Growing Number of Investors Drawn to MIPIM
The 30th annual MIPIM commercial property expo on the Cote d’Azur is a barometer of how the different commercial property market sectors and regions are viewed by international investors and developers against the wider economic climate.
The number of attendees at the Palais des Festivals in Cannes has continued to rise and reached 26,800 delegates this year, a figure that is close to the numbers who attended MIPIM in the pre-crisis days. Country, city and company representatives from Hungary, Czech Republic, Estonia, Latvia, Lithuania, Poland, Romania and Ukraine showcased their markets and projects to leading international investors and financiers.
An increased amount of capital is flowing towards the commercial real estate sector as capital looks for a home. As many as 5,400 representatives of investment and financial companies from 100 countries attended MIPIM 2019 according to REED Midem, the organizers of the four-day event.
From the supply perspective, CEE developers and country representatives perceive the need to promote their cities and development projects at such major international property and investment expos as MIPIM and Expo Real in Munich.
To that end, the Municipality of Budapest, the Hungarian Investment Promotion Agency and the Association of Property Developers’ Round Table (IFK) established “Budapest-Hungary Time To Invest”, a joint stand. Developers Atenor, Futureal Group, Gránit Pólus Group, GTC Hungary, HB Reavis, Horizon Development and Wing all presented projects due to hand over in 2020.
“I think the importance of the Budapest-Hungary stand is to promote the city and Hungary rather than individual projects,” commented Attila Kovács, managing director of Horizon Development at MIPIM, who presented the Szervita Square office, residential and retail project.
Róbert Ésik, president of HIPA, added: “For HIPA, MIPIM is especially important, since it gives us the opportunity to present Hungarian real estate development projects to international investors at one of the most significant events of the sector. In the first quarter of the year, we have already concluded EUR 1 billion in FDI, which gives a competitive edge over our Central European neighbors.”
The Visegrad Four countries (Hungary plus Czech Republic, Poland and Slovakia) had another record year for investment volumes in 2018 with almost EUR 12 billion in assets traded according to Cushman & Wakefield. The leading market by far was Poland with EUR 7.22 bln. Czech Republic recorded EUR 2.35 bln and Hungary reached EUR 1.64 bln, while Romania reached EUR 970 million and Slovakia EUR 720 mln; 2019 is expected to be another strong year for the region.
“The fundamentals of the market are good, with strong occupier markets, rents not overpriced, and interest rates not expected to rise. More investors have been focusing on core capital, and this should continue,” commented Jonathan Hallett, head of CEE at Cushman & Wakefield.
Reflecting positive tenant and investor demand in both CEE and the wider Europe, a number of large, urban projects were showcased. The Belgian Atenor presented the 72,000 sqm phased, speculative Aréna Business Campus in Budapest, the second large, phased office project by the developer in Hungary after Váci Greens. Such ambitious, large-scale projects reflect the current long-term confidence in the Budapest office market as all high end office projects are attracting multiple bids from both local and international investors.
Jan Hübner, CEO at HB Reavis Hungary, commented that investors were already showing an interest in the Agora Budapest project, the first 30,000 sqm phase of which is due to complete by the end of the year.
“The shifting paradigm is from real estate as a cost item to real estate as a product enhancer,” he said at a panel discussion on Budapest 2030. The aim is to make Budapest one of the most livable cities in Europe according to Gábor Bagdy, deputy major of the capital city. Many discussion forums at MIPIM were concerned with issues related to design, sustainability, life-style and city management issues, reflecting tenant demand at the top end of the markets.
Another large-scale Central European mixed-use development project unveiled at MIPIM was the 230,000 sqm Towarowa 22 office, hotel and residential project on a 6.5-hectare site in the Wola district of Warsaw by the prolific developers and investors, EPP and Echo Investment, designed by the Copenhagen-based BIG architects studio.
“Our ambition is to create a multi-function, well-designed neighborhood that will attract people and encourage them to live, work and spend free time there,” said Mikael Andersson, project director at Towarowa 22. Construction work on the EUR 1 bln project is due to commence in two years.
In Romania the fifth district municipality of Bucharest promoted what Daniel Florea, its mayor, describes as the “most attractive piece of real estate in Romania in the last 30 years”. The masterplan of the EUR 800 million-100 million project is designed to include more than 10,000 residential units, a 70,000 sqm commercial area and 300,000 sqm of offices and large green areas. The transport hub has an estimated 400,000 people who commute daily.
Kyiv was promoted by its mayor, the former world heavyweight boxing champion Vitali Klitschko, who emphasized the development possibilities and the high yield returns, albeit for higher risks than the established Central European countries.
Poland had the largest representation from the region with both Warsaw and several provincial cities promoted. That said, Hungary is attracting increasing interest from investors with a significant yield premium on Poland and Czech Republic. Office, logistics, hotel and specialized residential are currently the preferred investment objects, while the retail sector is being treated with some caution.
The Hungary-Budapest stand at MIPIM.
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