Property news

BudaPart CITY is on the right track

The very first lease contract has been signed for an entire floor

Budapest, 2020. 07.22. The shape of Budapest’s newest quarter is more visible day by day: the handover process of the next two residential buildings is ongoing and the execution of BudaPart CITY has stepped into an impressive phase.

The ongoing development of Property Market, BudaPart CITY, constructed by Market Építő Zrt.,  will provide office spaces and other services on six floors and almost twenty thousand square metres. BudaPart is often described with a state-of-the-art appearance; the office building compliments the work of this year Ybl prize winner architect studio Fazakas Architects LLC directed by György Fazakas.

The construction is currently ahead of schedule: the structure of the three-storey underground garage, the ground floor, the mezzanine level and the first two floors have already been completed, framework on the third office-level pillars is currently underway, whilst in the basement and on the ground floor stone works, mechanical and electrical works is already in full swing. The highest point of the building is expected to be reached by mid-autumn, with the occupancy permit in place by June 2021.

Bayer Hungária Ltd., a multinational pharmaceutical firm was among the first, who signed a lease contract for a complete floor in the office building, closely 3200 square metres and they will move into the new generation business hub, upon its handover mid 2021. The developer was represented by the co-exclusive agent Eston.

„BudaPart CITY brings a metropolitan vibe into the workplaces: the neighbourhood welcomes everyone with a complex infrastructure and a unique, green environment. The office building hosts a large-sized restaurant and additional 700 square metres of retail space, therefore the services of BudaPart will according to the plans also include a stationery shop, a drugstore, a bookshop, a cafe, a post office and a showroom. Employees can thus accomplish their everyday duties easier and faster with having even recreational possibilities located right next to their workplace: they can arrange meetings, friendly dinners or even a refreshing run at Kopaszi Dam, in the neighbourhood of the Danube” – said Dr. Mihály Schrancz, Managing Director of Property Market.

BudaPart development as a whole is going according to plans: three buildings have been handed over and the handover process of two new residential buildings was started this month. In 2021, besides BudaPart CITY, BudaPart Homes ‘E’ will be finished as well, followed closely by the central park of the neighborhood. This year the construction of further office and residential buildings and a hotel can be expected. Altogether, 15 residential, 13 office buildings and a hotel will be built within the frame of this investment.


/original press release by Property Market


Eston International. the Hungarian associate of Savills, hosted their annual commercial property conference in Budapest. The audience had the opportunity to chat about the latest trends of the sector with the hosts and speakers of the event: Adrjan Salamon, CEO of Eston International and Chriss Gillum, Head of Offices Regional Investment Advisory EMEA, Savills. As Mr. Salamon explained: “The Budapest property market continues to be very attractive and keeps delivering new records in many aspects. Following the record investment volume of 2018, ~EUR 2 bn we see prime yields reaching new, record low, levels in all main sectors: a CBD office building has been recently transacted at 4.9%. Budapest office and logistics vacancy rates bottomed at 5.9% and 2% respectively and class A rents are increasing dynamically in both segments. Investors also perceive the current situation as appealing and a bigger expansion of investment volume is hindered by the narrow supply of prime products.”

Commercial property investment activity exceeded €8bn across Poland, the Czech Republic, Slovakia, Hungary and Romania in the first three quarters of 2019, 54% above the five year average, according to Savills latest research report. Investment turnover in CEE has been rising steadily since 2013, by 24% pa on average, reflecting increasing investor confidence in the region, underpinned by above EU average economic expansion, falling unemployment and growing consumerism.

Poland, as the largest economy, accounts for 46% of the total GDP of the five countries and has captured 56% of the investment activity in the first nine months of the year with over €4.5bn. The Czech Republic saw transaction turnover reach €2.36bn, about one third of the total, while Hungary and Romania accounted for 6% of the total turnover each and Slovakia for 3%.

Historically, cross border investors have been the strongest players in the region. German, UK and Austrian investors would traditionally dominate these markets accounting for over half of the activity. Over the past three years the share of US and German investors has dropped and the markets witnessed significant inflows from South Africa (14% in 2018) and Asia (12% in 2018). Most notably in the first nine months of 2019, Korean investors increased their share of activity from 4% last year to 14%. Recent deals involving South Korean capital include the sale of an Amazon warehouse in Prague, with Savills advising the buyer.

Competition for the best assets has caused a fast yield compression over the past few quarters in the region. The average prime CBD yield in the five countries was down to 5.26% in Q3 19, 28 bps lower than last year and 12 bps below the previous quarter. Prime CBD office yields are lowest in Prague at 3.9% followed by Warsaw (4.5%) and Budapest (4.9%), while higher yields of 5.75% and 7% can still be achieved in Bratislava and Bucharest respectively.

Chris Gillum, Head of Offices Regional Investment Advisory EMEA, Savills, says: “Offices continue to be the most attractive asset class for investment into CEE, accounting for over 60% of the


investment volume in the first nine months of the year, a strong rise from 45% over the same period in 2018.

“We have seen an increasing willingness of international capital to enter the region, led by the comparative access to good quality product and healthy fundamentals, explaining the sector’s strong performance which we expect will continue to attract investors well into 2020. For example, in October, Corporate Finance House Group, a Middle Eastern investor, acquired the holding structure owning Day Tower office building in Bucharest, its first investment in the country, with Savills advising the buyer.”

Occupier take-up levels across the respective CEE capitals have been rising by 9% pa on average over the past five years, pushing the average vacancy rate across Prague, Budapest, Bucharest and Warsaw to 6.9% compared to 13.8% in 2014 and half a percentage point below last year. Prague has the lowest availability of offices with 4.6% vacancy, Budapest follows at 5.9%, Bucharest at 8.0% and Warsaw at 8.2%.

Eri Mitsostergiou, Director, European Research, Savills, adds: “Oxford Economics forecasts that Warsaw (2nd), Budapest (5th), Prague (6th) and Bucharest (9th) will be amongst the ten fastest growing European cities over the next five years with 2.6% average annual GDP growth, versus a European average of 1.9%.

“As supply of prime product becomes tighter, investment volumes for 2019 are projected to be about 5-10% below last year’s levels. We believe that there is more space for yield compression, especially in the prime logistics segment. Some further yield hardening is also likely in the prime office segments of Warsaw and Bucharest in particular, while yields should stabilise in Prague. The retail segment is expected to witness a stabilisation of yields and some softening trends are already evident. However, growing retail sales should support the performance of the best assets and drive demand for logistics space.”


György Tamáska

Marketing manager

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