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June–July, 2013 www.resourceinfo.hu Ft 750 A -csoport tagja CEE/SEE Special Edition CEEon the move?INTERVIEW ANALYSIS ANALYSIS FOCUSMarcus Cieleback, Croatia on RICS Market CEEHead of Research the doorstep Sentiment Survey developers andat Patrizia of the EU for Hungary developments

PrCoEpEe/SrEtyE Forum 2013September 24, 2013 | Vienna, PwC Headquartes The future of CEE Distressed properties in CEE: Opportunity for investors, trouble for banks Investment trends in the region Country risks in CEE Development opportunities in the CEE region: Where and what to develop? Opportunities in the SEE region – New rising stars?Leading CEE real estate professionals at one event. Real estate executivesfrom Austria, Czech Republic, Slovakia, Poland, Hungary, Romania, Serbia, Croatia.Presentations, panel discussions, networking opportunities.Partner Sponsor In association withFurther information:www.portfolio.hu/en/[email protected], [email protected].: +36 1 327 40 86

 REsource CONTENTS 14 32COVER STORY ANALYSISAround 10-15 years ago, Central Europe used to be the El Dorado of the With its EU accession this summer, CroatiaEuropean real estate market. The property sector generated enormous prof- will present investors and developers alikeits for market players and huge developments were realized all the way from with significant opportunities. However, thisWarsaw to Sofia, from Prague to Bucharest. Is CEE still attractive these days? is a harsher economic environment than thatHas this once uniform region now become heterogeneous? What are the cur- in which the first two waves of CEE EU acces-rent opportunities available on these markets? sion occurred: real estate markets in Poland, Hungary, the Czech Republic, Slovakia, 5–12 Brief news ANALYSIS Romania, Bulgaria, Slovenia, and the Baltic States developed considerably after joiningCOVER STORY 30–31 SEE as the new investment the EU. destination 14–15 Is Central Europe still attrac- INTERVIEW tive? ANALYSIS What is the most attractive market in EuropeREPORT 32–33 EU accession brings develop- these days? Why have investors started getting ment opportunities to Croatia more cautious about Poland? We interviewed 16–17 Facility Management Confer- Dr. Marcus Cieleback, Head of Research at the ence in Budapest ANALYSIS German company Patrizia Immobilien AG. Patrizia plans to grow its assets under manage-INTERVIEW 34–35 Corporate lending in CEE ment to at least EUR 10 billion by 2015. This means that for 2013 and subsequent years, they 18–19 Johnny Dunford, Global Com- ANALYSIS anticipate an increase of at least EUR 1 billion mercial Property Director for per year. RICS 38–39 Retail - All quiet on the West- ern front? INTERVIEWANALYSIS ANALYSIS Outlook for 2013-2014 on the CEE develop- 20–22 Hungarian Market Sentiment ment and investment market. How is the CEE Survey 40–41 The whole region can not be property market doing during a very difficult lumped together time in the Euro-zone? Which markets areINTERVIEW the most attractive in CEE at the moment? LIST Six leading CEE real estate decision makers 22 Marcus Cieleback, Head of shared their views with us. Research at Patrizia Im- 42–49 Real estate developers in CEE mobilien Real estate developments inANALYSIS CEE 24–25 Housing market trends in CEEINTERVIEW 26–29 Six people, six opinions Partners Sponsor SectionGeorge Soros June 12, 2013 | Hilton Castle www.resourceinfo.hu | 2013/6–7.

REsource EDITORIAL Csanád Csűrös Editor-in-chief//[email protected] Has Central Europe regained its momentum? RE Minden,IngatlanInfó SOURCE ami ingatlan This edition of REsource Magazine focuses on the Central and Eastern European prop- erty market. What we are looking for is an answer to the question of just how attrac- További hírekért, elemzésekért látogasson el tive the region has remained from an investment point of view. Around 10-15 years ago, a honlapunkra! www.resourceinfo.hu investors and developers who chose Central Europe could find unique opportunities. The property sector generated enormous profits for market players and huge develop- resourceinfo hírlevél ments were realized all the way from Warsaw to Sofia, from Prague to Bucharest. How- ever, the global crisis, which befell us all in 2008, severely damaged most Central and READ US DAILY//SUBSCRIBE@//www.resourceinfo.hu Eastern European economies. Except for Poland, almost every CEE country suffered, to a lesser or greater extent, losses as well as financial and real economic turbulences. Editor-in-chief Poland was clearly the star in those years following 2008, with solid economic growth Csanád Csűrös – [email protected] and a continuously liquid investment market. Editor In this, our latest issue, we investigate exactly what kind of investment and develop- Gergely Ditróy – [email protected] ment opportunities are currently available in the region. We ask several property mar- ket decision-makers who are active in the CEE region what they expect for the next Contributors few years and which markets they consider the most attractive. Is Poland still allur- Piroska Kádár, David Lawrence, Katalin Major, Bálint Nagy, István Palkó, ing or is the biggest market in the region already overheated? With its highly favorable Gábor Patkó price level, what kind of opportunities does the Budapest property market hold in store? These are the questions we asked experts from Bluehouse Capital, Colliers, Cushman & Advertising coordinator Wakefield, Raiffeisen Evolution and TriGranit, among others. This edition also takes an Anita Gombos-Nagy – [email protected] in-depth look at Southern Eastern Europe’s emerging markets, paying special attention to Croatia, which finally joins the European Union on 1 July of this year. Translator András Nagy Property Investment Transaction Turnover in CEE (Million €) Hungarian copy editor 4,000 Judit Maruszki 3,500 Copy editor Esther Holbrook 3,000 Photo 2,500 Lázár Todoroff, Fotolia.com, MTI, Profimedia.hu 2,000 Design & Layout Bátor Márkó Benes – [email protected] 1,500 Sales 1,000 Balázs Agócs – [email protected] Csaba Égly – [email protected] 500 Publisher 0 Zoltán Bán NET Média Inc. SOURCE: CBRE, RESOURCE 1033 Budapest, Polgár u. 8–10., Hungary 1Q 2007 Phone: +36-1-327-4080, fax: +36-1-327-4081 2Q 2007 E-mail: [email protected] 3Q 2007 www.resourceinfo.hu 4Q 2007 1Q 2008 HU ISSN 1419-4392 2Q 2008 3Q 2008 A REsource IngatlanInfó bármely részének másolásával és terjesztésével kapcsolatos 4Q 2008 minden jog fenntartva. 1Q 2009 2Q 2009 A NET Média Zrt. valamennyi, a REsource IngatlanInfóba bekerülő adatot, információt, 3Q 2009 hírt megbízható, ellenőrizhető forrásból szerez. Az adatokat és információkat – 4Q 2009 lehetőségeinkhez képest – a megjelenés előtt kontrolláljuk. Mindezen körülmények 1Q 2010 ellenére előfordulhat, hogy a REsource IngatlanInfóban utóbb tévesnek bizonyuló hírek, 2Q 2010 információk jelennek meg. Éppen ezért felhívjuk tisztelt olvasóink figyelmét, hogy ha 3Q 2010 a megjelentetett hírek, információk alapján gazdasági, pénzügyi döntést kívánnak 4Q 2010 hozni, úgy előzőleg az információk megfelelőségét, valóságtartalmát ellenőrizzék. A 1Q 2011 megjelenő információk esetleges valótlanságából, pontatlanságából eredő károkért a 2Q 2011 NET Média Zrt. mindennemű felelősségét kizárja. 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2013/6–7. | w w w. r e s o u r c e i n f o . h u

 REsourceHungary ranks first in Europe, but – according to Oxford Eco- nomics – only 6% of the output generated by an average employee is used for office BRIEF NEWSThanks to having one of the lowest labor pest between 2010 and 2030, the highest rate costs. This is half of the CEE average andcosts within the European Union, to the estimated for Central and Eastern Europe. even lower than in Western Europe. Thiscountry’s central location, to its geographi- The majority of immigrants are expected to means Budapest has a significant competi-cal and logistical features, and to its skilled be skilled workers coming from neighboring tive advantage compared to the other citieswork force. Hungary’s office market is one countries like Romania, Ukraine, Serbia, and in the region.of the top investment targets for domestic Slovakia. Such an influx would bolster Buda- Budapest at the center ofand international investors, as well as being pest’s leading role in the region. “New Europe”a prime rental destination. In addition,Hungary has the lowest office cost per cap- Low labor and office costs With Croatia’s accession to the EU andita within the region, affirms the Real Estate In 2012, the EU’s average hourly labor costs with the growing stabilization of SerbiaDevelopment Roundtable (IFK) who pre- for the economy as a whole (excluding agri- and the other ex-Yugoslav countries, Cen-pared a report on the subject together with culture and public administration) was tral Europe’s center has begun to shift fur-DTZ real estate consultancy firm. This is EUR 23.4. For the Euro zone, this average ther south. Consequently, Budapest couldhow developers argue the case for Budapest. was EUR 28. However, these averages con- soon be the center of “New Europe.” AfterBased on the latest survey covering global ceal significant differences between Mem- all, the Hungarian capital is in the center ofand regional investment market property,Hungary’s situation is far from being good. Vacancy rate on the modern office market in BudapestWe are amongst the countries with lowestinvestment volume and are actually at the 30%very end of the list. The Czech Republic and 25%Poland are both ahead of us. “In our latestsurvey, we identified a number of aspects 20%that clearly revealed the Hungarian office 15%market is facing drastic changes. I believethat Hungary will soon be the most attrac- 10%tive target for foreign or domestic compa- 5%nies looking for an office within the regionfor investment or leasing purposes, empha- 0% Q4 2001 Q4 2002sized IFK President, Ernő Takács. Q4 2003 Q4 2004 Q4 2005 Q4 2006 Q4 2007 Q4 2008 Q4 2009 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013Why is the Hungarian office SOURCE: BRF, RESOURCEmarket attractive?According to the latest forecast by Euro- ber States: the hourly labor cost varies from all major transportation hubs, with directstat, the European Union’s labor market EUR 3.7 (Bulgaria) to EUR 39 (Sweden). connections to all major cities in the region.will start to slowly decline from 2013. Only Hungary has the sixth lowest labor rates, In the coming years, CEE’s office market isa few major cities will be able to resist this EUR 7.5, far below the European average. sure to develop significantly, as the currentprocess. As a result of the shrinking popu- According to analysis from DTZ, nearly 9% office stock won’t be able to cover tenantlation and of the increasing labor mobility, of companies’ total expenses are related to demand. While the average office area is 11companies will be forced to reconsider their property or office leases. sqm/person in the Western European cap-office leasing strategies. Budapest – with itals, this value is only 2.5 sqm/person inits 1.7 million population and 2.4 million In Eastern Europe, tenants face greater CEE. This means that a significant numbercommuters – is Eastern Europe’s largest challenges than in other parts of Europe: of tenants in these cities are still not leas-city. The population within the capital and in the CEE region, 12% of the output per ing spaces in modern office buildings. Yet,its vicinity is expected to grow by 6% over employee goes toward for office rent while it seems they would like to move to bet-the next 20 years, due to the domestic and this ratio is only 7.8% in Western Europe. In ter quality offices. Thanks to improvingregional labor inflow. This estimated rate is the CEE region, office rental costs are in fact economic conditions, an increasing num-2.5 times higher than the Central European 35% lower than in other European coun- ber of companies can afford the move andaverage. tries, yet, at the same time, the output gener- Budapest, where most new office needs get ated by the employees is 56% lower than the absorbed, is in the best position within the Eurostat has forecasted the inflow of European average. Budapest has not only region.267,000 foreign workers to Hungary/Buda- the lowest property costs in nominal terms www.resourceinfo.hu | 2013/6–7.

REsource BRIEF NEWS Leszno in Poland. Commenting on the pros- pects for the remainder of the year, Taylor added, “we remain optimistic for the region, evidenced by a strong pipeline of transac- tions in due diligence. Investment demand continues to be patchy, being country and sector focused with an emphasis on core product located in liquid markets. That said, we are encouraged to see activity return- ing to the Czech market partly as a result of some re-pricing.” Good news from the SKANSKA GREEN TOWERS, WROCŁAW Four-year record investment business on the regional Czech market saw a recovery in Q1, with property market According to Cushman & Wakefield, six transactions closed and volumes up at investment activity in the key Central EUR 237 million, compared to just EUR 20 According to the latest report by CBRE, European markets of Poland, Czech, Slo- million for the same period in 2012. Simi- total commercial real estate investment vol- vakia, Hungary and Romania was main- larly, Hungary attracted EUR 159 million ume in Central and Eastern Europe reached tained in Q1 2013, with EUR 958 million in Q1 2013, significantly up from the same EUR 2.6 billion in Q1 2013. According to invested, some 6% above the five-year aver- period in 2012. Investors’ sector preference the study, the total investment volume for age. Whilst down from the previous quar- remained the office sector with some EUR CEE is three times higher than the level ters, positive investment sentiment and 646 million invested into offices. Significant achieved during Q1 2012. The most active underlying activity suggests investment transactions including the purchase of New markets were Russia (EUR 1.8 billion) and volumes for this year should match those City in Warsaw by Hines, PZU’s purchase Poland (EUR 600 million). The good news achieved in 2012. of Skanska’s Green Towers in Wrocław and is that total investment volume for the CEE the purchase of Andel Park B in Prague by region is three times the level achieved dur- Commenting on the level of activity in GLL. Allianz, Invesco, NEPI, Kulczyk Sil- ing Q1 2012 and is also the best first quar- Q1 2013, Charles Taylor, partner at Cush- verstein Properties and Hannover Real ter result in the last four years. Offices and man & Wakefield, said, “investor activ- Estate also made investments into the office retail continue to dominate – representing ity has increased marginally. Some inves- sector during this quarter. In contrast, retail 44% and 37% of the CEE market, respec- tors are considering taking more risk and investment activity was at its lowest since tively. Industrial properties are becoming reviewing the more developed and rela- 2009, with the only notable transaction increasingly popular and constituted 19% tively mature parts of CE and finding, not being Blackstone’s acquisition of Galeria of total property investment volume for Q1 just a yield advantage and better relative 2013 in CEE and 17% in Poland. The larg- economic growth than in the West, but also an improving level of liquidity.” Investment GALERIA LESZNO, POLAND volumes in Poland, the Czech Republic, and Hungary increased by some EUR 258 mil- lion following the Norges joint venture with Prologis regarding a high quality distribu- tion facilities portfolio. This single transac- tion represents 50% of total investment into the industrial sector across CE during 2012. Despite the fact that a significant part of the Prologis/Norges portfolio is located in Poland, this market saw volumes decline in Q1 2013 – with EUR 465 million invested compared to EUR 818 million in Q1 2012 and EUR 618 million in Q1 2011. The 2013/6–7. | www.resourceinfo.hu

 REsourceest transactions were in Moscow where, EU accession, the capital received only 17% BRIEF NEWSfor instance, Metropolis shopping centre of foreign buyers interest. However, bywas acquired for around EUR 900 million Ministry of Public Administration earlier, a 2006 this ratio had grown to 36.32%. Buda-by Morgan Stanley Real Estate Invest- total of 1,019 foreigners bought 998 prop- pest’s prevalence increased steadily over theing. In Poland, the most significant deals erties in 2010 and 1,120 foreigners bought period between 2007 and 2009 and then, inwere both in Warsaw: RREEF’s acquisition 1,069 properties in 2011. Thus, the 2012 2012, property in the capital was the mostof Green Corner from Skanska Property data indicates a slight increase. Regard- popular amongst foreign buyers: 47.6% ofPoland for EUR 94.6 million and Hines ing the nationality of the buyers, it can be the properties purchased last year wereGlobal REIT’s acquisition of New City established that Russians (445) are on the located in this area. Apart from Budapest,from ECI for EUR 127 million. top of the list, followed by Chinese (150) foreigners mostly bought properties in Zala and Ukrainians (128). In the past few years, (194) and Pest (60) counties. Regarding theAre foreign homebuy- investors have been more interested in the type of acquired property, it is clear that –ers returning? capital rather than the countryside. Before in 2012 as in previous years – apartments and houses were the most attractive to for-According to data provided by the author- eign buyers, totaling 80% of all real estateity in charge of authorizing the acquisition acquisitions. Vacant lots accounted for 9%of real estate by foreigners, approximately of the acquired property last year, 1.7% were1,186 foreign nationals obtained permis- holiday houses, and 0.4% were farmsteads.sion to acquire a total of 1,110 propertieslocated in Hungary last year. According to Eurohypo sellsthe data available on the government’s web- massive portfoliosite, most of the buyers were Russian citi-zens and most of the properties are in Buda- Eurohypo, a subsidiary of Commerz-pest. Based on the report published by the bank, has announced that it is sell- ADVERTISEMENTREsource-RE-17x12.indd 1 www.resourceinfo.hu2013|.05.2240. 18:331/:463 –7.

REsource BRIEF NEWS ing its EUR 3 billion property loan portfo- Q1 2013. Jos Tromp, head of CEE Research lio. This is followed by the news that a US and Consulting for CBRE, said, “interest consortium, consisting of Lone Star and in industrial property is driven by a vari- IMMO PARK, KOSICE Wells Fargo, will be the buyers. Lone Star, ety of factors including relatively low rental a private equity firm, intends to purchase rates, limited development activity (in both data reveals a lack of new developments (together with Wells Fargo) Eurohypo`s cases, with the exception of Russia), and a and yet, at the same time, occupancy rates UK property loans portfolio. Wells Fargo relatively high income component in total appear to be rising. & Co has expressed interest in acquiring returns – compared to more traditional the performing property loans, while Lone asset classes.” Mike Atwell, CBRE head of Hope for the real estate Star Funds has its eye on the non-perform- Capital Markets for CEE and Poland also market ing debts. Based on the announcements, had this to say: “The upswing in interest in the performing loans will be sold at a 10% the CEE is entirely in line with the forecasts Real estate investment company Atrium discount, while the non-performing ones made in CBRE’s 2012 Real Estate Investor Real Estate Europe has  completed place- come at a 25% discount. The EUR 3 billion Intentions survey. Our 2013 research casts ment of a EUR 350 million bond in the CEE portfolio includes 13 UK properties. Com- light on how the market may expect to region. The company bonds, listed on the merzbank’s move to sell the UK property change in the coming year. Specifically, of Vienna and Amsterdam stock exchanges, loans is part of its goal to shed off one of the 14% of investors who see the CEE as the have received oversubscription by four Europe`s biggest pre-crisis loan portfolios.  most attractive investment choice for 2013, times.  The bond bears a fixed coupon of Europhone was active throughout Europe the majority also considers Poland to be the 4.00% and matures by 2020. Standard & and disbursed hundreds of millions of euro most attractive market and the preference Poors and Fitch both rated the company in property loans, also in Hungary.  Its for Poland exceeds that of France, Spain, BBB-. Atrium Europe Real Estate owns a worst performing domestic project was and the Nordic countries. In terms of cities, EUR 2.18 billion portfolio, including 156 finance of the office complex Tópark. Warsaw was seen as the third most attrac- properties in the CEE region. The com- tive city for purchases in 2013. Clearly, this pany has 25 properties in Hungary worth Increasing interest in is very positive news for Poland and, with a total of EUR 83 million. According to the the region generally improved market circumstances, company`s press release, part of the EUR we hope to see a knock-on effect elsewhere 350 million will be used to refinance exist- According to the latest report by global in the region.” ing debts and the other part for financing property advisor CBRE, total commer- new acquisitions. cial real estate investment volume in CEE Immorent launches reached EUR 2.6 billion in Q1 2013, three mega investment Norwegian pension times the level achieved during Q1 2012 fund’s money and the highest first quarter result since Immorent, the Austrian-based subsid- transfers into real 2008. The most active markets were Rus- iary company of the Erste Bank Group, estate business sia (EUR 1.8 billion), although smaller announced a 150-thousand sqm indus- economies within the CEE have also seen trial real estate development in the Czech In just one quarter, the Norwegian state an increase. The largest transactions were Republic and in Slovakia. It has already pension fund, Norges Bank Investment in Moscow: Morgan Stanley Real Estate received the construction permits for Management (NBIM), has increased the Investing acquired Metropolis shopping its project called Immopark Praha.  The value of its real estate portfolio by 50%. The centre for around EUR 900 million and AFI 131-thousand sqm logistic project in pension fund`s asset value was equal to Development completed acquisition of the Prague will consist of seven halls. Addi- EUR 4.8 billion at the end of Q1 2013, which remaining 50% of Aquamarine BC III, a tionally, Immorent, already present also project close to the Kremlin. In Poland, sig- in Hungary, plans to extend its property nificant deals included RREEF’s acquisition in Kosice, Immo Park Kosice, (currently of Green Corner and Hines Global REIT’s 250 thousand sqm) by a further 17.5 thou- acquisition of New City, both in Warsaw. sand sqm. Concerning the massive devel- Offices and retail continue to dominate opment plans, the company’s CEO, Rich- the scene, representing 44% and 37% of ard Wilkinson, said that, with these plans, the market respectively. Industrial proper- they are responding to increasing regional ties are significantly increasing in popular- demand for logistic property. Unlike the ity, however, they currently constitute 19% booming Czech and Slovak markets, this of the total property investment volume for segment is rather subdued in Hungary. Q1 2013/6–7. | www.resourceinfo.hu

 REsource ment volume of EUR 8 million. Although BRIEF NEWS the retail segment is still an important sub- market, Q1 2013 figures reveal that it has become less paramount. Retail investments, totaling circa EUR 1.9 billion, once again this quarter, slightly decreased in market share ( – 9%). Logistics market booms in Europetranslates to a nearly 50% increase com- BUSINESS QAURTER IN MÜNICH / BERLIN Investment in European logistics andpared to the previous quarter.  The property industrial assets showed a strong start toportfolio yield was – 0.3% in Q1 and 0.49% reached EUR 6.65 billion, representing a the year with over EUR 3 billion trans-in Q4. (The funds negative yield was due to year-on-year increase of 21% – the high- acted in Q1 2013. According to research bythe foreign exchange rates losses and to the est level for a first quarter in five years. Jones Lang LaSalle, this was up by 111%transaction costs of the new deals. With- The trend of a stronger focus on the top compared to the Q1 2012 and up by 5%out these, the yield in Q1 would have been six locations (Berlin, Cologne, Düssel- compared to Q4 2012. The total volume1.5%.) As we reported earlier, the EUR 550 dorf, Frankfurt, Hamburg, and Munich) was driven by a significant joint venturebillion Norwegian pension fund intends observed last year continued in Q1 2013. portfolio transaction (Prologis/Norgesto increase the share of property within According to Savills’ records, the invest- Bank) with assets, distributed across mul-its portfolio from 1% to 5% in the coming ment volume increased year-on-year in all tiple European countries, totaling EUR 1.2years. The pension fund has become one of six markets with EUR 3.7 billion invested. billion and representing 40% of the Euro-the most active real estate investors in West The Savills report highlights the largest pean total. Europe’s top three markets; theEurope. The Norwegian giant has not yet single-asset transactions of Q1: the pur- UK, Germany and France, all recorded anpurchased any property in Central Europe. chase of an IVG open-ended special fund increase in transactional volumes for the for approx. EUR 500 million and Dundee’s equivalent period last year. At 7.50%, theInvestors trust purchase of an eleven-office property port- prime European yield remained stable forGermany folio for circa EUR 420 million from SEB. the third consecutive quarter in Q1 2013. Office buildings dominated Q1 figuresAccording to Savills, Germany’s total com- with over EUR 2.4 billion – 36% of the CA Immo won’t exitmercial investment volumes in Q1 2013 total transaction volume – invested in the Hungary sector, representing a 62% increase year- on-year. Hotel investments saw the stron- A long-term presence in Hungary and in gest growth – over 150% – plus, an invest- other primary markets, a focus on key offices’ asset class, the sale of nearly 10% of its real estate portfolio, as well as improved cost efficiency – these are CA Immo`s long- term plans to improve the company`s credit record, market confidence, and increase its efficiency. After having achieved significant growth in Germany and Eastern Europe between 2006 and 2011, its property assets have increased by EUR 2 billion over the last five years, now amount to EUR 5.3 bil- lion. CA Immo, an international real estate investment company, says it is planning to “re-dimension” its asset portfolio. The clear objective for 2013-2014 is to increase cred- itworthiness, profitability, and establish an equity share of at least 40%, while opti- www.resourceinfo.hu | 2013/6–7.

REsource BRIEF NEWS mizing risk with a view to stabilizing the be launched. Around EUR 300 million has sionals at CBRE. Last year, nearly half of company over the long term. In the future, been earmarked for construction projects the total volume transacted was invested the company intends to focus on its pri- in 2013 and these will be located exclusively in the UK. Buyers’ clear favorite is Lon- mary markets of Germany, Austria, Hun- in Germany (specifically in Munich, Frank- don. Among the top 10 European invest- gary, Poland, Czech Republic, Romania, furt, and Berlin). CA IMMO Hungary`s ment targets, several German cities rank and Slovakia. It reiterates that it is plan- plans are in line with the above-stated high and this clearly illustrates the strength ning to stay in these countries for the long focus, maintaining the current office port- of the German market. At the same time, term. At the same time, CA Immo plans to folio – amounting to nearly 200,000 sqm – France’s position has slightly weakened. gradually reduce its exposure in the Bulgar- and stabilizing occupancy rates (currently Apart from the core markets, Poland and ian, Croatian, Serbian, Slovenian, Ukrai- above 80%), added Gulyás. Dublin also ranked among the top 10 tar- nian, and Russian markets. In particular, gets. Capital coming from overseas (espe- the company plans to sell off hotel, logistics, Skanska expands in cially from America) is gaining a more and residential asset classes in these coun- Poland dominant role, generating an increasing tries. CA Immo intends to focus mainly on amount of activity on the market. Investors the office market and, consequently, in the Swedish company Skanska is currently are less focused on risks; fears regarding mid-term, the company plans to sell off real developing a 40-thousand sqm office build- recession, lack of capital, or the risks relat- estate not classified as part of its core busi- ing in Warsaw, Poland. The EUR 42 million ing to the Euro zone’s future are no longer ness. This relates primarily to hotel, logis- investment is seeking LEED certification. afflicting the market, says Tim O’Sullivan, tics, and residential asset classes; although, Although it will be built in a secondary Pol- head of Capital Markets at CBRE Hungary. size and tenant structure will certainly ish city, the project shall exceed the total In respect to yields, positive trends con- also be key criteria in the sale of the indi- volume of handovers forecasted for Buda- tinue and the market is shifting towards vidual properties. The intention is to sell pest in 2013. This project serves as another further declines in the rates, especially for assets worth EUR 300-400 million in order excellent illustration of the difference the core markets. However, at the same to reduce the whole portfolio by 7-10%. In between the activity in Polish and the Hun- time, rental rates have not increased signifi- 2013, the partial sale of the Tower 185 office garian real estate markets. cantly. Poland not only has a dominant role building in Frankfurt will be an important at the regional level, but also on the Euro- item on their agenda. “Balancing and rede- Blue skies for Europe’s pean level. In fact, Warsaw is more attrac- fining the capital allocation within the port- real estate market tive than many other strong European loca- folio is also targeted for the next periods, in tions. Besides its favorable macroeconomic order to increase our profitability. Funds European real estate investment market conditions, this can also be mainly attrib- generated through the sales will be used to trends are quite positive these days. Not utable to the market’s size and liquidity. In repay loans and other financial liabilities surprisingly, market players are more trust- addition to Poland, Russia is another attrac- and to ensure a dividend is paid,” outlined ing of the main European markets, while tive target in the CEE region. Unfortunately, Managing Director CA Immo Hungary, Poland is the main target in East Europe, Hungary is not among the top three tar- Ede Gulyás. Contrary to previous years, the say Hungarian and international profes- gets. Investment activity on the Hungarian, main focus will now be stabilizing the port- Czech, and Slovak markets is still not very folio, which means fewer new projects will TOWER 185, FRANKFURT visible. Although there is some activity on the Hungarian market, apart from the clos- ing of one or two major transactions, not much is going on. The market is divided into two parts, one where investors con- centrate on prime products and another where investors look for high-risk prod- ucts. “The picture is more colorful than it used to be: besides all the capital coming from the traditional directions (previously, German institutional investors maintained quite a dominant position on the Hungar- ian investment market), Greek and Israeli investors are now arriving, said Gábor Bor- bély, head of Research and Consultancy at CBRE Hungary. However, yields are still at around 7.5% in Hungary. 2013/6–7. | www.resourceinfo.hu

 REsourceTarlós: 27 major invest- the development of sewer canals/system, BRIEF NEWSments by 2020 the renovation of the Chain Bridge and the Váralagút (throughway tunnel), the renova- income developments, says Urban Devel-Budapest City Mayor, István Tarlós has tion of the thermal bathhouses and of Váro- opment Deputy Mayor, Balázs Szeneczey.announced that “Budapest’s municipal- sháza tér (near Deak tér), the development According to Szeneczey, the price increaseity is working on twenty-seven major of the Budapest Zoo and Botanical Gar- is a good starting point in the effort to(above EUR 50 million) projects. Between den, and utility works. Tarlós pointed out eliminate chaos along the capital’s Danube2014 and 2020, the capital will apply for that, besides the metro line four (M4) proj- waterfront. Szeneczey said the capital cur-EU funding. Tarlós declared that, besides ect, there are several other ongoing proj- rently has an income of HUF 100 millionthe “salvage” of the former legacy projects, ects, like the development of the bus corri- from public land usage fees; however, floodadditional projects are already in progress dor in Rákoskeresztúr and the development prevention costs exceed HUF 250 million.and the legal, technical and financial prep- of tramlines 1-3, the Buda tramline project, Within the first year, the capital hopes toaration has already begun. For the first time the development of the selective waste col- collect half a billion forints. Under the newin three decades, a detailed and complex lection system, and the renewal of Széll regulation, instead of the current two cate-urban development concept has been pre- Kálmán tér. Tarlós also said that Budapest gories – public and private transportationpared. The Danube area development plan, is developing – not chasing dreams. Fol- – 18 categories will be defined, for example,which fills a 20-year gap and will follow lowing the preparatory phase, we will be based on occupied water surface, on chan-through to 2030, fits this concept, Tarlós able to target EU funds in 2014. The gov- nel usage, and on the extent of environ-emphasized. The mayor confirmed that the ernment is expected to decide in favor of mental burden.capital’s short and long-term projects are a number of these projects in the com-to be realized in cooperation with the gov- ing days. Tarlós noted that, similar to the CET to host cruise shipsernment. Of the HUF 1,100-1,300 billion ‘White Paper’ prepared about two years ago,projects now planned, the mayor mainly a new publication is due to be published The new recovery plan for Budapest’s Dan-highlighted transport development invest- next month. In this, they intend to report ube River waterfront has been finalized.ments such as: the modernization of metro on the progress the city has achieved con- Based on the concept envisaged by theline three (M3) and its northern extension; cerning the previously mentioned “critical BKK (Budapest Transportation Center),the second phase of the tram and trolley- issues.” the capital is to found its own cruise recep-bus vehicle project; the modernization of tion company and shall build two cruisemetro line one (M1) and its eastern exten- Fee increase to finance ship terminals: one at CET in the southsion; the renewal of the cogwheel rail- Danube developments and another at the wharf next to Szent Ist-way, the clean-up of its environment and ván Park. The plan envisages several large-its extension to Széll Kálmán tér; linking Budapest City Council representatives may scale developments at the wharf, includ-the Csepel/Ráckeve suburban train (HÉV) already decide in April on a uniform price ing a floating pedestrian zone on the Budato Astoria tér; and putting 400 new buses regulation for ports and quays. The munic- side. The southern terminal, at CET, wouldinto service. Furthermore, plans include ipality will finance this with additional be located within the Ferencváros coast- line (parallel with Közraktár utca). Based CET on the plans, this area would be suitable for 10-130 meter long boats. All the sup- plementary services would be located www.resourceinfo.hu | 2013/6–7.

REsource BRIEF NEWS within the CET building (some of these underground visitor center and a par- on compiling a museum collection. The are, in fact, already available). The termi- liamentary museum. The project design museum’s pre-WWII collection is almost nal at Szt. István Park would be located at can currently be viewed publicly on SIP’s complete, however, many valuable items the lower wharf between Radnóti Miklós homepage. Completion of the Parlia- have long since been destroyed in a “bar- utca and Révész utca. The planned length ment building’s changes have made the baric way” when many of the city’s statues is 1.4 km. In the 30-35 meter wide coastal reconstruction of Kossuth Square utterly were melted down, he lamented. zone, a track for serving vessels and for urgent, impressed Tamás Wachsler, pro- short-term waiting alongside a pedes- gram director of SIP. ‘The Nation’s Square’ Budapest takes trian walkway and a bicycle path are envis- will be asphalt and car-free, it will become share hold in RÁC spa aged. Based on the original concept, 16-20 greener and more spacious, the number of complex cruise ships could land in this area. Based (carefully selected) shrubs will triple in vol- on the available data, the revenue that can ume, and large water surfaces will appear Budapest’s municipal government has be generated by the mooring fees of these across the space, he added. On the build- become majority owner of the RÁC Ther- ships exceeds HUF 1.3-1.5 billion per year; ing’s north side, there will be four under- mal Bath, recently purchasing the Hun- thus, it seems a quite reasonable decision ground stories: the first three will be occu- garian Development Bank’s (MFB) for the capital to try to exploit this poten- pied by a 600-car garage and the upper one share. The deal now closed, the capital has tial. Besides the BKK report, another study will house the Parliament building’s visi- acquired the bath for HUF 2.7 billion (one (entitled The Development of Areas Along tors’ center. “Since the start of the program, third of the MFB loan of HUF 7 billion). the Danube) has also tackled this concept. we have obtained all necessary licenses Budapest is set become majority owner of This study defines 13 coastlines, which and the tender for selecting the main con- both the renovated thermal bath and of based on their environmental, traffic, and tractor has been completed successfully, Rác Nostalgia Inc., the company devel- navigation features could be used as cruise assured Wachsler. During this last stage, we oping the four-star hotel adjoined to the ship ports. The Ministry for the National carried out a so-called ‘online descending bath. The mayor’s press office has con- Economy has also recently addressed this price auction’ with the suitable candidates, firmed the details above; however, MFB’s issue in its National Maritime Strategy. wherein the candidates could bid based on press office did not want to comment. The The results of the various studies, however, each other’s offers. KÉSZ Inc., who offered renovated bathhouse and adjoining hotel sometimes appear to contradict each other the lowest price (at HUF 14.63 billion) won have been ready for three years and yet and, so far, no consensus has been reached the tender. The main contractor has already they have remained empty ever since. Sev- in this regard. begun the work: the civil engineering work eral international companies have offered already on progress at the north part of the to operate the complex, however, internal Kossuth tér complete Parliament is progressing well and the util- conflicts between the owners and the dis- by March 2014 ity channel change has been already com- agreement regarding the loan repayments pleted by the water works. Wachsler con- have made opening impossible so far. The The renovated square, developed under firmed that the new Parliament museum likelihood that they will open now, under the framework of Steindl Imre Program would be established by covering and the new circumstances, seems to be more (SIP), will be car-free, complete with an reconstructing the Parliament’s yard (Nr. realistic. 15). He says that they are already working RÁC SPA 2013/6–7. | www.resourceinfo.hu

www.resourceinfo.hu  REsourceCan the banks survive without the real estate investment market? SPONSORED ARTICLEWith the exception of Poland and a brief flurry of invest- ity depends upon the whim of politicians and the that the possibility of resale of the distressed asset inment transactions in the Czech Republic in 2011 and increasingly dissatisfied and unemployed European the event of loan default at the underwritten valueearly 2012, the rest of the Central European investment electorate. The sooner they can escape from this of 42% of build cost is very low, or that the new loan,market has been in a virtual investment deep freeze insecure reliance, the better the chance of their long even at 70% leverage must be secure at this level?for the last five years. This is due to a number of factors term survival. After all, 70% leverage for the best properties, at val-including the instability of the EU in general, currency ues which have declined 20-30% in the last five yearsconcerns, unpredictable investment environments etc. Clearly a strategic plan for recovery is urgently is equivalent to around the 50% leverage rate thatHowever, the freeze is mostly due to the lack of avail- required. So what would a bank strategy for recov- banks wish they had loaned at the peak of the mar-able debt financing from the commercial banks. ery look like? ket!Whilst investors in real estate are looking to alterna- Firstly it must involve a change of mindset. Banks At the moment my experience is that banks aretive sources of funding such as mezzanine debt, com- have, understandably, developed an over sensitiv- unwilling to lend more than exactly that level, 50%.mercial mortgage-backed securities (CMBS), real ity to real estate due to the size of the problem and To do so now, is in my view nonsensical. Yes, banksestate funds, pension funds, sovereign wealth funds, the threat that it poses to their continued existence. should universally adopt a policy that howeverinsurance companies, and private equity funds, the From the outside at least, it seems as if some banks enticing and potentially profitable real estate financ-issue of whether the so-called “soft landing” will con- have tried to avoid bringing the problem on bal- ing may be, the golden rule is to never lend moretinue for another three or another ten years depends ance sheet for as long as possible and others have than 70% - ever! But the current policy of droppingto a very great extent upon these banks. become positively hostile to the real estate sector. leverage to 50% is simply counter-productive. In the Whatever the emotions may have been, these reac- distressed example given above, it would under- The simple reason for this is not just that these tions don’t seem to be in the best interest of the write the loan at a value equivalent to 30% of buildmarkets are not mature enough to have developed bank’s shareholders as they do nothing to help pro- cost and let us not forget that this includes the valuealternative sources of funding but more impor- tect the value of their existing commitments. The of the land!. This may well meet the“zero risk”policytantly, because the banks are increasingly dominant problem is only going to get bigger without active which bank management is directing to its projectowners of real estate through their takeover of dis- intervention. financing teams, but it is certainly not high enoughtressed real estate assets. Furthermore, since 2008, to attract investors away from the more developedthe 20-30% drop in market value for income pro- By this I do not mean that they should set up a western European markets where they can achieveducing real estate assets has wiped out the value of real estate division to quantify the losses, sort out unleveraged returns of 6-8%.equity in highly leveraged assets, taking banks loan legal problems and ensure the basic security ofto value ratios to 100% in many cases. The banks the asset. This is a necessity, but one which - if it is It seems to me that this policy is a case of clos-are therefore the fully exposed owners of a high allowed to continue for too much longer - will create ing the stable door after the horse has bolted. It ispercentage and effectively the majority owners of costs which exceed the benefits of any slow recov- not a strategy which will rebuild the value of thealmost all leveraged real estate in the region! ery in asset values. What is urgently needed is that real estate portfolios which the banks – unwillingly – the banks need to devise a holistic approach to the hold, anytime before 2020. The banks, in fact, control Any investor who has actively approached banks whole real estate problem. Hopeless cases have to the answer to their own problem. With clear visionwith an interest in financing in general (or purchas- be written off more quickly and fire sold, before they and an objective strategy, they could significantlying distressed assets in particular) during the last five cost more to hold than their remaining value. improve their own situation as well as facilitate theyears in CEE has been met with a range of responses, rebirth of the entire Central European investmentfrom indifference to guarded and hesitant negoti- Clear internal guidelines in respect of property market.ations at unrealistically high prices or low levels of classes and sectors need to be drawn up. How mightleverage. Only in very few cases have banks indi- they look? Well, for a start, banks should properly www.convergen-ce.comcated a willingness to actively engage with inves- restart lending to finance the best blue chip invest- Phone: +361 2250912tors at both realistic pricing and with the offer of ments. This is the lowest risk sector and the effect ofmeaningful debt finance. Even at the prime, blue investment sales at this end of the market will bringchip investment end of the market, obtaining more confidence and more importantly a deeper pool ofthan 50% debt is extremely difficult and securing international investors back into the markets.any loan can take up to a year. As highlighted above,as the dominant owners of real estate in the region, In the retail sector, banks should most impor-this surely cannot be in the banks best interests, tantly support retail businesses with credit toshort or long term. finance shop fit-out works and investment in stock, as well as assisting them with advice on how best to If the largest banks do not come up with a strat- manage exchange rate risk. Similar direct and indi-egy to first stabilize and then grow the real estate rect strategies can be adopted for all classes of prop-market, they will have to keep writing-down losses erty, with the possible exception of developmenton their ever-increasing portfolios of distressed land, which will naturally recover with an overallproperty for the next ten years. This will continue recovery of the market.to have a negative effect on the health and stabil-ity of the banks, which in turn will require contin- Banks also need to think more strategically aboutued government support. Banks boards of directors leverage. Is it really risky to provide a 70% loan to ashould be very concerned that their future stabil- buyer of a modern distressed property when the value is 60% of its build cost? Or a prime invest- ment where there is an existing DSCR of 2 times or more? Can risk departments really not be persuaded www.resourceinfo.hu | 2013/6–7.

REsource COVER STORY Is Central Europe still attractive? CSANÁD CSŰRÖS Around 10-15 years ago, Central Europe in the CEE region. Warsaw is then fol- office space is due for delivery in 2013. used to be the El Dorado of the Euro- lowed by Prague, with 6.25-6.5% yields. This means that the currently 3 million pean real estate market. Has this After Warsaw and Prague there is a rela- sqm of office stock will only grow by half once uniform region now become tively big gap, and then Budapest comes a percent this year. In principle, this sug- heterogeneous?What are the current in with yields estimated at around 7.5- gests that the vacancy rate will start to fall opportunities available on these mar- 7-75%. Bucharest yields are even higher; sooner or later. kets? This time, all eyes are on Buda- typically 8.25% has to be paid for a pre- pest, Bucharest, Prague and Warsaw. mium office here. As we see, it is clear that There is still a chance yields are now spread in a band across 200 The Central European real estate invest- basis points. Thus, the region is surely not It is clear that Central Europe is full of good ment market has been doing quite well homogeneous. real estate products. In Warsaw, Prague, recently. It is almost old hat to mention Budapest, and Bucharest, investors can that the region’s most attractive invest- While Warsaw is booming, choose between many modern, premium ment choice is Poland, and Warsaw in Budapest is in recovery offices, shopping centers, and logistics particular. Property investment in Cen- properties, all with high occupancy rates. tral and Eastern Europe tripled to EUR 2.6 Not only yields vary significantly across For risk-averse investors who may be sat- billion in the first quarter (Q1 2013), com- the region, but other office market indica- isfied with lower yields, Warsaw or Prague pared to Q1 2012. So, we have decided tors show discrepancies, too. For instance, is clearly their best bet. However, those to focus our analyses here on the Cen- while Warsaw’s vacancy rate is currently who are willing to risk a little more, have tral European region in the more narrow below 10%, it is above 20% in Budapest. the chance to earn a lot of money today in sense of the phrase, excluding Russia. Prague (13%) is closer to Warsaw is terms Budapest or in Bucharest. of their vacancy rate, while Bucharest Total Q1 investment volume for the tra- (16%) comes in closer to Budapest in this Europe split into two ditional CEE markets (Poland, the Czech respect. Republic, Slovakia, Hungary, Romania, CBRE’s worldwide survey indicates that, etc.) was EUR 800 million. (The most Much like the vacancy rates, the for the majority of the world’s big cit- active market in Q1 was, in fact, Rus- amount of development activity also quite ies, the number of office leases have not sia.) Around 75% of the total investment varies from country to country on the fallen at all. South and North American volume (approx. EUR 600 million) came CEE markets. The relatively strong rental cities perform best, while rental rates have from Poland. The Polish market’s popular- demand, interest from investors, and the increased everywhere throughout these ity in Central Europe is undeniable. Still, rather low vacancy rate have all generated regions. In Asia, the picture is more com- the weight of the country – with a EUR 40 a wave of development in Warsaw. Based plex as rental rates have fallen in most the million domestic market – is greater than on analyses from CBRE, over 300 thou- major markets. According to the CBRE its population or economic importance sand square meters (sqm) of office space is would justify.The population and nominal now under construction. This means that GDP of the Czech Republic, Hungary, and the total Warsaw office supply will grow Romania combined are bigger than those by 8-10% by 2013 and this will most likely of Poland: nevertheless, the Polish invest- increase occupancy rates, too. ment market is over three times bigger than the three markets combined. It is worth comparing Warsaw to Buda- pest. In fact, the biggest differences can Warsaw’s popularity is also reflected be best illustrated comparing these two in the pricing. Investment yields in War- cities. Due to the high vacancy rates, saw are between 6 and 6.25%, making speculative development has virtually the Polish capital the most expensive city disappeared from the Hungarian capi- tal. At present, over 20 thousand sqm of 2013/6–7. | www.resourceinfo.hu

 REsource Office market vacancy in CEE (%) Prime office yields in CEE (%)25 10 COVER STORY2015 910 5 8 0 7 Budapest 6 5 4 3 2 1 0 Bucharest Moscow Prague Bratislava Warsaw Moscow Bucharest Budapest Bratislava Prague Warsaw SOURCE: CBRE, JLL, RESOURCE SOURCE: CBRE, JLL, RESOURCEsurvey, the European market is clearly Budapest is lumped together in the same rates have dropped continuously in thesplit into two; the first group contains the group with Barcelona, Lisbon, Madrid, past few years and, consequently, we havestable performers, while the second group Milan, and Rome. In these markets, the become the cheapest European office loca-includes the declining markets. Germany, drop in office rental rates has slowed down, tion. On the other hand, due to the cycli-the UK, Switzerland, Scandinavia, Poland, thus, it is believed that the lowest point is cal nature of real estate market, Budapest isand Russia with all have increasing rent close. According to CBRE, however, to slowly recovering. The region’s most popu-levels. They are all typically places with the contrary, Bucharest and Prague have lar city, the darling Warsaw, is currently ata stable economy. To the contrary, rental already reached their low points. In Mos- the other end of the cycle, so, it is still duerates are falling in Greece, Spain, Portu- cow and Warsaw, the increase in rental rates to eventually reach its peak. So, an optimis-gal, Italy, and Hungary and these are con- has also started to get back on course. On tic reading of Budapest’s domestic situationsidered the worst performing European one hand, Budapest is, therefore, amongst is that it will be again on an upward pathcountries, with ailing economies. the worst office market performers; rental sometime in the foreseeable future. BUDAPEST BUCHAREST WARSAW … OR PRAGUE? www.resourceinfo.hu | 2013/6–7.

REsource REPORT This spring, Portfolio.hu held its forth annual Facility Management stages of development, in order to minimize Conference. Property operators, property managers, asset managers, tax costs. Very accurate and clear contracts tax consultants, and real estate professionals came together to discuss must be stipulated to avoid future problems, the current issues, challenges, and opportunities of property manage- declared Managing Director of Hochtief ment (PM) and facility management (FM). Development Hungary Ltd., Ferenc Daróczi. K ATALIN MAJOR Participants also discussed FM’s and PM’s role in creating value. They all agreed that he conference started with a the most common measure of a FM’s per- FM/PM have an increasingly important role, formance is its financial performance. The and yet owners still emphasize cost and rev- T presentation by Johnny Dunford, survey clearly shows that when a FM is not enue as the key measures, with profit taking the Global Commercial Direc- treated as a supporting activity than compa- center stage. Hopefully, they agreed, owners tor of RICS (Royal Institution of Char- nies and corporate real estate managers are across the board will soon recognize that this tered Surveyors). Dunford presented the losing out in terms of cost efficiency, added area can add much needed value to a busi- global research recently conducted by RICS. value, and quality. ness. According to RICS`s research, surveying over 400 industry experts, property man- Importance of “Reducing costs through additional agement and facility management need to financial performance investments is an important issue and, be given a strategic role within a company thanks to these additional operations, cost in order to have an efficient business. During the conference’s first panel dis- savings can be achieved,” emphasized According to the study entitled “Rais- cussion, the guest speakers discussed real Director of PM at STRABAG Property ing the Bar: Enhancing the Strategic Role of estate taxation. Esteemed professionals and Facility Services, Katalin Honi . How- Facility Management,” corporate decision- in their field, they all agreed that changes ever, as the head of property and asset man- makers officially agree with the approach to taxation are capable of overturning an agement at Cushman & Wakefield, Zoltán (cited in the title here), yet, experience entire development budget and can con- Scharek, points out, “FM and PM services shows that, in practice, neither of these tribute to massive losses within a company. have to adapt to the management’s style, two areas receive enough attention. Most policies, and intentions. The managed prop- heads of FM still spend most of their work It was suggested that a business model erties should meet shareholders expecta- life on day-to-day operational activities and should suit the optimum tax regime and tax tions and should be capable of adapting advisors should be involved in the earliest to the market conditions. A well-operated building is obviously more valuable and can be sold with better conditions.” Insourcing or outsourcing? “How do companies currently consider investments and the alternative capital cost?” “How can facility managers develop a stra- 2013/6–7. | www.resourceinfo.hu

 REsource REPORTtegic vision?” Balázs J. Barts FRICS, head Real Estate, says that property owners inof the RICS Corporate Real Estate Profes- Romania and Poland are open to innova-sional Group asked these and other provok- tion, as high revenues do not allow priceing questions to startup the discussion on based competition. Price is not the mainthe financial impact of the issue. According focus in Romania either and other factorsto participants, the answer is simple: we still also matter to them, too. The same is trueneed to educate business leaders. in the Czech Republic, although this can well be attributed to the market’s matu- Many agreed that the key element of rity. The Czech market is more closed andstrategic planning is outsourcing. Accord- it is difficult to enter as a foreign company,ing to Péter Szijártó, CEO of B&V FM Ltd. notes Csukás. “Competition is on the rise(part of B&V Group), we can not clearly also in the foreign markets where entryopt for either outsourcing or insourc- barriers are low and there are always newing. The company itself defines its strat- entrants,” Csukás added.egy, rather than its way of thinking. Sometasks can be outsourced, while others Managing distressed propertiesneed to be resolved internally for the sakeof cost-effective operation. “Rather than a In the past few years, it is banks who havepassive facility management, an active one established the biggest real estate portfolios.is a must, alongside prioritizing portfolio Thus, they have been forced to weld a pro-management,” asserts Szijártó. fessional hand to property and facility man- agement. They will often outsource theseIs the Hungarian market activities, but it is not uncommon to havealready too small? an ‘own team’ dedicated to these tasks, says Dr. Mrs. Ágnes Drajkó Koháryné, head ofBasically, there have been no new devel- the PM Department at Erste Bank.opments on the domestic market. Thus, itis obvious that Hungarian developers are Indotek Group is purchasing - amongconsidering foreign expansion. The biggest other investments - foreclosed proper-market is, of course, the same as in other ties. So, they hold a differing opinion.sectors; Poland, says Managing Director of According to Gábor Vörös, head of the PMCommercial Property at TriGranit Man- department at Indotek Group, it is worthagement Inc., Attila Molnár. He believes purchasing foreclosed or distressed prop-that Hungarian tenants are more con- erty if it is feasible to achieve at least a 20%scious as competition is much more acute profit margin. “A professional FM man-here than anywhere else in region. Tenants ager has better options for increasing effi-here are ready to dedicate an entire team ciency and saving costs. Obviously, prop-in their organization to the task of optimiz- erty management is not one of a bank’sing FM and PM costs. Concerning the local core businesses. Further, by restructuringpeculiarities of the countries in our region, the lease agreements, significant revenueCsongor Csukás, CEO of BNP Paribas increases can be achieved,” Vörös added. www.resourceinfo.hu | 2013/6–7.

REsource INTERVIEW Budapest on the world map We interviewed Johnny Dunford, Global Commercial Property Director for RICS, at Portfolio.hu’s Facility Management Conference. He has worked in a wide range of areas on the CEE regional property market. He even lived in Budapest for a few years. Johnny Dunford currently oversees RICS’contribution to the develop- ment of international standards for the commercial property sector. K ATALIN MAJOR ou were the keynote speaker real estate investment in global cities”, which time, it was a lot of fun living in Budapest looked at global property markets from the and it’s just a shame that we have all gone Y at the conference; how did you corporate real estate residents’ perspective. backwards a little bit. My sense is that good like the event? And we’ve got two other projects which always comes out of these situations, you I thought that it was a really are coming later: one is the second part of learn from your mistakes. good conference. It’s a great location and I “Raising the Bar” and the other one is a study was intrigued how you managed to invite called “RICS Facility Management Guid- I suppose that you are still following representatives from banks (and other play- ance,” intended to give best practice guid- what’s happening on the CEE property ers) from almost every market segment. It ance to people working in FM. market. How do you see Hungary’s posi- was a real mixture of participants, which tion compared to other regional property is encouraging. Also, I’m glad to see how You used to work in the CEE regional markets? everybody wants to talk about facilities property market and you’ve lived in management under the current market sit- Budapest for several years. Yes, I do follow the events on the regional uation. The most important questions for markets, but, of course, there are plenty of everybody are how we can further reduce I lived in Budapest for about three years, people today who know it better than me. the costs while maintaining the quality of between 2005 and 2008, and it was great. I services and how FM and PM can add value really enjoyed it. I worked around the region Hungary has to face a number of chal- for companies and occupants. and I traveled quite a lot around Poland, the lenges and I think Budapest has to work Czech Republic, Russia, and so on. I also quite hard to get back to the same position What is your field of specialty as the worked in Prague when I was managing where it used to be. I’m really pleased to see global commercial property director? director at DTZ. that the last quarter results for Hungary What kind of projects are you currently were in the positive territory. That’s obvi- working on? This was the period at the end of the ously good news. There are also great peo- golden years, before the crisis. What was ple in Budapest, they’re well educated, and I am responsible for RICS commercial your impression then? the city is very nice to live in. However, as property operations around the world. I am it was mentioned several times today at the also responsible for professional standards I guess we are all very wise when we conference, there are a number of issues. So, development around the world, with partic- look back, which is a natural part of human for example, the tax regime or the uncer- ular emphasis on FM, Corporate Real Estate, nature. No one ever believes that the good tain economic environment, and other crit- and agency standards in Brazil, the USA and news is going to end. My impression now is ical factors which create a less favorable Asia. In the last few years, we have spent a that we made a mistake when everyone was environment than before. For example, I’m lot of time on facilities management in RICS just very keen to get on to the growth path thinking about Malév not operating, which because we realized that there’s a real mar- and use every opportunity. At the same time, has reduced the volume of flights and made ket need. In times of recession, everybody too many people – too many businesses and it more expensive to get here. All those sorts wants to make their property work better, countries – just grew too fast and lost sight of things make a difference to investors. so, FM is becoming increasingly important. of the fundamentals. Property tends to fall That’s why we started on this piece of work into two categories: “very good” and the On the modern property market you called “Raising the Bar”. Our feeling was we rest. Unfortunately, a lot of property fell into really need to think international. So, for needed to get to the occupiers – those who the second category and the crisis under- example, if you want to attract HSBC, Nokia actually use FM services – and find out what lined this difference in a number of situa- or Yahoo – a big global player to your prop- they are doing, what their needs are, to dis- tions and for many people because only very erty – you’ve got to think much bigger than cover how one can add value to it. Recently, good property has proven to be really resis- just what the Budapest market, the Hungar- we did another survey called “Corporate tant to the crisis. It was definitely a good ian market, or the Central and Eastern Euro- pean market wants. Multinational compa- 2013/6–7. | www.resourceinfo.hu

 REsourcenies compare Hungary to other emerging ple would look at Europe and say: “I’m not Again, the scale is enormous and it does INTERVIEWmarkets – like Brazil, for example – and, as sure what’s happening.” I think that’s a really have a number of advantages: English tendsI mentioned Yahoo, I’m pretty sure that they tough question and many political brains to be the dominant language, which is rela-would be looking at five or six different loca- and economic geniuses are trying to work it tively easy for most Europeans. The popula-tions in Central Europe alone. out. Unfortunately, I don’t know the answer tion density is very high and there is a real either. What’s plain is that it has been a crisis, appetite for services, education, and infra- Considering the regional market, I think it probably still is a crisis, and it will certainly structure development. It may prove to be athat companies naturally gravitate toward continue to be a worry for all market players slightly easier environment than Brazil.the big markets – like Poland, of course – as for some time.there are a lot of people there, there is very The Middle East used to be one of thegood infrastructure, and travel arrange- Recent trends (e.g. euro crisis, recession) favorites for property market investors.ments are also good. Prague has always been have tainted investors’ view of Europe. Basi- What kind of changes do you see?popular and I think it will continue to be so, cally, there is a lot of money that has goneas it’s a very stable country. into property and there is a lot of money The challenge with the Middle East is waiting to go into property, but big inves- twofold. Interestingly it’s the opposite of One of the roundtable talks at the tors now look at the world as a whole, so, if places like Brazil and India. You’ve got rela-conference was about distressed prop- Europe has got a question mark over it, even tively small populations with a lot of money,erty. You used to work as an investment if it only affects one country (e.g. Spain or whereas, in Brazil, you’ve got a lot of peopleprofessional, an asset manager at a pri- Italy), a lot of investors will just put a ring and each person has got a small amount ofvate equity company. What do you think around Europe and say that it’s all of Europe. money. In Brazil, governments can be quiteabout these opportunities? It’s simple: they choose from a world mar- difficult to understand, the regulations can ket and they will take their money to India, be quite complex. In the Middle East, if a par- We’ve been talking about distressed prop- China, or New York just for a safe bet. ticular leader decides that something is goingerty probably since about 2007. It’s very to happen, it happens very quickly. Inevitably,interesting and I think everybody was sur- One of your specialties is the emerg- there are also other complications for inves-prised that there was not a rush of assets ing countries' property markets. Follow- tors that wouldn’t come up elsewhere and theflooding onto the market with people and ing China and India, it’s Brazil and Africa environment is not so easy to live in, so, it’sbanks all needing to sell them, to get rid that are now gaining more attention. not very attractive for an international ten-of them. The short answer is yes; there are What is your impression of this trend? ant to go there. I think that the Middle Eastdefinitely opportunities in distressed assets.However, I think the bottom line is that it’s There is always a rush to new opportuni- will continue to grow, but innot as easy as it first appears. It’s not easy to ties. China has had a lot of interest, too, my mind it’s a veryget a really valuable asset at a low price. First so people have rushed in there, but not different oppor-of all, these assets are very hard to value and so much anymore. Brazil holds a lot tunity and theit’s also a real challenge to find financing for of very interesting opportunities. region is prob-these projects. My experience is that most The scale is enormous; Sao Paolo ably a little biteffective asset managers covering distressed alone has 20 million people. They low down theproperties are very innovative. So, for exam- also have the football world cup priority list forple, you might find that something that has and the Olympics coming up, the most investorsbeen a poor office building and falls into dis- weather is fantastic, and the lan- right now.tress; the new owner does something com- guage is easier to manage than, forpletely different. They turn it into flats or put example, in China. The country isretail in or give a big facelift, do some reposi- certainly more naturally aligned withtioning and then find a new market. There’s European mentality and culture. In addi-always opportunity. Yet, I think you’ve got to tion to the property sector, there are a num-be very clear with your business plan to pull ber of really big opportunities, for example,off such a project. in the service sector and in infrastructure. You are a global property market pro- Another place that I think hasn’t hadfessional. What is Europe’s position right a lot of interest just yet, but I thinknow on the international market? will become very interest- ing is India. Investment is all about perception, it’s all about sentiment and many peo- www.resourceinfo.hu | 2013/6–7.

REsource ANALYSIS Hungarian Market bly low-level of market activity stemming Sentiment Survey from a lack of investor confidence and dif- ficulties in securing capital. Citing weak Yield levels remain unchanged and pressure on rental rates in market fundamentals, several respon- Hungary continues to be prevalent confirms the Market Sentiment dents also pointed out that Hungary’s Survey, a joint study conducted by Eltinga, Portfolio.hu, and RICS. external image is poorer than in reality. The survey was designed to determine Hungarian senior real estate Cautious optimism has appeared towards professionals’ assessment of the current yield levels and rental the opportunistic investment market, now rates, as well as their general market expectations. Meanwhile, the helped along by banks’ increasing asset Budapest Commercial Property Index dropped to its lowest figure so sales, as well as in regards to certain mac- far: 90.35. roeconomic indicators. CSANÁD CSŰRÖS Individual real estate categories O pinions on yields have been for typical rental rates exhibit a decrease, In addition to questions about general either confidently or gradually with only a few examples of buildings hav- market sentiment and expectations, the increasing, depending on which ing managed to maintain their previous survey respondents shared their forecasts submarket is under scrutiny. The lowest levels. In fact, this statement applies both for yield levels and typical rental rates for level, 7.5%, is currently awarded to the to changes starting six months ago as well eight different property types. In terms of Top 5 shopping Malls, having increased as to the overall trends from the begin- rental rates, they had the chance to pro- from 7.0%, as reported earlier. The only ning of 2011 and on. Cheap (non-central) vide minimum, maximum, and typical sector where a clear, upwardly mobile offices and expensive (Top 5) retail have values. Participants in the Market Sen- yield pattern can be observed is retail held up fairly well over the last 18 months, timent Survey were asked to give mar- ,where all three submarkets are now seen whereas the weakest mid-term perform- ket characteristics for nine property cat- to command yields 0.5% higher than at ers have been prime non-CBD offices and egories and we were able to glen reliable the outset 18 months ago. mall-type retail parks. results for eight of them. The categories The pressure on rental rates remains are: top CBD office building, prime non- a central theme, as most median figures Under general comments made by par- CBD office building, good quality non- ticipants, a recurring theme is the nota- central office building, prime out-of-town logistics center, small business unit, one of the Top 5 shopping malls, retail park, and big box retail. BCP at record low The first survey took place in the second half of 2011 (H2 2011) and the starting 2013/6–7. | www.resourceinfo.hu

 REsource Top 5 shopping malls category, where – have, however, fallen (about 10% on typi- ANALYSIS according to respondents – prime yields cal and 24% on minimum rates). Accord-point value of this index is 100.00. Hav- increased from 7% to 7.5%. Following two ing to the participants, the typical rentaling been between 95.00 and 97.00 in the steps in the direction of reported growth, rate for a big box retail space is currentlysubsequent two rounds, the value has rental values have now moved back in the around EUR 7.5/sqm/month, only a slightdecreased to 90.35 by H1 2013. negative direction, too (30% in terms of adjustment to the EUR 8/sqm/month minimum rates and about 12% in terms of reported at the beginning of the survey.Office sector typical rates). The typical rental rate has Typical mall-type retail park rental rates decreased from EUR 40/sqm/month to are currently estimated at EUR 11/sqm/Survey participants’ attitude towards EUR 35.5 over the last half year, entirely month, compared to EUR 12/sqm/monthrental rates and yields across the entire reversing the growth seen in the previ- reported one and a half years ago.office sector has not changed significantly. ous 12 months. This has been one of mostHowever, marginal upward and downward influential factors included in the senti- Logistics sectortrends can be observed in three areas over ment index.the last four surveys. Maximum rental When questions turn to logistics, respon-rates for top CBD offices show some Similar movement has appeared within dents seem to express very solid opinions.increase (EUR 18/sqm/month, in the last the big box retail category and mall-type Sentiment regarding the investment yieldsurvey) while a downward trend has been retail parks, where yields have moved, remained as before (at 9.00%), both inindicated by respondents in regards to according to respondents, from 8% to regards to prime out-of-town logistic cen-typical rates for prime non-CBD (EUR 11) 8.5%. According to the respondents, ters and the small business unit category.and minimum rates for non-central offices rental rates for big box retail appears to This is not surprising, especially consider-(EUR 8.5). In summary, regarding rental have remained relatively stable. Opinion ing that no actually transaction to place inrates across all the three market catego- on mall-type retail parks rental values this market sector.ries, it can be stated that fierce competi-tion rages on. Apart from the most expen- About the survey It seems that the active demand in H2sive offices in the best CBD locations, 2012 was cause for optimism amongstrates appear to still be under significant The Market Sentiment Survey is a bian- professionals and their opinion haspressure. nual publication produced as a collab- changed in the last six months, resulting oration between the Eltinga Centre of in a Euro 25 cent decrease in respect to Regarding yields within the office sec- Real Estate Research, Portfolio.hu, and each out-of-town logistics scheme rentaltor, responses suggest a marginal outward RICS. It has been designed to determine type. Considering results from last year’smovement in all three categories, in line Hungarian senior real estate profession- survey, there is no change, however, thatwith historic trends (yields results from als’ assessment of current yield levels can tells us how the rents vary within athe previous three surveys). Accordingly, and rental rates, as well as general mar- fairly narrow range.the survey shows average yields stand at ket expectations. The purpose of the7.625%, 8%, and 8.725%, for the three cat- Market Sentiment Survey is to improve While, according to Sentiment Survey’segories respectively. market transparency by establishing a results in the last three rounds, typical benchmark for sentiment, drawing on a rental rates for a city logistics scheme isRetail sector wide range of professional expertise. All fixed at EUR 4/sqm/month, the question Hungarian RICS members (full members on minimum and maximum rental ratesThe most significant change recorded in as well as candidates for membership) caused dilemmas for respondents. Basedthe survey was in the retail sector, specif- were invited to fill out the questionnaire, on the answers, the deviation is signifi-ically the outward yield movement in the which was prepared by RICS and Portfo- cant; the highest estimate was four times lio.hu. The survey asked participants to greater than the lowest. express their opinions on current market yields and rental rates as well as future Survey participants market expectations. We used median values to assess the estimates, which A total of 38 real estate professionals, acts as a way to filter extreme values, around 25% with RICS Hungary’s mem- providing a clear picture of the current bership, participated actively in the cur- market consensus. All values included in rent Market Sentiment Survey. Of the the tables and in the article are median respondents, 70% were full RICS mem- values. bers and over 70% of them have more than 10 years professional experience. The surveys completed indicate that about 55% of respondents work for inter- national companies. www.resourceinfo.hu | 2013/6–7.

REsource  Change in rent opinions (euro/sqm/month)ANALYSIS Big Box Retail H1 2013 Prime out-of-town logistics center H1 2013 Mall-type retail park H2 2012 Good quality non-central office building H2 2012 Top 5 mall Prime non-CBD office building Small business unit Top CBD office building 0 5 10 15 20 25 30 35 40 45 0 5 10 15 20 Change in yield opinions (between H1 2013 and H2 2012 ) Big Box Retail H1 2013 Mall-type retail park H2 2012 Top 5 mall Small business unit Prime out-of-town logistics center Good quality non-central office building Prime non-CBD office building Top CBD office building 1 2 3 4 5 6 7 8 9 10 0 Market Sentiment Survey: All results in one table (all median figures) How do you think investment appetite for prop- erty will change over the next six months? Rent (€/sqm/month) Yield Don’t know: 3% Worsen: 6% (%) Typical Mini- Maxi- mum mum Top CBD office building 7.63 14 12 18 Prime non-CBD office building 8 11 9.75 13.5 Good quality non-central office building 8.73 10 8.5 12 Improve: 29% Prime out-of-town logistics center 9 3.25 2.5 4 Small Business Unit 9 4.00 3.13 5.5 Same: 62% Top 5 shopping malls 7.5 35.5 22.5 55 SOURCE: ELTINGA, RICS, RESOURCE Mall-type retail park 8.5 11 7.25 16 Big box retail 8.5 7.5 6 9 2013/6–7. | www.resourceinfo.hu

 REsourceA billion Euros every year INTERVIEWWhat is the most attractive market in In terms of yields and investment vol- We do not have one CEE market anyEurope these days? Why have investors umes, what do you expect for European more. Poland and the Czech Republicstarted getting more cautious about real estate markets in 2013-2014? can be considered one market and theyPoland? We interviewed Dr. Marcus are very close to the old, pre-crisis, CEE-Cieleback, Head of Research at the Ger- Prime yields will harden further as levels. The rest of CEE is more or less aman company Patrizia Immobilien AG. investors search for prime products and as region risk-averse, core investors are still a result of their great aversion to risk, still trying to avoid, at least in 2013 and possi- What has Patrizia recently acquired a very influential factor in Europe. At the bly also in 2014.and what are the plans for 2013-2014, same time, secondary yields will remainin terms of new acquisitions? stable at best. Total returns will, therefore, Most institutional investors prefer remain in the single digits and most likely Poland these days. Don’t you think that, Growth remains at the very top of our to some extent, a market bubble is tak-agenda. Our aim for the coming years not return to double digits in the foresee- ing shape in Warsaw? Are you lookingremains growing our assets under man- able future. at other CEE markets as well?agement to at least EUR 10 billion by 2015.For 2013 and subsequent years, we antic- What about the CEE property mar- All in all, Poland is also our favorite inipate an increase of at least EUR 1 billion kets? May we still speak of ‘one big CEE the CEE, but you are right in pointing outper year, so, we are planning to be active region’? the risks associated with high demand,on the buying side in the coming years. limited supply, and Poland’s deteriorating economic outlook. We have one invest- How do you see the euro zone debt ment in Hungary and are looking forcrisis? Is the worst already over or yet opportunities in other markets, too. How-to come? ever, our investors remain skeptical about the rest of the region. I think Croatia’s The worst might be over, but it will be EU accession will not boost institutionala long time before we will return to nor- investments in the short term, rather pos-mal. I do not believe that any country will sibly in two to three years’ time.leave the euro zone mostly because, in thatcase, speculation against other euro zone What is your favorite market andcountries would start immediately, which favorites asset type in Europe at thecould then lead to a situation where not moment?enough rescue funds would be available.Ultimately, this would lead to the end of Ireland is one of my favorites right now,the European integration as we know it especially the emerging REIT sector overtoday. Therefore, I think it is very unlikely there and prime office and retail in Dub-that any member country of the euro zone lin, also. Additionally, I would have a lookwould leave the currency union. at Denmark. ADVERTISEMENTLegfrissebb hírek,legaktuálisabb elemzések.RESOURCEINFO.HU www.resourceinfo.hu | 2013/6–7.

REsource ANALYSIS Some are soaring, some are still falling The 2008 crisis hit almost every sector in the world. However, thanks to the earlier developed bubble, it really was the real estate sector (and, in particular, the housing market) that was most greatly affected by the global recession. GERGELY DITRÓY C ontinents and countries have in 2009. Norway and Iceland (outside the pean market is much more polarized. On been disproportionately dam- EU) are also performing well. According one hand, there are high-performing coun- aged, thus, we can see significant to officially available data, not surpris- tries experiencing significant price increases discrepancies in the level of damage expe- ingly, the countries from the CEE region and on the other, there are countries with rienced by various countries’ housing mar- going through the most serious eco- long-term economic problems, where sim- kets: the U.S. is recuperating, Europe is nomic difficulties (Spain, Portugal, Slo- ply minimizing the price fall remains their stagnant and polarized, and the CEE region venia, Romania) have also experienced primary objective. Yes, the CEE countries is still unable to recover. the biggest drops in prices. Interestingly, belong to the lesser-performing group, yet the Netherlands, which has again entered outlook on a whole for the coming years USA vs. Europe into recession but is still quite stable, has is positive, thus, they could very well find experienced a very serious fall in prices, themselves as investment targets for domes- According to the latest S&P/Case-Shiller probably also explainable by the burst of a tic and international investors. Home Price Indices, the U.S. housing market previous price bubble. is experiencing a visible and durable revival. Regional trends The national composite rose by 1.2% in the After all, it looks like the U.S is recov- first quarter of 2013, compared to the pre- ering from the bubble burst. Although its What we can say about our region is that, vious quarter, Q4 2012. The annual increase price increase is quite impressive, it is not as is the case with other real estate sub- was almost staggeringly above 10%, with likely to be as dynamic as it was prior to the markets, it is Poland whose housing mar- New York realizing just over 2% growth. 2007 peak. All in all, the trend, complete ket is the strongest and most developed. European housing prices are not on the with smaller and larger swells, is clearly pos- This is true whether we compare the rise; on the contrary, according to some itive. Some corrections, however, are still housing price indices or the number of country indicators, they are still dropping. expected in the coming years, especially in new dwellings completed. The number of Estonia, Latvia, Malta, and Luxemburg certain submarkets. newly built homes and price changes are are some positive EU examples, even if typically closely related (except in excep- it should be annexed that Baltic coun- Europe, in the meantime, is still look- tional cases) as developers gravitate to tries actually recorded a nearly 40% drop ing to find its way. Compared to the rela- countries where they foresee potentially tively uniform picture of the U.S., the Euro- Growth in residential price indices (annual change in %) 2011 Czech Republic 2010 2009 Hungary Slovakia Poland Romania -30 -25 -20 -15 -10 -5 0 SOURCE: EUROSTAT, RESOURCE 2013/6–7. | www.resourceinfo.hu

 REsource Quarterly and annual house price developments Percentage change compared with Percentage change compared with Capital city Dwellings New ANAALYNSAILSYSIS the previous quarter the same quarter of the previous completed dwellings 2007–2011 per capita1 2012 year Q1 Q2 Q3 Q4 2012 Q1 Q2 Q3 Q4Czech Republic -0.4 0.1 -0.2 -0.1 -1.5 -2 -1.6 -0.7 Warsaw 75,668 4.5%Hungary 1.2 -3.8 -0.8 -2.2 -1.5 -4.4 -3.9 -5.6 Budapest 38,894 2.3%Poland* c c c c -2.2 0.3 -1 0.8Romania 3.8 -0.6 -4.2 -7.9 -9.5 -8.9 -5.6 -9.1 Prague 32,778 2.5%Slovakia -0.2 -0.9 0.7 -2 -2.6 -2.1 -1.9 -2.4Euro area -0.4 -0.2 -0.7 -0.5 -0.6 -1.8 -2.2 -1.8 Bratislava 15,756 3.4%EU -0.2 0 -0.4 -0.7 -0.7 -1.4 -1.7 -1.4 Bucharest 13,244 0.8% C=CONFIDENTIAL SOURCE: EUROSTAT, REAS, RESOURCE SOURCE: JLL, REAS, 1=RESOURCEgreater price increases. As soon as other as on the growth of the capitals’ home price zation and a slight price increase canregional countries – apart from Poland indices. Not surprisingly, Warsaw is leading already be observed in some sub-markets– begin to indicate rising price indi- the list with over 75 thousand new dwell- and with some property types. All acrossces, the number of completed dwellings ings. Compared to the population, this rep- the region, small towns and rural areaswill probably also grow. Due to the vari- resents a 4.5% share. Budapest is next on with limited economic growth poten-ety in economic, social, and demographic the list in terms of number of completed tial and high unemployment are thefeatures, it is hard to predict when the dwellings, followed by Prague, Bratislava, most likely to experience further pricebreakthrough will happen for individ- and Bucharest. Compared to the popu- decreases. Cities and regions that areual countries and when exactly currently lation, Bratislava has significantly more able to attract capital, certain submarketsstagnant (or dropping) home price indi- new homes, while Prague only a few more. at the center of a given county’s economyces will begin to improve. However, there Bucharest is the last on the list in every (like property targeting the creditworthyis a strong sense that the turning point aspect. This city was hit hardest by the cri- upper-middle class, or in a good location,is close, and investors have to pay close sis, as a grotesque price bubble manifested and with good public transport connec-attention if they want to take advantage within the pre-crisis period that proved tions), have already reached their lowestof the best timing for their buy. unsustainable for many reasons. point. Investors are now enjoying a ‘pro- tracted moment’, the point at which it is A survey published by REAS, in coop- Future prospects worth considering investing in the hous-eration with Jones Lang LaSalle, reports ing market of a CEE capital or of a majoron the number of completed dwellings in On a regional level, housing prices are city.CEE capitals between 2007 and 2011 as well still on the decrease. However, stabili- Dwelling completions in CEE Capital Cities, Quarterly Growth in Residential Prices in CEE Capital Cities 2002 – 2012 2008 – 2012 (Q1 2008=100)25,000 110 Warsaw Prague Bratislava Budapest Bucharest Warsaw Prague Bratislava Budapest Bucharest20,000 105 10015,000 9510,000 90 855,000 80 75 Q1 2008 Q2 20080 Q3 2008 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q4 2008 Q1 2009 SOURCE: JLL, REAS, RESOURCE Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 SOURCE: JLL, REASRESOURCE www.resourceinfo.hu | 2013/6–7.

REsource  1 QUESTION – 6 RESPONSES There is continual talk about distress opportunities and increasing sale andINTERVIEW Outlook for 2013-2014 on the CEE development and investment market. How leaseback activity, but I don't see any is the CEE property market doing during a very difficult time in the Euro-zone? material uplift in numbers for either Which markets are the most attractive in CEE at the moment? Leading CEE real of these within the 2013-2014 review estate decision makers shared their views with us. period. Secondary and tertiary proper- ties will continue to struggle, although CSANÁD CSŰRÖS it is interesting to see re-pricing in the tertiary segment producing some activ- Árpád Török, Silesia City Center in Katowice. Our key ity. Limited contrarian interest is emerg- CEO, TriGranit Development target is to develop combined commer- ing and this may trend. The same can be cial projects including retail, office, hotel, said for opportunities to develop or co- TriGranit’s flagship market is still Poland. and transportation hub components. develop prime stock – where it will be We will soon unveil our latest project, needed. But it is true to say that the the 164,000 sqm GBA City Center in At the same time, we still seek retail investor pool remains limited and has Poznan, while we continue our develop- and office development opportunities not grown since it shrunk post-Lehm- ment in Krakow. After successful open- within our target countries. ann. There is some local capital find- ing of our first three office towers next to ing its way into markets, but not at lev- Bonarka City Center in Krakow, we are John Verpeleti els to alter overall historic balances. I due shortly to deliver the latest addition Managing Director, do not see the more expensive, new debt to this project B4B “D”. Colliers International options that have been discussed doing much to alter the shape or practices of The Torgoviy Kvartal in Naberezhnye We have interesting scenarios develop- our markets. Chelny, Russia is one of our most pres- ing because the yield gap between the tigious and popular projects. Follow- most popular and least-favored markets The sector to look at? I have a soft spot ing our successful past performance, we is greater than it has ever been. In the- for logistics; perhaps because it has suf- have now commenced development of ory, this should be creating a good deal fered a lot and perhaps, partly, because Phase II of the mall. of interest in markets that have fallen I believe recovery will show signs there out of favor. The theoretical argument first. But that view is based on a \"gut\" Furthermore, we are making special is reinforced by the yield-rent combina- feeling, rather than anything too scien- efforts to complete Emonika City Center tion, as it gives an even more favorable tific or analytical. in Ljubljana, Slovenia. picture than the one-dimensional yield figure. But there remain political and/or It is a timely reminder to note that the There is a sensible deviation of sub- economic issues within several markets pioneers who picked well in the early regions within the CEE. While Poland which international Investment Com- days did extremely well when the mar- and Russia are performing generally well, mittees and/or Fund Managers remain kets turned, so, I do think we will be see- the central and southern parts of East- very uncomfortable with. And the huge ing increasing commitment to the CEE ern Europe, including the Balkans, are inhibitor in most markets has not gone markets. But, as market-changing cata- experiencing a visible slowdown due to away either: the lack of finance at a rea- lysts have yet to arrive, this will be part lack of capital and weaker demand. On sonable cost. of a gradual process of change. the other hand, there are still good pri- vate opportunities where the combina- I cannot see any reason for major Ioannis Ganos, Investment tion of location, demand/catchment, and swings in yields in any market or sector, Manager, Bluehouse Capital concept can result in some great proj- but much will flow from what happens in ects. Nonetheless, very thorough prepa- the region's leading city, Warsaw. Some I have a positive outlook for Central and ratory work is definitely required before are discussing a move away from the very Eastern Europe. I think that most of the embarking on such a project. dominant Poland, as the economic story CEE markets have been corrected, which is not what it was and in-market prop- means that a significant repricing has TriGranit has widespread experience erty issues (like pricing, product, and taken place in these countries both in in new city center prototypes; suffice to supply) make their impact. terms of capital values and rent. There- say, the two examples exemplifying this fore, I think that (unless a radical exoge- are WestEnd City Center in Budapest and nous negative shock hits these countries) the CEE-market will stabilize. Chances for a large exogenous shock are less than they were before, however, since it 2013/6–7. | www.resourceinfo.hu

October 3, Hilton Vár CEO Roundtable of the Hungarian energy sector Global and regional trends on the energy market Nuclear expansion in Hungary The possibilities of Hungarian suppliers on the energy market Innovative technologies in the energy industry Hungary as a new natural gas hub in Europe Partner SponsorFurther information:www.portfolio.hu/en/[email protected]: +36 1 327 40 86

REsource INTERVIEW 1. 2. 3. 4. 5. 6. FROM LEFT TO RIGHT: 1. ÁRPÁD TÖRÖK, CEO, TRIGRANIT DEVELOPMENT; 2. JOHN VERPELETI, MANAGING DIRECTOR, COLLIERS INTERNATIONAL; 3. IOANNIS GANOS, INVESTMENT MANAGER, BLUEHOUSE CAPITAL; 4. CHARLES TAYLOR, MANAGING DIRECTOR – HUNGARY, CUSHMAN & WAKEFIELD; 5. RUDOLF RIEDL, MANAGING DIRECTOR FOR HUNGARY AND SERBIA, RAIFFEISEN EVOLUTION; 6. MICHAEL KLEMENT, HEAD OF INVESTMENT MANAGEMENT CEE/SEE/CIS, CA IMMO is mostly a political issue, it is very dif- Core money continues to target domi- the darling of the region, despite moving ficult for investors to predict the out- nant shopping centers in Poland, as evi- into a more challenging part of the cycle comes. Yet, I think that ECB has realized denced by Allianz’s recent acquisition of with a slower, but still healthy, level of the seriousness of the situation and has Silesia City Center for EUR 412 million. economic growth. Despite a small con- taken necessary measures to create a bal- This follows transactions of similar pro- traction in the Czech Republic’s econ- ance. portions at Zlote Tarasy and Manufak- omy, fundamentals now look encourag- tura last year. Arguably, investor appe- ing and, with the increasing liquidity of Of course, we have to acknowledge tite for trophy office assets in Warsaw is this market, investors who have bought that the CEE region consists of coun- slightly less prevalent than it is for their in Poland (or who find current pricing tries with very different fundamentals, retail counterparts, as concerns have too rich for their blood) are expected with Poland performing the best at the surfaced regarding the sustainability of to turn their attention towards Prague moment. Bluehouse Capital is planning office rental rates. Vacancy rates also where quality products are available. to expand further into CEE, looking at show signs of being on the rise, as the Hungary and Romania remain for the potential acquisition targets mainly in development pipeline picks up the pace. brave at heart, but there are some more Poland, the Czech Republic, and Hun- The sale of New City to Hines and Sen- positive signals being sent out from here gary. Our focus is mainly the office and ator to Union demonstrates a high level and it is merely a matter of time before retail markets. You can find very attrac- of demand in the EUR 100 – 200 million activity starts to pick up. tive assets in all of these countries. bracket; whilst the competition amongst investors for the below EUR 100 million Rudolf Riedl, Managing Charles Taylor, category is even stronger. Director for Hungary and Managing Director – Hungary, Serbia, Raiffeisen Evolution Cushman & Wakefield Regional cities in Poland have begun to attract investor’s attention, too, (for Raiffeisen Evolution is present in most We continue to see a fair amount of inter- instance, as they have with RREEF and Central and Eastern European countries. est in the region on the part of inves- Deka) and target locations include War- I think that the CEE region itself is quite tors, with a notable focus on Poland and saw, Krakow, and the Tricity metropoli- diverse, with vast differences between the increased activity in the Czech Repub- tan area. particular countries. Poland is still the best lic. Investment volumes in Poland for performing market, even though acquir- 2014 are likely to – at the least – match Meanwhile, the logistics sector contin- ing bank finance is increasingly difficult those from last year, whilst activity in the ues to attract investment interest across there, as well. The Hungarian investment Czech Republic could double, given the the CEE region. Norges completed a joint market is currently at standstill; there are transactions currently in due diligence. venture with Prologis, creating a pan no transactions, mainly due to the lack of That said, investment demand contin- European portfolio with significant CEE political predictability. In Romania, cer- ues to be very specific with its targets, exposure. Blackstone remains acquisi- tain parts of the country are doing rela- with increased caution for places where tive, with its core money targeting prime tively very well, notably, some larger cities the development pipeline appears to be logistics rentals with long-term leases. in Transylvania and Bucharest. Raiffeisen gorged. Liquidity remains a key concern Evolution is currently developing a shop- for most investors. CEE market prospects continue to give off mixed signals, as investors continue to focus on risk aversion. Poland remains 2013/6–7. | www.resourceinfo.hu

 REsourceping mall in Bucharest that due to open second are weak, under-industrialized remain stable in terms of investment vol- INTERVIEWthis autumn, which is already nearly com- southern economies like Greece, South ume and investors, but the core investorspletely leased out. Croatia and Serbia are Italy, or Portugal. In this respect, CEE have become more selective.countries with a relatively positive out- economies are attractive, since most oflook, too. Croatia will join the European them are industrialized countries with In general, we don’t feel the pinch inUnion in July 2013, which will bring a high productivity and a highly skilled our portfolio. Tenant relations are prettysort of dynamism to this market. Serbia labor force. I think that once the euro important in times like these. So is find-is applying for a membership and market zone overcomes its crisis, the CEE region ing a proper solution for both occupantssentiment is positive there. Even though will be, once again, the engine for eco- and landlords, as budgets are shrunk andsecuring capital is a problem and interest nomic growth in Europe. shorted. Our portfolio has maintainedrates are quite high, the market is working a very high and healthy occupancy as aand the market is developing (especially Michael Klement, Head of result of our hands-on asset managementin Belgrade, the gateway to all the Balkan Investment Management CEE/ approach.countries; be it Bosnia, Montenegro, or SEE/CIS, CA ImmoMacedonia). Actually, it’s Austrian mar- Regarding our preferences within CEE,ket players who are currently the biggest Following two years of strong expansion, Poland in remains top rank, followed byinvestors in Serbian big cities, investing in, CEE’s office investment volume dropped the Czech Republic. Then we see a big-for instance, Belgrade, Nis, Novi Sad, and by 35% in 2012. The sharp corrosion in ger gap and there is Romania and Slova-Kragujevac. economic conditions coupled with uncer- kia and, currently, Hungary is still under tainty and political risk made investors pressure due to the political situation. I think that Central and Eastern more averse to taking risks. At the same Mostly opportunistic investors are activeEurope’s long-term prospects are rather time, on the supply side, the reduction in and trying to maximize their return inpositive. Right now, the euro zone is development activity over the past four those three countries. We, at CA Immo,divided into two groups: the first are years has led to a lack of prime assets are focusing on core office assets locatedstrong, export-driven economies such for sale in some CEE markets. 2013 will in the CBD of the capitals in our five coreas Germany, Austria, North Italy and the markets, namely Poland, Czech Republic, Slovakia, Romania and Hungary. ADVERTISEMENT SALE OF FORECLOSED REAL ESTATE CIB Group is offering 46 properties for sale via online auction throughout Hungary: retail units wwRewgi.sctirbaitniognaatlnadndaeutkacilisoa.ht u offices industrial units restaurants pensions plots Register to bid by 20 June 2013. Lead agent: Bidding period: 25-27 June 2013. Telephone: (+36 1) 423 1300 Details on real estate properties offered for auction, the registration form, details and rules of the auction described in the General Terms and Conditions are available on our website: www.cibingatlanaukcio. hu. All real estate properties are available for on-site viewings at request. We reserve the right to withdraw the auction at the beginning of the auction at latest. CIB Ingatlan Aukcio ReSource ww83x120.indd w1 .resourceinfo.hu | 20153/3/0/613–71.:03 PM

REsource ANALYSIS country risk, since it is no harder to do busi- ness in Bucharest than it is anywhere else The SEE region offers potential development and investment opportuni- in the region. From a real estate perspec- ties with higher potential returns for increased risk profiles than do the tive, there are good tax structures, freehold more established, but increasingly competitive, markets in Central and title, improving infrastructure, and a choice Western Europe. of international contractor. The country has an unfortunate reputation, however, in my DAVID LAWRENCE opinion, this is mostly unfounded. The reg- ulations and planning guidelines in Western ush factors include: develop- 1.2% for 2013 and 2.74 for 2014. Romania’s Europe are clearer and more predictable in GDP growth is forecast at 1.2% for 2013 regards to receiving planning permission, P ment and acquisition possibili- and an impressive 2.74% for 2014. For Ser- whereas, here, it tends to be inconsistent ties in relatively untapped markets, bia, 1.96% growth is forecast for 2013 and a and open to interpretation.” yield premiums in, for example, the follow- very positive 3.73% for 2014. ing; Poland, the Czech Republic, Slovakia Neale further argues that it is more com- and North Europe, and favourable forecasts Obstacles that are commonly associated plicated to get the infrastructure lined-up on GDP growth rates. Furthermore, Croa- with development in Croatia are high taxes, in Romania and you have to through a lot tia will join the EU in July and Serbia, having various bureaucratic obstacles to obtain- more procedures in order to acquire the been granted candidate status, is on its way. ing permits, binding legal opinions, and necessary permits. “Whether it is water, However, a major obstacle to develop- the perception of corruption. sewage, gas, or electricity; you have to get ment of the markets in Romania, Bulgaria, a building permit for each one. Whereas, Croatia, Serbia, Slovenia, and Montenegro In response to the demands of tenants in the Czech Republic, the institutions are remains the difficulty of obtaining devel- and investors, the majority of developers more organised and transparent and there opment and investment debt finance, as across SEE are seeking BREEAM, LEED, is a price per meter and you know what it’s SEE county risk has increased in the eyes and DGNB certification. For instance, the going to be and it’s easier to work out the of lenders, who are now pursuing very cau- latest project by Portland Trust, the EUR cost of connections. In Romania, it is a bit tious strategies regarding SEE. Negative 80 million Floreasca Park in Bucharest, has blurred.” sentiment has also been expressed con- a ground-sourced air conditioning pump cerning corruption and other perceived dif- system about 120 metres deep, which pre- Due to the perceived ‘greater’ country ficulties that can make the planning and cools or pre-heats the air before it gets risk, SEE has to offer a significant premium development processes expensive and time into the building system. This is a first in on investments in order to attract compa- consuming. Further, a lack of liquidity is Bucharest, as well as a novelty in CEE, and nies away from the more established mar- deterring developers and investors who should result in around electricity savings of kets. Jones Lang LaSalle (JLL) put prime require an exit strategy. Other potential around 30-40%, says Managing Director of office yields in Belgrade at 9.25% and both drawbacks include limited access to accu- Portland Trust, Robert Neale. Bucharest and Zagreb at 8%. This compares rate market information in largely opaque to 6.25% in Warsaw and 6.50% in Prague. markets where many deals are off-market The 62,000 sqm business park includes and there is a perception of unrealistic pric- 38,000 sqm of net office space, 25,000 sqm “The only reason they are going to look at ing expectations from vendors. of which has been pre-leased to Oracle for SEE is the yield gap. The problem we have The economic downturn has severely a ten-year period. The lease met the 65% in Serbia is that the majority of buildings restricted development pipelines in Roma- pre-lease requirement they needed to gain are owned by local developers. They, per- nia, Croatia, Serbia and Bulgaria. Despite the required debt finance from the banks, haps, don’t see and appreciate the gap in concerns over fiscal issues, GDP growth says Neale. The project is currently 85% pricing between Poland, the Czech Repub- forecasts look promising for Croatia, Roma- pre-let and is due for completion in Octo- lic, and Serbia. That price reflects the coun- nia, and Serbia. They are forecast to achieve ber 2013. try risk, plus the additional risk associated higher GDP growth rates than EU and Euro with investing in Serbia. For example, some zone averages. According to HS Global Neale paints the development process in investors will not look outside the EU. The Insight, Croatia’s GDP growth is forecast at Romania in a positive light. “There has gen- biggest difference between Croatia and Ser- erally been a one-point yield differential bia is the EU,” emphasises Andrew Peirson, between Prague and Warsaw and I have to Managing Director of JLL Serbia. assume this is due to the psychological or Although SEE has not attracted the top institutional investors, leading compa- nies such as Europa Capital, Immorent and Chayton Capital have all been active as investor/developers in the region. For instance, one favoured investment vehicle 2013/6–7. | www.resourceinfo.hu

 REsourceis for an investor to undertake a project in ANALYSISpartnership with a local developer or con-structor. SWAN OFFICE & TECHNOLOGY PARK, BUCHAREST Croatia has ample opportunities for ous milestone for the Romanian market as tourism in logistics centres in Croatia anddevelopment and investment along the it was the first prime office complex located office space in Zagreb. Obstacles to changeAdriatic coast. Hypo Alpe-Adria Bank, for in a city other than the capital to be traded remain the slow administrational systemone, is selling its 380-guest room Le Méri- to an international investment fund. and corruption. What we lack is a positivedien Lav Hotel, plus adjoining resort and approach to new investors coming to Croa-marina (totalling 4.4 hectares of prime “In the short term, people will be enthu- tia,” commented Director of Colliers Inter-beachfront property). “Le Meridien Lav siastic about joining the EU and the event national Croatia, Vedrana Likan, on Croa-Hotel and Resort offers a unique opportu- will be a big party. From the mid-term, if we tia’s imminent EU accession.nity to purchase an internationally branded, look at it from the perspective of 2013, 2014,market leading five-star hotel and resort. and into 2015, we can expect some major As for increased activity in SEE, muchCroatia’s ascension into the EU in July of positive changes and we are already seeing relies on the availability of debt finance andthis year is anticipated to improve the coun- interest from new international players and continued economic growth in the region.try’s long-term stability and boost its tour-ism industry,” said Angus Wade, ExecutiveVice-President at JLL Hotels & Hospitality,the company managing the sale. While Romania did not attract institu-tional investors during the peak of its pre-economic downturn, still, a landmark trans-action took place in the purchase of theCentral Business Centre (CBC) in Timiso-ara by South African investor NEPI for areported EUR 95 million. This was a seri- ADVERTISEMENT Buda Business R70 Office Bartók Ház Center Complex Europolis Park BUDAPEST AEROZONE Canada Square IP West Europolis Park BUDAPEST M1 Infopark A Capital Square City Gate Víziváros Office CenterA COMMANDING PRESENCEThis advertisement is produced for marketing purposes. Its contents, which are non-binding, are intended solely toprovide information and do not constitute an offer, a recommendation to purchase or a recommendation to sell underthe capital market law of Austria or any other country. For this reason, it would be inappropriate for any reader to relyon future-oriented statements. Results achieved in the past are not indicative of future developments. Advisorymeetings are necessary before entering into any actual investment.For more information about CA Immo visit www.caimmo.com or call +36 (1) 501 2800

REsource ANALYSIS EU accession brings development opportunities to Croatia With its EU accession this summer, Croatia will present investors and developers alike with significant oppor- tunities. However, this is a harsher economic environment than that in which the first two waves of CEE EU accession occurred: real estate markets in Poland, Hungary, the Czech Republic, Slovakia, Romania, Bulgaria, Slovenia, and the Baltic States developed considerably after joining the EU. DAVID LAWRENCE further concern is that Croatia the mid-term, if we look from the perspec- vis have undertaken development proj- tive of 2013, 2014 and into 2015, we can ects in partnership with local developers A still faces its own fiscal hiccups; see some major positive changes; there is and constructors. Major planned projects having slipped back into reces- really no space for more negative trends in include TriGranit’s 40,000 sqm office com- sion in 2012 and facing the IMF forecast Croatia, as we have really hit the bottom. ponent of the Arena Centar in Zagreb and that the economy is due to grow by less From a positive view, we are already see- two development sites overseen by GTC, than 1% this year. Further, unemployment ing an interest in logistics centres in Croa- who does not rule out proceeding with the has hit 20% and real estate investment vol- tia, office space in Zagreb from new interna- development of at least one of these.  HB ume has been low, with a limited supply tional players and tourism. We can expect a Reavis plans to develop a EUR 60 million, of investment grade product. With regard major turn in the economy in 2015 and not 34,000 sqm office tower in Zagreb sched- to the development process, Croatia has a before. Obstacles to change remain the slow uled for handover in 2014. This year, Sky reputation for bureaucracy and unpredict- administration system and corruption,” said Office complex in Zagreb is also due to ability and the various market sectors suffer Managing Director of Colliers Interna- receive a second tower. from a lack of visibility. tional Croatia, Vedrana Likan, comment- “In the short term, people will be enthu- ing on EU accession. In general, it is hoped that EU mem- siastic about joining the EU and the event bership will improve sentiment towards will be a big party. The reality will hit when Since 2004, regional investors have the Croatian markets. “First of all, acces- we realise that nothing major or instanta- been active on the Croatian market, with sion to the EU should change the percep- neous will change for the Croatian econ- a number of acquisitions and develop- tion of the Croatian market and increase omy and real estate and construction mar- ment projects. Further, developers such as investor interest in quality investments. If kets are a large component of this. From Immorent, GTC, TriGranit and HB Rea- the government manages to implement 2013/6–7. | www.resourceinfo.hu

 REsource increase sales volume and also put positive ANALYSIS upward pressure on rental levels. However,new legislation regarding the promotion of consumption, which strongly affected retail this indicator is has not yet shown signs ofinvestment and the law on strategic invest- trade performance. Prime office yields are recovery for 2013.ments then 2013 could bring some positive put at 8.5% and industrial yields remainchanges in the level of direct foreign invest- unchanged at 10.5%. However, yields, char- According to some pundits, investors’ments. EU accession should improve busi- acterised by low liquidity, face uncertainty interest is expected to move from the con-ness sentiment and bring changes in inves- in the current market environment. struction of office space and shopping cen-tors’ perception of Croatia,” says Likan. tres towards hotels and other service-related “EU accession will make retail some- real estate activities. Naturally, there are sig- With the implementation of government what more favourable, as there will be no nificant opportunities for development andinvestment measures in Croatia, expected customs tax.  This should also give a cer- investment along Croatia’s Adriatic coast-GDP growth is forecast to help solidify cur- tain level of comfort to retailers look- line. For example, Hypo Alpe-Adria-Bankrent yield levels. “I would put yields at 7.5- ing to enter the market. In the office sec- has appointed JLL Hotels & Hospitality8.5% for prime office and retail and 9.0- tor, there will also be an impact in the sense Group to sell its 380-room Le Méridien Lav10.0% for industrial.  However, it is only that there should be an increase in activity Hotel (as well as the adjoining resort andwhen we have seen some transactions take for many companies, which will result in a marina spanning 4.4 hectares) located onplace that we will really know where yields need for more office space. Perhaps the big- the Adriatic coast. Another Croatian groupare at,” commented Arn Willems, Country gest change will be that more institutional is looking for international investors andManager at GTC Croatia. investors will start to take Croatia seriously developers for a massive leisure, residential, into consideration when deciding where to and hotel complex close to Dubrovnik. The According to Colliers International, invest, which should lead to more liquid- proposed first phase would develop aroundprime yields in retail rose to 8.5% due to the ity on the investment market. This means 1 million sqm of real estate space.depressed retail sector and drop in private that we will see more property (shopping centres, office buildings, logistics parks, However, not everyone is convinced. hotels, etc.) exchanging hands more reg- Tim Norman, Chief Executive of Europa ularly which creates a ‘healthier’ market,” Capital Emerging Europe sees some red explained Willems. flags for the development process. “All real estate in Croatia is overpriced, although The key challenge facing the retail indus- there are possibilities in logistics and the try is how to deal with the abundance of coastline needs to be developed. However, supply brought on by the rapid develop- having looked at this seriously ourselves, ment that took place in the previous decade the planning laws are so complicated that, as well as the sharp decline in consumer even if you can get a project that follows all spending and growth that followed. This the rules, you could still find that there is predicament is already leading to fierce sufficient corruption to stop you.” competition for tenants between landlords and the balance of power during negotia- The logistics market remains subdued, tions has shifted dramatically in the favour as the only significant transaction last year of tenants. The retail market will be mostly was an 18,000 sqm project located near driven by positive expectations regarding Zagreb, developed by Immorent and deliv- disposable income growth, which would ered to Immopark. However, EU acces- sion will be coupled with the entry of new retailers and cargo. Distribution players could act to stimulate the industrial mar- ket, increasing its appeal to foreign inves- tors and operators. “Obstacles that are commonly associated with the investment market in Croatia are high taxes, various bureaucratic obstacles such as obtaining permits, binding legal opinions, as well as the high perception of corruption in Croatia. However, changes are expected to bring positive changes in investment activities in the following years,” concluded Likan. www.resourceinfo.hu | 2013/6–7.

REsource ANALYSIS Hungary has become Slovenian drop is certainly not yet over. On the contrary, the Czech Republic’s credit a Baltic State activity is growing, despite the recession. This intermediate group includes also Slo- Similar to the Baltic States, Hungary is far behind even in the imagi- vakia where, similarly to the Czech Repub- nary regional competition for bank loans. In the other countries, lic, corporate lending is still at 2008 levels. everything is a bit less: less Forex debt, less government burden, The third (“lucky”) group includes Bulgaria, and a slighter, more modest decline in domestic lending activity. Romania, and Poland. In these countries, the situation started to deteriorate only in IST VÁN PALKÓ 2012, hand in hand with the slowdown in economic growth. Despite the slowdown, Corporate lending: the region by the scarcity of bank credit, clearly the banks’ corporate loan portfolio is 13-17% divided in three parts consequence of parent banks’ deleveraging. higher today than it was before the crisis. But, in fact, this split is not only typical in The question as to whether it is that a credit Based on their corporate lending activ- this region - lending activity in the euro boom would set off economic growth or, ity during (and after) the crisis, countries zone is falling in the periphery countries rather, it is the other way round is a classic can be divided into three main groups. (the places hit hardest by the crisis), while ‘chicken or the egg’ problem. The region The first group includes the Baltic States it is actually increasing, albeit moderately, could soon become an interesting labo- and Hungary. Here, corporate lending in core EU countries. ratory, as the picture, in regards to GDP activity has dropped durably and clearly: development and lending activity, is quite the credit portfolio is nearly one fourth of In most countries across the region, diverse. In any case, it’s safe to say one what it used to be five years ago. The sec- credit conditions tightened dramatically thing about Hungary: climbing out of the ond group, consisting of the Czech Repub- between 2008 and 2009. The alleviation recession, which Q1 2013 data suggests is lic and Slovenia, shows a moderate decline, in 2010 was followed by a recent, more now happening, won’t be attributed to the yet both with very different timing. In the moderate tightening of the lending reigns. resurface of lending activity. Capital loans Czech example, a significant fall was regis- Conditions for corporate loans have not are still at their lowest levels here in Hun- tered between 2008 and 2010 and, in Slo- tightened considerably during the last few gary and the investment rate is currently venia, this happened only after 2011. The quarters (except in Slovenia). Slovenian slightly above 15%, which is the average for Slovenian banking sector is in a transi- and Romanian banks have the strictest the EU’s periphery countries. The drop in tional stage: the sector still has privatiza- policies regarding clients: Attributed to the domestic demand is further exacerbated tion and portfolio cleaning ahead, thus, the elevated credit losses, credit denominated in the domestic currency hold the highest premiums (around 4% or higher). Slovenia is then followed by Hungary, where cor- porate lending premiums stand at around the EU average. Generally, companies in 2013/6–7. | www.resourceinfo.hu

 REsource Hungarian problems, arising from Forex relatively stringent credit conditions, have ANALYSIS loans, are well known. Similar problems all forced banks to increase margins. As athe region can obtain credit in their local are not observable in other countries, or to result, the premium on new housing loanscurrency (and in Euro) for similar or lower far lower extent. Consequently, other gov- (calculated based on the total cost of credit)interest rates than they could before the ernments have been more patient. Mean- is almost 5% higher than the base rate. Thiscrisis (the decrease is particularly true for while, Hungary removed almost one fifth figure is around 3% for the euro zone and,Hungary, as the base rate was cut several of its mortgages, causing banks to suf- in fact, throughout the region. To compare,times). However, non-price related condi- fer HUF 260 billion in losses with its loan the average total cost of credit in the localtions are much more restrictive than they repayment option. Therefore, it is worth currency is around 10% in Hungary, 4% inused to be half a decade ago. Collateral- filtering this specific impact from the the Czech Republic and in Slovenia, and 5%based lending has clearly taken a fall, as a regional data. in Slovakia.company’s cash flow generating ability hasbecome the top priority for banks. Accord- Unlike in the corporate lending sector, Different bank fatesingly, the number of loans related to prop- Bulgaria and Romania are not the best per-erty-based projects is insignificant for a formers in retail lending. Poland, however, Banks’ balance sheets well reflect theirmajority of the countries in the region. maintains an outstanding performance, lending activity. The once dominant Aus- although growth has slowed down there trian banks (Erste and Raiffeisen) haveRetail Loans: Hungary tops also. Slovakia is also performing well. Since been left with stagnant or moderatelythe price charts the introduction of the Euro, the popula- decreasing credit portfolios in the last tion enjoys the lowest interest rates in the quarters. Analysts express concerns aboutIn regards to retail lending, the picture is euro zone. In this extremely torn market, their capitalization, as it might limit theirsomewhat different as its stages of devel- the Czech Republic, Bulgaria, and Roma- opportunities for dynamic growth. Nev-opment were already rather dissimilar nia have been stagnant since 2008 (and Slo- ertheless, from time to time, acquisitioncountry-to-country before the crisis. The venia since 2011). In these countries, cus- rumors, about how the above-mentioned tomers pay back roughly the same amount banks are supposed to be the buyers in of credit as they take out. In recent years, the transactions, take flight. In fact, the repaid loans in Hungary amount to HUF scarcity of credit on the market squeezes 300-400 billion more than newly taken ones OTP Bank’s Hungarian activity as well. Its do. Hungary sits somewhere near last place above-average margin and consumer lend- in the region, alongside the Baltic States. ing programs that it launched throughout the eastern markets have made the bank In terms of lending conditions, the Hun- resistant to domestic constraints and, thus, garian processes are also considered to be to the resulting credit losses. Czech and unique. The non-performance loan ratio Polish banks, both focusing on one market, being above 18%, the bank levy, the early are performing well and their profitability repayment option, the over exposure in is surprisingly stable compared to Hungary. Forex loans and the general tightening ofChanges in outstanding corporate loans (October 2008 = 100, Changes in outstanding household loan (October 2008 = 100, exchange rate adjusted) exchange rate adjusted)120 Slovakia 160 Slovakia Slovenia 150 Slovenia 140110 Bulgaria Bulgaria 130100 Poland Poland Hungary 120 90 110 Hungary Czech Rep. 100 Czech Rep. 90 80 Romania Romania Euro Zone 80 70 70 Euro Zone Baltic States Baltic States SOURCE: MNB, RESOURCE SOURCE: MNB, RESOURCE3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 www.resourceinfo.hu | 2013/6–7.

REsource SPONSORED ARTICLE The FHB Home Price Index – A unique service for Hungary Why is the FHB Home Price Index a unique service on the Hungarian residential market? How does this index contribute to increased transparency of the residential real estate market? Which market players stand to profit the most from this new service? The FHB Home Price Index is Hungary’s first trans- ably reports on the mood of the sector as well as the macro economy were responsible for this action-based, residential real estate price index. A on the basic residential market processes in play trend. The population’s disposable income grew unique feature of the FHB index is that it is the and the changes in the overall index for the coun- by 46% during this period and preparations for first indicator resource that is based on transac- try. In this way, this index assures a significant the home subsidy system increased positive tional prices. In short, it displays changes in Hun- increase in Hungarian residential market trans- expectations towards the residential market. It garian used residential property transactional parency in, and through, its data. must be noted, however, that it was not only res- prices from the year 1998 to present, provided in idential prices that increased in Hungary during quarterly breakdowns. FHB’s service is more than your typical national this period, but inflation clocked double digits residential price index. In addition to being a and consumer prices grew by 30% within these The real estate sector traditionally struggles nationwide index, the FHB publishes supplemen- three years. with transparency problems. For one, compared tary quarterly reports offering its clients detailed, Annual change of the FHB index in nominal terms and FHB Index from Q1 2000 to Q4 2012 deflated by consumer price index (%) included (2000 = 100) 50 220 FHB Index nominal FHB Index real 40 200 30 180 20 160 10 140 0 120 -10 100 80 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1Q 00 3Q 00 1Q 01 3Q 01 1Q 02 3Q 02 1Q 03 3Q 03 1Q 04 3Q 04 1Q 05 3Q 05 1Q 06 3Q 06 1Q 07 3Q 07 1Q 08 3Q 08 1Q 09 3Q 09 1Q 10 3Q 10 1Q 11 3Q 11 1Q 12 3Q 12 Source: FHB Source: FHB to the financial sector, the real estate market is tailored indices. These indices provide break- Residential prices continued their upward clearly less transparent. Lack of transparency is downs by area and/or type of property. Subscrib- trend from the beginning of 2001 on to end of demonstrated both in terms of average pricing ers who order this service will receive a detailed 2003. Yet, compared to the above scenario, it was levels and within the features of residential mar- picture of the current climate for any given seg- much more sedate with its average 11% increase ket transactions. All this stems, fundamentally, ment of the residential market, in accordance in value, when adjusted for inflation. Demand from the nature of the real estate market. Every- with their own special strategic business needs increased after discounted financing faced a revi- where you go the real estate market is amongst and areas of interest. talized supply market, once new home construc- the least transparent sectors. However, Hungary tion began increasing from 2001. By 2003, the sys- significantly lags behind the more developed From full speed ahead to full stop tem of subsidies had become untenable for the countries in this respect. budget and that is when the first stringency mea- The FHB Home Price Index covers residential mar- sures took effect and this also affected the homes Indeed, since no transparent index (based ket events from the past 15 years. With this ana- prices. on actual transactions) has ever existed in Hun- lytical data, we can divide the decade behind us gary before this point in time, the FHB Home into four distinct eras. The first period (from 1998 Tightening the subsidies system had an effect Price Index is truly a stopgap service. Players to the end of 2000) represents a radical increase on the residential market, too, with home values’ on the Hungarian market can now keep track of in both nominal and adjusted inflation prices. steep, upward trend finally breaking its course in the changes on the residential market, making Over a period of three years, the value of homes 2003 and, in the following years, only a 4% rate use of an index that provides statistics based on increased by 132% and their value, adjusted for of increase would be recorded. In other words, at actual transactions and compiled using transpar- inflation, almost doubled. Favorable changes in that point, the price increase was keeping pace ent methodology. The FHB Home Price Index reli- with the rate of inflation. Despite the reigning in 2013/6–7. | www.resourceinfo.hu

 REsource 3Q 00 Change of the FHB Home Price Index (Q/Q) Methodology 1Q 011.2 3Q 01 The FHB Home Price Index measures the 1Q 02 development of Hungarian residential 3Q 02FHB Index nominal FHB Index real real estate prices. The index is made up 1Q 03 of quarterly reports, starting with the first1.15 3Q 03 quarter of 1998. 1Q 041.1 3Q 04 Quarterly disclosures will also contain 1Q 05 data from the previous quarter. The first1.05 3Q 05 publication, released this October, con- 1Q 06 tains 46 data points – the last of which1 3Q 06 applies to the second quarter of 2009. The 1Q 07 value of the index is normalized using the0.95 3Q 07 average for the year 2000 (i.e., the aver- 1Q 08 age index value in 2000 is, thus, 100). The0.9 3Q 08 index is based on actual sales transaction 1Q 09 data from the residential real estate mar- 3Q 09 ket and was prepared by processing data 1Q 10 from over 800,000 residential properties 3Q 10located in over 3,000 Hungarian munici- 1Q 11palities from 1998 onwards. The source of 3Q 11this data includes FHB records as well as a 1Q 12database purchased from APEH (the Hun- 3Q 12garian tax authority) and from duty offices (prior to 2008). SPONSORED ARTICLE As not every single piece of property Source: FHB is sold every quarter, our observation is that – even if the transactional data isof the subsidies system, competition in lending The power of prediction complete – information often relates tomeant lenders were still able to maintain demand, a restricted sample from the real estateand the volume of loans granted, at levels similar The greatest advantage of FHB’s service package, stock and that sample is not necessarilyto the previous period, for a few more years. After in addition to its unparalleled collection of data, representative. In such cases, the devel-the subsidies were withdrawn, foreign currency is its equally exceptional market prognosis. Along opment of simple indicators (i.e., the aver-loans, with their lower interest rates, became with quarterly data, FHB also provides its clients age and median price) is affected by themuch more popular and, thus began the rise of with a range of residential market forecasts. A type of property in transaction during thethe Hungarian population’s foreign currency debt. one-of-a-kind service in Hungary, FHB considers given period (in other words, by the com-This long, upward trend was due to change course this as an essential tool for aiding its subscribers position of the sample). When comput-at the end of 2007 when, all of the sudden, news in making timely economic decisions. For sub- ing the FHB House Price Index, we man-of another development took the foreground: sev- scribers who are interested in a specific subsec- age to use a “composition effect,” a sort oferal important residential market indicators began tion or market sector, FHB also has the capacity hedonic method widely used within theto all point in the same direction, announcing that to design specialized research products, based on field. The composition effect is createdsupply was saturated, demand had decreased, individual client’s distinct and specialized needs. when there are changes in the regionalavailable income had, firstly, leveled off and was, These products can provide a company with fully distribution. If, for instance, there weresecondly, starting to decrease, and there were an detailed analysis on a specific period of time, a more transactions in Budapest during oneincreasing number of reports from abroad con- certain geographical area, and/or a particular certain period (as compared to other peri-cerning the end of the real estate boom. type of property. ods) then the hedonic method corrects for these. In FHB home index’s historic timeline, the max- Being able to accurately foresee future trendsimum value turns up in the first quarter of 2008, and predict changes in residential prices is espe-whence the gradual decline in residential prices cially important for players on the residential mar-begins. Compared to the to-date record high resi- ket, since both mid – and long-term the best busi-dential price levels, national averages were 8.6% ness decisions always involve keeping one steplower in the second quarter of 2008. The grad- ahead of the game. The service packages offeredual decline in residential prices took place along- by FHB can provide you with the most accurate,side comparatively lower turnover, which could reliable forecasts on future changes to residentialbe seen more in regards to the turnover for used process and market trends and we see this infor-homes, rather than in a decline in the number of mation as fundamental to any company’s futurenewly built ones. success.FHB INDEX ZSOLT MOLNÁR DR. GYULA NAGYURL: www.fhbindex.hu Vice-managing Director FHB Mortgage Bank Nyrt.E-mail: [email protected] FHB Real Estate Zrt. FHB Index Project ManagerDirect line: Phone: +36 (1) 452-9208 Phone: +36 (1) 452-5930+36 (1) 452-7999 Mobile: +36 (30) 748-3913 Mobile: +36 (30) 964-6087Address: 1082 Budapest, E-mail: [email protected] E-mail: [email protected]Üllői út 48. www.resourceinfo.hu | 2013/6–7.

REsource ANALYSIS All quiet on the Western front? While the macroeconomic outlook is far from promising, some European retailers are still planning further expansion in 2013. The available prime space is quite limited in the mature markets; thus, emerging markets offer far greater opportunity for expansion. With multichannel retailing becoming increasingly prominent, online shopping remains on par with store expansion as an important area of growth in 2013. BÁLINT NAGY T he macroeconomic outlook, also around 44% of retailers plan to open 10 Based on CBRE’s report, Istanbul was backed by the latest surveys, sug- stores or less. All in all, given the difficulty the most active European development gests that 2013 won’t be a year in accessing prime space in many markets, market last year. It saw the hand over of expansion for most retail chains’ Euro- most of these plans reflect an ambitious, of seven new centers, including Mar- pean locations. Research by CBRE indi- and yet still realistic, level of expansion. mara Park (94,000 sqm) and Trump Tow- cates that ambitions towards expansion ers (41,000 sqm). Istanbul will be the most have dropped most significantly in Italy, All quiet on the Western front? active development market in coming years Russia, Portugal, Hungary, and in Greece. with 32 centers currently under construc- Apart from Germany, only Oman was able Retail chains plotting future expansion tion. Europe’s other highly active develop- to improve its figures: 6% of retailers plan (such as global brands like the Spanish ment market is Russia. In St. Petersburg, to expand in 2013, compared to the 4% in clothing company Inditex) have a host new residential areas – complimented by 2012. of good opportunities available to them renovated road and rail links – are driving Reflecting its strong economy within in Europe. Across Europe, shopping cen- the shopping centre development market the euro zone, the most important target tre development increased by 10% year- forward, with half a million sqm now under for retailers in 2013 is Germany (54%). In on-year, now totaling 1.71 million square construction. Moscow has the largest the first half of 2012, twenty new interna- meters (sqm), and a large proportion of development pipeline, with 815,000 sqm tional brands entered the German mar- this is located in Eastern Europe. The fact due to be yielded over the next two to three ket with the luxury and high-end market that a substantial majority of new shop- years. In neighboring Ukraine, Kiev has sector providing most of the new arriv- ping centre developments in Europe are eight centers, totaling 445,000 sqm, under als, including Paule Ka, Belstaff, Stone located within the emerging markets is construction: attracting a record-high 40 Island, Loiza, Zadig & Voltaire, Tory greatly significant. Prime space is in short new international retailers last year, it is the Burch and J. Lindberg. In the CEE region supply in mature markets and retailers fourth most active development market in – where most retailers have at least partly are increasingly turning to these emerg- Europe. Scandinavian countries and Aus- given up their expansion plans – Poland ing, but increasingly promising, alterna- tria are also strong in new developments. (23%) is the most attractive destination, tives. followed by the Czech Republic (15%), Russia (12%) and Romania (9%). Hun- gary (5%) lags significantly behind, rank- ing above only Slovakia (4%), Bulgaria (3%) and Serbia (3%). Although 2013 won’t be the year of Euro- pean expansion, those brave few setting course for expansion have very ambitious plans. Around 20% of retail businesses plan to open over 30 stores and this, compared to the 25% of retailers from last year, this is slight decrease. However, 33% of retail businesses plan to open 11-30 stores this year, which is more than last year. Further, 2013/6–7. | www.resourceinfo.hu

 REsource There are, however, markets that are ANALYSISsimply not doing well. In Hungary, forinstance, practically nothing is being built. geographic expansion via the online mar- store and book-trade sector and specifi-\"The economic situation is critical in East- ket. Increasing web shops’ product range cally for the electronic books market. Theern Europe, not many new brands are was a top priority in 2012. biggest battle is clearly preparing to takeplanning to enter the market; Hungary is place on the electronic stores market, asnot the target for large-scale expansions,” Online sales, however, are a big chal- the price advantage of global supply chan-commented Head of Retail at CBRE Buda- lenge for global retail brands. The compet- nels is clear. Domestic electronic stores,pest, Anita Csörgő. According to Csörgő, itive advantage and experience of e-com- neither traditional nor online stores, canthe situation is much better in the Czech merce companies is clear. A good example hardly compete with their prices.Republic, Slovakia, Poland, or even in is Amazon, whose global expansion hasRomania. In these countries, apart from caused other international brands quite a Fashion brands are Europe’s traditionalhaving more developments, construction headache. Amazon has established its first strong bastions, as traditional on-siteleases are much more convincing. The European warehouses in the UK, France, store purchasing is still highly practicedHungarian situation, however, still repre- Germany, and in Italy. Recently, they have amongst local consumers. In addition,sents good opportunities for local brands. established their first warehouse in the impulse purchases continue to be theLow consumption and high vacancy rates CEE region near Bratislava; a clear sign exclusive privilege of traditional shops.beat retail rental prices down. This could they have intentions for regional expan- Thus, for fashion brands, online sales arebe a market breakthrough point for the so- sion. Currently, their Czech, Polish, and complementary to traditional sales rathercalled \"pop-up stores,\" mostly represent- Slovakian markets, are all supplied from than their replacement. However, struc-ing local brands. here. According to recent reports, the tural changes are inevitable. The speed of company is planning to enter simultane- these changes is largely dependent on howAre online sales the future? ously the Hungarian, Croatian, and the quickly online companies can expand and Romanian markets in 2013. on the available marketing budget. Rec-Multichannel strategies are becom- ognizing this, most of the global fash-ing increasingly important for European The expansion of Amazon and other ion brands will focus on increasing theirretailers. Alongside the opening of new global electronic companies can create online market share in the future.stores, online sales will also be key in 2013. anomalies, especially for the electronicThe increasing importance of multichan-nel sales is no surprise, as the popularityof the new media and of social network-ing sites clearly back it up. With the helpof digital tools, consumers can be reachedeasier. A more direct contact establishedbetween consumers and retailers can notonly build their brand, but also build up anassociated lifestyle branding. CBRE's sur-vey shows that 40% of retailers this year(compared to last year’s 28%) are planning www.resourceinfo.hu | 2013/6–7.

REsource ANALYSIS The whole region can not lumpedbe together The prolonged crisis well demonstrates that countries in the CEE region The prolonged crisis has not even can not be lumped together. While some countries – hit by the first spared Poland, a country thought to be waves of the crisis – are slowly recovering, others (considered, thus far, crisis-resistant. Poland was the only coun- the crisis-resistant role models) are even edging back in decline. In any try in Europe that got through the crisis case, it can be said that, in the years to come, this emerging European without a recession and, due to its dis- region won’t be seeing another boom. tinguished result, they started to regard Poland as one of the core countries of PIROSKA KÁDÁR the EU. It seems, however, that Poland’s dynamic growth has come to a close; the T he first waves of the crisis ment planned to stimulate the economy economy’s performance was stagnant exposed the region’s vulnerable by releasing the budget for few years. The last year, with Q1 GDP growth only 0.5% spots and clearly exhibited the crisis, however, did not take the expected higher compared to the previous quarter. differences between its parts. For example, V-shape as anticipated, but rather formed In comparison, Polish growth in 2011 had in 2009, the Hungarian economy’s perfor- a wide-lying U. As a result, Slovenia is now been above 4%. mance shrunk by nearly 7% and the Slove- forced to enforce long-delayed reforms nian one by 8%. Already back then, Hun- and engage in fiscal tightening. Their debt More surprisingly, the Czech economy gary had been enjoying IMF support and ratio has doubled and the economy is is also underperforming. In fact, last year Slovenia may be supported by the euro expected to remain in recession, not only its economy showed weaknesses similar zone’s permanent rescue fund, according this year but in the next year as well. Slo- to that of Hungary, where the economy to market speculations. Both the Hungar- venia has gone from being an exemplified shrank by 1.7% on average. The Czech ian and Slovenian real estate sector col- role model into one of the worst perform- economy shrank by 1.3%. Nevertheless, lapsed during the crisis. Slovenia pulled ers in the region. Furthermore, a local bank while a slow recovery is expected in Hun- through the first few years; the coun- crisis is also forecast: the Slovenian state, gary this year, the Czech economy expects try’s vulnerability was reduced by the fact which owned roughly 80% of the banking an additional 1% decline. It might be the that public debt was below 40% of the sector, has been forced to give up a few of GDP. Meanwhile in Hungary, public debt its banks and non-performing loans now was around 80%. The Slovenian govern- make up one quarter of the GDP. GDP relative to 2005 output level (%, 2005=100) GDP growth in 2012 and estimated growth in 2013 in selected CEE countries 140 Bulgaria 5 Czech Rep. 2012 2013 (estimated) 130 4 Estonia 3 2 Latvia 1 120 0 -1 Lithuania -2 -3 110 Hungary Poland SOURCE: EUROSTAT, RESOURCE 100 Romania Slovenia 90 Slovakia Croatia SOURCE: EUROSTAT, RESOURCE Q2 2005 Q4 2005 Q2 2006 Q4 2006 Q2 2007 Q4 2007 Q2 2008 Q4 2008 Q2 2009 Q4 2009 Q2 2010 Q4 2010 Q2 2011 Q4 2011 Q2 2012 Q4 2012 Slovenia Croatia Czech Rep. Hungary Bulgaria Slovakia Poland Romania Estonia Lithuania Latvia 2013/6–7. | www.resourceinfo.hu

 REsourceonly Visegrád country to remain in reces- industry is mainly driven by car produc- forecasts for some of the other countries ANALYSISsion. If we consider the broader region, tion. Automotive companies present in in the region are even more unfavorable.in fact, perhaps only Slovenia’s economy the Czech Republic are not performing The Romanian economy – slowly recov-might do worse. As it were, the Czech well. Czech economy is only expected to ering from the recession – is expectedRepublic is experiencing its longest reces- recover in the second half of the year. Pro- to grow by 2%. According to the baselinesion since the regime change. duction at the Toyota-Peugeot-Citroën scenario, the Slovakian economy should factory – located about 30 km from expand by only 1%. The pre-crisis growth What are the reasons behind the Czech Prague – dropped by one fifth. rates of 7-8% or above are not going toeconomy’s slowdown? The basic answer repeat themselves, not even in the fastestis that the Czech economy is strongly The Baltic States, included in the growing countries in the region.linked to the euro zone. Exports account broader interpretation of the CEE region,for approximately 80% of the GDP and are considered to have the highest growth Therefore, while the CEE region pre-most of these are sent to the EU. A decline potential in the coming years. They serves its growth advantage compared toin foreign demand hit the economy hard. are far from having escaped significant the developed countries, its countries stillYet, the main reason for the 2012 reces- losses (18-20%) during the crisis, how- consider this period a kind of “lost decade”,sion was the decline in consumption. ever, tough measures have made a rapid just as euro zone countries do. Yet, everyHousehold consumption decreased by restructuring possible. This time, unlike country will come out of this period –3% (year-on-year) due to the budget con- during the real estate balloon in the 2000s, characterized by an unsustainable pre-straints introduced by the government growth has not been overheated. Further- crisis situation followed by a sort of evolu-(i.e. increase in VAT). The drop in con- more, in 2011, Estonia was the first Bal- tionary adaption afterwards – differently.sumption was bigger only in the countries tic state to join the euro zone. Latvia is The economic policies employed in thethat were explicitly in crisis. This year, expected to join in 2014 and Lithuania, years ahead will significantly determinethe tables turned and consumption can too, in 2015. who will escape into the future and whoincrease, however, growth was dragged will continue to be trapped in the presentdown by the export figures. The Czech However, not even the so-called “Baltic day economic mire. Tigers” can expect growth above 4% and ADVERTISEMENT www.resourceinfo.hu | 2013/6–7.

REsource  Real estate developers in CEE Type of real estate development Where are you present in the region?LIST Company Company headquarters headquarters/ contact – phone number, officeregional retailheadquarters website, e-mail industrial, logistics(country, city) residential hotel Hungary Czech Republic Poland Romania Austria Slovakia other Company name Current main projects in the region and in Hungary – name, planned delivery year ABLON Real Estate Budapest, Hungary ü ü ü ü ü N.A. üüüü – – – P: +36 1 225 6600 Developer Kft. www.ablon.hu [email protected] AIG/Lincoln Kft. Budapest, Hungary ü ü ü – – The Quadrum Phase II., III. (HU) – 2015, 2018 ü – – – – – – P: +36 1 382 5100 www.aiglincoln.hu [email protected] Codic Hungary Kft. Brussels, Belgium üü – – – V48 (HU) – Q3 2015 ü– –ü– – – P: +36 1 266 6000 Margit Corner (HU) – Q3 2015 www.codic.eu Dózsa Office Complex (HU) – Q1-2 2016 www.v48.hu www.margitcorner.hu [email protected] P: +36 1 225 0912 ConvergenCE Budapest, Hungary ü ü ü – – N.A. ü – – – – ü – www.convergen-ce.com offi[email protected] CTP Humpolec, ü–ü– – CTPark Brno, CTPark Plzen, CTPark Ostrava –ü–ü–ü – www.ctp.eu Czech Republic ECE Projektmanagement Hungary, Budapest, üü – – – Árkád Örs vezér tere Budapest 1–2. üüü – ü – – www.ece.com (HU, Budapest) – 2013 [email protected] Budapest Kft. Germany, Hamburg Echo Investment S.A. Kielce, Poland üü – – – Mundo Center (HU) – 2015-2016 ü – ü ü – – Ukraine P: +36 30 429 2333, +48 41 33 33 333 www.echo.com.pl orsolya.stefankovits@ echo.com.pl offi[email protected] Goodman Group Brussels, Belgium Goodman Üllő Airport Logistics Centre (HU), – www.goodman.com Goodman Kraków Airport Logistics Centre (PL) , – – ü – – Pomeranian Logistics Centre (PL), Goodman Mlada ü ü ü – ü ü Boleslav Logistics Centre (CZ), Goodman Senec Logistics Centre (SK) Forum BC I (SK, Bratislava) – Q2 2013 HB Reavis Hungary Kft. Slovakia, Bratislava üü – – – River Garden II-III. (CZ, Prague) – Q1 2014 üüü – – ü Croatia P: + 421 258 30 30 30 Váci Corner Offices (HU, Budapest) – Q2 2014 [email protected] Gdanski BC I.-II. (PL,Wrocław) – Q2 2014 2013/6–7. | www.resourceinfo.hu

 REsource Real estate developers in CEE Type of real estate development Where are you present in the region? Company office headquarters/ retail regional industrial, logistics headquarters residential (country, city) hotel Hungary Czech Republic Poland Romania Austria Slovakia other LISTCompany name Current main projects in the region and in Company headquarters Hungary – name, planned delivery year contact – phone number, website, e-mailOrco Property Group Luxembourg, üüüüü Szervita Office Building (HU) – Q4 2013 üüü – – ü Slovakia, P: +352 264 7671 Luxembourg Złota (PL) – Q4 2013 Croatia, www.orcogroup.com Russia, [email protected] Bubenska (CZ) – Q3 2015 GermanyPenta Investments Bratislava, Slovakia Bory (SK), Bory Mall (SK), Čulenova (SK), Digital – www.pentainvestments.com Park (SK), Florentinum (CZ), Košice – Pereš (SK), ü ü – ü – Košice –VŠA (SK), Masaryk Station Investment – ü – – – – (CZ), Nová terasa (SK), Ružinov (SK),Tesla (SK), Waltrovka (CZ), Záhorské sady (SK)Portus Buda Group Zrt. Budapest, Hungary ü ü – ü – CDO – Calasanz Downtown Offices (HU) P: +36 1 488 7476 Inspired Garden Project (HU) ü – N.A. N.A. – – Serbia www.portusbudagroup.com Port@ (SRB, Zrenjanin) offi[email protected] Warsaw, Poland – P: +48 22 218 36 00 www.prologiscee.com Budapest, Hungary, [email protected] Prague, Czech Republic, – – ü – – Prologis ParkWrocławV DC2 (PL) – Q2 2013 ü ü ü ü – ü Bratislava, Slovakia, Bucharest, RomaniaRaiffeisen evolution Vienna, Austria 2nd Central – Office am Park (AT,Vienna) – 2013 P: +36 1 346 6400,project Floreasca City, Promenada Mall +43 171 7060development (RO, Bucharest) – 2013GmbH – www.raiffeisenevolution.com ü ü – ü ü Leninskiy Prospekt 119 (RU, Moscow) – 2013 ü ü ü ü ü – office@ Kerepesi Business Park, (HU, Budapest) – 2016 San Gally Park (RU, St. Petersburg) raiffeisenevolution.com Plößlgasse 15 + 17 (AT,Vienna) – 2013Shikun & Binui R.E.D. Budapest, Hungary Kamaraerdő residential project (HU, Budaörs), – P: +36 1 437 8376Hungary Amsterdam, Holland www.shikunbinui.hu Tükörhegy residential projekt (HU,Törökbálint), ü ü ü ü ü Méta street logistics project (HU, Budapest), ü ü ü ü ü – gyozo.gabor@ shikunbinui-red.com Búlcsú street office project (HU, Budapest), residential project (HU, Üröm)Skanska Commercial Warsaw, Poland Riverview (CZ, Prague) – 2014, Nordic Light – www.skanska.com/propertyDevelopment Europe (HU, Budapest) – 2015, Green Court Bucharest (RO, Bucharest) – 2015, Green Horizon (PL, ü ü – – – Lodz) – 2013, GreenTowers (PL,Wrocław) – 2013, ü ü ü ü ü – Malta House (PL, Poznan) – 2013, Atrium 1 (PL, Warsaw) – 2014, Green Day (PL, Wrocław) – 2014, Kapelanka 42 (Pl, Krakow) – 2014 Poznan City Center (PL, Poznan) – October 2013 Bonarka 4 Business Building D (PL, Krakow) – Q4 2013 Slovenia, P: +36 1 374 5600 www.trigranit.comTriGranit Fejlesztési Zrt. Budapest, Hungary üü – üü Torgoviy Kvartal extension (RU, Naberezhnye ü – üü – ü Croatia, [email protected] Chelny) – Q1 2015 Macedonia, Arena Office Park (HR, Zagreb) – 2018 Russia Emonika City Center (SI, Ljubljana) – 2015 ERA City (MK, Skopje) – 2015 www.resourceinfo.hu | 2013/6–7.

REsource  Real estate developments in CEE Name of real estate Country Location of real estate Name of real estate Total gross Est. monthly Est. time of Real estate developer/Leasing agent(s) development dvelopment developer size of the rent (€/sqm) delivery building(sqm) phone website, e-mail 2nd Central Office ParkLIST P: +36 1 346 6400 www.raiffeisenevolution.com Administrativní centrum +43 171 7060 office@raiffeisenevolution. Lomnickeho A Vienna, Austria Raiffeisen evolution 20,339 N.A. 2013 com CZ Prague, Czech Republic Green Cape International s. r. o. 7,000 N.A. Q1 2014 N.A. AP2 H Klapka street 4., Budapest XIII., Hungary WING Zrt. 114,802 N.A. prelease + 20 P: +36 1 451 4280 www.wing.hu month [email protected] Arena Office Park HR Zagreb, Croatia TriGranit Fejlesztési Zrt. GLA,55,000 N.A. 2018 P: +36 1 376 6500 www.trigranit.com [email protected] Artgen CZ Argentinská, Praha 7, Czech Republic PPF 22,040 13.5 Q4 2014 N.A. www.joneslanglasalle.cz Atrium 1 PL Warsaw, Poland Skanska Property Poland 18,000 N.A. 2014 – www.skanska.pl Aviatica CZ Radlická, Praha 5, Czech Republic Penta Investments 27,500 13.5 2015 – www.joneslanglasalle.cz Bartók Udvar Office Building H Bartók Béla út 105–113., Budapest XI., IB Irodaház Kft. office: 10.9-13.9 2015 Benkő Orsolya www.infogroup.hu Phase II. Hungary 32,000 werehouse: 5.9 P: +36 1 481 4522, +36 20 432 3846 shop: 13.9-17.9 BB Centrum Delta CZ Vyskočilova, Praha 4, Czech Republic Passerinvest 36,520 13.9-14.25 2014 – www.joneslanglasalle.cz Blox CZ Evropská 11 – 13, Praha 6, Czech Republic BPD Development 30,824 15.8 Q1 2014 – www.joneslanglasalle.cz Bonarka 4 Business (B4B) PL Krakow, Poland TriGranit Fejlesztési Zrt. GLA 37,000 N.A. D Building P: +36 1 376 6500 www.trigranit.com Borská Pole Q4 2013 [email protected] CZ U letiště 2/1074, NC Borská pole, 320 11 Catinvest 8,500 N.A. Autumn 2014 – www.joneslanglasalle.cz Plzeň, Czech Republic Bory Mall SK Bratislava, Bory, Slovakia PENTA Investments 55,000 N.A. Autumn 2014 – www.joneslanglasalle.cz Bubenská 1 CZ Bubenská 1, Prague 7 – Holešovice, Orco Property Group office: P: +420 221 416 311 www.bubenska1.cz Buda Palota Czech Republic 30,000 from 11.5-13 Q4 2015 [email protected] Budapesti Északi Városközpont retail: from 15-30 H Krisztina krt. 6–8., Budapest XII., Hungary WING Zrt. 25,000 N.A. prelease + 24 P: +36 1 451 4280 www.wing.hu month Jones Lang Lasalle [email protected] P: +36 1 489 0202 www.joneslanglasalle.com Váci út – Róbert Károly Körút corner, Alpha Tower Kft., Beta Tower Kft. 180,000 N.A. Q1 2017 P: +36 1 346 7161 [email protected] H Budapest XIII., Hungary (Carion Group) [email protected] CDO – Calasanz Downtown H Váci street, Budapest, Hungary Portus Buda Group Zrt. 21,000 5-18 N.A. P: +36 1 488 7476 www.cdo.hu Offices [email protected] 2013/6–7. | www.resourceinfo.hu

 REsource Real estate developments in CEEName of real estate Country Location of real estate Name of real estate Total gross Est. monthly Est. time of Real estate developer/Leasing agent(s)development dvelopment developer size of the rent (€/sqm) delivery building(sqm) phone website, e-mailCentrum Krakov Murmanská 1475, Praha 10, 100 00, DTZ: Ptera Macháčková LISTCity Home Czech Republic +420 605 296 541 CZ Centrum Krakov a.s 14,000 5-40 Q3 2013 [email protected] H Mester u. 83., Budapest IX., Hungary Nanette Real Estate Group 23,500 N.A. C Building P: +36 1 472 2828 www.nanette.hu Q2 2013 [email protected] West Phase C1+C2 CZ Prague, Czech Republic FINEP CZ a.s. 24,000 N.A. Q4 2014 – www.citywest.czClark 1Copa Center Národní WING Zrt.: P: +36 1 451 4280 www.wing.hu, [email protected] Office BuildingCrystal H Clark Ádám tér 1., Budapest I., Hungary WING Zrt. 3,500 N.A. prelease + 18 Cushman &Wakefield: www.cushmanwakefield.com month P: + 36 1 268 12 88 info.budapest@ eur.cushwake.com CZ Prague, Czech Republic Copa Centrum Národní s.r.o. 16,200 N.A. Q3 2014 P: +420 221 017 111 www.copa.cz H Búlcsú street, Budapest, Hungary Shikun & Binui R.E.D. Hungary 17,000 12 2015 Győző Gábor www.shikunbinui.hu P: +36 1 437 8376 gyozo.gabor@ shikunbinui-red.com CZ Vinohradská, Praha 3, Czech Republic GES Group 13,648 16.5-17.5 2014 – www.joneslanglasalle.czDózsa Office Complex H Dózsa György út 144-148., Budapest CODIC Hungary Kft., 40,000 14.5 Q1-2 2016 P: +36 1 266 6000 www.codic.eu, www.v48.huDuna Passage XIII., Hungary Pesti Házak Zrt. [email protected] PalaceEMONIKA City Center H Kvassay Jenő road 1., Budapest IX., WING Zrt. 220,000 N.A. N.A. P: +36 1 451 4280 www.wing.hu Hungary [email protected] H Bajcsy-Zsilinszky road 78., BudapestV., Horizon Development 14,500 16-21+VAT December 2013 P: +36 1 473 1209 www.eiffelpalace.hu Hungary www.horizondevelopment.hu SLO Ljubljana, Slovenia TriGranit Fejlesztési Zrt. GLA 110,000 N.A. 2015 P: +36 1 376 6500 www.trigranit.com [email protected] CZ 5. Května, Praha 4, Czech Republic Erste Group Immorent 31,691 14.9-16.5 N.A. – www.joneslanglasalle.czERA City MK Skopje, Macedónia TriGranit Fejlesztési Zrt. GLA 55,000 N.A. 2015 P: +36 1 376 6500 www.trigranit.com [email protected]ébet Irodaház„A”building H Erzsébet királyné útja 1/c, Elsbet Ingatlan-fejlesztési 9,700 10-12 May 2014 P: +36 1 428 6070 [email protected] Budapest XIV., Hungary és – hasznosítási Kft.FEI CZ Černoviská terasa, Brno, Czech Republic CTP industrial: 25,000 N.A. Q1 2014 DTZ: Martin Šumera [email protected] office: 10,000 P: +420 602 224 102Floreasca City, Promenada Mall RO Bucharest, Romania Raiffeisen evolution 65,365 N.A. 2013 P: +36 1 346 6400, www.raiffeisenevolution.com +43 171 7060 office@ raiffeisenevolution.comFlorentinum CZ Na Florenci 19, Praha 110 00, Penta Investments office: 49,000 19 Q2 2014 DTZ: Pavel Domalewski [email protected] Czech Republic retail: 8,000 P: +420 736 109 313 www.resourceinfo.hu | 2013/6–7.

REsource  Real estate developments in CEE Name of real estate Country Location of real estate Name of real estate Total gross Est. monthly Est. time of Real estate developer/Leasing agent(s) development dvelopment developer size of the rent (€/sqm) delivery building(sqm) phone website, e-mail Forum Business CenterLIST Prievozská/Bajkalská Street, Central Martin Marko www.hbreavis.com, Business District, Bratislava, Slovakia SK HB Reavis 18,648 12.45 7/2013 P: +421 908 729 331 [email protected] Friday CZ Lomnického 13, Praha 4, Czech Republic Budějovická 377 7,800 N.A. Q3 2014 – www.joneslanglasalle.cz Futurama Business Park CZ Sokolovská 136, Praha 8, Czech Republic Erste Group Immorent 9,300 14-14.5 N.A. – www.joneslanglasalle.cz Phase 3 Galéria H Baross tér 7–9., BudapestVIII., Hungary Gestesa 27,000 office: 13-15 N.A. DTZ Hungary www.dtz.com/hungary retail: 20-25 P: +36 1 269 6999 [email protected] Gdański Business Center I. PL Taśmowa 7, 02-677Warsaw, Poland HB Reavis 47,012 18.5-20.5 Phase I.: 3/2014 Aleksandra Rafalowska aleksandra.rafalowska@ Phase II.: 5/2014 P: +48-22-203 4420 hbreavis.com Goodman Gliwice Logistics Centre PL ul. Eiffel’a, Gliwice, Poland Goodman 50,837 N.A. N.A. – www.goodman.com/pl [email protected] Goodman Gyál Logistics Centre H M5 – M0 Intersection, Gyál, Hungary Goodman 21,000 N.A. N.A. – www.goodman.com/hu [email protected] Goodman Kraków Airport PL ul. Komandosów 1, Modlniczka, Poland Goodman 141,499 N.A. N.A. – www.goodman.com/pl Logistics Centre [email protected] Goodman Łódź Logistics Centre PL ul. Lutomierska, Pabinice, Poland Goodman 26,902 N.A. N.A. – www.goodman.com/pl [email protected] Goodman Mlada Boleslav CZ Plazy – Mlada Boleslav, Czech Republic Goodman 57,800 N.A. N.A. – www.goodman.com/cz Logistics Centre [email protected] Goodman Poznań Airport PL ul. Batorowska,Wysogotowo, Poland Goodman 49,560 N.A. N.A. – www.goodman.com/pl Logistics Centre [email protected] Goodman Poznań Logistics Centre PL Niepruszewo, BUK, Poland Goodman 50,191 N.A. N.A. – www.goodman.com/pl [email protected] Goodman Senec Logistics Centre SK Dial’ničná cesta 18, Senec, Slovakia Goodman 180,000 N.A. N.A. – www.goodman.com/sk [email protected] Goodman Toruń Logistics Centre PL Łysomice k/Toruń, Poland Goodman 91,911 N.A. N.A. – www.goodman.com/pl [email protected] Goodman Üllő Airport H Zsaróka út 8., Üllő, Hungary Goodman 155,000 N.A. N.A. – www.goodman.com/hu Logistics Centre [email protected] Goodman Warsaw PL Emilianów,Warszawa, Poland Goodman 54,697 N.A. N.A. – www.goodman.com/pl Logistics Centre [email protected] Goodman Wrocław PL ul. Kiełczowska,Wrocław, Poland Goodman 51,768 N.A. N.A. – www.goodman.com/pl East Logistics Centre [email protected] 2013/6–7. | www.resourceinfo.hu

 REsource Real estate developments in CEEName of real estate Country Location of real estate Name of real estate Total gross Est. monthly Est. time of Real estate developer/Leasing agent(s)development dvelopment developer size of the rent (€/sqm) delivery building(sqm) phone website, e-mailGraphisoft Park Hungary 1031 Budapest, Graphisoft Park Kocsány János www.graphisoftpark.com LISTGreen Court Bucharest Záhony u. 7. Ingatlanfejlesztő Kft. H 88,000 15.5 continuous P: +36 20 661 2401 [email protected] RO Bucharest, Romania Skanska Romania Phase I. N.A. 2015 – www.skanska.ro 19,000Green Day PL Wrocław, Poland Skanska Property Poland 15,900 N.A. 2014 – www.skanska.plGreen Horizon PL Lodz, Poland Skanska Property Poland 33,000 N.A. 2013 – www.skanska.plGreen Towers PL Wrocław, Poland Skanska Property Poland 23,100 N.A. 2013 – www.skanska.plHaid Center Linz – Enlargement A Ikeaplatz 2-8, 4053 Haid, Upper Austria ECE Projektmanagement Austria GLA 43,000 N.A. Q4 2014 Birgit Haglmüller [email protected],and Refurbishment GmbH P +43 676 4353459 [email protected] Eva Büll P: +43 699 11356152Hungária 95 Business Park H Hungária krt. 95., Budapest XIV., Hungária 95 Business Park Kft. 26,000 N.A. 2015 – www.bernheim.hu HungaryIngersoll-Rand Equipment CZ Industrial zone Kolín-Ovčáry, Czech Goodman 28,501 N.A. August – www.goodman.com/czManufacturing Republic 2013 [email protected] Garden Project H Svábhegy, Budapest, Hungary Portus Buda Group Zrt. 9,000 N.A. N.A. P: +36 1 488 7476 www.portusbudagroup.com offi[email protected]řišská 16 CZ Prague, Czech Republic Immofinanz Group 6,000 N.A. Q4 2013 – www.jindrisska16.comJungmannova 15 CZ Prague, Czech Republic Immofinanz Group 6,800 N.A. Q3 2014 – www.jungmannova15.czKapelanka 42 PL Krakow, Poland Skanska Property Poland 12,200 N.A. 2014 – www.skanska.plKarcagi Ipari ParkKerepesi Business Park H Penny u.1., Karcag, Hungary Karcagi Ipari Park Kft. 18,000 N.A. continuous Infogroup Management Kft. www.infogroup.huKorona Gallery 11 Benkő OrsolyaLeninskiy Prospekt 119 saleable areaLibeňské doky Phase E1 15 ha P: +36 1 481 4522, +36 20 432 3846 H Budapest, Hungary Raiffeisen evolution project 65,000 2016 P: +36 1 346 6400, www.raiffeisenevolution.com development Kft. +43 171 7060 office@ raiffeisenevolution.com RO Calea Dorobantilor 239, 3rd Floor Echo Investment SA Phase I. N.A. Q1-2 2015 P: +40 374 200 384 www.korona-brasov.ro 010567 Bucharest, Romania GLA 35,000 [email protected] RUS Moscow, Russia Raiffeisen evolution 25,241 N.A. 2013 P: +36 1 346 6400, www.raiffeisenevolution.com +43 171 7060 office@ raiffeisenevolution.com CZ Czech Republic Karlin Group 9,000 N.A. Q3 2013 P: +420 226 251 080 www.karlingroup.cz www.resourceinfo.hu | 2013/6–7.

REsource  Real estate developments in CEE Name of real estate Location of real estate Name of real estate Total gross Est. monthly Est. time of Real estate developer/Leasing agent(s) development dvelopment developer size of the rent (€/sqm) delivery Country building(sqm) Malta House phone website, e-mailLIST PL Poznan, Poland Skanska Property Poland 15,700 N.A. 2013 – www.skanska.pl Dózsa György út 144–148., www.codic.eu Budapest II., Hungary Margit Corner H Codic Hungary Kft. 5 000 14.5 Q4 2015 P: +36 1 266 6000 www.margitcorner.hu Mega Mall Bucharest [email protected] RO On the junction of Pantelimon and Iancului Real4You 240,000 N.A. N.A. DTZ Echinox www.dtz.com/ro Streets, Bucharest, District 3, Romania P: 021 310 3100 [email protected] Metrodom – Mátyás tér 11. H Mátyás tér 11., BudapestVIII., Hungary Metrodom Kft. 7,167 N.A. October 2013 Media Services Kft. www.metrodom.hu, P: +06 30 522 2236 [email protected] Metrodom – Rozsnyay u. 33. H Rozsnyay u. 33., Budapest XIII., Hungary Metrodom Kft. 2,880 N.A. October 2014 Media Services Kft. www.metrodom.hu Mundo Center P: +06 30 522 2236 [email protected] Csömöri út – Bosnyák u., Budapest XIV., www.echo.com.pl Hungary H Echo Investment Hungary Kft. GLA 34,500 N.A. 2015-2016 P: +36 30 429 2333 orsolya.stefankovits@ echo.com.pl Na přikopě 14 CZ Prague, Czech Republic Immofinanz Group 4,200 N.A. Q4 2013 P: +420 221 883 270 www.immofinanz.com Nordic Light H Budapest, Hungary Skanska Property Hungary 26,200 sqm: 12.95-13.50 2015 (Phase I.) – www.skanska.hu Office Garden III. H Alíz utca 4., Budapest XI., Hungary Phase I. 19,600 + Phase II. 6,600 www.robertson.hu offi[email protected] GRT Group 18,500 12.5-13 2015 Robertson Hungary Kft. P: +36 1 327 2050 Office Islands CZ Prosecká,Tupolevova, Beranových, Praha 9, Hochtief Development 76,800 12.5 2015 – www.joneslanglasalle.cz Czech Republic Palác Stromovka CZ Prague 7 – Holešovice, Czech Republic Lordship a.s. 7,000 N.A. Q1 2014 P: +420 257 530 071 www.lordship.eu Palmovka Park II CZ Prague, Czech Republic Metrostav a.s. 14,500 N.A. Q4 2013 P: +420 266 709 110 www.metrostav.cz Pauler Ház H Pauler u. 15., Budapest I., Hungary OTP Ingatlan Zrt. 3,577 N.A. Q2 2014 www.otpingatlan.hu/ – ingatlan/Pauler_haz www.paulerhaz.hu Plößlgasse 15 + 17 A Vienna, Austria Raiffeisen evolution 8,870 N.A. 2013 P: +36 1 346 6400, www.raiffeisenevolution.com +43 171 7060 office@ raiffeisenevolution.com Polgár Ipari Park H Hajdú u. 40., 4090 Polgár, Hungary Polgár Invest Kft. 120,000 2.5-4 Q3 2014 – www.polgariparipark.hu [email protected] Pomeranian Logistics Centre PL ul. Kontenerowa 21, Gdańsk, Poland Goodman 515,761 N.A. N.A. – www.goodman.com/pl [email protected] Port@ – Cultural Center SRB Zrenjanin, Serbia Portus Buda Group Zrt. 3,000 N.A. N.A. P: +36 1 488 7476 www.portusbudagroup.com offi[email protected] POZNAN City Center PL Poznan, Poland TriGranit Fejlesztési Zrt. GLA 60,000 N.A. October 2013 P: +36 1 376 6500 www.trigranit.com [email protected] 2013/6–7. | www.resourceinfo.hu

 REsource Real estate developments in CEEName of real estate Country Location of real estate Name of real estate Total gross Est. monthly Est. time of Real estate developer/Leasing agent(s)development dvelopment developer size of the rent (€/sqm) delivery building(sqm) phone website, e-mailPrologis Park Wrocław V DC2 PL ul. Ryszarda Chomicza, NowaWieś Prologis 17,800 N.A. Q2 2013 P: +48 22 218 36 00 www.prologiscee.com LIST Wrocławska, Poland [email protected] Gardens H Váci út 80–84., Budapest XIII., Hungary Horizon Development 25,000 14.5+VAT N.A. P: +36 1 473 1209 www.horizondevelopment.huRiver Garden Office II-III. CZ Karlín, Prague, Czech Republic HB Reavis 26,046 14.25 – 14.50 Q1 2014 Ladislav Szabo [email protected] P: +420-225 001 900Riverview CZ Prague, Czech Republic Skanska Property Czech Republic 7,000 N.A. 2014 – www.skanska.czS9 Florenc CZ Sokolovská 9, Praha 8, Czech Republic J&T Real Estate 3,185 17.95 Q1 2014 – www.joneslanglasalle.czSan Gally Park RUS St. Petersburg, Russia Raiffeisen evolution 88,435 N.A. N.A. P: +36 1 346 6400, www.raiffeisenevolution.comSpectrum Office Corner H Hungary, Budapest 1191, Üllői út 180. RZT Kft. +43 171 7060 office@ raiffeisenevolution.com 8,775 11-12 built to suit Robertson Hungary Kft. www.robertson.hu P: +36 1 327 2050 offi[email protected] Office Building H Hungary, 1052 Budapest, Orco Property Group 5,400 N.A. Q4 2013 P: +36 1 880 7258 www.szervita.com Szervita tér 8. 4,700 office [email protected] Office Building CZ Budějovická/Sedlčanská, Praha 4, Czech Budějovická 377 4,667 15.5-15.8 July 2013 – www.joneslanglasalle.cz RepublicThe Mark RO Calea Grivitei 82–102, Bucharest, Romania s Immo GLA N.A. N.A. – www. 20,500 joneslanglasalle-romania.com Phase I.-IV. Phase II. 22,000The Quadrum Pase 2, Phase 3 H Hungary,Vecsés, Lincoln út 1. AIG/Lincoln Kft. N.A. 2015 P: +36 1 382 5100 www.aiglincoln.hu Phase III. [email protected] 2018Torgoviy Kvartal extension RUS Naberezhnye Chelny, Russia TriGranit Fejlesztési Zrt. GLA 53,800 N.A. 2015 P: +36 1 376 6500 www.trigranit.com [email protected] WING. P: +36 1 451 4280 www.wing.hu, [email protected] prelease + 18 Eston Int’l: P: + 36 1 877 1000V17 H Váci út 17., Budapest XIII., Hungary WING Zrt. 22,200 N.A. month Jones Lang LaSalle: www.eston.hu P: +36 1 489 0202 www.joneslanglasalle.com www.codic.euV48 H Váci út 48/e-f, Budapest XIII., Hungary CODIC Hungary Kft. 13,500 13.5 Q3 2015 P: +36 1 266 6000 www.v48.hu [email protected]áci Corner Offices H Hungary, 1138 Budapest,Váci út 150. HB Reavis Group 38,520 12.5-13.5 May 2014 P: +36 1 238 0359 www.vacicorneroffices.com [email protected]áci Greens H Váci út 117–119., Budapest XIII., Hungary Atenor Group 16,000 11.5-12.5 Q2 2013 P: +36 1 785 5208 www.vacigreens.hu [email protected] [email protected] Park Karlin II. CZ Prague, Czech Republic North-Line a.s. 9,500 N.A. Q1 2014 CBRE www.cbre.cz P: +420 224 814 060 Złota 44/46 Str ,00-120Warsaw, 68,400 P: +48 22 595 4900, Śódmieście, Poland +48 607 408 401Złota PL Orco Property Group 35,800 apartment N.A. Q4 2013 www.zlota44tower.com 973 commercial The list was compiled by REsource. No claim is made as to the accuracy of the information. The database was compiled based on information by real estate developer companies and real estate agencies as of June 4, 2013. www.resourceinfo.hu | 2013/6–7.

REsource V. kerület Váci utcában A kategóriás irodaházban irodák 75 m2 nagyságtól kiadók.LINE ADS VÁCI UTCA CENTER Méret Ár/ m²/hó Parkoló Légkondi Metró- Emelet Liftek Épült Felújítás Érdeklődni 1056 Budapest, közeli száma éve Váci u. 81. Tel: 411 0442 Budakeszi Kereskedelmi Park 9,600 € 10-13 166 ✓ ✓ 9 6 1996 2010 vaciutca@ vaciutcacenter.hu Size Price/sqm/ Parking Air cond’ng Metro Floor level Elevators Year built Year refur- Information month places close bished Offices to let in A-category office building in 5th district Váci utca, starting from 75 sqm. Eladó fejlesztési telkek – Budakeszi Kereskedelmi Park Beso- Beépíthetőség Legkisebb Kínálati ár Telek Összte- Közmű- Elérhetőség rolás zöld terület: rület ellátás Gksz:-3 Max. 30% 35% 27 550 2,700 – 68,800 ✓ +36 1 327 2050 HUF/m2 15,800 m2 m2 [email protected] Zoning Building Minimum Asking Sites from Total public Contact code footprint green cover price size utilities Budakeszi Commercial Park – development sites for sale ADVERTISEMENT PrCoEpEe/SrEtEy Forum September 24, 2013 Vienna, PwC Headquartes Partner Sponsor In association with 50 | 2013/6–7 | REsource IngatlanInfó www.resourceinfo.hu