Real Estate

Value of homes falling because of glut

Budapest's housing market has still not recovered from the effect of reductions in home loan subsidies; a fall in demand has created an oversupply and prices are stagnating. Still, builders keep building. Demand is declining or stagnating not just on the housing market, but on the commercial property market as well, according to a Q3 2004 report on the capital's real estate market by economic research institute GKI.

Prices have remained more or less level in Q3, with just a slight drop in the average price for resale homes. Smaller homes, under 60 sqm, are more expensive per square meter than larger homes.

Property developers say new home prices will rise no more than 3-5% in the next 12 months. Used home prices will increase just 2-3%, below the expected rate of inflation.

About 46,000 households are planning to buy or build a home in 2005, 12,000 fewer than in 2004. About 266,000 households are planning to renovate their existing homes next year, 61,000 fewer than in 2004.

Between a fourth and a fifth of office space in Budapest is vacant, with the situation unlikely to change significantly in the next 12 months. Occupancy rates in upscale buildings in Buda are only slightly higher than rates in less exclusive buildings in downtown Pest.

The situation is much the same on the market of retail space, warehouse space and industrial space. Only demand for empty lots is still strong.

Biggeorge's renamed Eston International
Biggeorge's, a real estate company based in Budapest, has been renamed Eston International. Eston Chairman/CEO Adorján Salamon announced the name change in Budapest. Salamon previously announced that he had raised his share in Biggeorge's to 49.9%, buying a stake from the company's founder, Tibor Nagygyörgy. The rest of the company is owned by Wallis Ingatlan. Eston International had sales of HUF 400 million in 2003 and dealt with commercial property worth a combined HUF 100 billion in 2003, or about a tenth of the market. Salamon called 2004 an outstanding year, although he declined to give a revenue target. The 143,000-sqm of space rented out in the first nine months of 2004 was over the average 80,000-120,000 sqm in the last 3-4 years. The market for leased office space is expected to expand substantially in 2005, and returns on the market should be better than in Western Europe. This will attract big Western European institutional investors, Wallis Ingatlan Deputy CEO Balázs Báthory said. The market for leased commercial space slowed down last year but picked up again six months ago, Báthory said. He added that surveys show retail businesses, especially clothing shops, operating in downtown areas expect to expand in the future.

GL Outlet opens in Törökbálint

GL Outlet, the second such establishment in Hungary, was officially opened in early December. The “soft opening," prompted by an increasingly strong demand from shoppers, took place in late November.

GL Outlet is situated on M0 motorway at Törökbálint between motorways M1 and M1. The outlet will have 61 stores on about 17,000 square meters, while the other outlet, Premier Outlet Center, sprawls across 13,500 square meters and has 46 stores.

The construction of the centers absorbed about EUR 25 million each and had international financing and operating background. “We are proud of the impressive tenant line-up, and will welcome even more big names over the next few months," said Gergely Bodó, director of GL Outlet at the opening ceremony. The branded stores include: Benetton, Sisley, Calzedonia, Intimissimi, Hugo Boss, Gap, Guess, Giovane Gentile, Retro, Skiny, Miss Sixty, and Paris Boutique and also a number of multi-brand stores featuring Versace, D&G and Byblos, Armani Jeans, Christian Dior, Moschino, Valentino, Calvin Klein and Jean Paul Gaultier. Products will be available at a discount of 30% to 70%, the director said. “The outlet price policy and the quality tenant mix are the real attraction of GL Outlet," the company said.
GL Outlet boasts Europe's first Hewlett-Packard factory outlet, the first outlet store of Danish designer kitchenware brand Bodum, as well as a discount wine store Bornívó, featuring 175 different types of wine. “As a result of the success of our first phase, we are heading toward the second phase of the development, the extension of GL Outlet," said Bertrand Jourde, development director at Group GL. The outlet is the first major Hungarian development by Group GL, a Belgian developer and the owner of two existing outlet centers, one in Belgium (Messancy) and the other in France (Bordeaux). Group GL is planning to develop a fourth outlet center in Romania in the near future.

Europolis opens new regional office in Hungary
Europolis, a leading real estate company in Central and Eastern Europe, opened a new regional office in Budapest. After Warsaw and Prague this will be its third office opened in a EU accession country. The Hungarian regional office will focus on the improvement of services offered to customers, by reducing response time and making accessibility easier and providing more in-depth market knowledge. In addition, the office will be responsible for identifying new investment opportunities in Hungary. “First of all my task will be to secure the long-term value and the performance of our investments by servicing our tenants and maintaining the high quality of our buildings,” said Csaba Széll, managing director for Europolis Hungary. Széll, an architect and economist, will be in charge of managing the new regional office. “Hungary plays an important strategic role for us, because it’s one of the strongest economies in the region, the service sector is well developed due to a high skilled labor force, which is crucial for our business,” said Bernhard Mayer, managing director of Europolis Group. After the acquisition of the AIG portfolio, the biggest transaction in Central and Eastern Europe in 2003 with a total volume of around EUR 150 million, the necessary critical mass was reached to open a regional office in Hungary. Europolis Portfolio in Hungary comprises now four properties in operation (City Gate, Infopark Research Center, Airport Business Park and M1 Business Park) and one under construction, IP West Office Park. The total volume of the portfolio is some EUR 216 million.

GTC launches two investment projects

GTC Magyarország Ingatlanfejlesztô Rt. launched two projects in Budapest last December. The company, listed on the Warsaw Stock Exchange, is developing an office-building complex named Center Point II and a luxurious apartment house, RiverLoft Apartment, which will consist of 170 housing units. RiverLoft will boast loft, penthouse and duplex units, and prices range between HUF 400,000/sqm for apartments and HUF 440,000/sqm for loft units. Construction is expected to be completed by early 2006. RiverLoft will also offer over 5,700 sqm of office space. GTC Director Robert Snow announced the company will build the Center Point II office building in the immediate vicinity of the already completed Center Point I complex. The two buildings will be connected by an inner garden and pools. Center Point II will offer 22.5 thousand sqm of office space, thus increasing the total space offered by the two buildings to 44,000 sqm. Letting rates are expected to be over EUR 14/sqm a month. GTC has been present in CEE since 1994. The company’s capital partners include Deutsche Bank, EBRD, Citigroup and Immofinanz. Its current market value is USD 700 million.

Hungarian investors buy historic building on Danube for HUF 4 billion
Ökocentrum sold "Lánchíd Palace", a 7,800-square-meter building next to Budapest's Chain Bridge on the Buda side to investors Ákos Bácsai-Nagy and Zoltán Vincze for HUF 4 billion, business news portal NAPIonline reported. The two men will soon be joined in the investment with Sirabel, a company registered in Switzerland. The historic building, designed by Miklós Ybl - one of Hungary's most famous architects, will be turned into a luxury office building at a total cost of HUF 4 billion.