HB Reavis looks beyond London for expansion

CEE developer HB Reavis will be looking beyond London offices next year as part of an international development strategy which has seen it invest in two developments in the UK capital over the past 18 months.

The Slovakian developer first announced in October 2013 that it was opening an office in London as part of plans to enter the UK property market.

'We realised that in Central Europe our options were limited in terms of where we could invest. So we decided to look elsewhere and we opted for two modern cities, London in the West and Istanbul in the East,' said Pavel Trenka, who was named CEO of HB Reavis at the time of the launch of the new strategy.

While the company has yet to invest in Turkey due to the difficult political and macroeconomic conditions, the business in London is thriving. At the end of last year, HB Reavis exchanged contracts to acquire 20 Farringdon Street, a prime development opportunity in London’s Midtown. The site has full planning permission for a new 12-storey office building totaling 75,000 sq ft (7,000 m2) and HB Reavis is now working to further improve the scheme, which is expected to be delivered by early 2018.

In 2013, the company also bought 33 Central, a rebranded 225,000 sq ft office development at 33 King William Street, in the City of London, due for completion in early 2017.

Focus on offices
'We are looking for one or two other projects in London and for now we plan to stay focused on the office segment in Central London. However, in the longer term we are open to looking beyond offices in terms of product type, as well as to investing outside of Central London,' noted Trenka, adding that he cannot disclose further details at this stage. 'Given that the UK property market is very transparent, we are not looking for a strategic partner for our development programme. However, we are open to partnering on an individual project level on a case-by-case basis.'

The company does, however, rely on a number of advisers, brokers and agents, he added. ‘The biggest difference in the way we operate in this market is that while in Central Europe we have in-house capabilities to manage all the different phases, in London we are more reliant on third parties. Our aim for the future is to replicate as much as possible the successful elements of our central European business.'

Offices currently represent around 85% of the company’s business, but HB Reavis has recently also been expanding in the retail sector. Its largest project – the €650 mln mixed-use Twin City in Bratislava – includes a €250 mln shopping and leisure centre and the company is ‘looking at a pipeline of opportunities in Poland’, according to Trenka.

Twin City
According to the latest edition of PropertyEU's annual Top Developers survey, the second phase of Twin City is currently the biggest office project in the pipeline in Europe. The 150,300 m2 scheme consists of offices, retail and a bus station linking the historic centre of Bratislava with a modern business district which has been designed to stimulate a healthier work-life balance. Around 65,000 m2 are currently under construction with a pre-let ratio over 50%.

HB Reavis has secured Swiss Re as its first major tenant for the Twin City office complex. The Swiss insurance company has taken a 10-year lease on 14,200 m2 and has an option to take a further 6,300 m2 which is virtually an entire building.

Later this year the company plans to launch a new phase of 35,000 m2 while the development of the shopping centre and the bus station is planned to start in 2016.