The View 9

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Budapest Prime Yield Levels by Sector

Source: CBRE Research

The drop mainly stems from the Budapest prime shopping centre deal streak coming to a halt, as most of these assets have already traded over the past few years. Secondary assets remain attractive, however, as proven by the transactional activity in 2019. The largest retail deal of the year was for a portfolio of four shopping centres (two in Budapest, one each in Győr and Mikolc) that was acquired by Indotek Group from Klépierre – marking the latter’s exit from the country – while the most notable single asset trade was that of KÖKI, which was purchased by the local fund Adventum. The largest non-shopping centre transaction involved three retail warehouse assets housing Metro wholesale stores in the Budapest agglomeration, which FLE acquired in a sale-and-leaseback structure as part of a regional portfolio. The hotel sector saw continued investment activity in H2 2019, with three transactions totalling EUR 144 million. This raised the sector’s annual volume to EUR 261 million, making it the undoubted relative winner of 2019 in the light of the marginal volume in 2018 and the generally lacklustre investment activity of recent years. The most notable deal of H2 2019 was the trade of the five-star Sofitel Budapest Chain Bridge, which marked the second high-profile hotel acquisitionby IndotekGroup afterHotel Gellért that closed earlier in the year. In addition, three mid-sized hotels traded in the central neighbourhoods of downtown Budapest; Hotel Parlament and Zichy were purchased by Echo Partners while Eurostars Danube Budapest was bought by Hotusa Group. Industrial assets saw improved investment activity in H2, with seven deals totalling EUR 81 million (+81% y/y), raising the annual investment volume in the sector to EUR 144 million (+36% y/y). However, as the increase occurred from a rather low basis the performance continued to lag far behind the other sectors. The largest industrial deal involved M7 Real Estate’s disposal of their countrywide, mostly value-add logistics portfolio, which was acquired by the Chinese CNIC Corporation. Another notable transaction was Infogroup’s purchase of Technik Park HeliPort in Kecskemét, which included stable income and value-add components as well as further development possibilities.