Europa Capital has bought a portfolio of office properties in Budapest as the market shows signs of improvement.

The investment manager said it has bought three assets in the Hungarian capital for its pan-European Europa Fund IV vehicle.

The firm said the 30,000sqm portfolio is being acquired below replacement cost. 

Europa Capital said it will refurbish the Kalvin Centre, Duna Office Centre and Baross 52 properties.

Robert Martin, principal and head of Central Europe at Europa, said principal capital cities in central and eastern Europe are “fundamentally sound, but are under-capitalised and require intensive asset management in order to fulfil their potential”.

The International Monetary Fund recently said the Hungarian economy was “growing at a strong pace helped by accommodative macroeconomic policies and improved market sentiment”. The IMF forecast economic growth of 2.7% for 2015, down from 3.6% in 2014.

In the first quarter of this year, €44m was invested in Hungary, according to Cushman & Wakefield.

The advisory firm said capital is returning to Budapest, with an ”upswing in buying activity” across all commercial sectors forecasted for this year.

JLL meanwhile, says the Hungarian commercial real estate market closed a “remarkable” 2014, with €580m invested in Hungarian commercial properties last year.

The figure is the second highest volume in Hungary since 2007, according to JLL’s Q4 2014 Budapest City Report.

Among the various asset classes, the performance of the Hungarian office market was especially convincing, JLL said, with vacancy dropping to its lowest level in the past six years and with gross take-up breaking record volumes.

The most popular asset class was office, generating 35% of the total volume, followed by retail with 29% and industrial with 13%.