IMMOEAST Immobilien Anlagen AG has carried out another significant investment on Budapests booming real estate market. The company has acquired the Haller Gardens office project, one of the most spectacular development projects in the Hungarian capital, in the form of a forward purchase.
Haller Gardens was developed by AIG Lincoln, one of the most well-known globally active real estate development companies, and will feature a total of 40,000 m² of lettable space. The property is located in the best city centre location near the Danube across from Millennium City, where amongst others Vodafones headquarters and the National Theatre are settled. The start of construction for the seven-floor property, which also features a three-floor underground garage with 600 parking places, will be in summer this year. Completion is planned for summer 2008. IMMOEASTs total investment (incl. tenant-specific changes, marketing costs, etc.) will amount to just under €80 million.
With Haller Gardens we have been able to invest in an outstanding development project at a very early stage, says IMMOEAST Chairman Karl Petrikovics. As a result we have considerably higher prospects for returns than if we had acquired a finished property. This may also be because IMMOEAST already has a very strong market position in Budapest: Now we are just at home in Budapest as we are in Austria. As a result, we are able to invest more easily in development-stage projects on this market because we not only have excellent knowledge of the market but also our own strong rental capacities in Hungary, which we can take best advantage of for projects such as Haller Gardens.
Petrikovics is not only optimistic about the Haller Gardens project, but about the Budapest market in general: Vacancy rates have continually fallen over the years and Budapest has profited the fastest and most from EU enlargement. We have also witnessed a considerable increase in the value of the city as one of Central Europes leading business locations and therefore anticipate that the enormous demand for modern office space will continue. The backlog demand remains enormous here and, with approximately the same population, Budapest has just under 20% of the amount of office space Vienna has.
Prior to the acquisition of Haller Gardens, IMMOEASTs portfolio in Hungary had already reached 32 properties with 900,000 m² of total lettable space. The real estate portfolio is highly diversified and includes office space as well as retail and logistics properties. The most significant assets in Hungary are the discount market chain Stop Shop, the office properties West Gate Business Park and Szepvölgyi Business Park as well as the logistics centre Pharmapark. There is also the Mester Business Park development project in which 250,000 m² of lettable space will be created.
As a result, Hungary is IMMOEASTs most important regional market: it accounts for more than 30% of the total portfolio. The company has also announced that with the investment programme for the current 2005/06 business year, an overall volume of five billion euro will be reached and that Hungary as well as the other EU contributing states will be its main focal point.