Investment volume plunges 80% in Hungary

Property investment volumes in Hungary plunged 80% in 2008 to EUR 409 mln, real estate adviser DTZ said in a new report. Major transactions in 2008 included GLL' s EUR 130 mln purchase of Bank Center and UniImmo Global’s EUR 60 mln acquisition of Krisztina Palace. The main industrial transaction was SEB Asset Management’s EUR 21 mln purchase of Tulipan Park.

Offices accounted for 73% of investment volumes in 2008, bringing the total volume since 1999 to 48%. Retail transactions accounted for 16% of the turnover in 2008 while industrial transactions had a 10% market share. German investors, including two open-ended funds (SEB Asset Management and Union Investment) were the dominant purchasers in 2008, accounting for over half (54%) of transactions.

The investment market has yet to feel the full brunt of the financial crisis, the authors said. ' As certain vendors become more distressed in 2009, price expectations should start to converge, boosting transaction volumes.'

DTZ estimates that initial yields for prime product in 2008 moved out by 125 basis points in office and retail, with a much larger adjustment among secondary assets. For 2009, the adviser expects prime yields to increase further to 8.5% for office and retail and 9.5% for industrial.

The global financial crisis has hit Hungary the hardest among Central Europe’s economies, tightening credit conditions further and resulting in a EUR 20bn IMF-led bailout in October. GDP is forecast to have grown by 1% in 2008 as consumption and investment continued to fall. The economy is expected to contract by 2-3% in 2009 but should be on a stronger financial footing once the recovery begins, DTZ said.