Real estate investment volume for Hungary in 2018 was close to EUR 1.8 billion, reflecting a third consecutive year of strong investor appetite and the highest annual transaction volume since the economic downturn of 2007, according to JLL.
JLL’s preliminary investment volume for Poland for the same period is put at EUR 6.3 bln, with EUR 2.4 bln-2.5 bln for Czech Republic, while Cushman & Wakefield estimate the Czech total at EUR 2.8 bln. The CEE regional total (taking in Czech Republic, Hungary, Poland, Romania and Slovakia) stood at EUR 11.6 bln-12.3 bln, according to JLL.
Last year saw a record broken with domestic capital investing a record high of around EUR 1 bln, 57% of the total. It was even larger at EUR 2 bln, or 65% of the volume, in Czech Republic.
“Among the large institutional funds, OTP RE Fund was the most active, investing twice as much as Erste RE Fund and Diófa RE Fund together,” comments Benjamin Perez-Ellischewitz, head of capital markets at JLL Hungary.
The disposal of the 80,000 sqm Corvin Offices portfolio by Futureal was the largest office transactions to date in Hungary, and one of the top ten in CEE, following such prominent deals as the sale of Rondo 1 in Warsaw and The Park and Florentinum in Prague, according to JLL.
“Furthermore, the acquisition of Corvin Offices by the local OTP Real Estate Fund signals the changed investment attitude of the Hungarian investors, who have become strong competitors to foreign capital not only in the value-add or core plus assets, but also for prime properties,” adds Perez-Ellischewitz. JLL advised on the transaction.
Other deals involving domestic capital were the acquisition of MOM Park Offices and Shopping Center by OTP RE Fund and the purchase of Mill Park by Erste RE Fund from Skanska. Another prominent deal was the purchase of Mammut Shopping Center by South Africa’s NEPI Rockcastle from Lone Star.
As in recent years, the office asset class generated the largest share of volume at 46%, followed by retail with 39% and logistics at 7%, with the balance made of assets purchased for future development purposes. JLL estimate prime yields at 5.75% for offices and shopping centers and 7.5% for logistics.
“Competition among investors is at its peak, pushing capital values up and yields down, therefore we recorded a 25-basis point compression in the prime office sector,” concludes Perez-Ellischewitz.
Rita Tuza, head of research & consultancy at JLL, expects the 2019 investment total to be in the region of EUR 1.5 bln-1.8 bln. JLL forecasts EUR 5 bln and EUR 2.5 bln for Poland and Czech Republic, respectively. The 2019 forecast for the CEE region as a whole is EUR 11.55 bln.