New member on board of ESTON PM Team

István Földi – Senior FM Manager

As a result of continuous developments and innovative ideas ESTON International continues to be successful, which is reflected not only by figures, but also by the fact that in 2017 and in the first half of this year our portfolio was extended by several new projects and we have more and more satisfied clients by our side.

The firm’s dynamic development calls for expanding our team. ESTON firmly believes that the enhancement of client satisfaction and the further strengthening of the company’s role in the property market can only be reached with committed and motivated colleagues, who see challenges as opportunities for self development. This is why we are happy to announce that we have a new member, István Földi on board.

István joined ESTON’s team as Senior FM Manager in July. The expert has about ten years’ work experience in the field of facility management. He has worked in the field of sales, quality control, and FM due diligence among others, furthermore as a facility manager he was responsible for the operation of office buildings, industrial- and logistics facilities and commercial facilities.

“I am very happy to welcome István in our team in this very active, challenging period. We are especially proud that thanks to István our Property Management team can control the FM duties with our own team member, which opens up new possibilities regarding client satisfaction.” – said Mr. Adorján Salamon, Managing Director of ESTON.

BRF report Q2 2018

The Budapest Research Forum (hereinafter the ‘BRF’, which comprises CBRE, Colliers International, Cushman & Wakefield, ESTON International, JLL and Robertson Hungary) hereby reports its Q2 2018 office market summary.

Three new office buildings were delivered to the Budapest office market in the second quarter of 2018, totalling 57,060 sq m. GTC White House (21,560 sq m) and Promenade Gardens (22,500 sq m) both opened their gates along the Váci Corridor, while Graphisoft Park South (13,000 sq m) is the newest phase of the namesake park.

The total modern office stock currently adds up to 3,503,170 sq m, consisting of 2,838,720 sq m category ‘A’ and ‘B’ speculative office space as well as 664,450 sq m owner occupied space.

Please, find the full report below (pdf).

SAVILLS COMPLETES ACQUISITION OF Cluttons middle east business

  • Savills establishes Middle East platform following the acquisition of Cluttons network in the region
  • Business to be rebranded Savills during 2018

International real estate advisor Savills has completed the acquisition of Cluttons Middle East, a leading real estate consultancy business in the region.  The business employs 190 staff in seven locations throughout the region, providing Agency, Management and Consultancy advice in both the Commercial and Residential sectors.  The acquisition, which was completed on 31 May will see Savills take full ownership of Cluttons Middle East, a business which has been established in the region for more than 40 years.

The business will be re-branded Savills during 2018. Cluttons Middle East’s 190 strong team will transfer to Savills global platform with immediate effect. The full retention of Cluttons Middle East leadership team and employees will ensure clients not only continue to benefit from the same regional expertise but also benefit from Savills global platform.

The region has been a strategic target for Savills, and the acquisition sees Savills establish its first wholly owned business in the Middle East having previously been represented by associates in the region. This new Savills business in the Middle East provides a vital bridge between Savills expanding European business and its established Asian operation, further strengthening Savills global coverage. Savills has developed some strong relationships with its associates in the region over many years and while the formal associations will come to an end, the firm expects to continue cooperating with its former partners in the future.

Mark Ridley, Savills Deputy Group Chief Executive, says: “The Middle East region is key to the global economy and its continued economic development, increased government investment and a young population will continue to accelerate its significance.

“The acquisition of Cluttons Middle East geographically links our European and Asian business by enhancing our EMEA platform.  With a market leading position, and strong local leadership, we will be able to offer a high quality service to both existing and new clients as we look to expand our platform of services.”

With offices across the UAE, Bahrain, Egypt, Oman and Saudi Arabia, Cluttons Middle East is the most established Real Estate Advisory business in the region, servicing a large portfolio of clients ranging from international corporate and institutional investors, to private individuals and families. The company has built its market leading reputation working on some of the region’s landmark residential, office, retail and industrial projects.

Steven Morgan, Chief Executive at Cluttons Middle East, comments: “Despite economic headwinds across the region in recent years, Cluttons Middle East has grown from strength to strength and Savills acquisition is testament to our current position in the market.  This acquisition by Savills is an incredibly positive  and exciting opportunity for all Cluttons Middle East clients and employees as it will merge our regional expertise with Savills global capabilities.  We are confident that the new consolidated offering will enable Savills to become a market leader in the region from the outset and we look forward to introducing the new brand to our clients and the wider market in the Gulf.”

Across the region, Savillsthe Cluttons Middle East team will continue to lead the business, comprising; Steven Morgan, Chief Executive; Harry Goodson-Wickes, Head of Northern Gulf; Murray Strang, Head of Dubai; Ed Carnegy, Head of Abu Dhabi; Suzanne Eveleigh, Head of Sharjah; Ihsan Kharouf, Head of Oman; and Richard Paul, Head of Professional Services.

Budapest Business Journal Special Report with Adorjan Salamon

Congratulations on celebrating 25 years in business. What have been the highlights?

The company started operations in the real estate market in 1993 and begun expanding its range of services very early on. As a declaration of its professional approach, the company narrowed its focus to commercial real estate in 2004. ESTON has earned – and maintains – a strong market position in this sector where the main competitors are local offices of the biggest global real estate service providers. Since 2010, ESTON offers customized solutions in the property management industry as well; in fact, this has become one of ESTON’s most dynamically evolving departments. In September 2017, ESTON and Savills formed professional association with the aim of extending the company’s services to institutions and property companies looking to invest in Hungary, as well as to introduce Hungarian clients to the wider European market through Savill’s extensive network of offices. By now, ESTON’s team and market share, as well as our annual turnover, are the largest in the company’s history and I am sure we can further grow in the current market situation.

How has the market changed since company’s establishment?

We saw a full round of the CRE market life cycle with an accelerating upswing starting in the early ‘90s, only to be hit by the crisis. And again, market fundamentals are continuously improving, market players are optimistic as the overall health of the sector has been restored and available funding seems to be abundant. As I see it, the market has become more segmented, both in geographical terms and by means of product features and, following a refreshment of the investors’ and developers’ scenes (exchange of many market players), the activities and market shares of domestic companies have strengthened remarkably. In short, the Hungarian property market is mature and much more professional than 25 years ago and the same applies to ESTON as well.

How do you evaluate the Budapest office market in 2018? How do you think it will develop?

The Budapest office market is evolving with increasing dynamics and as such, it is a very interesting, yet challenging environment for property professionals. Class “A” offices are sought after and time management of office lease transactions has become extremely important as landlords are still in a strong position at negotiations. We must emphasize the importance of careful planning, as we have gained special expertise in representing tenants and landlords. As such, ESTON was awarded for closing Nokia Networks’ 25,000 sqm deal with the title “Office Transaction of the Year”; on the other hand, by means of a 10,300 sqm prelease agreement, we successfully contributed to the relocation of Fundamenta to the Hill Side Offices scheme, which was the biggest prelease in 2017. Development activity intensifies this year, which could bring a temporary, though not lasting, stop to market trends.

 Are there any obvious trends to be identified?

Dynamically decreasing vacancy has been a clear indicator of office demand exceeding supply. In 2018, more offices may be completed than in the last three years together (260,000 sqm); on the other hand, preliminary occupancy of offices under construction is very attractive. Rents are on the rise while yields are still diminishing and development lots are in great demand. Developers still believe in expansion and I also see opportunities, niches, in the market where value may be generated. I think landlords may maintain their strong negotiating power in 2018, which would be reflected in a growing difference in rents in different office classes.

And what is the picture for the investment market? How has this changed over the years and what do you predict for the future?

Historically, Germany based investors dominated the market for a long period. After the crisis, and following a restructuring of the portfolios, new investors appeared with different risk sensitivity. It is clear now that the Hungarian real estate investment market has recovered and investment volumes have returned to a healthy level. Also, the increasing importance of local investors can be identified; Hungarian entities’ investments grew to 40% out of the annual investment volume as their focus shifted towards pricier assets. I think, this latter trend continues in 2018 as well.

Compared to your 25 years in business, property management is a relatively new area for you, yet you have already won several prizes. What do you put your success down to?

Flexibility and trustworthiness are the foundations of our professional services and this is especially true in property management. We hire experts who pay attention to details and are committed to deliver the highest standard of services to our clients. The portfolio of office buildings we manage, now more than 200,000 sqm, has continuously and dynamically expanded since the establishment of our PM department and we are confident that we can further grow our market share in 2018 as well.

Source: Budapest Business Journal (May 4 – May 17, 2018)

BRF Industrial Property Market Report 2018 Q1

In the first quarter of 2018, two new buildings were handed over with the size of 18,020 sq m: a 11,020 sq m warehouse in East Gate Business Park, and a 7,000 sq m hall in the next phase of Budapest Dock Szabadkikötő building C. Furthermore, one existing building was included in the stock due to adequate quality and occupational status; the second building of Logicor’s Fehérakác property raised the industrial stock with 4,400 sq m. The total modern industrial stock in Budapest and its surroundings stood at 2,068,900 sq m at the end of Q1 2018.

Total demand amounted to 103,790 sq m in Q1 2018, marking a 45% increase over the figure noted in the same period last year. Lease renewals accounted for 72.7% of the quarterly volume, while the share of new leases was 21.8%. Expansions stood for 5.5% of the quarterly volume. No pre-lease agreement was signed in the first quarter of 2018.  24 leasing transactions were recorded in the first quarter, out of which two agreements were signed for more than 10,000 sq m. The average transaction size was 4,320 sq m during the quarter, which is one and a half times the average level of the previous five years’ first quarters. 98% of all leasing activity was recorded in logistics parks, where the average transaction size was 4,620 sq m, while the average deal size in city logistics schemes equalled 1,075 sq m.

The two largest transactions of the quarter were lease renewals.  HOPI at Goodman Gyál Logistics Centre renewed its contract on 21,700 sq m, while in Prologis Park Budapest – Sziget Schneider Electric signed a lease renewal for 19,960 sq m. The largest new lease agreement amounted to 7,000 sq m and was signed in Budapest Dock Szabadkikötő. The largest lease expansion was recorded in Prologis Park Budapest – Batta on 4,180 sq m.

Please click the title for the full report.

BRF Office Market Report 2018 Q1

Two new office buildings were delivered to the Budapest office market in the first quarter of 2018, totalling 18,280 sq m. In the CBD Markó Offices 9 was handed over on 2,630 sq m, whilst the new D phase of Váci Greens was completed with 15,650 sq m in the Váci Corridor.

Furthermore, one asset was added to the BRF stock as in the future it will operate as an office building again.The total modern office stock currently adds up to 3,446,110 sq m, consisting of 2,781,660 sq m category ‘A’ and ‘B’ speculative office space as well as 664,450 sq m owner occupied space.

As the result of our annual stock revision, 1 building was excluded from the modern stock and further 46 buildings GLA’s were amended due to re-measurements taken place over the beginning of 2018.

The office vacancy rate has decreased to 7.3%, representing a 0.2 pps reduction quarter-on-quarter – the lowest rate ever recorded on Budapest office market. In line with the preceding quarters, the lowest vacancy rate was measured in the South Buda (2.7%) submarket whereas the Periphery still suffers from an overwhelming 31.2% vacancy rate.

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WING office buildings represented by ESTON

ESTON International and WING Zrt. have been working together for more than twenty years. As a result of the fruitful cooperation ESTON is going to do exclusively the leasing of WING Zrt.’s office buildings (Skylight City, Studium Office building, Máriássy Modern and Váci 175).  

Skylight City, situated on Róbert Károly ring road, close to Váci street, which used to give home to Material Center furniture store has recently been renovated and now offers office and retail space in accordance with modern requirements. The technical and architectural features of the building deriving from its previous function make possible the creation of environment conscious, people oriented work spaces. The huge glass surfaces, the inner atrium with a glass roof and the spacious area around it create a unique atmosphere in the building. The layout of the building offers solutions for companies which require large, contiguous office space. The underground garage offers electric charger and bicycle sheds with changing rooms and shower for the employees. The success of the project is shown by the fact that the occupancy rate of office building was 65% prior to its handover in spring.

One of the big advantages of Studium Office Building is its great accessibility. It can be found close to the city centre, on the riverbank of the Danube, next to Corvinus University and the Great Market-hall. The M3 and M4 underground stops, several tram stops are within a few minutes’ walk, but there are also buses and trolley buses in the area. The office building is accessible not only by public transport but also by car, parking is made convenient by the two-storey underground garage, where there is public garage too. Due to the building’s excellent features and high technical standard there is just one office area for lease. It has beautiful panoramic view on the Danube and is ideal for tenants for whom the vicinity of the university counts as an advantage.

The building complex in Máriássy street located at the Pest side of Rákóczi bridge is a unique spot in Budapest. One of the buildings in the complex is built in modern style, while the other building used to be the Calf market hall (Borjúvásárcsarnok) and is now renovated at a high standard in loft style. Its location makes it easy to reach both the Buda side and the Pest side quickly: the M1/M7 motorways can be reached in 15 minutes by car, the city centre in 10 minutes by car, while the airport in 20 minutes by car. Trams 1 and 2 can be reached easily within a short walk, which provide access to underground lines M3 and M2. In Lurdy shopping mall, which is next to the building, you can find some restaurants, shops (bank, post office, pharmacy, drugstrore, etc.), gym, cinema and further service providers are expected to open their business there. The success of our work and the favourable location are shown by the high occupancy rate.

VÁCI 175, situated on the most well-known office corridor of the capital in Váci street, is an office building on four floors, which is easily accessible by car and by M3 underground as well. Duna Plaza shopping mall, which is in the vicinity, provides a wide range of services for the area’s residents and workers as well. Thanks to ESTON’s cooperation, occupancy rate is 100% in the office building. There is one leasable office area downstairs with street entrance ideal for retail shop or show room.

Mr. Adorján Salamon, owner and General Manager of ESTON said: “We are very happy to be working on this diverse office portfolio, we are proud of our common past with WING Zrt. and of our common successes. I think that from this wide selection we can provide an office solution for our Clients which perfectly suits their needs. We are happy to continue the cooperation in the future with WING Zrt with our enthusiastic and committed office leasing team.”

Market Report – Modern offices 2017

In 2017 about 80 thousand sq. m new office area was handed over; this figure is smaller than that of last year or the one previously expected. More than half of the newly delivered office area (42.5 thousand sq. m) can be found in the South Buda region, where new office buildings have been built for the first time since 2010.

The biggest new building is the Hungarian Nobel Prize winners’ Park I (24000 m² in South Buda), where Ericsson is located.

The building of further 410 thousand sq. m new offices has begun; out which about 265 thousand sq. m could be handed over in 2018 (in 15 buildings). The office stock of Váci Corridor will almost reach one million sq. m by the end of 2019; this is a sought-after area, which is shown by the fact that the current occupancy rate of the offices is not worse (41% on average) than the market average despite the concentrated developer’s activity.

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Market Report – Industrial and logistics properties 2017

In 2017 industrial and logistics property developers became more active, and the total stock surpassed 2 million square meters. The amount of annual handover was more than 100 thousand square metres for the first time since 2009; the majority of the developments were finished in the second half of the year.

New developments of about 118 thousand square meters were completed in 2017, this is 50% higher than the volume last, and is roughly as big as the development volume of the past five years.

The biggest new hall was made at Inpark Páty Industrial Park: Kühne & Nagel could move into the new establishment of 23 thousand square meters in the third quarter. The new developments which are currently in process take up about 130 thousand square metres. Out of these Üllő Airport Logistics Center is a significant project, here more than 85 thousand square metre of new property is expected to be handed over in the third quarter of 2018.

There was a new record in leases in 2017: following a very strong first half year the annual volume of transactions was close to 620 thousand square metres. This was the first time when demand was bigger than 500 thousand square metres. The number of lease extensions, new contracts and pre-lease agreements increased significantly compared to last year, however, there was a smaller demand for expanding leased areas.

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Market Report – Investment properties 2017

The Hungarian economy grew at a fast pace, by 4.2%, in 2017 (GDP growth at the middle of the year was 3.7%). The country’s economic performance is middle ranking among central European countries, which is higher than the EU average (2.4%). Investments showed growth (16.7%) again following the setback last year. Building industry’s activity grew significantly, by 30%, in comparison with last year. Strengthening building activity resulted in higher prices: the price index of the building industry was 8.4% for buildings in 2017 (in 2016 this figure was 4.3%)

The volume of residential property buildings grew by one fifth compared to last year, in Budapest the number of completed flats grew more significantly, by 56%. The volume of flat handovers is expected to continue to increase in 2018, on the other hand it can be seen that the number of new developments decreased as a result of the approaching deadline of the new, reduced VAT rate for purchasing new flats, which is to be introduced in the near future.

The expansion of retail trade turnover was similar to last year (4.9%), the growing trend is expected to continue in 2018 due to the increase of net income. Consumer prices grew by 2.4% in 2017.

Rate of unemployment dropped to 4.2% in 2017, which is one percentage lower that the figure in the previous year. Employment rate grew by 1.6% to 68.2% compared to last year. Shortage of labour can be seen in more fields (e.g.: construction industry, production industries), in addition, the rate of unemployment shows significant differences regionally. Base rate has not changed since the middle of 2016 (0.9%).

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