790 million Euro transacted on the Hungarian commercial real estate market in 2015
January 26, 2016
The Hungarian commercial real estate market reached the highest volume since the peak of the market in 2007 with ca. €790 million transacted in 2015. Almost 60% of the annual volume was generated by portfolio transactions, which clearly reflects the increasing interest of investors for large platforms in an attempt to gain significant exposure to the market.
The outstanding performance of the market was supported by various factors. Market fundamentals improved remarkably, with record breaking occupier demand, declining vacancy rates and a limited development pipeline. The pool of buyers deepened: the importance of Hungarian real estate funds and overseas investors increased strikingly, the presence of exotic private money remained significant, while European capital (British and Austrian investors) was also active. Moreover, the yield spread with Western European and other leading CEE markets guarantees the attraction of the market.
Based on the latest transactional evidence the prime office yields stand at 7.00% along with prime retail while we now price prime logistics at 8.75%.
Benjamin Perez-Ellischewitz, Head of Capital Markets at JLL Hungary said: „In our opinion, interest for Hungarian assets will increase further in 2016. Domestic buyers (local real estate funds, the Hungarian National Bank) and overseas investors will drive most of the activity and liquidity will remain high in every asset class. Although several property portfolios were already transacted in 2015, we expect further large platforms to be sold in 2016 as well as large ticket landmark buildings. The market witnessed increasing activity on the transaction of claims and we expect the secondary debt trading to remain an essential part of the activity in 2016.”
Rita Tuza, Head of Research at JLL Hungary added: „It is highly anticipated that Hungary’s sovereign debt rating will be upgraded from junk level to investment grade in March 2016, which could be encouraging even for the more conservative investors for whom the strong market fundamentals and relatively high yields have not be compelling enough arguments. The gap in pricing expectations between vendors and bidders narrowed and liquidity increased in every asset class along with improved debt finance terms.
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