The View 7th edition

INVESTMENT MARKET

14

TIM O' SULLIVAN MRICS Senior Director, Head of Capital

Markets, Hungary

DEAL VOLUMES AND SECTORAL SPLIT

investment volumes, the former maintained its top position. Offices attracted 49% of the annual investment turnover, closely followed by retail assets with 44%, while the still under represented industrial sector fell to 6% and hotels to a mere one percent. The office sector saw 17 transactions in H2, with a combined value of EUR 668 million. This boosted the number of office deals throughout 2018 to 25 and the sector’s annual turnover volume to EUR 818 million, up by a slight 2.5% y-o-y. The largest office transaction of the year involved Corvin Offices, a portfolio of six standing buildings and one ongoing development to transfer upon completion, which form a significant part of the Corvin Quarter area in Pest. The portfolio was purchased by OTP RE Fund, marking the largest property acquisition ever closed by a Hungarian investor. The second largest office deal was for Skanska’s newly completed and largely pre-let Mill Park project, purchased by another leading domestic investor, Erste RE Fund. To complete the picture, the third largest office acquisition was Diófa RE Fund’s deal for Alkotás Point in central Buda, and another similarly sized deal took place in the same submarket in the form of Goldman Sachs’ purchase of Science Park.

After the initial low investment volume in the first half of the year, H2 2018 compensated with a rally that produced a record high biannual investment turnover in terms of volume. The strong upswing was driven by a handful of large-ticket transactions, yet activity in the small-cap segment was also buoyant. This raised the total 2018 investment volume to EUR 1.68 billion, marking it the third highest on record – down by 6% y-o-y but considerably higher than expected early in the year. The year saw more than 50 transactions close at an average size of EUR 31 million, down from the EUR 38 million average in 2017. Looking ahead, occupational market fundamentals and investor appetite remain solid for 2019, supported by lax monetary conditions. The increased development pipeline for offices and hotels is set to ease the short tradeable product supply and help boost volumes. CBRE expect a somewhat more conservative 2019 investment volume in the range of EUR 1.3-1.5 billion based on current outlook. While 2018 saw the gap between the office and retail sector narrow in terms of total

Office

Retail Industrial

Other

EUR million

Forecast Period Average

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019 F

Annual CRE Investment Volumes in Hungary

Source: CBRE Research