln,” added Rita Tuza, Head of Research at JLL.

“Although the latest changes in the retail sector’s specific legislations might have adverse consequences on the liquidity of non-prime retail assets in the immediate future, we expect a strong upswing in investors’ appetite for offices and logistics properties. Based on the transactions in the pipeline, the growing appetite of investors (local and international players alike) and easier debt finance, we are confident that 2015 will show a significant progression of activity and yield compression. We should reach a volume of at least €750 mln, a 30% y.o.y increase over 2014,” commented Benjamin Perez-Ellischewitz, Head of Capital Markets at JLL.

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