Commercial Property Market In Hungary Shows Promise
There was much talk about the improving conditions of the Hungarian property market in the last year. However, it is only now that Colliers International has come up with a report with concrete numbers proving the conversion of opportunities into real transactions.
In the past six months of this year, the total investment amount in the Hungarian commercial real estate market crossed 280 million euros. Over 230 million euros of this total came from investment deals that would generate income, a number not seen in Hungarian property market in the last three years. In comparison to the first six months of 2013, the market this year has shown a significant increase in the volume of transactions, at least by 45 percent.
As for the Q3 of 2014, it has started off with a lot of promise. Bence Vecsey, Head of Investment Services from Colliers International Hungary, said that two significantly big investments have already gone through, earning a total of 50 million euros. There is yet another real estate transaction that is currently in the pipeline and is expected to finalize in some time. Vecsey was also the sales adviser for both these big deals, which included Skanska’s premium office space and development (18,000 sq. meters), Green House, and single-let distribution center (37,000 sq. meters).
Green house transaction is being seen as important since it was the first open-market commercial property transaction in the last two years that had some significant value. This was Colliers International’s third deal; it had recently acquired Stefania Park. Vecsey also said that the most positive feature of the market today is the return of interest in logistic parks, one of the least favored property interests in the last five years or so.
Colliers International predicts a very good real estate year for Hungary, its forecast pegging the total transaction value for the entire year (2014) at more than 500 million euros. This would be the best numbers in the last three years, an indication of real promise in the Hungarian properties market.
Responsible factors and change in the market dynamics
The positive trends visible in the Hungarian property market is due to combination of various factors including the improvement in the country’s macro-economic environment, low interest rates, inexpensive products, availability of debt, and the amount of capital that the real estate investors possess.
Interestingly, there has also been a change in the profiles of the investors. The market, which was previously dominated by German and Austrian investments, is now rapidly becoming a favorite with private equity houses from USA and UK, Middle Eastern investors, and Hungarian institutions. The latter group is the one that is actively closing on property deals, while the former champions are putting down all their attention on certain exit opportunities.
It may be very difficult to come up with a ballpoint investment figure, but the trends and developments do look promising, according to Vecsey.