Properties held by banks can invigorate the property market

New opportunities are emerging in the Hungarian real estate market four years after the beginning of the global credit crisis: investors are becoming more open to developments abandoned because of the crisis, and the current project owners, the banks once financing those developments are happy to sell assets not foreign to their core business. Mostly the well-built and well-located residential properties may be the best investments in this segment.

The Hungarian real estate market has been showing hardly any sign of pick up since the crisis. The demand for real estate and the financing of developments by banks is only shadow of its former self, and no change is to be expected within a reasonable time frame. According to the analyzes of the Budapest’s housing market averages over the past decade, the demand for newly built homes already exceeded the very limited supply last year, however the unsold stock is still significant. Still, a new segment appears to be emerging in the market: constructions abandoned because of the crisis are offering investment opportunities for those who want to make a profit before new developments could be completed. The well-located and higher quality but already better priced residential buildings are the most popular projects in this new segment.

 
“One successful business deal is already behind us in 2013, with our help CIB Bank has sold a half-finished project to a group of investors stemmed from Israeli investors to local Hungarian market players who are very well informed about the micro economy in Hungary.” – announced Tim O’Sullivan, Head of Capital Markets at CBREHungary.

This is the third such sale CBRE handled over the past 12 months in which CBRE participated as advisor. These partially developed properties offer great add-value and upside for investors willing to take them on. Tim O’Sullivan of CBRE commented: when taking on such instructions you always worry about the level of interest you will receive – but we have been pleasantly surprised by the level of interest we have received for this type of sale and asset. With three sales under our belt, we have recently accepted the sale of a forth such property located in Rahó utca.”

CBRE is just now in the process of selling the Rahó Street residential project of CIB Bank. The property located in the 11^th District, on the side of Sashegy matches perfectly theexpectations of the new investors: excellent location, better built than the average, the 88 apartments in three buildings and in a green environment are an excellent opportunity for those investors who would be happy to complete a half-finished development in good condition, and – perhaps with some modifications – adding their own ideas, could easily find buyers for them.”