BY TIBOR TATÁR
Following the global financial crisis of 2009 and the inevitable slump that followed, the Hungarian economy has finally been granted a long-awaited upgrade to its credit rating after almost five years.
Fitch, Moody’s, and S&P have all reinstated Hungary as “investment grade category,” meaning a huge boost to Hungary’s economic credibility and a rapid increase in the value of domestic and foreign money being invested in Hungarian real estate schemes. Continuous GDP growth has raised Hungarian purchasing power exponentially, leading to significantly increased economic performance and attracting foreign and local investment.
In a recently published report, commercial real estate(CRE) investment in Hungary rose by 180% from the previous year. It also estimates that total investment in that sector will have reached €1.2 billion by the end of 2016. This astonishing sum will be the second-highest annual figure to date and has largely been fueled by investment in retail, which accounted for €289 million in the first half of 2016. Shopping center performance has had particular success, compressing to 6.75% – 6.6% in prime yields, whereas the high-street yield has sunk to 6.35% – 6.25%.
US-based private equity funds are currently leading the recent acceleration, with Austria and Germany not far behind. Local developers haven’t been left out, however, and are enjoying cheaper bank financing combined with the benefits of MARK, a national asset management company designed to resolve problems within the commercial property sector. This has all resulted in increased market liquidity in an area that greatly needed it.
Futureal is one local developer determined to take advantage of Hungary’s economic upturn, with a focus currently on Budapest, which was recently identified as having the strongest return profile in CEE. As a family-run company, Futureal was established by Péter Futó (Co-Founder and Chairman) and Gabor Futó (Co-Founder and Group CEO) and moved into property in 2003, subsequently employing over 300 real estate professionals across the region. With a reputation as one of the top 20 real estate developers in Europe, our investments center on Hungary, Poland, and Romania, and we have developed over €900-million-worth of properties on 600,000-sq-m of gross built area.
With an influx of readily-available investment, Futureal has recently managed to begin development on 12 new projects in Budapest, meaning €1-billion-worth of schemes in the pipeline, aiming to cover 700,000 sq m of GLA.
The most significant of these will be Etele Plaza, located in the southwestern part of Budapest, set to be the last major shopping center development in Budapest, to be completed in Q4 of 2019. With 53,000 sq m of GLA, Futureal has enjoyed a highly successful pre-leasing phase, with 85% of anchors already secured. We have also been able to bring to the table numerous international brands, reinforcing the desire of global companies to invest in Hungary, already an extremely promising retail real estate market.
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