Budapest's Allee Shopping Centre has given the Hungarian real estate investment market a major boost for the second time within four years.
Budapest's Allee Shopping Centre has given the Hungarian real estate investment market a major boost for the second time within four years.
In an all-Dutch affair during H1 2014, NN - the insurer which is in the process of separating from Dutch banking group ING - acquired a 50% interest in the fully leased shopping centre for €95 mln. The vendor was ING Real Estate & Other, the vehicle encompassing the remnants of the ING Real Estate Development business and other property-related investments.
Market watchers see the deal as a further sign of the renewed investor interest in a number of long-lacklustre CEE markets compared to booming Poland and to a lesser extent, the Czech Republic. 'Appetite for Slovakia, Romania and Hungary has increased notably during H1 2014, with these markets clearly back on the radar for many funds, James Chapman, head of CE capital markets at Cushman & Wakefield, said.
SPREADING INVESTMENT
'On the back of the transfer of 50% of Allee Shopping Center, Hungary recorded its best Q2 results since 2010, and further landmark deals are in their final stages of closing. We expect that this growth in interest will evolve into greater transaction volumes in these markets during H2 2014,' Chapman said.
'Core investors are looking at Poland and Czech for prime, landmark shopping centres, viewed to offer better value against other core European countries whilst the regional cities across both countries have opened up with a significant shift of core and value-add capital towards this sector. Prime shopping centres in Hungary and Slovakia are also back on the radar for investors searching for stock,' he added.
In its Pulse report on the CEE region, JLL said that Hungary is building its position as a property investment location on a foundation of improving economic figures. Hungary and Poland both recorded 1.1% GDP growth in Q1 2014, the best performances among the 28 EU countries. The forecast is for 2% growth in Hungary and 3% for Poland for the full year.
Prime retail yields in Hungary range between 7.25 and 7.50% compared to 5.5% for Poland. Prime office and logistics yields in Hungary were at 7.50-7.75% and 9.25%-9.50% respectively at the end of H1. Not surprisingly, therefore, the Hungarian real estate investment volume for H1 2014 came to €236 mln compared to just €175 mln in the same period last year. Domestic investment activity, coupled with interest from CEE regional players and international private equity investors, is fuelling expectations that the total Hungarian volume for all sectors will hit €500 mln by end-2014.
This is not the first time that the Allee mall has given the Hungarian market a much-needed push. ING RED opened the 47,000 m2 shopping centre, located in the Buda region of the city, in 2006. Allianz Real Estate paid over €100 mln for a half share in April 2010, the first major investment transaction seen in the Hungarian capital since the property markets retreated following the outbreak of the financial crisis.
At the time ING RED retained the remaining 50% and management of the centre, though Allianz Real Estate had an option to acquire 100% control.
OTHER MARKETS
CEE retail property investment was well down in H1 2014 compared to the same period last year, and in comparison to office investment.
Figures published by CBRE indicate about €440 mln of retail investments was carried out in the first six months of 20014 compared to almost €2 bn in H1 2013. Office investment was up 3% to just over €2 bn in H1 2014.
PropertyEU Research recorded nine notable retail property transactions in the region during H1 2014. The top deals were the €200 mln-plus acquisition of Poznan City Centre by Resolution Property and ECE, and Invesco Real Estate acquiring Galeria Kazimierz in Krakow for €180 mln.
The Allee transaction was the third-largest retail property transaction by volume followed by Meyer Bergman's acquisition of the Fashion Arena Outler Center in Prague for €71 mln.
See the September Deal Watch subscriber-only publication for lists of the top CEE and European transactions during H1 2014