IVG Immobilien AG is selling five properties with a total rental area of almost 38,000 m² to HGA Capital Grundbesitz und Anlage GmbH, at a price of €99.8 million. This is the largest office real estate transaction in recent years in Budapest. The sale comprises three modern office buildings at Infopark Budapest (30,000 m²) and two historical, listed properties in the city centre on Andrássy út Boulevard (7,700 m²), which is a UNESCO World Heritage site.
"The deciding factors for the acquisition were the outstanding property quality, the occupancy level of almost 100% and the positive growth forecasts for the Budapest office real estate market", says Joachim Seeler, Managing Director of HGA Capital.
HGA/Central Europe V Fund planned for March 2006
The acquisition of these properties paved the way for further development of the Central European fund product line. The buildings are to be incorporated into the "HGA/Mitteleuropa V Fund", whose launch is planned for the end of the first quarter of 2006. This fund is HGA Capital's third Hungarian fund.
IVG acquired the two period buildings, 11 and 12 Andrássy út, which were built at the end of the nineteenth century in neo-renaissance style, in the late 1990s. Subsequently, IVG restored and modernised the listed buildings comprehensively and in line with the original plans. The tenants include Budapest Bank, the Hungarian Investment and Trade Development Agency (ITDH) and the international solicitors, White & Case.
IVG has been developing Infopark Budapest in close cooperation with the Technical and Scientific Universities since 1998, and it is now one of Central Europe's cutting edge science and technology parks. There are currently about 60,000 m² of rental area at Infopark Budapest, and when the final stages are completed it will offer almost 100,000 m² for over 7,500 jobs. Renowned technology companies such as Hewlett Packard, Epson, T-Systems, T-Online, the Hungarian National Office of Research and Technology (NKTH) as well as Daewoo and Nissan have chosen Infopark Budapest as a location for their offices.
IVG remains committed to Budapest
"This sale does not mean that IVG is leaving Budapest. We have been in Budapest for a long time and will continue our development activities there. This transaction has allowed us to achieve a strong profit contribution at an early stage in the current financial year", stresses Eckart John von Freyend, CEO of IVG.
The transaction will not affect the further development and unified operation of Infopark negatively. IVG has been developing a new building with a rental area of 17,700 m² at Infopark since December, and further building is possible. Leasing of portfolio buildings and tenant support remain the responsibility of the IVG office in Budapest, and will be assumed by HGA Capital over the course of the year. Facility Management will continue to be carried out by DeTe Immobilien's Hungarian subsidiary.
Further positive prospects for the Budapest office market
Due to increased interest from international investors, Hungary has developed a well-recognised real estate market in the European context over the last number of years. Due to an excellent leasing performance, the office vacancy rate has fallen considerably since the boom at the end of the 1990s, from 21% in 2001 to 12% today. The IVG European real estate barometer posted an average rent of EUR 14.50 per m² in Budapest for the third quarter of 2005, indicating an upward trend for the rent level.