RES_2014_4_web

September 2014 www.resourceinfo.hu HUF 750 Member of the GroupCEE Property Forum 201425 September 2014, Hotel Park Royal Palace, Vienna Moscow stormclouds cast a long shadowINTERVIEW ANALYSIS OPINIONS FOCUSAlan Vincent, Office develop- CEE: mix of CEE developersmanaging director ment boom on risks and and develop-of ConvergenCE core CEE markets opportunities ments

WHEN IT COMES TO YOUR OFFICE, WIEN NORDHOW AMBITIOUS ARE YOU? WIEN NORD Many factors make the critical difference in the quality of workplaces and company sites. That’s why CA Immo provides office environments that underpin your company’s aspirations to leadership. As a specialist in office properties in the big cities of Europe, we set the standard. For more information, please visit www.caimmo.com CA IMMO HUNGARY KFT. Rákóczi St. 70-72., Budapest H-1074, Hungary Phone: +36 (1) 501 28 00 / Fax: +36 (1) 501 28 01 Email: offi[email protected]

 REsource OPINIONS CONETENT 10 What are the most attractive markets in CEE? How have the different markets beenCOVER STORY developing after the crisis? What are the risks on the various regional markets?The whole world is concerned about the escalating Russian-Ukrainian conflict and What opportunities do the different pricingthe Cold War-like tension between the EU and Russia, and this dark cloud casts a long and yield spreads offer investors? Is it timeshadow on the CEE property markets’ performance as well. The markets of Ukraine for the real turning point for less favouredand Russia, formerly coming increasingly into the crosswires of property market markets? What are the most attractiveplayers, may be powerfully affected by the continuing crisis.The future is at the moment investment assets in Budapest? Leadinguncertain, the magnitude of the damage depending on how long the situation lasts. CEE experts share their opinion.Fallback, however, is already perceptible. 26 5–9 Brief news ANALYSIS INTERVIEWCOVER STORY 28–29 Time for the real turnaround All of the CEE markets have reached a level 10–12 Moscow stormclouds cast 29–31 Hungarian home loans: of maturity now, each market has its own a long shadow rewriting the past particular characteristic. As such CEE can no longer be seen as a homogenousANALYSIS 32–33 Some succeed, others don’t – investment location. It’s clear that the Residental markets in CEE Polish and Czech markets came out of the 14–15 Getting out of the woods crisis in better condition than Hungary, but 34–35 The Hungarian housing market comparing prime office investment yields 16–18 Improving macroindicators in is really reviving with Warsaw at 6%, Prague at 6.25% I see CEE countries Budapest as the most attractive location 38–39 City developments in CEE with comparative yields for the best offices 19–20 Spreading optimism in CEE at 7.25, Alan Vincent, B.Sc., MRICS, 39–40 A huge conference centre to be managing director of ConvergenCE belives. 21–22 Office development boom in built in Budapest Warsaw and Prague LISTOPINIONS 36–42 CEE developers and develop- 23–25 Risks and opportunities - What ments do CEE markets offer?INTERVIEW 26–27 Budapest: an attractive investment market CEE PROPERTY 21 FORUM ANALYSIS Vienna 2014 The Warsaw and Prague office markets are 25th September 2014 • Hotel Park Royal Palace, Vienna, Austria regarded as thriving despite some concerns over vacancies. Some say that Poland asMore information and registration: www.portfolio.hu/conference y [email protected] y Phone: +36 (1) 327 4086 an almost “core” destination and Warsaw office stock is expected to reach fivePARTNER: SPONSORS: million sqm within the next three years. At the same time the Budapest and Bucharest office markets are showing signs of recovery after a period of limited delivery. www.resourceinfo.hu | 2014/9.

REsource EDITORIAL Katalin Major HUNGARY’S LEADING, BILINGUAL REAL ESTATE MAGAZINE Editor-in-chief//[email protected] MEMBER OF THE PORTFOLIO GROUP Let’s see! What’s in store for the CEE? RE SOURCEIngatlanInfó After last year’s huge success, we are organising a conference together with RICS in Vienna for the second time, We are bringing 50 speakers – leading real estate experts For further news and analyses, visit our website! and opinion makers of the property world to share their views on the more and more www.resourceinfo.hu exciting Central Eastern European property markets. In our event 200 top level real estate decision makers, CEE real estate professionals, real estate executives from resourceinfo newsletter Austria, the Czech Republic, Slovakia, Poland, Hungary, Bulgaria, Romania, Serbia and Croatia will be discussing what this region has in store for investors, real estate READ US DAILY//SUBSCRIBE@//www.resourceinfo.hu developers consulting firms.In honour of this event the current issue is dedicated to the Editor-in-chief Central Eastern European (CEE) coutries, which are offering more and more opportu- Katalin Major – [email protected] nities, but and also challenges. While the markets of the CEE region are of course devel- Contributors oping in different ways, the general picture shows that optimism is spreading in the Ákos Budai, Gergely Ditróy, David Lawrence, Bálint Nagy, István Palkó, region: while the Polish and Czech markets continue to flourish, we have finally hit and Tünde Madurovicz-Tancsics passed rock bottom in less favoured markets as well. Less favoured – so far: the RICS Advertising coordinator Commercial Property Monitor for Q2 2014 revealed that most regional markets, slowly Krisztina Barta but steadily, seem to be getting out of the woods. In most Central and Eastern Euro- Translator pean markets macroeconomic challenges influence real estate sentiment, but expecta- Adrian Bury, András Nagy tions are improving with a longer term outlook for capital values. This year is expected Copy editor to be the strongest since 2006 for the Polish investment market, and there is a real office McLean és Társa Kft. development boom in core CEE markets, despite some concerns of over development Photo and vacancies. At the same time the Budapest and Bucharest office markets are on the Lázár Todoroff, Shutterstock.com, MTI, Profimedia.hu way to recovery. It appears that international investors are once again beginning to trust Sales in the more peripheral markets of the region, and despite rating the risks as high, they Attila Bacsa – [email protected] are chasing yield. And yield diffeneces between core and peripheral CEE markets are Publisher persuasive: looking at prime office investment yields, for example, while Warsaw is at Zoltán Bán 6% and Prague at 6.25%, Budapest offers 7.25%. NET Média Zrt 1033 Budapest, Polgár u. 8–10., Hungary At the same time a dark cloud casts a long shadow on the region’s performance. The Tel: (+36-1) 327-4080, fax: (+36-1) 327-4081 world is concerned about the escalating Russian-Ukrainian conflict and the Cold War- E-mail: [email protected] like tension between the EU and Russia. The emergence of this crisis has a significant www.resourceinfo.hu influence on the property markets in the two countries as well, which were previously HU ISSN 1419-4392 on the upswing. The signs can already be seen. Our paper is regularly reviewed in the revived All rights reserved in connection with the copying and distribution of any part of REsource IngatlanInfó. NET Média PLC. obtains all the data, information and news included in REsource IngatlanInfó from reliable, verifiable sources. The data and information are checked before publication, to the best of our ability. In spite of all this, it is possible that news and information appears in REsource IngatlanInfó, which subsequently turns out to be erroneous. For this very reason we draw the attention of our readers to the fact that, should they wish to make economic or financial decisions on the basis of the published news and information, they should first of all check the adequacy and veracity of the information. NET Média PLC. disclaims all responsibility for damage resulting from the possible falsehood or inaccuracy of the published information. 2014/9. | www.resourceinfo.hu

 REsourceUnusual deal on the Budapest Optimism on the Hun- BRIEF NEWSoffice market garian property marketThe Budapest property investment mar- fessional consensus is well above the mar- The majority of real estate experts are nowket has been shaken up by a rather ket value of the office block. optimistic with regard to the future accord-unusual deal: the Hungarian National ing to the latest Market Sentiment Survey.Bank (MNB) has purchased a premium In an interview György Matolcsy, pres- It turns out from joint research by Eltinga,category, inner-city office building. Since ident of the Hungarian National Bank, Portfolio.hu and RICS that in the premiumAugust 1st the MNB has been the regis- spoke of a 6.5-7 percent yield level in segments of the office market, not only havetered owner of the recently transferred connection with the purchase of the rental fees reached the nadir, but they haveEiffel Palace Office Building, located at Eiffel Palace, which means that the cen- even begun to rise to an extent clearly visi-78 Bajcsy-Zsilinszky Road in the Inner tral bank really did pay a rather high price ble to the naked eye.City. The title deed attests that the cen- for a property. At least, market players dotral bank purchased the property from not usually pay so much for a Budapest Six months ago we reported that expertsEiffel Palace LLC., and at the same time office building nowadays. The 6.5-7 per- participating in the Market Sentiment Sur-this UniCredit Bank’s 28 million euro cent yield level certainly rates as very low vey resulting from collaboration betweenmortgage was cancelled, as was its right (i.e. expensive) in Budapest today. We do PICS, Portfolio and Eltinga are increasingof pre-emption. not know of a transaction in recent years optimistic with regard to the investment where the yield level fell below 7.5 per- market, with no-one now expecting dete- The MNB is at present in operation in a cent. This is corroborated by the joint rioration of morale. The optimism has con-number of properties, one of these being research of Portfolio and RICS and by tinued to rise in this present survey: accord-the Krisztina Boulevard office block individual significant open market trans- ing to more than half of the respondents,housing the former Hungarian Finan- actions in the recent past. the investment appetite on the domesticcial Supervisory Authority, for which the property market will improve. Based on therental agreement will presumably expire For that matter, this was not the first research, the Budapest yield levels continuein a few years, making it worthwhile for news in recent weeks about a prop- to be basically stable. Exceptions to this arethe institution to look for another loca- erty purchase by the central bank. The the lower category offices and retail proper-tion. Taking into account the present MNB bought a manor house located in ties. In the top premium category which canbusiness and yield environment it is not Tiszaroff for 415 million HUF, and at the be considered a reference point (top CBD -surprising that instead of concluding a end of last year the former headquar- Central Business District – building), 7.5new rental agreement, the central bank ters of an organisation for the safeguard- percent has been regarded as a stable con-has decided to purchase a property. ing of interests named the Hungarian sensus for a relatively long time. Association of Craftsmen’s Corporations The Eiffel Palace is an absolutely pre- (IPOSZ) came into the possession of In the more expensive segments of themium category office block in district V; the central bank – for 450 million HUF, office market, rents have already begunoriginally opened in 1893, the building according to press information. The four- to rise: according to the experts polled,was revitalised by Horizon Development storey building, however, on June 18th of rental fees have increased both in the topwith reconstruction launched in 2011. this year was passed on to its own, newly CBD office block and the premium non-The major tenant of the block is Pricewa- established educational-scientific foun- CBD office building categories. One ofterhouseCoopers, the office building hav- dation, the Pallas Athene Domus Scien- the most important findings of the pres-ing been let out to the extent of almost tiae Foundation. ent research is that rents are perceptibly70 percent according to the information increasing in the upper segments of theavailable. During reconstruction the exte- office market. A typical rental fee for therior of the building regained its original top CBD office buildings has increased byappearance, and the interior spaces, tech- 2 euros compared with the end of 2013, i.e.nical structure and building technology it has already reached the 15 euro level. Asystem have been renovated on the most change in the cycle is also indicated by theup-to-date principles. fact that typical rental fees have begun to depart from minimum rents, whereas in There is little information available to recent years precisely the opposite of thisthe public on the details of the transac- was observed.tion; according to an announcement bythe central bank the property was pur- On the retail market, however, the cor-chased for 45.3 million euros (almost 18 rection in the rental fees has not yet stopped,billion HUF), which according to the pro- the fall has continued over the last six www.resourceinfo.hu | 2014/9.

REsource BRIEF NEWS The south Klotild has changed hands before: in 2010 the local government sold it together with the Párisi udvar and 15 Szent István Square to one of the compa- nies of the SCD group – which has since gone bankrupt. But in the end the buyer did not pay the purchase price, and the deal fell through. HB Reavis sale in Prague months according to property analysts. KLOTILD PALACE The HB Reavis Group has sold the Prague Together with this it is worth emphasis- River Garden Office I office building to the ing that typical rents for top shopping cen- values with respect to the rental fees and Prvý realitný fond (PRF) managed by IAD tres are at the 2011 level, i.e. significant fee transaction yields in that the median rent is investment. reductions have not come about in the pre- divided by the median transaction yield for mium segment. This cannot be said, how- each category (top CBD office, city logistics Based on the transaction the office block ever, about retail parks and big box type property, retail park, etc.). This calculation may be valued at more than 50 million properties, where falls of 12 and 25 per- is performed for each category and various euros, which represents a derived yield of cent respectively have occurred in the past weightings are coupled with the categories, 6.5%. The River Garden Office I opened 3 years. In both categories of the logistics which represent their significance within in 2012, is located in the developing Kar- sector (premium out of town logistics real the whole property sector.) lin district of Prague and has around 19,500 estate, city logistics property) rents have square metres of rentable area. Utilisation continued to fall, in the former case reach- A Turkish investor has is 100% at present, thanks to tenants such ing a round 3 euro level, and in the latter the bought the south Klo- as Unilever, ADP, Monster Worldwide, 4 euro level has “fallen”. The fees in both cat- tild palace Alpiq, Tengelmann or HB Reavis them- egories are at a nadir at present. selves. The south Klotild palace has been sold; the Participants in the survey were also asked monument has come into the hands of a Plaza stop: still an issue about the results of the April parliamentary Turkish investor, the sale price being 2.15 elections. According to almost half of the billion HUF. The buyer is Melis Invest- The government is willing to make con- property experts the effect of the election ment LLC. belonging to the Özyer Group, cessions in the issue of the ban on build- result on the international opinion of Hun- and a hotel will probably be opened in the ing large new shopping centres (the so- gary is neutral, whereas it is positive accord- memorial building. Besides paying the pur- called plaza stop), in order to dispel the ing to around 40 percent. Less than 15 per- chase price, the buyer has had to undertake concerns of the European Commission. cent think that the election results will have to renovate the building completely within The Ministry of Justice has responded to a negative effect on opinion of the country. five years. all matters raised by Brussels on the plaza stop issue, according to which the govern- At the same time, the Budapest Com- The local government invited entries for ment is willing to change certain elements mercial Property Index (BCP) which aggre- an open, international competition in sev- of the regulation but continues to insist on gates the results of the study has fallen to a eral legs for the local-government owned the paragraph banning the construction of new low. A slight rise may have been reg- part of the Klotid palace, empty since 2009, shopping centres larger than three hun- istered in the first half of the year, but the and the present, third competition has dred square metres. Work on formulating present fall of more than 100 basis points been successful. The competition guide the modifications is already underway in has pushed the value of the index to under was purchased by four enquirers. Since its the Ministry for National Economy. 90. In contrast to the past three years, the foundation in 1948 the Özyer Group has fall was not caused by a reduction in rental been a group of companies in family hands, Before this year’s European parliamen- fees, but by the yield increase observed in which is the owner of seven hotels, and its tary elections, the commission launched the cheaper office market and retail seg- activities have been expanded to include infringement proceedings against Hun- ments. (The Budapest Commercial Prop- jewellery trade, property development, gary in connection with the restrictive erty Index (BCP) incorporates the median media and energetics branches. rules known as plaza stop. According to the European Commission the regulation 2014/9. | www.resourceinfo.hu

 REsourcerestricting the construction of shopping nomic College of the Budapest Region Tri- BRIEF NEWScentres larger than three hundred square bunal have been doing their work in onemetres is disproportionate, and in addi- M3 BUSINESS CENTER building, in the M3 office block owned bytion it is also considered problematic that CPI Hungary (formerly Ablon), as havethe minister for national economy and Környéki Törvényszék). the Budapest Region Administrative andnot an independent authority is commis- Besides the organisational units of the Labour Court, the Executors’ Office andsioned to decide on any possible exemp- the Penal Group. CPI Hungary is a mem-tions. According to press releases, the Min- Tribunal, housed until now in various ber of the CPI Property Group. Besidesistry of Justice sent a letter to the European buildings, the court of public administra- Ablon, CPI bought the Endurance realCommission at the end of July, and the reg- tion and labour will also move to the M3 estate fund in 2013, thus becoming oneulation may be altered depending on the Business Center. This 5900 square metre of the most active investors in the CEEresponse to this. Hungary is prepared to rental is the biggest new rental contract region. The company group manages morereview certain elements and conditions of of the year so far. Since 15 August 2014, than 610,000 square metres of retail area,the plaza stop if necessary, to discontinue the Civil Divisions of the first and second 407,000 square metres of office space, 17any possible disproportionateness and to instance of the Civil, Administrative and hotels (with 8,000 beds) and 212,000avoid even the appearance of offending EU Labour College and the Court of Company square metres of industrial and warehouselaw – announced the Ministry for National Registration and the Bankruptcy, Liqui- space in the region.Economy. dation and Litigation group of the Eco- Housing market isThe biggest deal catching upof the year The property market continues to be char-6000 square metres of office space in the acterised by high transaction volumes inM3 Business Center has been rented since the current year. 27 percent more resi-August by several organisational units of dential property changed hands in Augustthe Budapest Region Tribunal (Budapest than one year previously – as it turns out ADVERTISEMENT0DJ\DU7HOHNRP1\UWHODGrmVEmUHOKHWįLQJDWODQRN,URGDKg]DNWHOHSKHO\HNxGxOįNODNgVRNwww.strabag-pfs.huBudaörs Budapest, XI. Sopron Budapest XV.Gyár u. 2. Budafoki út 59. Széchenyi tér 7-10. Kert köz 20.)XQNFLrUDNWgUEg]LV )XQNFLrLURGD )XQNFLrLURGDmVWHFKQROrJLD )XQNFLrLURGDmVWHFKQROrJLDcSxOHWWHUxOHWP2 cSxOHWWHUxOHWP2 cSxOHWWHUxOHWP2 cSxOHWWHUxOHWP27HOHNWHUxOHWP2 7HOHNWHUxOHWP2 7HOHNWHUxOHWP2 7HOHNWHUxOHWP29LVV]DEmUOmV– 9LVV]DEmUOmV– 9LVV]DEmUOmVP2 9LVV]DEmUOmVP2 www.resourceinfo.hu | 2014/9.

REsource BRIEF NEWSfrom Duna House Transaction Estimates. Photo: János Marjai/MTICompared with the level during the years following the crisis, high transaction vol- umes continue. The number of sales tak- a building in a similar category before on VÁRKERT BAZÁR ing place in August fell slightly short of the the Budapest market. The Green House is preceding month, but this is a normal, sea- after all the premium product of a leading 2,500 sqm of exhibition space. The second sonal phenomenon. Sales of 8978 proper- European developer, with high utilisation phase included the construction of new ties were transacted in August. The volume and the latest green solutions. This market areas, the reconstruction of the royal gar- in the preceding month is thus 27% higher segment has been dominated almost exclu- dens and the completion of a new under- than the value estimated one year before, sively by foreign institutional investors for ground garage. which is remarkable. around the past 20 years. The domestic property market (has) suffered to a signifi- Transportation in the area is also being Based on Duna House estimates the total cant extent for about the last 6 years, from improved as part of the reconstruction pro- transaction volume for the current year is the fact that international (typically West- ject. Lánchíd utca was refurbished, a new approaching 64 thousand, which signi- ern European and North American) insti- pier for BKK boats was inaugurated and the fies a 16% growth compared with the same tutional capital disappeared on the clients’ opening of a new tram stop serving Várk- period of 2013. Based on the high forecasts side, which was generally explained by the ert Bazár is underway, while some nearby for September and the seasonally strong risks of the Hungarian market. roads and squares are still under construc- end-of-year months, it is increasingly cer- tion. The total cost of the reconstruction of tain that volume this year will approach or Although one swallow does not a sum- Várkert Bazár, which is expected to attract may even reach 100 thousand, which will mer make, Diófa’s acquisition must defi- 250,000 visitors each year, was HUF 11 bil- be the highest level on the property mar- nitely be regarded as a positive sign. On lion. ket since 2008. the one hand it suggests the possibility that Hungarian institutional capital may play a Starwood Capital A milestone on the more active role on the Budapest property has been shopping Budapest investment market in the future. On the other hand the in Poland market fact of the transaction is a positive message for the whole market, which is particularly Within the scope of one of the largest office The Green House office block of Skanska important in such an illiquid situation. market transactions in Poland in the year Hungary Real Estate LLC., which has also so far, the Ghelamco Central Eastern Euro- been awarded an international prize, has Várkert Bazár: opened pean office development firm has sold been sold. The new owner of the green for the second time three important office projects to a con- office building is the open-ended Torony trolled subsidiary of the Starwood Capital Real Estate Investment Fund under the The renewed Várkert Bazár opened for the Group global investment company. direction of Diófa Fund Management, reg- second time this year on August 29. Recon- istered as a member of the FHB Group. struction works on the long-neglected Of the three office spaces sold, two are building started in February 2013 and the located in the business quarter of War- The Green House is the sixth office Buda Castle’s newest attraction was briefly saw, the T-Mobile Office Park completed investment by Skanska in the Hungarian opened to visitors in April. The first phase in the May of 2013 and the £opuszañska capital. Located in District XIII, the build- included the renovation of the parts orig- (Łopuszańska) Business Park offer a total ing which was opened in the December of inally designed by Miklós Ybl, containing of 78,000 square metres of office space, 2012 offers tenants office space on 7 sto- and the third project, the Katowice Busi- reys and 17,800 square metres. The office ness Point opened in 2010, is to be found block which is rented out to the extent of in Katowice city centre. The popularity of 98 percent at present houses international companies such as the AVIS Budget Group, MSCI or the ABB, among others. Although the parties have not made details of the transaction public, rumour has it that the yield level of the deal worked out between 7.5 and 8 percent. The transaction could even be regarded as a milestone, as no institutional investor with a domestic background has purchased 2014/9. | www.resourceinfo.hu

 REsourcethe office blocks in question is shown by “B” category offices, the volume used by pri- high quarterly volume was also boosted by BRIEF NEWSthe fact that close to 100% of the offices are vate owners being 636,500 square metres. the transactions in excess of 5000 squarerented out. Each one also has a green rating metres which were concluded in the sec-(BREEAM), the T-Mobile Office Park being The office market vacancy index is at pre- ond quarter. The gross rental reachedthe first office park in Poland which could sent 17.6%, which means a fall of 0.9 per- 248,900 square metres in the first quarterboast of this recognition. This unprec- centage points for the quarter, and of 2.3 of 2014, which means a 71% increase inedented triple sale well exemplifies the percentage points over the year. At this demand compared with the same periodgrowing dynamic of the Polish market, as point, however, we must not forget to men- in 2013. 20 percent of the demand waswell as its increasing significance for inter- tion the performance of the complement of new contracts, expansions and pre-leasesnational investors. rented offices which may be more relevant represented an 11 percent proportion per from the point of view of the market, and type of contract, whilst 5 percent of theRecord letting on the which likewise fell compared with the pre- total demand was made up of private take-Budapest office market vious periods, though at the moment it is overs. The strongest rental activity was ranging well above 20% (21.9%). registered on the “Pest Central” submar-The full complement of offices in Buda- ket, where 34 percent of the gross rentalpest, including speculative buildings and With regard to the submarkets, the per- was realised.those in private ownership, amounted to formance of South Buda is once again the3,205,600 square metres in the second best (11.8%), whilst the highest vacancies It is particularly welcome news that thequarter of 2014. The BRF has registered the are still measured in the Budapest metro- strong performance for the quarter is high,conveyance of a new office block on Váci politan area (the agglomeration), where the resulting in a net absorption of more thanRoad. With the opening of the Váci Cor- proportion of vacant office space reached 46,000 square metres. This is one of thener Offices (21,100 square metres), the 31.9% in the second quarter of 2014. most important data points with respect tocomplete modern speculative complement the present and future of the office market,includes 2,569,100 square metres of “A” and The gross rental volume in the second which shows what the extent of expansion quarter was 191,720 square metres, which is really like, and whether there is genuine is an outstandingly high quarterly value. demand for the new spaces. The net rental also displayed a record high value, reaching 81,210 square metres. The ADVERTISEMENTwww.portfolio.hu/conference y [email protected] y Phone: +36 (1) 327 4086 20 conferences, 8000 participants annually, covering 7 branches of industryDomestic and regional economic and financial decision makers, CEOs and professionals High-level networking opportunity, unique professional content www.resourceinfo.hu | 2014/9.

REsource COVER STORY Moscoswtormclouds cast a long shadow TÜNDE MADUROVICZTANCSICS The Russian economy may be hit hard by the European and American sanctions. The markets of Ukraine and Russia, for- An important component of these is that merly coming increasingly into the cross- the accessibility of European and Ameri- wires of property market players, may be can credit markets has been restricted for powerfully affected by the continuing cri- the Russian state banks. This makes access sis. The future is at the moment, the mag- to longer term resources more expensive nitude of the damage depending on how for the financial institutions, and therefore long the situation lasts. Fallback, however, for the financing of the Russian economy. is already perceptible. This has indirectly increased uncertainly in connection with the Russian markets, thus Political uncertainty in Ukraine has been worsening the business environment. As increasing since the beginning of 2014. The a result of the Ukrainian conflict and the prime minister resigned at the end of Janu- sanctions, a larger measure of capital out- ary, the president Viktor Yanukovych and flow and a more volatile exchange rate have his government left the country, following been observed in recent times, which have which a temporary government was set up. also had a negative effect on the property Early elections were held at the end of May, market. and a new government was formed under the leadership of Petro Poroshenko. Besides In contrast to investments of record the political changes, Ukraine was com- magnitude in 2013, the Russian investment pelled to face numerous new challenges, and market significantly underperformed at after the loss of Crimea, fighting broke out in the beginning of 2014, although accord- East Ukraine. Sanctions were then imposed ing to 2013 data from Cushman & Wake- on Russia by Europe and the United States field it had previously been the 12th most because of its disputed role in the develop- attractive investment target. In the first six ment of the situation. months of the year the estimated invest- ment volume was approximately 1.2 bil- The emergence of this crisis situation may lion dollars, which is roughly 30 percent have a significant influence on the property less than in the same period last year. Even markets in the two countries, which were though last year was outstanding with previously on the upswing, and the signs regard to the data from the first six months, of this can already be seen. Great losses this result still gives food for thought, since could be suffered by the Ukrainian econ- numerous transactions were initiated at omy, which following the stagnation of last the end of last year, their completion slip- year has already experienced a fallback in ping through to 2014. According to Col- the first quarter of 2014, the real GDP of liers estimates, property investments for the country falling back by 1.1 percent com- the current year may fall back to half of pared with the level one year earlier. This those measured in the past three years, tendency is expected to have continued in not even reaching the level for the year the second quarter, though the actual data 2007. Overlooking present activity levels, will only come to light later. According to the investment sum by the end of the year the IMF forecast of July, the Ukrainian econ- could be 3.7-4 billion dollars, in contrast to omy could shrink by 6.5 percent this year. It the investment volume of more than 8 bil- is likewise bad news that domestic consump- lion dollars last year. tion is falling, but industrial production and investment activity have also fallen sharply. 2014/9. | www.resourceinfo.hu

 REsource In the first quarter it was domestic inves-MOSCOWand rental fees are beginning to come undertors who were principally active; they trans- pressure.acted around 80 percent of the investments, COVER STORYwith Finnish and Swedish players also mak- Everything depends on stabilisationing purchases. In the second quarter thebalance tipped further in the direction of The Russian property market has thereforedomestic buyers: with regard to the first half lost some of its earlier momentum, but weof the current year, only somewhat more must not forget that the Russian market hasthan 6 percent of the total investments may numerous advantages, even just due to itsbe linked with international players. size. Consumption is constantly increasing, incomes and the population are expanding Damian Harrington, MRICS, M.Sc; too, which may make the country attractiveRegional Director of Research & Con- to investors in the long term. A very impor-sulting, Eastern Europe Regional Team tant role with respect to the future, however,declared: at the start of 2014 they predicted is taken by how long the crisis takes to end.that a reduced regional investment volume Should the political and economic situationturnover would be plausible in 2014, as a stabilise, the Russian commercial propertydirect result of the Russia/Ukraine con- market may continue to count on the inter-flict. As of mid-year, this has become a real- est of international and domestic propertyity with most investors focused on Russia players. A protracted conflict, however, maydeploying a ‘wait-and-see’ mentality while cause the market further significant losses.there has been a weakening of international Existing as well as future sanctions mayinvestment sentiment towards the coun- unsettle the country’s economy, which willtry. Although Russian investment volumes also adversely affect domestic property com-have been lower in H1 2014 than previous panies, and cause foreigners to lose interestyears it is not all bad news. Owner occupiers in getting involved. It may be a warning signare taking the opportunity to buy assets – a that Russian investments are falling in spitenumber of office, retail and logistics/distri- of the fact that the volume of investments hasbution facilities having been acquired so far increased in other countries in the region:in 2014 – and some long-term foreign inves- to a highly significant extent in Poland, fortors have remained active. instance, but investors are also starting to return to Hungary. In a similar way to the previous year, theattention of investors in the first six months Árpád Török, CEO of TriGranit said aboutwas primarily focused on Moscow, 87 per- the situation, that in Russia they don’t see anycent of the property investments coming sign of decrease in retail turnover, mostlyto the whole country being registered here. only stagnation. The Russian domestic mar-The yields have not yet changed over the first ket is strong while the volatile economic envi-six months, but according to the July expec- ronment in Ukraine immediately broughttations of Colliers International, growth of down the willingness to invest. However, ithalf a percent is likely by the end of the year. seems like the retail chains that are present in Russia are holding back the realisation of As a result of the credit market restriction their expansion and network developmentit may be more difficult for property market plans. The trends of lending activity trendsplayers to find resources in the future, and show deterioration, and the ongoing conflictrefinancing may become more expensive. has already set off a decrease of internationalThe banks may think more carefully about investments and foreign bank loans.who to provide with loans, though goodproperty projects will hopefully continue In connection with the crisis and theto have access to credit. The sanctions may, future of the Russian real estate mar-however, also affect demand. The strictures ket Damian Harrington said: while Russiaon the credit market may also set back retail remains a blocked market for many interna-turnover, and in the case of the office market tional investors this will play into the handsthe slowdown may have a negative effect on of other CEE locations. Aside from theleasing. The vacancy rate may develop unfa- change in the distribution of capital acrossvourably in every property market segment, the region, there have been some other www.resourceinfo.hu | 2014/9.

REsource CÍOMVLEARPSSTZOTROYRI Domestic and international investors' in Russia (billion USD) 8 7 International Domestic 6 5 4 3 2 1 0 H1 2006 2007 2008 2009 2010 2011 2012 2013 2014 SOURCE: CBRE, RESOURCE KIEV direct impacts on the Russian market in par- vnia has been greatly devalued, which has whereas it is 11 percent in the industrial ticular. The depreciation of the ruble has had exercised a further significant negative effect property segment. a negative effect on tenants, especially in on the Ukrainian business environment. The retail whose core business implies costs are present attitude of investors is well reflected Downward pressure is weighing on rental denominated in foreign currency (including in the fact that thanks to the unstable politi- fees on the office submarket, the vacancy rate import of goods and rental rates) while their cal environment, very few investments were and rental fees will remain sensitive to the income is denominated in Russian rubles. concluded on the Ukrainian property mar- economic performance of the country in the Despite the appreciation of the ruble in June ket in the first half of 2014. medium term, and to developments in the and July, as sanctions have been imposed crisis. The rental market continues to have and the conflict continues, the ruble has According to DTZ estimates, the value significant potential in Ukraine, thanks to the fallen back to the lows of March earlier in of property investments in Ukraine in 2013 magnitude of the population and the coun- the year. totalled around 48 million dollars, but in try, as well as the present very low maturity the first quarter of 2014 there were practi- level of the market. There are likewise many On the other side of the coin, Western cally no secondary investment deals. In the opportunities inherent in the logistics market sanctions on Russia have started to place a second quarter there were transactions, to a in connection with the upswing in retail. drag on economic growth in the eurozone total value of 16 million dollars, but this only with Q3 growth looking rather unhealthy affected two properties in all: a Kiev office The future for Ukraine, however, is very after growth had stagnated in Q2. Italy has building was sold for 12.5 million dollars and uncertain for the time being, and it cannot fallen back into recession, France is flatlining a warehouse on the outskirts of Kiev for 3.5 really be seen at present when the political and even Germany has seen a big fall in out- million dollars. uncertainly will be resolved. put. Whilst these issues are driven primarily by the need for structural reform and chok- According to DTZ forecasts, this year’s sec- The long-term situation depends on how ing austerity, the extra burden on markets ondary investment transactions may reach quickly the conflict can be resolved. All sim- resulting from sanctions is likely to exacer- 25-150 million dollars by the end of the year, ilar conflicts automatically lead to uncer- bate the short-lived nature of Europe’s eco- irrespective of the stabilisation of the present tainty, which in this case has a stronger effect nomic recovery, filtering into weaker occu- situation. There may be investor demand for on the Ukrainian real estate market than on pier demand into 2015. Mario Draghi’s income-producing office buildings, retail the Russian one, said Árpád Török. recent move to cut ECB rates to try and and logistics properties located primarily stimulate growth and fend off a period of in Kiev, but in the case of retail properties In the case of Ukraine they certainly deflation is evidence of how real the prob- other major cities may also come into view, expect long-term negative effects. There lem has become. although investors will clearly avoid the east- will be a setback in the field of development ern region of the country. and real estate investments because of the Ukraine is suffering too increased country risk, therefore lending Premium property market yields in Kiev activity will drop or narrow down completely, The business attitude with respect to continue at a high level compared with the but loans will definitely become more expen- Ukraine at present is characterised by wait- rest of Central Europe. According to data sive. All this leads to deteriorating yields, and-see. The Ukrainian currency, the hry- from March, the yield is 12.5 percent on and as a result also to value loss. Currently the office market and the retail market alike, Ukraine is too dangerous even for opportun- istic investors with a higher risk tolerance. 2014/9. | www.resourceinfo.hu

 REsource CÍMLAPSZTORINordic LightExcellent business location, energy andcost efficient solutions.26,200 sq m quality space to accommodateyour office and retail requirements.96-98 Váci Road, 1133 Budapest, HungaryContact: [email protected], +36 1 382 9100www.skanska.hu www.resourceinfo.hu | 2014/9.

REsource ANALYSIS Getting out of the woods The RICS Commercial Property Mon- expect increasing investment activity in beyond the prime segment. Retail rents itor for Q2 2014 revealed that most the next two years, as well-positioned are supported by reasonable pre-leasing regional markets, slowly but steadily, and well-managed properties may prove rates for new developments and a return seem to be getting out of the woods. to be profitable investments, especially to growth of consumer expenditures In most Central and Eastern European when compared to other CEE countries. since the start of the year. And in indus- markets macroeconomic challenges On the other hand several value-adding trial and logistics real estate the shortage influence real estate sentiment, but products are available in the marketplace; of supply is putting upward pressure on expectations are improving with a lon- investors willing to take greater risks may rents while demand builds up.” ger term outlook for capital values. also find attractive deals.” In Hungary, confidence in the rental In Bulgaria and Hungary, rents and capi- A positive value was registered for outlook turned positive for the first time tal values are expected to pick up across Occupier Sentiment in Bulgaria, Hun- in four years, while in Romania confi- the board over the next 12 months. Sim- gary and Romania, while it is slightly dence in the outlook for rents turned ilar movements are expected for capi- negative, but in relatively neutral terri- negative and rents are projected to fall in tal values in the Czech Republic, but the tory, in the Czech Republic. In Hungary all but the retail sector (where they are outlook for rents shows a more mixed the index has reached its highest level expected to remain flat). picture across market sectors. The next since the global financial crisis, while in 12 months look to be gloomier in Roma- the Czech Republic and Romania it has The Czech Republic demonstrated nia where growth in capital values is pro- eased back relative to the last quarter. the highest Investment Sentiment index jected to slow and rents are expected to reading by some margin, although the fall. Occupier demand increased across the reading is also positive in Hungary. The board in Bulgaria, Hungary and Roma- Index reacheds its highest level since All four countries have their own mac- nia, particularly in the office sector in 2011 in the Czech Republic and since roeconomic challenges to face, but a Bulgaria and in the office and retail sec- 2010 in Hungary. The index is in neutral brighter economic outlook is captured tors in Hungary. In the Czech Repub- territory and indicates a more or less sta- in the latest Q2 survey. In Bulgaria, the lic, growth in availability outpaced occu- ble investment market for both Romania government’s resignation and a swift pier demand in both the office and retail and Bulgaria. In Romania it turned neu- outbreak of vulnerability in the banking sectors, in the industrial sector, however, tral for the first time since 2010. sector could cause some challenges and demand is outpacing availability and ten- jeopardise a brighter outlook, while the ant inducements are falling. In Romania “Bulgaria together with a number of other three countries are facing record growth in availability accelerated, espe- other SEE and CEE countries is among low inflation and interest rates. cially in the office sector. our primary targets. Although the num- ber of investments one could make in Balázs Czifra MRICS, Country Head, Rents are expected to increase across Bulgaria, and more precisely in Sofia, is DTZ Hungary added: “Hungary shows all three sectors (office, retail and indus- signs of being on the path to recovery. trial) in Bulgaria and Hungary over the BALÁZS CZIFRA This can be seen on the occupier market, next twelve months. In Bulgaria a par- where there is increasing interest; a lack ticularly firm increase is expected in of available, larger prime space in prac- the office market. In the Czech Repub- tically all market segments. Although lic office rents could be set to fall further, vacancy rates are still high, occupiers but the retail and industrial areas of the have a quite limited choice of modern, market should see growth. good quality, large contiguous space. This trend will lead to pre-let or built-to-suit “In Bulgaria, investor interest is going agreements and impose upward pressure up on the back of a brighter outlook on rental levels. Hungary has once more for occupier demand and rental growth become an interesting, potentially attrac- across all three commercial real estate tive market for investors mainly looking segments,” Michaela Lashova, MRICS, for retail and office products. With the Managing Partner at Forton, the Cush- positive signs on the occupier market we man & Wakefield Alliance Partner in Bulgaria and FYROM, said. “The funda- mentals further improved in the office market with positive spillovers seen 2014/9. | www.resourceinfo.hu

 REsource ANALYSIS STUART JORDAN MICHAELA LASHOVArather limited, there are some good qual- Republic, with growth anticipated in all In Romania capital values are expected toity investments that can generate decent sectors, although the industrial sector remain flat in all areas of the market.returns and therefore be of interest to is the standout performer. “The level ofinvestors,” Lila Pateraki, Director of Busi- activity in the industrial sector and the Nevertheless, the longer term outlookness Development at Zeus Capital Man- weight of capital forcing itself into the for capital values (12 months) is encour-agers, said. “We believe that there are still sector has benchmarked pricing, with a aging for all four countries, with someopportunities in the office market and in significant appetite for single stand-alone degree of growth projected in each sec-the retail sector.” investment assets, through to industrial tor. In Bulgaria a firm pick up is expected, parks, portfolios and even entire plat- the Czech Republic exhibits the stron- In all four countries investment enqui- forms.” commented Stuart Jordan FRICS, gest readings with a strong appetite in theries continue to increase across the board. Head of Capital Market, JLL. Meanwhile, industrial sector now being reflected in aThe growth was particularly strong in the modest growth is expected in Hungary competitive retail sector, while in Hun-retail sector in Bulgaria and Romania, across the board. Results vary in Bulgaria, gary and in Romania capital values areand in the industrial sector in the Czech where retail values are expected to fall only expected to pick up moderately.Republic. while office and industrial segment val- ues are anticipated to be more or less flat. This is a result of elevated capital valueexpectations (3 months) in the Czech ADVERTISEMENTHUNGARY’S LEADING, BILINGUAL REAL ESTATE MAGAZINEMEMBER OF THE PORTFOLIO GROUP www.resourceinfo.hu | 2014/9.

REsource ANALYSIS Improving macroindicators in CEE countries Macroeconomic data shows that most countries in the region are performing better in 2014 than they did in 2013. Growth is expected to accelerate in all members of the Visegrad Group, but most of them are still fight- ing stubbornly high unemployment rates and facing budgetary issues. Also, all examined countries in the CEE region are experiencing record low inflation rates that may cause problems in the longer run. All in all, the countries in the region are increasingly showing signs of recovery, but they are still not entirely out of the woods. ÁKOS BUDAI fter spending two years in 56.5 in July, remaining in expansion ter- with high debt figures. Public debt stood ritory, where it has been since May 2013, at 85.1% of GDP at the end of the second A recession, the Czech Republic’s suggesting that the Czech manufacturing quarter despite the government’s continu- economy is expected to grow sector will remain on its growth trajectory. ous pledges to reduce it. Consumer con- 2.5% this year. Yearly GDP growth was fidence has been on an upward path for 2.5% in Q2, lower than the 2.9% rate reg- Estimates for Hungary’s GDP growth more than two years now, but July’s figure istered in Q1. Nevertheless, economic this year, after a 1.1% expansion in 2013, of -18.9 is still not as promising as April’s conditions continued to improve in the have been on the rise for months now. eight-year high of -15.3 was. The manu- past months. The labor market especially Based on higher than expected quarterly facturing PMI rose sharply to 56.7 in July benefited from the recovery in domes- figures in the first two quarters most ana- from 51.7 in June and has been expanding tic demand, as the unemployment rate lysts estimate 2.8% economic growth for 12 months now, which is a distinctly decreased from a record high of 8.6% in for 2014. Unemployment in Hungary positive sign in an economy that other- January to 7.4% in July. While business has been on a downward path for more wise shows a very mixed picture. sentiment decreased somewhat in the sec- than a year now (at 7.9%, a six-year low ond summer month, Czech consumers are in July), but the increase in employment Poland’s economy has proven to be one optimistic. Consumer confidence declined is mostly due to the sharp rise in public of the most resilient in Europe during the slightly to -4.3 in August from a four-year work schemes since 2010 and to the jump years of the crisis, but it appears to have high of -2.3 in July. Meanwhile, the Pur- in the number of Hungarians taking jobs lost steam last year. Economic growth in chasing Managers’ Index (PMI) stood at abroad. Also, the country still struggles the region’s largest country stood at 1.5% in 2013 and is expected to be at 3.3% in Real GDP growth (y/y, nsa, %) 2014, but Poland is likely to suffer the most from Russia’s recently imposed ban on the 8 HU SK RO PL CZ import of almost all fruit and vegetables. 6 Unemployment nearly reached a two- 4 2010 2011 2012 2013 2014 year low in July at 11.9%, while industrial 2 production and retail sales growth both 0 bounced back in July from reaching one- -2 year lows in June. After three months of -4 deteriorating expectations for the future, -6 business confidence also bounced back in -8 August to 5.1. Manufacturing shows a less -10 promising picture: the PMI began con- 2009 tracting for the first time in a year in July. Economic growth in Romania is expected SOURCE: EUROSTAT, RESOURCE to slow down to 3.0% in 2014 from 3.5% in 2013. Several sectors of the Roma- nian economy are showing signs of losing steam. Industrial production grew by 2014/9. | www.resourceinfo.hu

 REsourceProperty valuation based on new foundations SPONSORED ARTICLE In the past year, the domestic suit developments, and I also believe NÓRA SARLÓS ÁGOSTON JAKABcommercial property market has that high-quality projects make sensebeen showing signs of recovery. in the long term in every segment.. property trade in order to obtain max- N.S.: The growth in the number ofAre you experiencing the recovery imum information on the market, are our engagements, and also their nature,of the market through more client As one of the signs of recovery informed on the areas directly and attests that asset management by localapproaches? from the crisis, a property valuation indirectly connected with the prop- governments is playing a prominent practice based on new foundations erty trade, represent an ethical atti- role nowadays. The individual usage Ágoston Jakab (Á.J.): We have def- has emerged in Hungary (too). How tude and have advanced professional concepts for property asset compo-initely experienced market recovery, do you see this issue? qualifications. nents may hold ambitious expecta-both in the growth of the number of tions which are difficult to support byengagements from banks, and the N.S.: As a result of the crisis, the mar- Is the question of defaulted prop- the market at the moment, and whichnumber of valuations either preceding ket and economic conditions have erties still a current issue on the do not necessarily harmonise with theor following other market transactions. become more difficult, so there is even domestic market? How are these current market value of the asset com-It is important to note, however, that more need for qualified valuers in the assets to be assessed? ponents.for us the recovery mostly involves the future. There is an increase in the signif-updating of earlier valuations; there is icance of experts who are familiar with N.S.: The defaulted properties can’t How does a property expert pro-a far greater number of these than of unpublished market background infor- necessarily do anything about being ceed in such cases under the presentengagements due to new develop- mation because of their market pres- defaulted. I prefer the appellation uncertain market conditions?ments. ence. Property valuers are faced with defaulted credit transaction. In most significant difficulties: due to the lack cases the property “houses” an eco- N.S.: It is extremely important that In the past year both the devel- of transactions, suitable market data nomic business, which will either be with regard to the given property asset,opment and the investment mar- are not available, and so input param- successful, or not. The value of the the valuation analyse several forms ofket appear to be recovering, more eters have become more uncertain for assets is embodied in certain forms of value, differentiating the market valuetransactions have been concluded certain methodologies, i.e. the results value. The individual forms of value are form featured in the balance sheet andin the current year. What are you of individual approaches are more scat- defined along certain assumptions. In that for investment assuming definedexperiencing in this area? tered. The appearance of huge quanti- the case of the determination of mar- development concepts. An anomaly ties of defaulted properties on the mar- ket value, the highest and best use so typical of the period immediately Á.J.: Over the past few years (2008- ket has had a negative effect on the of the given asset must be examined, before the crisis may thus be avoided,2012) our professional activities linked value of functioning properties. Insofar which is the possible and legal use of it when in many cases the market valua-to investments has been very low key, as the actual data for speculative trans- which may be realised in practice, may tion of properties was made based onbut in the last two years we have man- actions are public, they distort the mar- be properly justified, is financially fea- an unprepared project.aged to get engagements again in the ket significantly – damage could even sible and results in the greatest value.case of several green and brown field be caused if the offer price becomes In the case of usage for speculativedevelopment projects, which rep- public. Revaluation of the portfolios of purposes, value for a given marketresent significant growth compared properties valued before the crisis has player is to be determined by meanswith the preceding period. Due to in many cases not been done, or not of the assumption of a defined use.the new business credit opportuni- properly, and this significantly distortsties, we have an increasing number of the market. The discount rates are “the- What is the experience in therequests for the review and valuation oretically constructed” or come from state sector?of smaller and larger developments foreign sources, there are no transac-for pre-financing banking purposes, tion data to rely on.and in addition, for supervision of thefull project from the bank’s point of As a result of all this it can be saidview following signature of the loan that there is greater uncertainly in thecontract. We interpret this tendency valuation process due to the unreli-as clear recovery of the investment ability of the market and the appear-market. ance of distorted data, and so the applicability of valuation methodol- What kind of property develop- ogies is limited. Valuation requires ament projects have a raison d’être in circumspect method, qualified valu-Hungary today? ers are needed who have professional experience, practise networking in the Nóra Sarlós (N.S.): Primarily build-to- www.resourceinfo.hu | 2014/9.

REsource ANALYSIS PRAGUE 11.5% on a yearly basis in June after reg- After a low growth rate of 0.9% in 2013, to 0.1% in July and is expected to stay in istering a 13.4% growth in the previous Slovakia’s economy is expected to expand the same territory for a while, depending month, while retail sales grew by 10.3% by 2.5% in 2014. Industrial production on the next round of government-induced year-on-year in the first summer month growth accelerated to 7.5% in June from utility price cuts and the effect of Russia’s (as opposed to 10.1% in May). Unem- 4.7% in May, retail sales grew by 2.5% on a import ban. Poland has seen a 32-year-low ployment has been steadily above 7.0% yearly basis in June (as opposed to 1.6% in inflation rate of -0.2% in August and the for months now. This summer, concerns the previous month), while the unemploy- year-end figure is expected to be around were raised in Bucharest about certain ment rate has been decreasing for more 0%, but as in the case of Hungary, Rus- budgetary issues. In July, President Traian than 18 months, but still stands at a rel- sia’s import ban poses a downside risk to Băsescu sent a previously approved social atively high 12.7% in July. All in all, most the growth of consumer prices. Slova- security tax reform back to Parliament. signs suggest that the Slovakian economy kia’s inflation rate has also been steadily According to the president the 5 percent- is picking up in 2014. around 0% for almost a year now. Price age point cut in social security contribu- growth at -0.1% in July was unchanged tions could create a risky shortfall in gov- All regional countries have experienced from June. Romania is the only country in ernment revenues. In response Prime record low inflation this year. The Czech the region that hasn’t experienced defla- Minister Victor Ponta gave his assurance Republic saw a slight increase in prices tion in the past few months, but 2014 still that the budget deficit would not surpass from a rate of 0% in June to 0.5% in July. brought record low increases in the price this year’s target of 2.2% of GDP. After two months of never before seen level: the CPI in August stood at 1.0%. deflation, the CPI in Hungary increased Inflation (HICP, y/y, %) 10 HU SK RO PL CZ 8 6 4 2 0 -2 2010 2011 2012 2013 2014 2009 SOURCE: EUROSTAT, RESOURCE BUDAPEST 2014/9. | www.resourceinfo.hu

 REsourceSpreading optimism ANALYSISThis year is expected to be the strongest since 2006 for the Polish investment market as volumes areexpected to top €4 billion for the year. Over €2 billion in volume is predicted for the improving Czech Republic.A more modest €500 million plus is anticipated for Hungary.DAVID LAWRENCEA lthough private equity funds Investment volumes in the CEE region (2014 H1, %) and CEE regional investors are actively investing in Hungary, the Poland 39major Austrian and German funds are still Russiapersuing a “wait and see” strategy, prefer- Czech Republic 21ring the economically successful Polish Baltics 18and Czech markets. Romania, the second Hungarylargest CEE EU country after Poland, is Romania 7finally regaining its status as an investment Slovakia 6destination and 2014 is expected to set a Others 6new post-2008 economic crisis investment 2volume benchmark. However, institutional 1investors have still not entered Romania. “Core investors that are focused on 0 10 20 30 40 50prime in Warsaw and Prague are start-ing to seriously consider Bucharest. What SOURCE: COLLIERS INTERNATIONAL, RESOURCERomania needs is an arm’s length institu-tional deal at an attractive price. The devel- saw. The almost fully let Class A property regional and logistics will be present bothopment activity by for example Skanska portfolio has been placed in the Starwood around Prague and regionally,” said Tewifand AFI Europe is significant,” commented Opportunity Fund 1X. “Improving busi- Sabonyui, Managing Director of JLL in theTroy Javaher, Head of CEE Capital Markets ness conditions and easing credit condi- Czech Republic.at JLL on the prospects for Romania. tions are likely to support an increase in Unsurprisingly, Poland reported a circa investment in Poland,” Keegan Viscius, Budapest is back on track50 percent share of CEE investment (or Vice-Preident of Starwood Capital Group€1.433 billion) for the first half year accord- commented on the deal. In Budapest, Skanska Property Hungarying to JLL. This was followed by the Czech has sold the 17,800 sqm Green HouseRepublic with 25 percent (or €719 million), The Prague office market is also active office centre to the Hungarian open-endedRomania with 15 percent (or €430 million), after a two-year downturn. One of the property fund, the Torony Real EstateHungary with 8 percent (or €230 million) largest transactions in Prague and CEE in Investment Fund managed by the Diófaand Slovakia with 2 percent (or €34 mil- the first half year was the purchase of the Fund Management, a member of the FHBlion). City Tower office centre in Prague by PPF Group. Erste Bank was the financial part- The thriving Polish investment mar- Real Estate for €130 million. In another ner in the acquisition. The deal is generallyket is attracting investors to regional cit- deal, HB Reavis Group sold the 19,500 regarded as a significant step in the recov-ies not only for the retail and industrial, sqm River Garden Office I in Prague to ery of the Hungarian property investmentbut also for the office segment. In a recent the Czech investor Prvý Realitný Fond market, in that a class A office centre bydeal, Starwood Capital Group purchased (PRF), managed by IAD Investments, for a major international developer is the sub-three office developments from Ghelamco. a reported €50 million plus. “The Czech ject of an investment acquisition. MichaelThe 78,000 sqm Class A portfolio con- Republic is back on the investment map, Edwards, Partner at Cushman & Wakefieldsists of the Katowice Business Park in Sile- which was not the case two years ago. (C&W) sees the closing of the deal as a sig-sia and the T-Mobile Office Park and the Although Prague office will be the high- nificant advance for Hungary.Lopuszanska Business Park, both in War- est in terms of volume, retail will be more Distinct signs of a recovery in the www.resourceinfo.hu | 2014/9.

REsource  Investment volumes in the CEE region (pre 2009) Investment volumes in the CEE region (post 2009) Others Slovakia Others Slovakia8% 8%ANALYSIS Baltics 3% Baltics 5% Poland Romania 4%2% Romania 28% 7% 4% Russia Hungary 35% 5% Czech Republic Czech R. 16% 12% Russia Hungary 16% 17% Poland 30% SOURCE: COLLIERS INTERNATIONAL, RESOURCE SOURCE: COLLIERS INTERNATIONAL, RESOURCE Hungarian investment market were evi- Office was the dominant sector for In addition to office the logistics sector is dent as Dutch ING Real Estate completed investment in Romania in the first half year attracting investors with yields of 7.25 per- the sale of its remaining 50 percent stake as it accounted for 80 percent of deals. The cent for Poland. In one of the biggest trans- in the 47,000 sqm Allee shopping centre in largest transaction was the acquisition by actions of the year, the US-based Blackstone Budapest for a reported €95 million. Globalworth of the BOB and BOC office has acquired the 200,000 sqm Standard Life buildings in Bucharest in addition to 446 Poland logistics portfolio for €118 million. In one of the largest European retail apartments and 25 retail units in an adja- Standard Life made the purchase through deals of the year, TriGranit, Europa Capital cent project from RREEF for €210 million. its European logistics platform, Logicor. and PKP sold the Poznan City Center retail Globalworth also purchased Tower Center The portfolio consists of 200,000 sqm of complex to a consortium of Resolution and International in the Bucharest CBD for €58 GLA of warehouse and office space devel- ECE. “Core investors are looking at Poland million. The international investor is focus- oped by Standard Life Investments and its and the Czech Republic for prime, land- ing its activity on Romania. development partner PDC in addition to a mark shopping centres, seen as offering 70,000 sqm development plot. better value compared to other core Euro- Yields are lowest in Prague pean countries. Meanwhile the regional cit- Outside the more traditional invest- ies across both countries have opened up, JLL put prime office yields for Bucharest at ment sectors, the hotel investment market with a significant shift of core and value- 8.25 percent compared to 6.25 for Warsaw is also active. This year has seen the sale of add capital towards this sector. Prime shop- and 6.00 and heading to sub-6 for Prague. the Four Seasons Hotel in Prague to North- ping centres in Hungary and Slovakia are This compares to 7.50-7.75 percent for wood for a reported €80 million. In Buda- also back on the radar for investors search- Budapest. In general a two percent yield pest, the Dubai-based Al Habtoor Group ing for stock,” said James Chapman, Head differential is expected between Warsaw has purchased the Intercontinental Hotel. of CEE Capital Markets at C&W. and Bucharest. The group, which is active in hotel and hos- pitality development, bought the Le Meri- RIVER GARDEN dien Hotel in Budapest in 2012. Further hotel transactions are expected to close this year in Prague. According to C&W it makes more sense to buy an existing trading hotel rather than build a new one, simply because property prices are still below replacement costs. The German Halaba bank is financing Starwood Capital Group’s Poland office portfolio purchase with the provision of a €136 million long term loan. Commen- tators stress the importance of investment financing for a functioning investment market beyond Poland and the Czech Republic. 2014/9. | www.resourceinfo.hu

 REsourceOffice development Outside of the capital, Skanska Property ANALYSIS Poland has installed the facade of the first boom in Warsaw and Prague building at the 46,000 sqm Silesia Business Park located in Katowice. The developmentThe Warsaw and Prague office markets are regarded as thriving despite is Skanska’s largest project in Poland and issome concerns over vacancies. At the same time the Budapest and a sign of the success of the Polish market,Bucharest office markets are showing signs of recovery after a period of in that such a large, quality complex by alimited delivery. leading developer is being constructed in a major city outside of Warsaw. According toDAVID LAWRENCE Skanska, the first building is 65 percent let after a pre-lease was signed with PwC. “We evelopers regard Poland as Ghelamco is developing the 49-story, are developing the complex phase by phase 220 meter high Warsaw Spire that together and the first building will be available forD an almost “core” destination and with two adjacent buildings will provide a occupation by the end of 2014,” said Mar- according to Savills, Warsaw office mixed-use complex next to the Palace of iusz Krzak, Regional Director of Skanskastock is expected to reach five million sqm Culture in central Warsaw. The developer Property Poland.within the next three years. JLL research is one of a number of leading internationalrecords that over 1.1 million sqm of office companies that are active in the Warsaw The standard of office buildings in CEEspace is in the pipeline, not only in Warsaw office market, as the conventional wisdom is generally regarded as on a similar level tobut in Krakow, Wroclaw and Tri-City. is that the city is the major business cen- that found in Western Europe, as develop- The Warsaw office market is continu- tre of Central Europe. The development of ers need to meet the requirements of ten-ing to thrive as construction activity has high visibility skyscrapers is in fashion as ants and investors in order to let a building,reached 579,000 sqm with an additional the city seeks to live up to its reputation as facilitate debt finance and attract investors.62,000 sqm under refurbishment. The lat- a leading European and indeed, world city. Developers of prime products are construct-est delivery was the 38,000 sqm first phase Furthermore, there are few height restric- ing in accordance with BREEAM, LEED andof the 67,000 sqm Eurocentrum office com- tions that restrict development in Prague DGNB certifications in order to conformplex by Capital Park Group. For 2014 a total and Budapest, where there are concerns to EU legislation, and this is now a basicof circa 350,000 sqm of newly built and over the need to preserve the historic cen- requirement from tenants and investors.refurbished office space is expected to be tres.completed, according to JLL. In Prague, developers such as HB Rea- vis, Karimpol, PPF Real Estate, Skanska and Immorent have anticipated that there will be a scarcity of supply at some point and have started construction on a specula- WARSAW SKYLINE www.resourceinfo.hu | 2014/9.

REsource  Total investment volumes in CEE (EUR billion) of the recently completed fourth metro, located on the western edge of Budapest.ANALYSIS 16 Reflecting the current situation in the slow- 14 moving Budapest office market, Futureal 12 2000 2002 2004 2006 2008 2010 2012 2014 is persuing a phased development strat- 10 egy with construction going ahead once pre-lets have been concluded. The develop- 8 ment project is planned to become a busi- 6 ness and leisure hub that will include retail 4 and service elements. 2 0 In another major development the equity-rich developer, Skanska is set to 1998 commence construction of the first phase of the 26,000 sqm Nordic Light in Váci út. SOURCE: COLLIERS INTERNATIONAL, RESOURCE The project will be developed in two phases depending on pre-lets. tive basis. About 300,000 sqm of space will international developers such as Skan- be delivered in the next two years accord- ska, Atenor and Futureal. These companies Economic and political concerns from ing to Tewfik Sabonyui, Managing Director are able to find financing and construct in international developers have put a brake of JLL in the Czech Republic. Although the what is considered to be a challenging office on market development since the eco- Prague office market is generally viewed in market. The market has historically high nomic downturn and eurozone crisis. How- a favourable light, one potential black cloud vacancy rates and these currently stand at ever, Romania is now attracting prestigious on the horizon is a high vacancy rate that 18.5 in the city with circa 2.55 million sqm developers such as Skanska, AFI Europe, has risen to 14 percent. Vacancy in Warsaw of speculative office stock, according to the Raiffeissen Evolution (RE), Portland Trust is predicted to rise to 14 percent and this is Budapest Research Forum. Around 80,000 and the Atenor Group, and this is seen as a expected to put pressure on rents. sqm of space is under construction. significant step forward. However, this vacancy level should be The largest completion belongs to HB Skanska is due to complete the first qualified in the case of Prague, as there is Reavis, which has officially opened the 19,500 sqm phase of the Green Court office considerable variation across the city with, 21,000 sqm Váci Corner office complex complex in the fourth quarter after an esti- for example, a vacancy of 6 percent in after a two-year construction period. The mated €46 million investment. A 13,700 Prague 4 and 31 percent in Prague 7. Tew- so-called Váci út Corridor has developed sqm pre-lease has been signed with Orange. fik Sabonyui, Managing Director of JLL in into the major out-of-centre business dis- The company has applied for a Gold LEED the Czech Republic, argues that there could trict of Budapest. Zoltán Radnóty, CEO of certification for the planned three buildings be office oversupply in particular locations, HB Reavis Hungary expects the complex to totaling 52,000 sqm. The lastest office deliv- but overall there is no such oversupply. be fully let by the second half of 2015. A €21 ery in Bucharest was by the Belgian Atenor million debt financing agreement has been Group with the 18,000 sqm first phase of However, another problem for develop- concluded with Raiffeisen Bank as was the the Hermes Business Campus (HBC). The ers in Prague is the lengthening lease nego- case with earlier HB Reavis projects in Slo- three-phase project is planned to deliver a tiation process that is now often as long as vakia and the Czech Republic. total of 78,000 sqm of space. a year. “This puts pressure on landlords and it takes longer to get tenants into a build- Robert Papp, senior consultant at the Hun- Regarding pipeline projects, DTZ Echi- ing and banks can get nervous. This can garian firm Robertson argues that the dif- nox estimates that new Bucharest office force landlords into offering financial incen- ficulties of the Hungarian office market are supply will reach 150,000 sqm in 2014, in tives and concessions,” said Tewfik Sab- grossly misrepresented. “The right asset in a city with a total stock of a little over two onyui. Pre-lease requirements from lend- the right location will have no problem let- million sqm. This is significantly lower than ers for Prague office developments are put ting as has been the case with Skanska’s Prague and Budapest and half of the stock at 40-50 percent. Green House and Atenor’s Váci Greens,” he in Warsaw. Prime rents are quoted at €18.5 said. per sqm per month with vacancies put at 15 Although office development in the Hun- percent, according to JLL. However, vacancy garian capital is limited, cranes working in Another CEE developer, Futureal has data should be treated with caution as it var- the Váci út business district are an indi- launched the €170 million Budapest One ies widely depending on the sub-market. cation of the popularity of the area with business park adjacent to the terminus Bucharest, Prague and Budapest are regarded as being at the bottom of the office rental cycle in contrast to Warsaw, where rents are falling, according to C&W. 2014/9. | www.resourceinfo.hu

 REsourceRisks and opportunities – Of course, this trend also poses risks. OPINIONSWhat do CEE markets offer? In the near future, for example, we will need to keep a close eye on developmentsWhat are the most attractive markets in CEE? How have the different in Warsaw: large volumes of high qualitymarkets been developing after the crisis? What are the risks on the vari- floor space come onto the market and willous regional markets? What opportunities do the different pricing and increase the competition and – in someyield spreads offer investors? Is it time for the real turning point for less areas – the low vacancy rates will rise in thefavoured markets? What are the most attractive investment assets in future. At the same time, potential stays highBudapest? Leading CEE experts share their opinion. in areas with less development activity. K ATALIN MAJOR Bucharest has emerged as highly prom- ising: demand is high for centrally located Bruno Ettenauer, CEO, Poland, property prices are partly under the office space, which opens up definite oppor- CA Immo AG. production value which makes the region tunities for development activity. Due to our rather attractive for investments. The vol- expertise, we consider Hungary an attrac-In our view the markets of the CEE region ume of transactions is increasing, especially tive market, too, with one weakness: the loware developing in different ways. What most in Poland. Due to the current pressure to availability of external financing. of these countries have in common is that invest, money is flowing into the market andthe rental level in the office sector is at a low, real estate is in demand on account of the With regard to the current Ukrainian-that is to say a sustainable level. Excluding prevailing interest rate situation. Russian conflict, I think that the middle European industrial nations will be more afflicted than the geographically close CEE countries. Most likely, the losers in this con- flict will be the European industrial nations and Russia, while Asia and also the USA will remain unscathed or will even benefit from this situation. ADVERTISEMENT www.resourceinfo.hu | 2014/9.

REsource OPINIONS 1. 2. 3. 4. 5. 1. BRUNO ETTENAUER, CEO, CA IMMO AG; 2. JENŐ FARAGÓ, INVESTMENT ANALYST, PORTICO INVESTMENTS; 3. MIKE EDWARDS, HEAD OF VALUATION & ADVISORY, CENTRAL EUROPE; HEAD OF CAPITAL MARKETS AT CUSHMAN & WAKEFIELD; 4. DAMIAN HARRINGTON, DIRECTOR OF RESEARCH, EASTERN EUROPE, COLLIERS; 5. DIETMAR REINDL, COO IMMOFINANZ GROUP Jenő Faragó, Investment more investors tend to forget that the cur- The best opportunities are the core ones. Analyst, Portico Investments rent good data are not exactly a result of a There are clear arguments for future yield well-founded and well-governed economy. compression and rental growth. Vacancy A positive mood is spreading on the mar- This might after all be indifferent from the in the best buildings is actually quite low ket, some are optimistic about the coming point of view of the result, as most market – I would suggest sub-10% - and rents and years, and some are already positive about actors move when there is confidence in the incentives are beginning to readjust from a the present. Pessimists are in the minority. market. If some start to believe that things tenant’s market. The lack of supply in recent The numbers appear to support this mood. are going well and others follow them, we years means that there is little prime stock Real estate investment volumes are up. In might end in an upward spiral, attracting available and pressure could be brought to some countries, 2014 forecasts say they will more foreign capital – and the optimists will bear on rents again - indeed rents have to hit 2006-2007 levels, and all countries’ prog- nod and say: “I told you so”. increase to justify development and, based noses talk about the highest investment vol- on recent statistics, demand seems to be umes since the crisis. This is supported by Mike Edwards, Head of Valuation increasing. good GDP data and GDP forecasts, the & Advisory, Central Europe; lowest unemployment levels in a long time, Head of Capital Markets at As for the attractive assets in Buda- growing industrial output and what is most Cushman & Wakefield pest, investors are focussed at polar oppo- important for us: increased retail spending. site sides of the market. Some are look- By looking at Portico’s portfolio we can con- The different markets have their own merits. ing at distressed assets, whilst others are clude that in all our countries tenants report Poland is seen as the most established and after core assets with long leases. Owners’ increasing turnovers each quarter. therefore stable market offering buyers a vis- expectations are still some way from buy- ible exit, but Budapest’s comparative pricing ers’ for “value add” opportunities, such as A more in-depth look at the region reveals may offer better prospects for rental growth those assets with vacancies etc. One issue that Poland and the Czech Republic are tak- and yield compression in the medium term. we have identified is that there are a number ing the lead and the main investor focus is of investors looking for large volumes that on these two countries, while other coun- Last year, Hungary saw next to no invest- the market cannot match. You will begin tries are feeding on the crumbs only and ment; this year we have already seen Green to notice investment in property companies investment activity comes mostly from House and Eiffel Palace trading and there rather than the assets themselves as a result. domestic players. The fact that the Hungar- are various well-known assets under due ian real estate market was shaken up by a diligence. Investors are actively looking Damian Harrington, Director of very unusual player, the Hungarian National and, critically, access to finance is increas- Research, Eastern Europe, Colliers Bank, sends ambiguous signs to foreign ing – but let’s not get too carried away just investors. yet. The focus is on the very best-class assets In 2013 commercial real estate volumes and when one considers the fundamentals for CEE reached €10.8 billion, up around While more and more investors were con- of these assets – occupancy, class of tenants, 20% on 2012. Through the first half of 2014 vinced that the Hungarian real estate mar- location and quality – then Hungary seems investment volumes across CEE have been ket had bottomed out and the next years very underpriced compared with other mar- positive, but have slowed marginally, los- may therefore be regarded with cautious kets. It is natural that investment is returning. ing some of the momentum that was gained optimism and a slow catching up, more and 2014/9. | www.resourceinfo.hu

 REsourceduring 2013. This is primarily the result of it is beginning to moderate in those mar- Looking at our core countries, Poland and OPINIONSa slow-down in Russian investment trans- kets that led in 2013, including Moscow, St. the Czech Republic are currently the mostaction volumes, due to concerns over the Petersburg and Kyiv, and is starting to rise in active transaction markets in Eastern Europe.current Russia/Ukraine conflict. The Rus- other peripheral cities, including Bucharest, The sale of the Silesia City Center, our Pol-sian market has seen €750 million worth Bratislava and Tallinn. ish shopping centre, during 2013/14 repre-of deals close in H1 2014, but the hiatus in sented a benchmark deal for the CEE region.international investor activity puts this fig- As for the future, if investment demandure below the €2.5 billion, half-yearly aver- continues to diversify across the region in However, investors are also shifting theirage which the market has posted over the the second half of 2014, this could take us attention to other CEE destinations – e.g.last three years. back towards a more robust “Mid-Case sce- Bucharest – because of the attractive risk- nario” for investment volumes. However, return profiles. With regard to our develop- Although there may have been a decline it is more likely that it won't be until 2015 ment activities our focus will be – besidesin closed deals in Russia, this should not before regional investment genuinely picks Germany – first and foremost directeddetract from the growing popularity of the up pace outside of the core CEE markets of towards Poland, Romania and Russia.core Polish and Czech investment markets Poland and the Czech Republic.which continue to see increasing deal vol- As emphasised in the past, our business inumes and should at least match 2013 levels. Dietmar Reindl, Russia is a source of considerable satisfactionEqually, investment activity is also picking COO IMMOFINANZ Group in spite of setbacks: the returns are signifi-up across the Tier 2 markets of the region cantly higher than in Eastern and Western- notably the Baltics, Hungary and Roma- The spin-off of BUWOG gave IMMOFI- Europe, and the occupancy in our proper-nia. This has led to some yield compression NANZ a sharper profile as a commercial ties is well over 90%. However, the crisis inin these locations during the first half of the property specialist with a focus on Cen- Ukraine, its further development and theyear. There are also signs of increasing inter- tral and Eastern Europe. Russia is now our sanctions imposed by the west and Russiaest further south and east in the likes of Bul- largest single market, followed by Aus- represent uncertainty factors that have sub-garia and Serbia. tria, Romania, Poland and Germany. Even stantially clouded the mood of investors over though Eastern Europe is still not the the past weeks. New development activity is also begin- growth story we would like to see – it wouldning to recover in the smaller markets of the be good to have stronger impulses from the Apart from these developments, the Euro-region. For example, as of H1 2014, the vol- economy for our rental business – we are pean Central Bank has also set a signal inume of office space under construction in convinced of the long-term growth story favour of real estate investments with itsBudapest is at its highest level since 2010. and the convergence potential of this region. interest rate announcements. There is noAlthough as the individual markets adjust to In 2013 the total return on our CEE prop- end in sight to the loose monetary policysuch a large volume of incoming new supply, erties brought us the “IPD Property Invest- and the related low interest rates. That, inmany have continued to experience fluctuat- ment Award in Central & Eastern Europe” turn, has increased investors‘ search for rel-ing vacancy rate conditions through the year. for the highest performance among the 49 atively safe investments as an alternative to portfolios surveyed in this region. the money market. The economic recovery Similar movements can be seen in the in Central and Eastern Europe is continuingretail segment. While there is still a huge ADVERTISEMENT with a higher GDP growth than in Westernamount of new construction underway Europe. BUDAPEST DECISION MAKERS, ECONOMISTS, INVESTORS ECONOMIC AND CORPORATE LEADERS AT ONE PLACE. FORUM register now! 20142nd October 2014 • Budapest, Hotel Sofitel How could Hungary’s competitiveness be improved? y Central Bank Governors’ panel Development outlook on Hungary overshadowed by the Russia-Ukraine crisiswww.budapesteconomicforum.hu y www.portfolio.hu/conference y [email protected] y [email protected]: SPONSOR: SECTIONS: www.resourceinfo.hu | 2014/9.

REsource INTERVIEW Budapest: an attractive rent or sell it with ease. In Hungary there investment market will be some industrial and production opportunities in the regions and smaller How does a CEE real estate pioneer see the post-crisis CEE market? How scale commercial investment in provin- did CEE markets transform into mature property markets starting in cial cities but this will be more of interest the late nineties? Which countries are the most attractive in the region? to local investors. Downtown residential What does the Budapest market offer? We spoke to Alan Vincent, B.Sc., may finally pick up and start to show good MRICS, managing director of ConvergenCE. investment returns after being flat for ten years, thanks to the government invest- K ATALIN MAJOR ment in the downtown area, the City and the 5th district, which are finally bring- ing out the true beauty of Budapest land- marks. ou are one of the real estate larly in the office sector) in Warsaw. On Which markets are the most attrac- the other hand, being the capital city of tive in CEE at the moment in terms Y pioneers in Central Europe, a country of 40 million people, Warsaw of investment? Budapest is still very you have experienced how will continue to be an attractive invest- cheap, compared to Warsaw or Prague, CEE markets developed over the last ment location for global investors. I fore- the yield difference is still considerable. 20 years. You have seen a lot: the boom see a quite illiquid investment situation Is Budapest still a market for opportun- of the late nineties, the crisis, the post- approaching in the smaller capital cities istic buyers or are there opportunities crisis period, and now – hopefully – the (similar to Vienna) once the best build- for institutional capital as well? stabilisation. How do you see the region ings have traded to traditional long term now in the context of the past 20 years? institutional investors. For institutional investors this is a ques- I think all of the Central European mar- tion of returns. They are chasing yield. The kets – Poland, Hungary, the Czech Repub- It’s been interesting to see that although brave ones who come in early will benefit lic and Slovakia – have reached a level of Hungary and Budapest were way ahead of the most. Comparing prime office invest- maturity now. It’s a logical progression any of the other CEE countries in the early ment yields for the first half of 2014, with from the underinvestment during commu- nineties, in terms of development and Warsaw at 6%, Prague at 6.25% and even nist times followed by the boom in foreign FDI, they started to fall back from about Bratislava at 7%, I see Budapest as the direct investment which caused this mas- 1998. The cause was partially demographic, most attractive location with comparative sive development through the nineties up which is understandable compared to yields for the best offices at 7.25%. Simi- to 2007. I would say the first ten years was Warsaw, but obviously as we all know, lat- lar spreads are also present in the retail catching up and the last five years became terly there was a perception problem with and industrial sectors. In fact these yields a speculative boom. As I have said in the Hungary, because it was very much seen as are already moving down fast (witness the past, that period will in future be com- a small peripheral market. When Greece recent sales of Vision Towers North and pared to the 1880s and 90s in terms of the crashed, a lot of investors were expecting Eiffel Palace). Investors realise that they development of Budapest. that something similar would happen here. can buy here at a discount compared to Each market has its own particular This, combined with all the politically other CEE capital cities. characteristic. As such CEE can no longer motivated negative media that followed be seen as a homogenous investment loca- the first Fidesz landslide victory, did not Opportunistic buying of distressed tion. It’s clear that the Polish and Czech help bring investment back to Hungary. assets has been much more difficult than real estate markets came out of the crisis Fortunately we seem to be past that now. expected, due to the unclear and frag- in better condition than Hungary, both in mented approach as well as overpric- terms of the health of local banks and in Budapest is catching up, but from now ing by the banks holding these portfolios. terms of investor perception, but it seems on I see significantly fewer development That was an opportunity that I think eve- Budapest in particular is catching up. opportunities than in the past, as it has rybody expected but it hasn’t really hap- I see Budapest, Prague and Bratislava as become a mature market. The future will pened. The banks, of course, will be very more stable rental markets than Warsaw be far more controlled and less exciting; happy to see capital values improving at going forward, mainly due to the urban the development and renovation of the the best end of the market and they may structure and limitations of the built fab- existing stock and a more normal mar- believe that this will also have a positive ric of these cities, compared to the rela- ket will follow. We are definitely not going impact on their portfolios, but I think that tively unlimited development potential, back to a situation where you can build an is going to take some time, because they and therefore risk of oversupply (particu- office building in Soroksár, for example, are at the complete opposite end of the call it an A grade building and expect to risk scale. 2014/9. | www.resourceinfo.hu

 REsource Office market indicators in Budapest INTERVIEWappear to have improved in the last 12months. What do you expect for thenext 1-2 years? I believe that there will be a steepincrease in interest from investors, whichwill raise capital values quite significantly. Iexpect retail and office yields to reach themid-6% level, rents to stabilise and conces-sions such as rent free periods to signifi-cantly reduce as vacancy continues to fall.The big challenge in Budapest is going to bethe renovation and re-use of historic build-ings, finding ways to make them efficient. The Eiffel Palace is a very good exam-ple here. There is an interesting issuearound this office building as the Cen-tral Bank just bought it. The transactionis quite controversial, experts are debat-ing whether this was a good investmentand whether a central bank shouldinvest in real estate at all. What do youthink about this issue? It is difficult for anyone who is not acentral banker to make a judgment. I can’treally second guess the investment strat-egy of the Central Bank without knowingwhat their investment objectives are. I dothink there is a place in every investmentportfolio for real estate. It is a long-termsecure asset, which holds its value. If youask me what the ten best office investmentprojects in Budapest are, Eiffel Palace isdefinitely one of them. It is a great building,it was an expensive investment and clearlythe developer didn’t cut any corners interms of the quality of the building. It alsohas a very good long-term tenant in PwC.As a real estate investment I would say itis a rather conservative one. If the ques-tion is whether the Central Bank should bebuying real estate or not, I think that is onefor bankers, not real estate experts. As for ConvergenCE, what are yourplans for the next years? We are looking at investing in existingassets and developments at the moment,as well as continuing to expand our nicheservice lines of asset, property and projectmanagement services, to a select group ofinternational investors. www.resourceinfo.hu | 2014/9.

REsource ANALYSIS Time for the real turnaround ace (the former Ballet Institute) on Andrássy Avenue was sold to a Luxembourgish com- The years of the crisis have completely transformed the allocation of pany belonging to a sheik of the Qatari royal investment volumes among Central and Eastern European countries. family, at an undisclosed price. In August, The biggest winner is Russia and the country that has lost most of its the southern Klotild (also known as Matild) attractiveness is Hungary. Palace was purchased by Melis Investment, a unit of the Turkish Özyer Group for EUR ÁKOS BUDAI 6.85 million. All three buildings are expected to be converted into hotels and the Párisi A ccording to data compiled by retail segment also point to an improving Udvar is also expected to feature restau- Colliers International, prior to situation. Futureal purchased Sziget Center rants and a conference center after renova- 2009 Hungary received 17% of all in Tököl, while another Hungarian investor, tion. These purchases show that Hungary is CEE investments, while the same number Portico acquired three hypermarkets occu- gaining momentum among foreign investors for the post-2009 period is only 5%. These pied by Spar from the Raiffeisen Fund for and also that we will see grey spots in the city are daunting numbers, but luckily for Hun- EUR 3.6 million. Furthermore, a 50% stake centre filled with life once more, which could gary, several reports on increasing invest- in the Új Udvar shopping centre in Budapest further increase Budapest’s attractiveness. ment activity have surfaced in the first half of was sold to individuals initially involved in the year, with many stating that international its development. Unorthodox purchases investors are also returning to the market. All signs point to investment appetite in Eastern capital A special kind of investor has also become Hungary significantly increasing in the first active this year. The National Bank of Hun- half of 2014. The first open market transac- Buyers from the Gulf region have been gary (MNB) has purchased two proper- tion in years occurred in May, when the Ste- actively present on the Hungarian hotel ties in the past months. First, in July, it pur- fániaPark office building was sold by IVG to market for years now. H1 2014 saw the chased a castle hotel in Tiszaroff. The final an unnamed German investor, marking a acquisition of the Intercontinental Hotel by price remains unknown, but a few months real turn in the Hungarian real estate capi- the Al Habtoor Group. This was the second earlier this property was up for sale for EUR tal market. Also, the biggest transaction in deal the Dubai-based real estate conglom- 1.84 million. The central bank plans to oper- the CEE retail market in Q2 2014 happened erate made in Budapest after buying the Le ate the facility as its own resort in the future. in Budapest. ING Real Estate Development Meridien Hotel in 2012. sold their remaining 50% share in the Allee The second and much bigger transac- shopping center to an ING insurance fund Investors from the Middle East also tion was the purchase of a premium-cate- for EUR 95 million, which helped Hungary showed considerable interest in aban- gory office building in the downtown area of record its best Q2 results since 2010. doned landmarks in downtown Budapest. In July, Skanska announced the sale of In May, Párisi Udvar on Ferenciek Square ALLEE SHOPPING CENTRE its “Class A” Green House office build- was acquired by the Mellow Mood Group ing in downtown Budapest to the Hungar- (developers of the nearby Klotild Palace) for Budapest. The property known as Eiffel Pal- ian open-ended property fund Torony Real EUR 6.7 million. In June, the Dreschler Pal- ace is one of the top ten office buildings in Estate Investment Fund, managed by Diófa the capital and it was sold to the MNB for Fund Management, a member of the FHB EUR 45.3 million. According to MNB gov- Group. Green House was completed in 2012 ernor György Matolcsy, the transaction took and currently 98% of the building is leased. place at 6.5-7%, indicating that the office It is the only LEED Platinum-certified office building was overpriced. That yield level building in Hungary. The EUR 36 million transaction will be recorded in Q3 2014 and it is a milestone in the Hungarian real estate market, since the last 20 years rarely saw Hungarian institutional investors mak- ing similar purchases. It is not only large, international deals that show positive movements in the invest- ment market: several smaller deals in the 2014/9. | www.resourceinfo.hu

 REsourceseems considerably low, since no similar Hungarian home ANALYSIStransaction took place in the previous 12 loans: rewriting the pastmonths in Budapest below 7.5%. Du passé faisons table rase (Of the past let us make a clean slate) – this These purchases are controversial both widely known line from the Internationale soon takes on a new mean-from a political and an economic point of ing for several hundred thousand Hungarians with foreign currencyview. In is unclear why the central bank loans.would buy overpriced property, and it isdebatable whether an institution like the IST VÁN PALKÓMNB really needs a castle hotel or a “ClassA” office building. M asses of credit agreements years ago an exchange rate limit scheme are being rewritten in Hungary, was introduced with the concurrence ofStill not there yet probably soon transferring a sum the banks and the government, but irratio- equivalent to almost 3 billion euros from nally enough, only a total of 40 percent ofGyörgy Lindwurm, Investment Associ- the banks’ tills to the debtors’ pockets. those entitled have laid claim to this so far.ate at DTZ Hungary agrees that increasing Meanwhile in the area of new lending the Meanwhile assessment of the rate spreadinvestment activity can be seen in the Hun- sky is not cloudless for the banks either: (use of selling and buying rates, i.e. hetero-garian real estate market, but he believes burgeoning home loans will shortly be geneous rates) used during disbursementthat most international institutional inves- policed with new regulations by the cen- and repayment of foreign currency loanstors have merely invested in Poland and tral bank. and the unilateral contract modificationsthe Czech Republic so far. In some cases, carried out by the banks continues to beHungarian assets have been excluded from Fresh hopes, inherited problems inconsistent, and debtors’ ability/willing-regional portfolio investment deals. ness to pay is deteriorating: the proportion For years Hungary has been reckoned of undischarged home loans according to So far, in 2014, all signs have been pos- a black sheep in the region from many data from the end of June is 13.6 percent,itive; there’s been more movement in the angles in connection with the banks. It also of which that for foreign currency loansmarket, the number of distressed prop- falls significantly behind in lending to the is 17.7 percent. In addition, the evictionerties decreased and in the case of some population compared with the eurozone moratorium and other government mea-properties that are fully rented out for a and other countries in the region: reckon- sures restrict the banks’ portfolio clean-longer term we could even see bid wars ing without revaluations, in the past year ing, so the banks are compelled to post-starting. Yields have decreased to between household credit has fallen back by close pone addressing the problem. As a result7% and 8% for office buildings and to to 5 percent, whereas Slovakia, Poland and of all this, the risk cost to the banks con-around 8.5-9% in the industrial segment, the Czech Republic produced a growth of tinues to be very high, and although theyaccording to György Lindwurm. 5-10 percent. (Figure 1) New loans may have fallen significantly in recent times, have increased significantly compared their resource costs are not be neglected This corresponds to prime office invest- with the nadir of 2013 (for instance the either. It can best be explained by thesement yields for Warsaw at 6%, Prague at month of July brought a jump of 75 per- two factors that the interest surcharge on6.25% and Bratislava at 7%. Budapest is still cent compared with one year earlier), but newly awarded home loans continues tovery cheap compared to the Polish or the for the time being this has not counterbal- be very high in Hungary by internationalCzech market, and the relatively low yield anced the repayment of foreign currency standards (Figure 2).levels could steer investors in Hungary’s loans taken out before the crisis.direction, but most of them still consider The foreign currency loanthe country and political risks too high. For- Home loans in this country have already package is hereeign investors are still cautious; they pre- been bleeding from many wounds: closefer to buy properties in the two main mar- to half the credit stock is still foreign cur- Based on the result of the April parlia-kets of the region that offer stable cash-flow rency-based, mostly denominated in Swiss mentary elections, newly in possessionand low risk. However, macroeconomic francs. The exchange rate for the Swiss of the support of two-thirds of parlia-conditions and the financing environment franc has grown by more than 60 percent ment the government probably felt that itin Hungary have considerably improved by today compared with the average rate had received the mandate to settle someover the last year. Office market indicators when the loan was taken out, significantly of the above problems in a way that wasalso paint a more and more positive picture increasing the burden of debt on house- unfavourable to the banks. The responsi-and with the economy picking up we might holds. In order to restrict the unfavour- bility, however, was only partly the gov-see increased end-user demand. Thanks able exchange rate effect, two and a halfto these developments, despite the risksrelated to instability, we should see inter-national institutional investors returning toHungary in the next year. www.resourceinfo.hu | 2014/9.

REsource ANALYSIS ernment’s: on June 16th, the Curia, the With regard to the precise calculation of recover their losses resulting from any supreme judiciary in this country, subse- the sum to be returned to those with for- governmental measures (the bank tax quently extending the result of a specific eign currency loans because of the rate introduced in 2010, the final repayment of lawsuit, resolved to declare the rate spread spread, the central bank provided guide- 2011-2012, the transaction fee introduced used with foreign currency loans to resi- lines at the beginning of August. Use of in 2013) with capital injections received dents to be unethical, and instead ordered the published formula is in principle not from the parent bank. Foreign-owned the retroactive use of the central bank’s obligatory for the banks, but the cen- banks in Hungary have received a capital official exchange rate. And in connection tral bank may enforce this based on its increase of close to a total of 1000 billion with the fairness of unilateral interest rate supervisory authority. The essence of HUF over the past five years in such ways. increases, 7 strict requirements were set the formula is that the banks must take up. If a contractual condition does not con- into account current overpayment by cli- Will the foreign currency loans form to any one of them, it is to be regarded ents retroactively as advance payment of be converted to HUF? as unethical. With this the contracts as a the capital sum of the loan. If this for- whole do not become invalid, but the indi- mula is extended to the settlement of the Settlement of the foreign currency loan vidual conditions enabling modification of hordes of interest rate increases which are issue from a legal dispute angle, therefore, the contracts do. expected to prove unethical, then accord- is expected to be complete by the end of ing to estimates a loss of around 900 bil- this year, and the indebtedness and debt As the Curia’s resolution only applied to lion HUF (almost 3 billion euros) is to be repayment obligation of the population will foreign currency loan contracts affected expected for the banks. Assuming that in fall considerably. Although the financial by lawsuits, at the suggestion of the gov- the case of extant contracts the amount position of the banks is deteriorating signif- ernment, Parliament decided on July 4th due back is settled in such a way as to icantly, a positive point is that the vulnera- to declare in law that the rate spread in all reduce the outstanding capital debt of the bility of the country because of foreign cur- the residential foreign currency loan con- foreign currency loans, the capital debt of rency resources (primarily short-term) may tracts was unethical, and in addition to an average person with a foreign currency be reduced, and the available income of express the opinion in law that unilateral loan may fall by almost one fifth compared households may increase. With this, how- contract modifications (typically inter- with the present amount by the beginning ever, the banks’ walk to Canossa because of est rate increases) were unethical in the of next year, and the regular payments by foreign currency loans will not have come case of HUF loans as well as foreign cur- close to one quarter. to an end: according to statements by gov- rency loans. Instead of the clients, the bur- erning party politicians, at the end of 2014 den of proof is transferred to the banks: by All this will result in a sizeable loss for or in the first half of 2015 the foreign cur- around the end of the year they may prove, the Hungarian banking sector, though rency-based mortgage loans (and possibly within the scope of an enforced judicial procedure prescribed by law, that they Fig. 1: Annual transaction-based growth rate of household loans in proceeded ethically in the cases of unilat- eral contract modification. These lawsuits international comparison are underway at present; based on the initial judgements, the banks don’t have % much chance. 15 As the Curia’s aforementioned 7 condi- tions (which are also authoritative at pres- December 2012 December 2013 June 2014 ent for the Metropolitan Court transact- ing the lawsuits) are extremely strict with 10 regard to ethics, it is predictable that the banks will not be able to defend the deci- 5 sive majority of the loan contracts before the court. It is to be expected, therefore, 0 that besides the rate spread, clients will get back the rise in regular payments due to -5 the unilateral contract modifications, and the interest rate on their loans will return -10 to the original level. As to exactly how and in what sum, a law appearing in autumn -15 Slovakia (perhaps September) may make provi- Poland sions. Czech Republic Bulgaria Euro area Baltic states Romania Mediterranean countries Hungary SOURCE: MNB, ECB, RESOURCE probably not a stability problem. Close to other foreign currency loans) may be con- four fifths of the foreign currency loans verted to HUF. to residents have been financed by major banks under Western European own- When they hear this, the final repay- ership, which so far have been able to ment of 2011-2012 may once again come to mind for bank management (as well as 2014/9. | www.resourceinfo.hu

 REsource Fig. 2: International comparison of spreads on housing loans extended in domestic currency (%)7654321 HU SK RO SLO PL CZ Euro zone02008. I. II. III. IV. 2009. I. II. III. IV. 2010. I. II. III. IV. 2011. I. II. III. IV. 2012. I. II. III. IV. 2013. I. II. III. IV. 2014. I. II. ANALYSIS SOURCE: ECB, NATIONAL CENTRAL BANKS, MNB, RESOURCE GYÖRGY MATOLCSYcredit rating experts and foreign inves- attempting to draw on the lessons of the Hungarian home loans, therefore, nowtors). At that time, better-off foreign cur- past. It was announced on August 27th: just reviving and comprising around onerency borrowers could get rid of their the debt brake regulation promised in quarter of the sum advanced before the cri-loans with a 25-30 percent exchange rate the spring will be introduced on 1 Janu- sis, are facing a great many challenges. Adiscount, but the banking sector (taking ary 2015. Within the scope of this, tak- huge issue is how bank lending will react tointo account the compensation received ing out excessive loans by the population the financial loss resulting from the foreignfrom the bank tax) lost more than 260 bil- will be restricted by three measures: 1. the currency loan package, and what fractionlion HUF. If in accordance with the prom- instalment-to-income ratio index will be of the population will drop out from amongises of certain governing party politicians introduced, 2. the credit cover index will potential borrowers in consequence of thethe foreign currency loans were now con- be readjusted (Figure 3) and 3. verification fresh measures by the central bank. Tar-verted to HUF not at the market exchange of legal income will be needed for taking geted handling of the undischarged loansrate, but at some discount rate, then this out loans. According to the MNB, the new and acceleration of the residential creditwould result in a renewed major capital regulation will not really push back resi- portfolio cleaning are as yet unsolved tasks.loss for the banking sector. Whether the dential lending, but it will provide the cen- There is a reason for hope, however, as irre-government will dare to undertake this, tral bank with a new tool should the pro- spective of the state of the financial sectorcannot be known as yet. cess of residential indebtedness become Hungarian economic growth has begun, excessive in the future, as the indices in the wake of which domestic housingThis is still not the end introduced now may be made more severe demand is gradually increasing. It is con- later by the central bank (on the upward ceivable, therefore, that Hungary will notBesides dealing with inherited problems, curve of the credit cycle, for preventative solve some of the problems of residentialthe Hungarian state, and with it the Hun- purposes). borrowing, but grow out of them.garian National Bank (MNB), is clearlyFig. 3: Debt brake regulation valid from January 1, 2015Income Instalment-to-income ratio (PTI) HUF EUR Other currencyUnder 400 k HUF 50% 25% 10%At least 400 k HUF 60% 30% 15%Credit type Credit cover ratio (LTV)Mortgage loan HUF EUR Other currencyVehicle loan 80% 50% 35% 75% 45% 30% SOURCE: MNB, RESOURCE www.resourceinfo.hu | 2014/9.

REsource  Some succeed, others don’tANALYSIS When could the regional housing markets recover? As in other parts of the continent, the property markets of the Central Eastern European region are characterised by polarisation. Certain countries are on their way out of the pit, whereas others are just approaching the bottom. TÜNDE MADUROVICZTANCSICS T he European housing mar- Hungary, property prices increased in Bul- autumn of 2013 to the first quarter of 2014, kets are characterised by dichot- garia, Romania and the Czech Republic in prices have risen by 1 percent. omy. The downhill trend follow- the first quarter of 2014. The downhill trend ing the world economic crisis of 2008 has continued in Croatia and Slovenia, whilst The Romanian market, which likewise suf- not stopped in many countries, and no Slovakia was characterised by stagnation fered a housing market shock involving a fall turnaround has yet occurred. At the same and a slight fall. of more than 40 percent between 2008 and time, another group of countries is typi- 2013 after the property market balloon burst, fied by a much more favourable environ- Where have prices begun to rise? is also showing signs of recovery, with resi- ment, and recovery can be observed. A rea- dential property prices rising in the first quar- son for confidence is also given by the fact The prices of residential properties are rising ter of 2014. This may give reason for hope, that the fall is slowing in several countries, in Bulgaria, which suffered one of the great- but the future is still in question. In recent and the market is approaching the bottom est price falls in the crisis, with housing los- years a rise in the first quarter has been fol- of the pit. The prices of residential proper- ing almost 30 percent of its value between lowed by a fall again in the rest of the year. ties increased most in Ireland, the United 2008 and 2010. The crash had eased off by Kingdom, Sweden and Germany during the 2013, but even so there was a fall of a fur- In comparison with the region, Hun- past year, whereas the greatest fall was suf- ther 6 percent. In the background of the gary belongs to the middle field with regard fered by markets in Italy, Holland, Spain and huge drop of 6 years ago was a price bubble to the effects of the crisis on prices, with a Portugal. generated by enormous foreign demand due housing market price fall of around 18 per- The crisis also brought huge losses to to the approaching accession of the country cent occurring between the zenith and the the property market in the Central Eastern to the EU, which then burst with the credit nadir. In the first quarter of the present year European region, and the present dichotomy crisis of 2008. Many regarded the country prices have shown a rise of close to 2 per- typical of the continent’s property markets as the next Spain. The rise experienced at cent compared with the last quarter of 2013, is found in these countries too. Apart from present is therefore positive news, but the which may be a sign of recovery. increase is by no means drastic. From the Of the countries in the region, in the Czech Republic, likewise showing signs of Housing price trends (2010=100) Housing construction trends 2010=100 105 135 100 CZ AT SK BG 95 115 PL RO 90 CZ 85 SK HR 80 BG 75 95 HU SLO 75 SLO 55 RO HR HU 35 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 SOURCE: EUROSTAT, BIS, RESOURCE SOURCE: EUROSTAT, RESOURCE 2014/9. | www.resourceinfo.hu

 REsourceupswing, there was a much smaller fall com- the property markets of Croatia and Slove- ber of permits reach the level experienced in ANALYSISpared with the above with regard to hous- nia are clearly performing the worst. The 2010. Here growth was discernible right uping prices. Compared with the third quarter only positive thing that can be said is that to the second quarter of 2014, although aof 2008 which is regarded as the peak, the the price fall seems to be slowing. The Croa- sight check in expansion is seen with respectfall in residential property prices remained tian market is still groaning under the losses to the past quarter.under 10 percent up till the first quar- caused by the earlier bursting of the residen-ter of 2013, and since then a slight growth tial property price bubble, which was created But positive signs have also appearedhas been experienced with prices rising by due to increased interest from foreign inves- in other countries, although these are stilla little more than 1 percent between the tors, as in Bulgaria and Romania. rather fresh at present. The new data fromlast quarter of 2013 and the first quarter of the second quarter of 2014 further con-2014. Prices are also rising in Poland, where In contrast to the price trends, trends firm the hope of resurrection, growth hav-housing market players experienced a rise in the number of transactions was much ing continued in several countries. Theseof more than 2.2 percent between the first more similar in the various countries, the include the Czech Republic and Hungary,and last quarters of 2013. Prices also rose in most residential properties changing hands but favourable signs are also appearing inUkraine in 2012 and 2013 on the residential between 2006 and 2008 in the countries of Poland. Construction is being launchedproperty market which in any case only suf- the region. Growth in residential property from the lowest level in the case of Hungary,fered a slight fall of 7 percent in total follow- sales is seen at present in Hungary, Romania and will still not reach even half of the 2010ing the crisis. At the same time this tendency and Bulgaria, although the rise is rather slow. rate.could be broken due to the Ukrainian crisis. At the same time, the number of transac- tions continues to fall in Croatia, according What can we count on in the future? Of the countries in the region, Slovakia to data from the OTP Jelzálogbank (Mort-is still characterised by stagnation, which gage Bank). Concerning the housing market trends, ithas lasted for more than a year. So we still is worthwhile examining economic devel-need to wait for a significant recovery in Where has construction begun? opment in the individual countries, as thisthis county which suffered a fall in residen- can have significant influence on the prop-tial property prices of a little more than 24 The crisis discouraged developers from erty market. In the case of the region it canpercent during the crisis. Prices are likewise engaging in housing construction, as is be said that following the fallback of 2012,stagnating in Austria, which is the only one clearly shown by the drastic fall in the num- the economy in ever more countries onceof the countries in consideration which has ber of building permits. This was most again entered a growth phase in 2013, orexperienced a significant growth in prices noticeable in Hungary, but developments the extent of fallback eased off, which maysince the crisis broke. The value of residen- also dropped off greatly in Bulgaria and Cro- have a positive effect on the housing mar-tial property in Vienna has been rising since atia. ket. Last year, economic prospects improved2004, so almost twice as much had to be paid in Romania, Hungary and Bulgaria, and thefor homes at the end of 2013 than 9 years At present the continent is also divided extent of fallback dropped in the Czechearlier, according to data from the Austrian with regard to trends in the numbers of Republic and Slovenia.National Bank. Of the countries in the region, building permits, although developments are being launched in ever more countries. In light of the figures we can be confi- In the region, only in Bulgaria does the num- dent in respect of several countries that the negative trend characteristic of recent years Annual changes in GDP in the CEE countries (%) will finally turn round this year, and this will perhaps even persist. In Bulgaria the trend15 in housing construction indicates recovery, as do the prices, but we can also hope for Bulgaria Austria Slovenia the resurrection of the Hungarian housing market, where besides the rise in prices, the Czech Republic Poland Slovakia number of transactions seems to be expand- ing. There is positive news in the case of10 Hungary Romania Romania too, such as a growth in the num- ber of transactions, but on the whole the5 market is just about convalescing.0 For the time being, the residential prop- 2007 2008 2009 2010 2011 2012 2013 erty market in Croatia has not fully come round since the crisis, with neither prices-5 nor construction making an imminent turn- around likely, and furthermore the number-10 of sales is falling. SOURCE: EUROSTAT, RESOURCE www.resourceinfo.hu | 2014/9.

REsource ANALYSIS The Hungarian housing tres of economically less prosperous coun- market is really reviving ties and regions, continue to bring the aver- age down, whereas the capital city and the The tediously reiterated crisis and its effects are slowly beginning to centres of production signify powerful bas- fade and a new world is appearing, the wings of a system based on new tions with respect to both transactions and foundations and values gradually unfolding above the ruins of the hous- the turnaround of average prices to growth ing market, with regard to sellers, buyer and financers alike. We can on a local level. only trust that the clarification process which has lasted for many years will persist, and indeed continue, and the market will not quickly forget Prices the lessons learnt from the passing crisis. The changes in average prices can be and GERGELY DITRÓY are reckoned on the basis of various calcula- tion methods. The Central Statistical Office A lthough slowly, instead of over- ket growth preceding the crisis. And the (KSH) publishes several different types of priced properties, realistic offer data from recent months show that follow- data series, of which we have taken the sta- prices are beginning to appear, pri- ing the seven lean years and a persistent fall tistics examining pure price changes as a marily in those areas still today dominated in average prices, an increasing number are basis. It can be clearly seen from the statis- by a total lack of demand. Ever more delib- thinking that the time has come to realise tics office’s data series that when quality is erately, buyers are seeking and purchasing postponed moves, investments anticipating held constant a kind of positive trend can from the properties on sale in accordance the nadir, and purchases arising from other be seen (at least a reduction in the extent of with their own existing means and require- changes in life situations. fallback), whilst the general price indices still ments, and we can only trust that this will point downwards. The difference here, how- remain so in the long term. And thanks to Opinions that the Hungarian housing ever, lies in the details already referred to. those hundreds of thousands who have got market, and principally certain segments The prices of better quality, well-located sec- into trouble over foreign currency loans, and of it, is now no longer on a downward ond-hand homes (both within the country the discontinuation of such loans, financ- slope but at the beginning of a rise, are also and the cities) have already stabilised, indeed ers are much more circumspect at present attested by mutually supporting data. The they have begun to rise slightly, but the prop- in providing credit to home buyers requir- signs of stabilisation and growth, however, erties involved in other transactions con- ing mortgages. The market has been able to as can unfortunately be perceived ever more tinue to bring the average down considerably. create a basis for slow growth, without any strikingly in society as well, do not pertain to kind of state contribution, which promises every segment of the housing market. With More sales and purchases to be decidedly more stable than the mar- regard to the still struggling prices, smaller towns and settlements, as well as the cen- One of the most striking of the positive signs, which is decidedly important not only with regard to the housing market, but also the stability and stabilisation of house- holds and credit institutions, as well as their trust relationships, is the amount of lending. Second hand dwellins pure price change Monthly home mortgages in local currency (billion HUF) 103 70 60 101 50 40 99 30 20 97 10 95 0 93 2010=100 91 Corresponding period of the previous year=100 89 Corresponding period of the previous quarter year=100 87 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 2007/01 2007/05 2007/09 2008/01 2008/05 2008/09 2009/01 2009/05 2009/09 2010/01 2010/05 2010/09 2011/01 2011/05 2011/09 2012/01 2012/05 2012/09 2013/01 2013/05 2013/09 2014/01 2014/05 SOURCE: KSH, RESOURCE SOURCE: MNB, RESOURCE 2014/9. | www.resourceinfo.hu

 REsource Crime in your areaAlthough housing market prices are influ- tant criteria. In the latest report of Otthon- Budapest and data from the 44 most relevant ANALYSISenced primarily by location, the quality and térkép (Home Map), taking the data pub- settlements with respect to the housing mar-legal background of the given property and lished on the Hungarian Police crime map as ket, both in Budapest and in the provincialother technical and environmental factors, a basis, you can search the crime statistics for towns, for those settlements with the mosthouse hunters are laying increasing empha- the period in question on a street-by-street active tourism and night life, such as Siófok,sis on selecting not only an appropriate prop- level. This development enables you to inves- and the inner city districts in Budapest, theerty, but also an area with appropriate envi- tigate on the level of crime categories such crime statistics are sky high.ronmental features. The proximity of public as crimes related to motor vehicles, hometransport, schools and services can be incor- break-ins, violence against persons or other Of course it doesn’t hurt to note that theporated into the price of a given property crimes, to what extent your residential envi- average figures, as in the case of house prices,just as easily as, for instance, the technical ronment, or the area of your prospective new are not valid everywhere, as the majorityfeatures of the building. But when buying a residence, is infected in comparison with the of the crimes are registered in certain focalproperty, the green area index, or even the average. points (such as the Western Railway Stationcrime index of the location could be impor- – Nyugati pályaudvar – and surroundings) On the map including the districts of where huge crowds are constantly present.The huge fallback after the discontinuation monthly basis compared to the same peri- from an increasing number of good qual-of foreign currency loans (apart from the ods in the previous year. Meanwhile, the ity renovated flats and houses, which repre-final repayment period, as clearly seen on CSO’s official data shows that close to 3000 sent significant competition for new hous-the graph) was followed by a relatively sta- more sales were transacted on the Hun- ing and developers. It would certainly beble period of a monthly 15-20 billion HUF, garian housing market in the year 2013, so desirable with regard to the development ofwhich seemed to take wing in the middle trusting in the preliminary data from 2014, the housing market, if only from the stand-of 2014 and the latest data from July show the year 2012 clearly signified the bottom of point of business environment stability andnumbers of 26 billion HUF, following con- the pit with its total number of transactions job opportunities, if new housing develop-tinuous growth. Should this tendency con- amounting to 86 thousand. ments started up again, which is alreadytinue in a similar way, these processes could indicated by scattered signs. The recovery ofhave a significant positive effect, with regard What is definitely noteworthy, however, the new housing market is of course not pri-to both transactions and prices. and will be an interesting and specifically marily desirable from the standpoint of serv- important index in the future, are those ing the interests and profits of the develop- The encouraging signs are also confirmed new housing construction and sales figures ers, but it is a kind of mirror of the trends inby the estimates of the numbers of monthly which reached rock bottom last year. It is the solvency and the long-term confidencetransactions constantly updated by Duna indisputable, that those looking for quality of the population, as well as the stability ofHouse, which since the beginning of the property, who represent the most important the country.year have measured a 10-20% growth on a buyers on the present market, can chooseMonthly estimates of the number of residential transactions Number of home sales and homes built for sale10,000 Year Home sales as Second hand Of which Homes built 9,000 a whole homes New home for sale 8,000 7,000 2009 91,100 82,900 8,300 16,900 6,000 5,000 2010 90,300 85,500 4,800 10,700 4,000 2011 87,700 83,900 3,900 4,800 SOURCE: DUNA HOUSE BAROMETER, RESOURCE 2012 86,000 83,300 2,600 3,500July 2013 2013 88,700 86,400 2,300 3,200 Aug. 2013 Sept. 2013 Oct. 2013 Nov. 2013 Dec. 2013 Jan. 2014 Febr. 2014 March 2014 April 2014 May 2014 June 2014 July 2014 Aug. 2014 SOURCE: KSH, RESOURCE www.resourceinfo.hu | 2014/9.

REsource SAPNOANLSYSOIRSED ARTICLE Prices hit a record low on the Hungarian housing market Due to the continuous falling of prices, Hungary now has one of the least expensive housing markets in the European Union. The low price levels favor buyers, and the decreasing interest rates on mortgage loans and increasing government support are now coupled with a modest new housing supply. The FHB House Price Index provides a deeper understanding of Hungarian housing market processes, providing an accurate picture of the current price levels and predicting future trends. How did Hungary become tain its level of demand for a few years, with the (less than € 1,000/square meter) as well as a very the cheapest? volume of loans granted on par with the previous modest number of newly built homes. Hungarian period. After the subsidies were withdrawn, foreign prices are considered low even for the CEE region. FHB’s House Price Index covers residential market currency loans, at that point featuring lower inter- events over the past 15 years. With this informa- est rates, became much more popular – and thus Recently, however, several factors that influ- tion, we can divide the decade behind us into four began the population’s foreign currency indebted- ence the housing market have begun evolving in a distinct eras. The first period, from 1998 to the end ness. This long upward trend was about to change positive direction in Hungary. For one, the govern- of 2000, represents a radical increase in both nom- at the end of 2007 when, suddenly, several impor- ment is supporting home purchases more actively through various measures. Meanwhile, it seems Annual change of the FHB Index in nominal terms (%) FHB Index from Q1 2000 to Q1 2014 (2000 = 100) 50 250 156.9 45 40 200.7 35 200 30 25 154.9 20 150 15 10 100 80.2 5 0 50 FHB Index nominal FHB Index real -5 45.6 -10 0 -15 Source: FHB 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1998 Q1 1999 Q1 2000 Q1 2001 Q1 2002 Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 Source: FHB inal and real prices. Over the period of three years, tant residential market indicators began to point in that the Hungarian economy is slowly beginning the value of homes increased by 132 percent and the same direction: supply was saturated, demand to recover. Though not spectacularly, the economy their value adjusted for inflation almost doubled. decreased, the available income (that had at first has at least started to grow. Thirdly, interest rates Favorable changes in the economy were respon- leveled off) started decreasing, and there were an have been steadily decreasing over the past year. sible for this trend. The upward trend in residential increasing number of reports from abroad declar- The Hungarian National Bank (MNB) has lowered its prices continued between the beginning of 2001 ing the end of the real estate boom. rate to a record low (2.1 percent on the 23rd July and the end of 2003. Yet, compared to the above, 2014). In addition to all these positive factors, the it was much more sedate, with an average 11 per- In the FHB Home Price Index’s historic timeline, Hungarian housing market has accumulated a con- cent increase in value, when adjusted for inflation. the peak value is located in the first quarter of 2008, siderable amount of postponed demand, since the Demand increased since discounted financing faced where the gradual decline in home prices begins. number of sales transactions has been quite low a revitalized supply, as new home construction also Compared to the then-highest residential price over the last six years. started increasing from 2001 onwards. The system of levels, national averages were 6.3 percent lower in subsidies became untenable for the budget by 2003 2009. The gradual decline in residential prices took The so-called First Home Buyers segment – and the first stringency measures took place at this place alongside a decrease in turnover, which was analyzed separately by FHB – will profit from this. point, likewise affecting the price of homes. more visible in decreasing turnover for used homes Thanks to increasing income and more generous than in a decline in the number of newly built ones. state subsidies this segment has more favorable The reigning in of the subsidy system had an entry opportunities, and the Hungarian housing effect on the residential market with home val- Price level among the lowest market has become more affordable. ues’ steep upward trend finally breaking course in in the European Union 2003. In the following years only a 4 percent rate of To whom is the House Price increase was seen as at that point the price increase Since 2008, the trend has been clear: nominal hous- Index useful? was just keeping pace with the rate of inflation. ing prices in Hungary continue to decline, thus, we Despite tightening control over the system of sub- have been experiencing a downward trend for the The FHB House Price Index and its associated real sidies, competition in lending was able to main- last six years. Thanks to this, Hungary now has one estate professional services are useful to all eco- of the lowest average prices in the European Union nomic entities that are in any way related to the 2014/98.–9|. w| wwww.rwes.oreusrocuerincefoin.hfou.hu

 REsource Change of the house price index on the strongest Price changes in certain counties of Hungary ASNPALOYNSSIOSRED ARTICLE submarkets and the FHB House Price Index (2008=100) 10%105 Győr-Moson-Sopron 5%100 Price changes (2010-2013, %)0% 095 20 40 60 80 100 120 140 160 180 200 -5% Bács-Kiskun Tolna Hajdú-Bihar90 -10% Zala Vas -15% -20% Csongrád SomogyPest Budapest -25% SzSz-Bereg Veszprém85 M4 area Nógrád Békés FHB House Price Index Fejér80 Towns close to motorways Western Hungary Jász-Nagykun-Szolnok Heves Baranya Komárom-Esztergom Balaton Budapest Downtown75 Borsod-Abaúj-Zemplén 2008q1 2008q2 -30% Average price/sqm in certain counties of Hungary (’000) 2008q3 2008q4 2009q1 2009q2 2009q3 2009q4 2010q1 2010q2 2010q3 2010q4 2011q1 2011q2 2011q3 2011q4 2012q1 2012q2 2012q3 2012q4 2013q1 2013q2 2013q3 2013q4 2014q1 Source: FHB, REsource Source: FHB, REsourcehousing market. An adequate understanding of the with positive (Győr-Moson-Sopron) and negative published quarterly, FHB offers its clients access tomarket is essential to making sensible, solid deci- (Borsod-Abaúj-Zemplén) extremes in the counties. updates on a range of detailed indicators. Thesesions. This applies to every developer, financial insti- indicators allow us to give detailed breakdownstution, agency, or fund management firm dealing in In the same way that various submarkets in terms of region and property type. This meansreal estate. reacted differently to the crisis (weaker markets our subscribers receive tailor-made analyses of the suffered more), change is also going to happen in evolution and/or the current situation of a specific For example, if a developer plans to launch a different ways. The strongest submarkets will be housing market segment, according to their busi-housing project on a given site, it is crucial they the first to improve, so firstly positive changes are ness and strategic needs or their interests.have an understanding of the immediate and wider expected in the highly developed areas of Westernimplications relating to the development area’s Hungary, in the inner districts of downtown Buda- FHB also produces forecastsenvironment and that they be able to identify the pest, and in the cities that can be reached withintrends associated with the planned development two hours from Budapest by motorway (Győr, Kec- FHB has launched another unique service, besidetype. In fact, this information is not only essential skemét, Székesfehérvár, Szeged and Szekszárd). the House Price Index: the FHB House Price Forecast.for the developer, but also for the bank that is fund- The outlook is also more optimistic regarding real It includes a one year forecast and is updated everying the project, since an essential understanding estate in Budapest with connections to the Kelen- six months. The method used in forecasting is basedof the market plays an important role in the final föld railway station and metro 4, and in cites near on three pillars. First, based on Hungarian and inter-decision to finance it. Last but not least, this holds Balaton. At the same time the Index also shows that national experience a certain correlation was iden-true for the real estate agencies as well: a realistic the value of flats and houses in the eastern counties tified between selected macroeconomic indicators,pricing strategy is key to the success of a new res- decreased further, and that they are increasingly financial and credit market indicators and the salesidential project. Without an intricate knowledge threatened by forced sales. Another important fac- volume and prices of housing. Second, FHB also usesof the market, this is impossible. While the nation- tor is the proportion of force-sold real estate in each verified local assessments for its forecasts.wide statistics regarding the current situation in submarket, because this figure is a good indicatorthe housing market are not very positive, there is of the tenacity of a certain market. In addition, other empirical facts, obtained fromalready a sense of movement, and in fact there are the analyses of other real estate crises cannot besubmarkets where change is imminent. The geo- The current situation reflects a sensitive stage in ignored either. Thus the experience gained fromgraphical breakdown of data from the FHB House the real estate market cycle, where detailed break- similar international crises and related observa-Price Index also highlights that there are significant downs of comprehensive and accurate data, as well tions are also built into the model. FHB’s projec-differences between the various submarkets. Aver- as high-quality real estate consulting services are tion model not only provides information aboutage national trends do not apply consistently in all vitally important. the future development of housing prices, but alsoregions. The national market is clearly polarized, takes into consideration the dynamics of the prices FHB offers much more than a basic nation-wide given the modifying effect of the crisis. housing price index. Alongside the indexes that areFHB 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 ManagerAddress: 1082 Budapest, Phone: +36 (1) 452-9208 Phone: +36 (1) 452-5930Üllői út 48. Mobile: +36 (30) 748-3913 Mobile: +36 (30) 964-6087 E-mail: [email protected] E-mail: [email protected] wwwww.rwe.sroeusorcuericnefion.fhou.hu| 2|01240/184–/9.

REsource  City developments in CEEANALYSIS Capital cities in the region have all evolved tremendously since the end of the socialist era. City centers acquired a completely new look and became more pedestrian-friendly, while infrastructure received much needed investment. Although the crisis called a halt to commercial real estate development in many cases, Warsaw, Prague, Budapest, Bratislava and Bucharest are still expanding both towards the sky and below ground thanks to infrastructural and cultural projects mostly financed by EU funds. As we take a look at some of the most important city development projects in CEE capitals it is apparent that these cities are on the right path to becoming modern, fully European metropolises. ÁKOS BUDAI mong Central European capi- a public square, allowing pedestrians to one element of the city’s ambitious trans- view performances. Some backstage areas portation plan, as the line will be further A tal cities Warsaw has seen the of the theatre will have glass walls to show extended to the airport, and the construc- biggest transformation over the outsiders what is happening in the building. tion of a fourth line is expected to begin last decades, and based on its skyline it is Poland’s largest cultural project is sched- next year. the most modern city in the region. War- uled to be completed by 2019 and is esti- saw already has more skyscrapers than Ber- mated to cost EUR 95 million. Vast infrastructure lin and the city’s downtown area always developments in Budapest appears to be under construction. Despite Warsaw is not the only regional capital the economic hardships Poland had to face with a major cultural construction proj- This year, the Hungarian capital saw the last year, growth in the city never stopped. ect under way. The historical building of completion of its most important, scandal- Sometimes, however, the city’s expansion the National Museum in Prague has been ous and costly infrastructural development was perhaps too ambitious, and resulted undergoing reconstruction since 2011. The project in decades. Metro line M4 was inau- in controversy. For example, the construc- exhibition space in the renovated and the gurated on March 28. Construction on the tion of a new office building (a EUR 30 extended building will be nearly doubled. 7.4 km line featuring 10 new stations started million project) had to be cancelled a few The new museum is expected to open in in 2006 and was scheduled to be finished by months ago because UNESCO pointed out June 2015. end-2009. The total cost of the first phase that the new building could damage the of Budapest’s new metro line was EUR 1.44 historic nature of the area. Nevertheless, There is a further similarity between billion (HUF 452.5 billion). Two extensions 338,000 square metres of new office space Warsaw and Prague’s city development (one on each end of the line) have been will be built in 2014 in Warsaw, more than plans. The Czech capital is also extending planned, but they are currently not funded the same value for Prague, Bratislava and its underground network; the new west- by the Budapest city government or the Bucharest combined. ern section of Line A is scheduled to open European Union. Poland co-hosted the UEFA Euro 2012 this year. The EUR 675 million project is just which required the completion of the NEW METRO LINE, BUDAPEST National Stadium, and triggered construc- tion works on a new metro line. Warsaw’s second underground line was expected to be finished before the 2012 event, but has been delayed to the end of 2014. After its opening, Line II will provide a new link between the two banks of the Vistula River and also give the city renewed public squares. Currently, one of the Polish capital’s big- gest projects is the construction of the Museum of Modern Art’s new building. The 25,000-square-metre complex will also house a theatre with a stage opening onto 2014/9. | www.resourceinfo.hu

Currently, the most anticipated infra- rebuilding of the so-called Old Bridge.  ANALYSISstructural project in Budapest is the The current project aiming to improve and REsourcereconstruction of the Buda side’s most redirect Bratislava’s city transport involvesneglected public square, Széll Kálmán extending the tram line from the city cen- A huge confer-tér. Work is scheduled to start this year ter across the Danube, via a newly built ence centreand is expected to be finished next year bridge, to the city’s most densely pop- to be born inalong with the expansion of the tram net- ulated Petržalka borough which is cur- Budapestwork in the area. Another tram line is also rently only served by buses. Further plansbeing extended on the Buda side provid- also include the reconstruction of several Within four years, a new congressing a new link between the two sides of streets and squares in the city center, and center suitable for accommodat-the Danube. Major reconstruction works building a cycling path. The total cost of ing 4000-5000 may be built in Buda-on several other tram lines are also under the project is expected to be around EUR pest. Preparations for the projectway. 59 million, with 85 percent of the sum were begun this year, which accord- coming from EU funds, on the condition ing to information from REsource will Budapest also has several cultural con- that the project is finished by the end of be revealed soon. According to thestruction projects planned. The complete 2015. developers’ expectations, after thereconstruction of the Buda Castle might project is completed Budapest couldstart this year and it is projected to go on Bucharest has recently seen skyscrap- become one of the five most popularfor ten years. Phase ‘zero’ of the project, ers rising up from the ground, although conference venues in the world, andthe renovation and extension of Várkert Romanian architects generally avoid one of the top three in Europe.Bazár was finished on August 28. The gov- designing tall buildings due to the city’sernment is also planning to create a new vulnerability to earthquakes. There is an According to data from the flash reportmuseum district in the City Park, where increasing need for shopping opportuni- recently issued by the Central Statisti-construction hasn’t started yet, but the ties in the Romanian capital, so construc- cal Office (KSH), in the first six monthsopening date has already been set for 2018, tion work started in July on a new shop- of the current year the number ofthe next election year. ping mall called Victoria City Center. The hotel guest nights in Hungary grew by mall, which is developed by a Canadian almost 6 percent to above 7.8 million.Skyscrapers on the rise? real estate investor on the former indus- Apart from March, the sector showed trial platform Textila Dacia, should be an increase in practically every monthThe construction of two triangular towers opened in October 2015. during this period. Furthermore, thecalled Panorama City next to the Danube upward market trend has also left itsin the center of Bratislava began last year. Furthermore, the city’s metro network mark on revenues. The hotels’ grossThe 108-metre-high buildings will house has been expanding rapidly in the past few accommodation fee income of moremore than 600 new apartments. They will years. Currently, a new section of line M5, than 129.8 billion HUF turned out tobe the tallest residential buildings in Slo- measuring 1.6 km with two new stations is be almost 10 percent higher than invakia and almost 6,500 tons of iron and under construction. Also, the first part of the same period of the previous year. In45,000 cubic meters of concrete will be new metro line M5 is expected to be com- the meantime the number of availableused for their construction. pleted by 2016 and the 7.2-km-long sec- rooms also showed a slight increase in tion will feature 10 stations. The expected the first half of this year, which clearly Currently the most important infra- total construction cost of Bucharest’s line indicates a cautious growth of investorstructural project in Bratislava is the confidence. According to statistics, in the first six months of the current year PRAGUE 1335 more rooms were registered than in the first half of last year, which corre- sponds to a rise of almost half a percent. If we examine guest arrivals in com- mercial accommodation in the first half of this year by tourist region, it turns out that Budapest continues to play its lead- ing role. So much so that the number of guest nights in the capital in the first www.resourceinfo.hu | 2014/9.

REsource ANALYSIS Project of special significance but a governmental resolution of last year five most popular conference venues in the has brought the development into a rea- world, and one of the top three in Europe. A governmental resolution from the end of sonable timeframe. The Hungarian tour- In his opinion, all the conditions are met November 2013 provides for preparations ist trade has long lacked a facility able to for this to be achieved: the capital of Hun- for the conference center: it calls upon accommodate even five thousand people. gary is easily accessible from all parts of the the national development minister, by For lack of this, truly significant world con- world, it has a pleasant climate, there is a means of the Hungarian National Holding ferences cannot come to Budapest. In Feb- good price-value ratio relative to the stan- LLC, to make an immediate proposal for ruary this year, in his speech for the open- dard of services. Among the existing condi- the property deemed most suitable for ing of the spring session of parliament, tions he also lists that sufficient hotel rooms implementation of the project, and to Prime Minister Viktor Orbán even desig- are available in all categories, and further- take the necessary measures in order to nated a location for the project. Accord- more, public safety in Budapest is top-rank- guarantee state building authorisation. ingly, the facility will be built in the Millen- ing in Europe, and it has a good image. The head of portfolio must work out a nium City Center. detailed legal and financial scheme for As previously stated by Balázs Fürjes, he implementation with the assistance of the Balázs Fürjes, the government commis- deems that the congress center to be built government commissioner responsible for sioner responsible for special Budapest will be an investment which will operate to individual projects of special significance projects, has previously stated that as yet full capacity, be profitable for the national in Budapest, which will guarantee that the no modern conference center for at least 4 economy and pay for itself within 10 years, project (within the scope of the proper form thousand people and satisfying 21st century and which will create new jobs during both of public procurement) is implemented as a requirements has been built in Budapest. construction and operation. It will bring state investment, and that the constructed The work must therefore be started with a additional revenue for Budapest hotels, edifice will come into state ownership. knowledge of international experience. The tourism, and for SMEs active in event or government commissioner also considers it travel organisation – he added. And all this half of the current year, alongside a growth important that the center be designed by a will result is constantly increasing income index of an ample 3 percent, exceeded 3.6 Hungarian designer, and built by Hungarian from tax and contributions, as well as fall- million. Furthermore, the greatest growth companies. According to his briefing, one ing expenditure for the budget. The expan- here is thanks to the increased number of the first steps is to choose a consultant sion of conference tourism will at the same of foreign tourists. Whilst the number of in an open public procurement competi- time increase the number of visitors in lei- nights spent by foreign guests in Budapest tion, who will examine international exam- sure time tourism, as a traveller to a confer- rose from 3066 to 3174, the rise of domes- ples in order to help find the best concept ence for business purposes may later return tic tourist guest nights from 417 to 427 to be realised in Budapest. The designer to the city to relax for a longer period. The scarcely added proportionally to the statis- will also be selected in an open competi- government commissioner observed: the tics this year. tion – he added. The cost of the project will development of conference tourism is an be determined in knowledge of the designs, investment which will pay for itself, as the In spite of the constantly improving sta- and financing will be arranged for following highest per capita spending is measured in tistical index, numerous important factors this – said the government commissioner. the business segment. are still needed for an explosion in tourism He noted: domestic and EU resources may and by means of this the hotel development come into consideration. According to Balázs Fürjes, this devel- market. According to experts, besides the opment could be realised within 4 years. appearance of strong investors and positive For that matter, it is no coincidence that According to REsource’s information, the financing agencies, the greatest need is for Viktor Orbán mentioned the Millennium feasibility study needed for this, the proj- the development of tourism. Here we must City Center as the site for the conference ect budget and the designs will soon be think primarily of remedying the basic defi- center for four to five thousand people in released. ciencies as soon as possible. These include his February speech. The Hungarian state the development of air traffic, appropriate had purchased the open space next to the MILLENIUM CITY CENTER promotion of the country and Budapest, Palace of Arts from TriGranit Development and the construction of a conference cen- Corporation at the beginning of 2014. The ter similar to that of Vienna. center will be built on this plot of almost 13 thousand square metres, as already planned A huge conference center earlier. will be built; but when? “The project will be implemented with For almost a decade now there has been the active participation of the tourism sec- talk of a new Budapest conference center, tor” – stated the government commis- sioner previously, who deems it a realis- tic goal for Budapest to be among the first 2014/9. | www.resourceinfo.hu

Real estate developers in CEE  REsource Type of real estate development Presence in the region Company headquarters Company contact – phone number, headquarters/ regional website, e-mail headquarters office (city, country) retail industrial, logistics residential hotel Hungary Poland Czech Republic Slovakia Austria Other LISTCompany name Current main projects in the region and in Hungary – name, planned delivery yearAFI Europe N.V. Amsterdam, üüüü – AFI City (CZ), AFI Karlin Business Park (CZ) üüü – – Germany,Bulgaria, P: +31 204 218 928 The Netherlands Romania, Serbia afi-europe.eu info@afi-europe.euAIG/Lincoln Kft. Budapest, Hungary ü ü ü – – The Quadrum Phase II, III (HU) – 2015, 2018 ü ü ü ü – Bulgaria, Romania, P: +36 1 382 5100 www.aiglincoln.hu [email protected] Real Estate Vienna, Austria ü– –ü– TrIIIple (AU) – 2018 – – – –ü P: +431 7120 742-0Development Rosenhöfe (AU) – Q4 2015 – www.are-development.at offi[email protected] Immo Vienna, Austria ü– – –ü Avia (PL) – Q4 2014 ü ü – ü ü Romania, Serbia P: +431 532 5907 www.caimmo.com offi[email protected] Park S.A. Warsaw, Poland üü – ü – RoyalWilanow (PL) – Q3 2015 –ü– – – – P: +48 22 318 8888 www.capitalpark.pl [email protected] Property Zrt. Budapest, Hungary ü – üü – Duna Intermodal Logistics Centre (HU) – ü– – – – P: + 36 1 802 7300 2015-2020 – www.cbsproperty.hu [email protected] International S.A. Brussels, Belgium üü – – – Dózsa Office Complex (HU) – Q4 2016 Belgium, France, P: +32 26 600 070 Margit Corner (HU) – 2016 ü – – – – Luxembourg, Spain, www.codic.eu V48 (HU) – Q1 2016 Romania P: +36 1 225 0912ConvergenCE Budapest, Hungary üüü – – N.A. üü – ü – – F: +36 1 375 0445 www.convergen-ce.com offi[email protected] Property Group Luxembourg, üüüüü Quadrio (CZ) – 2014 ü ü ü ü – Germany, France, P: +352 264 767-1 Luxembourg Balance Building (HU) – 2015 Romania www.cpipg.com [email protected] P: +36 1 225 6600 www.cpigroup.hu [email protected] www.resourceinfo.hu | 2014/9.

REsource  Real estate developers in CEE Type of real estate development Presence in the regionLIST Company Company headquarters headquarters/ contact – phone number, officeregional retailheadquarters website, e-mail industrial, logistics(city, country) residential hotel Hungary Poland Czech Republic Slovakia Austria Other Company name Current main projects in the region and in Hungary – name, planned delivery year Crestyl Management A.S. Prague, Czech Republic ü ü – ü – Dock Phase II. (CZ) – Q2 2015 – –ü– – P: +420 226 202 800/801 Central Opava (CZ) – www.crestyl.com Central Kladno (CZ) Central Jablonec (CZ) [email protected] ECE Projektmanagement Budapest, Hungary –ü– – – Aquincum Központ (HU) – 2017 Denmark, Italy, P: +36 1 434 8208 Budapest Kft. ü ü ü ü ü Bulgaria, Romania, F: +36 1 434 8218 Greece, Turkey www.ece.com ECE Projektmanagement Hamburg, Germany üüü – ü Puro (AU) – Q2 2016 ü ü ü ü ü Germany, Spain, Italy, P: +49 40 60 60 60 G.m.b.H & Co. KG Arkady Hradec Kralove (CZ) – 2017 Switzerland www.ece.com Zielone Arkady, Bydgoszcz (PL) – Q3 2016 Echo Investment S.A. Kielce, Poland üü – üü Mundo Center (HU) – 2016/17 üü – – – Romania P: +36 30 429 2333, Erste Group Immorent AG Vienna, Austria Q22Tower (PL) – 2016 +48 41 33 33 333 www.echo.com.pl orsolya.stefankovits@ echo.com.pl offi[email protected] P: +43 (0)5 0100 27000 Enterprise Office Center (CZ), Erste Campus (AU), Bulgaria, Romania, F: +43 (0)5 0100 27204 ü ü ü ü ü Immopark Praha (CZ), Immopark Zilina (SLO), ü – ü ü ü Serbia, Croatia, offi[email protected] Innovation Park Puchstrasse (AU), Silo (AU) Slovenia www. erstegroupimmorent.com Futureal Budapest, Hungary üü – ü – Budapest One (HU) – Q1 2017 üü – – – – P: +36 1 266 2181 VisionTowers (HU) Q3-Q4 2014 www.futureal.hu [email protected] Corvin Corner Q3-Q4 2014 Ghelamco Poland Warsaw, Poland ü– –ü– N.A. –ü– – – Belgium, Russia, P: +48 22 455 1600 Ukraine www.ghelamco.com [email protected] Globe Trade Centre S.A. Warsaw, Poland üü – ü – N.A. ü ü ü ü – Croatia, Serbia, P: +48 22 60 60 700 Romania, Bulgaria www.gtc.com.pl Goodman Group Warsaw, Poland Goodman Üllő Airport Logistics Centre (HU), – www.goodman.com Goodman Krakow Airport Logistics Centre (PL), – – ü – – Pomeranian Logistics Centre (PL), Goodman Mlada ü ü ü ü ü Boleslav Logistics Centre (PL), Goodman Senec Logistics Centre (PL) 2014/9. | www.resourceinfo.hu

Real estate developers in CEE  REsource Type of real estate development Presence in the region Company headquarters Company contact – phone number, headquarters/ regional website, e-mail headquarters office (city, country) retail industrial, logistics residential hotel Hungary Poland Czech Republic Slovakia Austria Other LISTCompany name Current main projects in the region and in Hungary – name, planned delivery yearGraphisoft Park Budapest, Hungary ü– – – – Graphisoft Park (HU) – 2020 ü– – – – – www.graphisoftpark.comIngatlanfejlesztő Kft. [email protected] Twin City North (SK) – 2019,Twin City South (SK) – 2016-2024, Metronom Business Center (CZ) – 2015, Postepu 14 (PL) – 2015, GdanskiHB Reavis Real Estate Luxembourg, üüü – – Business Center II (PL) – 2016,West Station I-II. ü ü ü ü – – www.hbreavis.com Luxembourg (PL) – 2016-2018,Aupark Shopping CenterTrencin [email protected] (SK), Aupark Shopping Center Karvina (CZ), Aupark Shopping Center Hradec Kralove (CZ), Aupark Shopping Center Brno (CZ)Hochtief Development Warsaw, Poland ü– – – – South Park (PL) – Q1 2015, Copernicus Square – ü– – – – P: +48 22 335 77 77 (PL) – 2016 www. hochtief-development.plHorizon Development Budapest, Hungary ü– – – – Promenade Gardens (HU) – 2016 ü– – – – P: +36 1 473 1209 – www.horizondevelopment.hu [email protected] AG Vienna, Austria ü– – – – Nimbus Office (PL) P: + 43 1 88 090 Jungmannova 15 (CZ) ü ü ü ü ü Germany, Romania www.immofinanz.com mail@immofinanz.comJ&T Real Estate Bratislava, Slovakia üüüüü Rustonka (CZ) – – üü – – P: +421 2 5941 8200 Panorama City (SK) www.jtre.sk Zuckermandel (SK) [email protected] Westend Gate (SK)KÉSZ Csoport Budapest, Hungary ü–ü–ü N.A. üü – üü Russia, Belarus, P: +36 1 476 6900 Serbia, Ukraine www.kesz.hu [email protected]&wooD Warsaw, Poland üüü – – Hampton Park (PL) – ü– – – Romania, Russia P: +48 22 571 44 44 www.liebrecht-wood.comMayland Real Estate Warsaw, Poland –ü– – – Serenade (PL) – 2016 –ü– – – – P: +48 22 546 98 00 www.mayland.pl www.resourceinfo.hu | 2014/9.

REsource  Real estate developers in CEE Type of real estate development Presence in the regionLIST Company Company headquarters headquarters/ contact – phone number, officeregional retailheadquarters website, e-mail industrial, logistics(city, country) residential hotel Hungary Poland Czech Republic Slovakia Austria Other Company name Current main projects in the region and in Hungary – name, planned delivery year Metrodom Kft. Budapest, Hungary –ü – ü – Metrodom City Home (HU) – Q2 2015 ü – – – – – P: +36 1 211 2060 Metrodom Szent László út 41-43. (HU) – Q4 2015 www.metrodom.hu [email protected] Forum Radunia (PL) – 2016 Belgium, Germany, P: +31 (0) 182 690 900 Forum Poprad (SLO) – 2015 Multi Gouda,The Netherlands – ü – – – – ü ü ü – Italy, Portugal, Spain, www.multi.eu Ukraine, Turkey [email protected] OTP Ingatlan Zrt. Budapest, Hungary – – –ü– Pauler Ház (HU) – Q4 2014 ü– – – – P: +36 1 373 3800 Platán Lakókert (HU) – Q1 2015 – www.otpingatlan.hu [email protected] Penta Investments Bratislava, Slovakia üü – ü – Culenova (SLO) – üüü – – www.pentainvestments.com Mokotow (PL) – Q1 2017 Waltrovka (CZ) Plaza Centers Group Amsterdam, The üü – – – Kielce Plaza (PL) P: +31 20 344 9560 Netherlands Leszno Plaza (PL) ü ü ü – – Latvia www.plazacenters.com Lodz (PL) [email protected] Portus Buda Group Zrt. Budapest, Hungary üü – ü – CDO – Calasanz Downtown Offices (HU) ü– – – – P: +36 1 488 7476 Inspired Garden Project (HU) – www.portusbudagroup.com offi[email protected] PPF Real Estate Prague, Czech Republic ü ü – ü – ArtGen Office Gallery (CZ) – Q4 2014, LINE – –ü– – Germany, The P: +420 224 174 555 (CZ) – 2016 Netherlands www.ppfreal.com [email protected] Proform Zrt. Budapest, Hungary üü – – ü N.A. ü– – – – – P: 36 1 250 4288 www.proform.hu Prologis Warsaw, Poland Prologis Park-Sziget (HU) DC6 üüüüü Romania P: +48 22 218 36 00 www.prologiscee.com Budapest, Hungary [email protected] Prague, Czech Republic – – ü – – Bratislava, Slovakia Bucharest, Romania 2014/9. | www.resourceinfo.hu

Real estate developers in CEE  REsource Type of real estate development Presence in the region Company headquarters Company Current main projects contact – phone number, headquarters/ in the region and in Hungary regional – name, planned delivery year website, e-mailCompany name headquarters office (city, country) retail industrial, logistics residential hotel Hungary Poland Czech Republic Slovakia Austria Other LISTRaiffeisen Evolution Project Wien, Austria üü – üü Kerepesi Business Park (HU) – 2016 üüüüü P: +36 1 346 6400,Development GmbH +43 171 7060 – www.raiffeisenevolution.com office@raiffeisenevolution. com Prime Corporate Center (PL) – 2015Savills Poland Warsaw, Poland üü – – – West Point 120 (PL) – 2016 –ü– – – – P:+48 022 222 4000 Promenady ZITA (PL) Q4 2014 www.savills.pl [email protected] Sukcesja Shopping and Entertainment Center (PL) – 2015 Belariepark II. (CZ), Rohan City (CZ), Hrebenky P: +420 234 005 551 www.sekyragroup.czSekyra Group Prague, Czech Republic ü – – ü – (CZ),Smichov City (CZ), Zizkov City (CZ), Nové – – ü – – – [email protected] Tuhnice (CZ), Zamecky Dvur (CZ), Opatov Park II. (CZ), Dejvice Center (CZ)Shikun & Binui R.E.D. Budapest, Hungary üüüüü GardenVille Kamaraerdő (HU) üüü – ü Romania P: +36 1 437 8280Hungary Amsterdam, Holland GardenVilleTükörhegy (HU) www.shikunbinui.hu offi[email protected] GardenVille Üröm (HU)S IMMO AG Wien, Austria üü – üü N.A. ü – ü ü ü Bulgaria, Romania, P: 43 (0) 50 100-27521 Croatia www.simmoag.at offi[email protected] Property Budapest, Hungary üü – – – Nordic Light Offices (HU) – 2016 üüü – – – P:+36 1 382 9100Hungary Ltd. www.skanska.hu [email protected] Sp Warsaw, Poland ü – – üü Business Garden phase II. (PL) –ü– – – – P: +48 22 820 9151 Business Garden Poznan (PL) www.swedecenter.pl Business GardenWroclaw phase I (PL) [email protected] GdyniaWaterfront I. (PL)TriGranit Fejlesztési Zrt. Budapest, Hungary üü – üü Bonarka 4 Business Center ü ü – ü – Russia, Croatia P: +36 1 374 5600 Building E (PL) – Q2 2015 www.trigranit.com Bonarka 4 Business Center [email protected] Building F (PL) – Q1 2016WING Zrt. Budapest, Hungary üüü – ü East Gate Business Park (HU) ü– – – – – P: +36 1 451 4760 Dél-pesti Üzleti Park (HU) [email protected] V17 Office building (HU) – Q3 2016 www.wing.hu www.resourceinfo.hu | 2014/9.

REsource  Real estate developments in CEE Name of real estate Location of real estate Name of real estate Total gross size Est. monthly Est. time of Real estate developer/Leasing agent(s) development development developer of the building rent (€/sqm) delivery Country AFI City (sqm) phone website, e-mailLIST CZ Prague, Czech Republic AFI Europe 150,635 N.A. planned P: +420 255 743 111 afi-europe.eu AFI Karlin Business Center CZ Karlin, Prague 8, Czech Republic AFI Europe 12,289 N.A. planned P: +420 255 743 111 afi-europe.eu Aquincum Központ HU District III., Budapest, Hungary Arkady Hradec Kralove CZ Hradec Kralove ECE Projektmanagement 140,000 N.A. 2017 P: +36 1 434 8208 www.ece.com ArtGen Office Gallery CZ Prague, Czech Republic Budapest Kft. ECE Projektmanagement G.m.b.H 39,000 N.A. 2017 P: +49 40 60 60 60 www.ece.com & Co. KG PPF Real Estate 25,500 N.A. Q4 2014 P: +420 224 174 555 www.ppfreal.com [email protected] Aupark Shopping Center Brno CZ Brno, Czech Republic HB Reavis Group 31,220 N.A. 2017 P: +420 225 001 900 www.hbreavis.com HB Reavis Group 25,900 [email protected] HB Reavis Group 11,400 Aupark Shopping Center Hradec CZ Hradec Kralove, Czech Republic N.A. 2016 P: +420 225 001 900 www.hbreavis.com Kralove [email protected] Aupark Shopping Center Karvina CZ Karvina, Czech Republic N.A. 2017 P: +420 225 001 900 www.hbreavis.com [email protected] Aupark Shopping Center Trencin SLO Trencin, Slovakia HB Reavis Slovakia 10,100 N.A. 2017 P: +421 2 58 30 30 30 www.hbreavis.com [email protected] Avia PL Jana Pawla II. 41, 31-864 Krakow, Poland CA Immo & GD&K Group 12,500 N.A Q4 2014 P: +48 78 400 55 44 www.aviaoffices.pl [email protected] Balance Building H 99.Váci Road, Budapest, 1139, Hungary CPI Property Group 15,952 9.9 2015 P: +36 1 225 6600 www.cpigroup.hu [email protected] Buliding E: Q2 2015 www.trigranit.com Building F Q1 2016 Bonarka 4 Business (B4B) PL 9 Puszkarska, 30-644 Krakow, Poland TriGranit Fejlesztési Zrt. N.A. 14 P: +48 662 295 050 [email protected] www.bonarka4business.pl Budapest One HU Őrmező, Budapest, Hungary Futureal 70,000 N.A. Q1 2017 P: +36 1 266 2181 www.futureal.hu [email protected] Business Garden Poznan PL Poznan, Poland SwedeCenter Sp 80,000 N.A. under construction P: +48 22 820 9151 www.swedecenter.pl [email protected] Business Garden Warsaw PL Warsaw, Poland SwedeCenter Sp 58,000 N.A. Phase II. planned P: +48 22 820 9151 www.swedecenter.pl [email protected] Business Garden Wroclaw PL Wroclaw, Poland SwedeCenter Sp 100,000 N.A. Q4 2014 P: +48 22 820 9151 www.swedecenter.pl [email protected] CDO – Calasanz Downtown Office HU Váci Street, Budapest, Hungary Portus Buda Group Zrt. 21,000 N.A. N.A. P: +36 1 488 7476 www.cdo.hu [email protected] Central Jablonec CZ Jablonec nad Nisou, Czech Republic Crestyl Management A.S. 16,500 N.A. in preparation P: +420 226 202 800/801 www.crestyl.com [email protected] Central Kladno CZ Kladno, Czech Republic Crestyl Management A.S. 29,000 N.A. in preparation P: +420 226 202 800/801 www.crestyl.com [email protected] Central Opava CZ Opava, Czech Republic Crestyl Management A.S. 18,000 N.A. in preparation P: +420 226 202 800/801 www.crestyl.com [email protected] Copernicus Square PL Warsaw, Poland Hochtief Development Poland 42,199 N.A. 2016 P: +48 22 335 7777 www. hochtief-development.pl Corso Court CZ Prague, Czech Republic Skanska Property Czech Republic 17,000 N.A. Q2 2015 P: +420 737 256 304 www.skanska.cz 2014/9. | www.resourceinfo.hu

 REsource Real estate developments in CEEName of real estate Location of real estate Name of real estate Total gross size Est. monthly Est. time of Real estate developer/Leasing agent(s)development development developer of the building rent (€/sqm) deliveryCorvin Corner Country (sqm)Culenova phone website, e-mailDejvice Center HU 31–33. Futó Street, Budapest 1082, Futureal 6,200 14 Q3-Q4 2014 P: +36 1 266 2181 www.futureal.hu LIST Hungary [email protected] SLO Bratislava, Slovakia Penta Investments 150,000 N.A. in preparation P: +421 2 57788 111 www.pentainvestments.com bratislava@ pentainvestments.com CZ Prague, Czech Republic Sekyra Group N.A. N.A. in preparation P: 420 234 005 551-2 www.sekyragroup.cz [email protected]él-Pesti Üzleti Park HU 36–38.Táblás Street, Budapest, 1097, WING Zrt. N.A. N.A. continuous P: +36 1 451 4760 www.wing.hu Hungary [email protected] CZ Prague, Czech Republic Crestyl Management A.S. 120,000 N.A. Q2 2015 P: +420 226 202 800/801 www.crestyl.com [email protected]ózsa Office Complex HU 144–148. Dózsa György Street, Budapest, CODIC Hungary Kft. 41,000 13.5-14 Q4 2016 P: +36 1 266 6000 www.codic.eu 1134, Hungary [email protected] Intermodális Logisztikai HU Érd/Budapest, District XII (Nagytétény), CBS Property Zrt. 150,000 N.A. 2015-2020 P: +36 1 802 7300 www.cbsproperty.huKözpont HungaryEast Gate Business Park HU Akácos - Fót, 2151, Hungary WING Zrt. N.A. N.A. continuous P: +36 1 451 4760 www.wing.huEnterprise Office Center CZ Prague 4 - Pankrac, Czech Republic [email protected] Campus AU Vienna, AustriaForum Poprad SLO Poprad, Slovakia Erste Group Immorent AG 29,069 N.A. in development P: +43 (0)5 0100 27000 www.Forum Radunia PL Gdansk, Poland F: +43 (0)5 0100 27204 erstegroupimmorent.comGdanski Business Center II PL Warsaw, Poland www.enterprise-prague.cz Erste Group Immorent AG Total:117 000 N.A. under construction P: +43 (0)5 0100 27000 www.erstegroupimmorent. Office:12 000 F: +43 (0)5 0100 27204 com Retail:2 000 www.erstecampus.at Multi 45,775 N.A. 2015 P: +31 (0) 182 690 900 www.multi.eu P: +420 737 252 783 [email protected] [email protected] Multi 62,000 N.A. 2016 P: +31 (0) 182 690 900 www.multi.eu P: +48 697 901 200 [email protected] [email protected] HB Reavis Poland 46,000 N.A. 2016 P: +48 22 203 44 20 www.hbreavis.com [email protected] Waterfront II. PL Gdynia, Poland SwedeCenter Sp 65,000 N.A. Q3 2015 P +48 22 820 9151 www.swedecenter.pl [email protected] Gliwice Logistics Centre PL ul. Eiffel’a, Gliwice, Poland Goodman 50,837 N.A. N.A. N.A. www.goodman.com/pl [email protected] Gyál Logistics Centre HU M5-M0 Intersection, Gyál, Hungary Goodman 21,000 N.A. N.A. N.A. www.goodman.com/hu [email protected] Krakow Airport PL ul. Komandosow 1, Modlniczka, Poland Goodman 132,252 N.A. N.A. N.A. www.goodman.com/plLogistics Centre [email protected] Lodz Logistics Centre PL ul. Lutomierska, Pabinice, Poland Goodman 26,902 N.A. N.A. N.A. www.goodman.com/pl [email protected] Mlada Boleslav CZ Plazy - Mlada Boleslav Goodman 57,800 N.A. N.A. N.A. www.goodman.com/czLogistics Centre [email protected] Poznan Airport PL ul. Batorowska,Wysogotowo, Poland Goodman 52,310 N.A. N.A. N.A. www.goodman.com/plLogistics Centre [email protected] Poznan Logistics Centre PL Niepruszewo, BUK, Poland Goodman 50,378 N.A. N.A. N.A. www.goodman.com/pl [email protected] Senec Logistics Centre SK Dialnicna cesta 18, Senec, Slovakia Goodman 180,000 N.A. N.A. N.A. www.goodman.com/sk [email protected] www.resourceinfo.hu | 2014/9.

REsource  Real estate developments in CEE Name of real estate Location of real estate Name of real estate Total gross size Est. monthly Est. time of Real estate developer/Leasing agent(s) development development developer of the building rent (€/sqm) delivery Country (sqm) phone website, e-mailLIST Goodman Sosnowiec Logistics PL ul. Inwestycyjna, Maczki Bór, Poland Goodman 66,975 N.A. N.A. N.A. www.goodman.com/pl Centre [email protected] Goodman Torun Logistics Centre PL Lysomice k/Torun, Poland Goodman 82,815 N.A. N.A. N.A. www.goodman.com/pl [email protected] Goodman Üllő Airport Logistics HU 8. Zsaróka Road, Üllő, Hungary Goodman 155,000 N.A. N.A. N.A. www.goodman.com/hu Centre [email protected] Goodman Warsaw Logistics Centre PL Emilianow,Warsawa, Poland Goodman 54,697 N.A. N.A. N.A. www.goodman.com/pl [email protected] Goodman Wroclaw East Logistics PL ul. Kielczowska,Wroclaw, Poland Goodman 51,768 N.A. N.A. N.A. www.goodman.com/pl Centre [email protected] Goodman Wroclaw South PL ul. Logistyczna 6,55-040 Bielany Goodman 123,500 N.A. N.A. N.A. www.goodman.com/pl Logistics Centre Wrocławskie, Poland [email protected] Graphisoft Park HU 7 Záhony Street, Budapest, 1031, Hungary Graphisoft Park Ingatlanfejlesztő 116,000 15.5 1998-2020 P: +36 20 661 2401 www.graphisoftpark.com Kft. continuously [email protected] Hampton Park PL Warsaw, Poland Liebrecht&wooD 50,000 N.A. N.A. P: +48 22 571 44 44 www.liebrecht-wood.com Hrebenky CZ Prague, Czech Republic Sekyra Group N.A. N.A. in preparation P: +420 234 005 551-2 www.sekyragroup.cz Immopark Kosice [email protected] Immopark Praha Immopark Zilina SLO Kosice, Slovakia Erste Group Immorent AG 25,000 N.A. phase I. unders P: +43 (0)5 0100 27000 www. Innovation Park Puchstrasse construction F: +43 (0)5 0100 27204 erstegroupimmorent.com Inspired Garden Project Jungmannova 15 www.immopark.com Kielce Plaza Kerepesi Business Park CZ Prague, Czech Republic Erste Group Immorent AG 131,000 N.A. under construction P: +43 (0)5 0100 27000 www. Leszno Plaza F: +43 (0)5 0100 27204 erstegroupimmorent.com LINE Lodz Plaza www.immopark.com Margit Corner Metrodom City Home SLO Zilina, Slovakia Erste Group Immorent AG 150,000 N.A. under construction P: +43 (0)5 0100 27000 www.erstegroupimmorent. F: +43 (0)5 0100 27204 com www.immopark.com AU Graz, Austria Erste Group Immorent AG 175,000 N.A. in development P: +43 (0)5 0100 27000 www.erstegroupimmorent.at F: +43 (0)5 0100 27204 HU Svábhegy, Budapest, Hungary Portus Buda Group Zrt. 9,000 N.A. N.A. P: +36 1 488 7476 www.portusbudagroup.com offi[email protected] CZ Prague, Czech Republic Immofinanz Group 7,700 N.A. in development P: +43 1 88 090 www.immofinanz.com mail@immofinanz.com PL Kielce, Poland Plaza Centers Group 33,000 N.A. planning stage P: +48 22 231 9900 www.plazacenters.com HU Budapest, Hungary headoffi[email protected] PL Leszno, Poland Raiffeisen Evolution Project 65,000 11 2016 P: +36 1 346 6400 www.raiffeisenevolution.com Development Kft. +43 171 7060 office@raiffeisenevolution. com Plaza Centers Group 16,000 N.A. planning stage P: +48 22 231 9900 www.plazacenters.com headoffi[email protected] CZ Prague, Czech Republic PPF Real Estate 18,000 N.A. 2016 P: +420 224 174 555 www.ppfreal.com [email protected] PL Lodz, Poland Plaza Centers Group 35,000 N.A. 2017 P: +48 22 231 9900 www.plazacenters.com CODIC Hungary Kft. 5,100 13.5-14 Q1 2016 P: +36 1 266 6000 headoffi[email protected] HU 19-21. Margit krt., Budapest, 1024, 5,454 Hungary Metrodom Kft. www.codic.eu [email protected] www.margitcorner.hu HU 10 Nádasdy Street, District IX., Budapest, N.A. Q2 2015 N.A. www.metrodom.hu 1192, Hungary 2014/9. | www.resourceinfo.hu

 REsource Real estate developments in CEEName of real estate Location of real estate Name of real estate Total gross size Est. monthly Est. time of Real estate developer/Leasing agent(s)development development developer of the building rent (€/sqm) delivery CountryMetrodom - Szent László út (sqm)41-43. phone website, e-mail HU 41-43. Szent László Street, District XIII., Metrodom Kft. 3,291 N.A. Q4 2015 N.A. www.metrodom.hu LIST Budapest, HungaryMetronom Business Center CZ Prague 5 - Nové Butovice, Bucharova HB Reavis Group 33,595 N.A. 2015 P: 420 225 001 900 www.hbreavis.comMokotow Street, Czech Republic [email protected] CenterNimbus Office www.pentainvestments.com PL Warsaw, Poland Penta Investments 24,500 N.A. Q1 2017 P: +48 22 502 32 22 warsaw@ pentainvestments.com Csömöri Street/Bosnyák Street, District XIV., Echo Investment S.A./Echo www.echo.com.pl HU Zugló, Budapest, Hungary Investment Hungary Kft. 37,000 N.A. 2016-2017 P: +36 30 429 2333 orsolya.stefankovits@echo. com.pl PL Warsaw, Poland Immofinanz AG 19,000 N.A. in development P: +43 1 88 090 www.office.immofinanz.com mail@immofinanz.comNordic Light Offices HU 96-98.Váci Road, Budapest, 1133, Hungary Skanska Property Hungary Ltd. 26,200 12.95-.13.5 2016 P: +36 1 382 9100 www.skanska.hu [email protected] Tuhnice CZ KarlovyVary, Czech Republic Sekyra Group N.A. N.A. in preparation P: +420 234 005 551-2 www.sekyragroup.cz [email protected] Park II. CZ Prague, Czech Republic Sekyra Group N.A. N.A. in preparation P: +420 234 005 551-2 www.sekyragroup.cz [email protected] City SLO Bratislava, Slovakia J&T Real Estate 94,000 N.A. under construction P: +421 2 5941 8200 www.jtre.sk [email protected] Ház HU 15. Pauler Street, District I., Budapest, OTP Ingatlan Zrt. 3,577 N.A. Q4 2014 P: +36 70 457 2784 www.paulerhaz.huPlatán Lakókert Hungary [email protected] www. HU 98. Hunyadi Street, Balatonboglár, Hungary OTP Ingatlan Zrt. 4,929 N.A. Q1 2015 P: +36 70 953 9255 eladonyaralobalatonboglar.hu [email protected] Logistics Centre PL ul. Kontenerow 21, Gdansk Goodman 515,761 N.A. N.A. N.A. www.goodman.com/pl [email protected] 14 PL Warsaw, Poland HB Reavis Poland 34,445 N.A. 2015 P: +48 22 203 44 20 www.hbreavis.com [email protected] Corporate Center PL 78 Grzybowska Street,Warsaw, Poland Golub GetHouse 20,148 N.A. 2015 P: +48 22 695 01 10 www.golubgethouse.pl [email protected] Gardens HU 80-84.Váci Road, Budapest, 1133, Hungary Horizon Development 25,000 13.5-14.5 2016 P: +36 1 473 1209 www.horizondevelopment.hu [email protected] ZITA PL Antoniego Slonimskiego Street,Wroclaw, Savills Poland 21,120 N.A. Q4 2014 P: + 48 022 222 4000 www.savills.pl Poland [email protected] AU Vienna, Austria ECE Projektmanagement G.m.b.H 10,000 N.A. Q2 2016 P: +49 40 60 60 60 www.ece.com & Co. KGQ22 Tower PL Warsaw, Poland Echo Investment S.A. 55,000 N.A. 2016 P: +48 41 33 33 333 www.echo.compl offi[email protected] CZ Purkynova Street, Prague 1, 110 00 CPI Property Group 45,000 office: 21-23 Q4 2014 P: +420 281 082 110 www.cpipg.com Czech Republic retail: 90-120 [email protected] City CZ Prague, Czech Republic Sekyra Group N.A. N.A. in preparation P: +420 234 005 551-2 www.sekyragroup.cz [email protected]öfe AU Vienna, Austria Austrian Real Estate Development N.A. N.A. Q4 2015 P: +431 7120 742-0 www.are-development.at offi[email protected] Wilanow PL Wilanow, Poland Capital Park 36 700 N.A. Q3 2015 P: 48 22 318 8888 www.capitalpark.pl [email protected] www.resourceinfo.hu | 2014/9.

REsource  Real estate developments in CEE Name of real estate Location of real estate Name of real estate Total gross size Est. monthly Est. time of Real estate developer/Leasing agent(s) development development developer of the building rent (€/sqm) delivery Country Rustonka (sqm) phone website, e-mailLIST CZ Prague, Czech Republic J&T Real Estate 40 400 N.A. planned P: +420 221 710 111 www.jtre.cz [email protected] Serenada Shopping Center PL Cracow, Poland Mayland Real Estate 42 000 N.A. 2016 P: +48 22 546 98 00 www.mayland.pl www.ch-serenada.pl Silesia Business Park PL Katowice, Poland Skanska Property Poland N.A. N.A. Phase II: Q3-Q4 P: +48 22 653 84 00 www.skanska.pl Silo AU Vienna, Austria 2015 South Park PL Warsaw, Poland Erste Group Immorent AG 12,000 N.A. under construction P: +43 (0)5 0100 27000 www. F: +43 (0)5 0100 27204 erstegroupimmorent.com www.silo-offices.at Hochtief Development Poland 86,586 N.A. Q1 2015 P: +48 22 335 77 77 www. hochtief-development.pl Smichov City CZ Prague, Czech Republic Sekyra Group 210,000 N.A. in preparation P: 420 234 005 551-2 www.sekyragroup.cz [email protected] Spectrum Office Corner HU 180. Üllői Road, Budapest, 1191, Hungary RZT Kft. 8,775 11-12 built-to-suit P: +36 1 327 20 50 www.robertson.hu offi[email protected] Sukcesja Shopping and PL Lodz, Poland Savills Poland 46,000 N.A. 2015 P: +48 022 222 4000 www.savills.pl Entertainment Center [email protected] The Quadrum HU Vecsés, Hungary AIG/Lincoln Kft. N.A. N.A. Phase II: 2015 P: +36 1 382 5100 www.aiglincoln.com TrIIIple AU Vienna, Austria Phase III: 2018 [email protected] Twin City North SLO Bratislava, Slovakia Austrian Real Estate 110 000 www.are-development.at Development/Soravia Group N.A. 2018 P: +431 7120 742 7725 offi[email protected] www.triiiple.at HB Reavis Slovakia 28 700 N.A. 2019 P: +421 2 58 30 30 30 www.hbreavis.com [email protected] Twin City South SLO Bratislava, Slovakia HB Reavis Slovakia 194 700 N.A. 2016-2024 P: +421 2 58 30 30 30 www.hbreavis.com V17 12 350 [email protected] V48 13,500 Vision Towers HU 17Váci Road, Budapest, 1134, Hungary WING Zrt. 20,300 N.A. Q3 2016 P: 36 70 334 3555 www.eston.hu, [email protected] Waltrovka CODIC Hungary Kft. 169,000 +36 70 333 8282 www.jll.com Westend Gate 35,000 Futureal [email protected] Penta Investments 48/e-f.Váci Road, Budapest, 1132, www.codic.eu Hungary HU 13-14 Q1 2016 P: +36 1 266 6000 [email protected] www.v48.hu HU Váci Street - Dózsa György Street, District 14.5 Q3-Q4 2014 P: +36 1 266 2181 www.futureal.hu XIII., Budapest 1134 , Hungary [email protected] www.pentainvestments.com CZ Prague, Czech Republic N.A. N.A. P: +420 225 101 110 prague@ pentainvestments.com SLO Bratislava, Slovakia J&T Real Estate N.A. under construction P: +421 2 5941 8200 www.jtre.sk [email protected] West Point 120 PL 120Wlodarzewska Street,Warsaw, Poland Savills Poland 20,480 N.A. 2016 P: + 48 022 222 4000 www.savills.pl [email protected] West Station I-II PL Warsaw, Poland HB Reavis Poland 63,305 N.A. 2016-2018 P: +48 22 203 44 20 www.hbreavis.com [email protected] Zamecky Dvur CZ 9Vinor, Prague, Czech Republic Sekyra Group N.A. N.A. in preparation P: 420 234 005 551-2 www.sekyragroup.cz [email protected] Zielone Arkady, Bydgoszcz PL Bydgoszcz, Poland ECE Projektmanagement G.m.b.H 50,000 N.A. Q3 2015 P: +49 40 60 60 60 www.ece.com & Co. KG Zizkov City CZ Prague, Czech Republic Sekyra Group N.A. N.A. in preparation P: +420 234 005 551-2 www.sekyragroup.cz [email protected] Zuckermandel SLO Bratislava, Slovakia J&T Real Estate 66 000 N.A. planned P: +421 2 5941 8200 www.jtre.sk [email protected] 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 September 4, 2014. 2014/9. | www.resourceinfo.hu