BUDAPEST. APRIL 17. INTERFAX C.N
TRAL EUROPE - While the boom in investment volumes in real estate in the CEE region is expected to continue in 2007, investment transactions in volume terms in Hungary are seen stagnating year on year (y/y) at around EUR 1 bln (HUF 250 bln), international real-estate agent Jones Lang LaSalle's (JLL) Head of Capital Markets Ferenc Furulyas told reporters on Tuesday.
"Hungary was one of the few countries in the Central and Eastern European (CEE) region that saw a slight decrease in real estate investment volumes from 2005 to 2006," Furulyas told Interfax at the sidelines of the press conference. "We expect the investment volume to remain close to the EUR 1 bln threshold in 2007 as well."
In 2006, around EUR 950 mln was invested in the Hungarian real estate market, down from EUR 1 bln in 2005. Around a quarter of the 2006 investment value was directed at the office market, and the remainder was divided between the retail and the industrial markets, according to the latest figures from JLL.
Furulyas said that, in part, further volume increase was likely limited by of a lack of opportunities.
"I expect the Hungarian real estate investment volume to stagnate in the future, due in part to the limited size and number of real estate developments, as well as the size of the Hungarian market as a whole," Furulyas said.
In 2007, Furulyas expects the office market to take up an even larger slice of investments, increasing its share to about 50% in the total, versus 30% of investments directed at the retail segment and 20% at the industrial market.
Yields on the Budapest office market were around 6% in the fourth quarter of 2006, down from 7% in 2005 and around 10% in 2000. Average yields in Budapest were somewhat higher than yields in Prague and Warsaw but low compared to the 9-9.5% in Moscow.
Budapest has so far benefited from investment in the office real-estate market in recent years, mainly from Austrian and German, but also from U.S.-based and other funds.