Skanska Property has sold its dual-phased, 36,000 sqm Mill Park development to Hungary’s Erste Alapkezelő, a subsidiary of Erste Asset Management, for a reported EUR 100 million. This is the second acquisition deal between Skanska and the Hungarian fund following the Nordic Light transaction in 2016.
“The acquisition of Mill Park is in line with our desire to increase the fund’s real estate portfolio with newly built “A” category office buildings. This transaction provides a defensive, long-term sustainable income for the fund, so it serves well the interests of our investors,” commented Balázs Pázmány, head of the board of Erste Asset Management.
Mill Park, located in District IX, is 80% leased to multiple tenants, including IT Services Hungary, and will be completed in the third and fourth quarters of this year; the project is expected to receive LEED “Gold” certification.
In the current business and economic environment, the office development boom looks set to continue with developers able to source finance, conclude the necessary preleases and sell a development on to investors. Take-up volumes reached 250,000 sqm in the first half year with a current vacancy rate of 7.6% according to Cushman & Wakefield. As much as 76% of the H1 new office supply is pre-let, with a further 168,000 sqm scheduled for delivery in H2. Skanska was advised by Cushman & Wakefield on the sale of Mill Park.
Only three schemes were delivered in the second quarter of this year, bringing the total supply of quality office space in Budapest to 3.5 million sqm. However, a shortage of investment grade product is limiting investment market activity.
In Prague, Skanska has sold the 23,000 sqm LEED and WELL accredited Visionary to CA Immo for EUR 68 mln and in a separate deal the first phase of the LEED Gold accredited Campus 6 in Bucharest, also to CA Immo, for EUR 53 mln; the transactions occurred within a two-month period.
With Mill Park close to completion Skanska is looking to source further development plots in Budapest in line with its regional policy of developing office centers in major Central European capitals and leading Polish cities and selling them on to investors. The company is currently developing the 13,000 sqm third phase of the LEED Gold Nordic Light office project in Váci út.