According to Jones Lang LaSalle’s Q1 2013 Budapest City Report
June 7, 2013
73 million Euro was transacted on the Hungarian real estate investment market in Q1 2013 according to the international property advisor Jones Lang LaSalle. During the first quarter of 2013 only two transactions were concluded with a total investment volume of €73 million. One of these two transactions was not an institutional investment while the other was an off-market deal.
The disposal of the Match and Profi retail units continued and, as a result, more than 60 units were transacted at a value of around €15 million for mainly local, private food retailers or investors. ProLogis and Norges Bank Investment Management formed a joint venture at the end of 2012 and as part of the deal, the 50% of ownership of several Hungarian properties were sold to Norges. Altogether 18 distribution centres were involved in the deal with a value of €57.7 million.
According to the forecasts of Jones Lang LaSalle, the annual transactional volume will be around €300 million in 2013, reflecting a growth year-on-year. However, it is important to point out that this volume would include two large off-market transactions to the value of nearly €150 million.
Besides the volatile Hungarian macroeconomic environment, which is highly exposed to the changes of the international economic climate, the startling RE market fundamentals discourage most investors who would rather focus on safe-haven locations such as Poland. The country is largely off the radar for more traditional institutional buyers excepted for some high net worth individuals, value-add investors or local players.
According to Jones Lang LaSalle’s research Hungarian prime office yields are at 7.50%-7.75%, prime logistics at 9.25%-9.50% and prime retail at 7.25%-7.50%. At the end of 2012, a yield shift of 25 bps was recorded for retail and industrial properties. This has mainly reflected the lack of proper, open-market transactional evidence for several quarters in a row. There is also a clear re-pricing of non-core assets (secondary locations, class-B assets). While transactional evidence for this class is even thinner than for prime assets, the feedback of investors and banks is clear on this matter.
Marcell Szotyori-Nagy, Senior Investment Analyst of Jones Lang LaSalle Budapestcommented: „There is an increasing number of international investor groups interested in real estate investment opportunities across Hungary at the current pricing levels. However, this has not been reflected in the transaction volumes yet due to the unpredictable and unreliable economic policy as well as the limited financing possibilities. Hopefully the investment activity will improve in the second half of the year as a result of the decreasing bank margins and the recovering perception of the overall risk profile of Hungary.”
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