Hungary is on course for its second largest real estate investment volume in 2016 following on from two years of continuous growth, according to Peter Karai, head of leasing at central European developer Futureal.
Speaking at PropertyEU's CEE investment briefing at Colliers International's London office, Karai said that the company's confidence in sustained consumer spending growth and a new metro line in Budapest last month prompted the company to start building the 53,000 m2 Etele Plaza shopping and entertainment centre. The project is located at the end station of the M4 metro in the capital Budapest, and completion is scheduled for the final quarter of 2019.
'All the centre's anchor tenants have been secured,' he said, adding that up to 95% of tenants in the company's shopping centres are international brands, which makes for attractive investment assets. Interest in retail assets from a number of private equity funds is boosting prices for in the country's investment property, while Hungarian real estate investors - which make up one third of buyers - are also keen to acquire new assets.
Asked whether Futureal is building specifically satisfy the appetites of renewed interest from international investors, Karai said that not all the assets his company develops are for sale. 'The prime end of the investment market is very thin for investors. There is low liquidity and there are not many new schemes for international buyers to acquire. Increasingly they are having to focus on sub-prime assets with refurbishment or extension upside potential.'
Another factor attracting international investors is the decision by global rating agencies to change their view of Hungary. Karai pointed out that Standard & Poor’s and Fitch recently upgraded the country to investment grade after downgrading it five years ago. Moody's is expected to do the same very soon.
