– How did you benefit from the office market prosperity?
– We could perceive the real estate market revival – through the growing demand on our buildings. I can tell you that since 2014 this is our third outstanding year. The current results were made possible by the overall market optimism too, but our success has a good reason: the effort and investment we put in the market during the recession, as well as the dedicated and purposeful work of the S IMMO team in the last years.
– Would you please mention some details?
– We have completely renewed and rebranded our buildings inside and outside. Our purpose was to upgrade our buildings in order to keep our existing tenants and attract new ones. This is what happened for example in City Center, River Estates, Buda Center and Podium office buildings.
– The continuously declining vacancy rate make rental costs higher. How long, do you think?
– The domestic rents have already approached the Viennese office market rent level before 2008. During the crisis we registered a significant decline, but it has started to increase again in the recent years, and now is about to reach the previous level. In fact a variety of factors can affect rents. Beyond macroeconomic issues (just think about Brexit) domestic economy, changes in the labor market, and new development in the market – these all influence tenants' decisions and thus the office rent changes.
– In your opinion, how persistent is the current (real estate) business cycle?
– The Hungarian market once again entered the path of recovery; IMF (International Monetary Fund) forecasts 2% GDP growth for 2016, and 2.4% for 2017. We register growing interest by investors, so we are optimistic for the upcoming years, and we believe that the recovery will be sustained.
– Real estate experts agree that Váci út is still a hit. What about other submarkets?
– Location has always been important for us when choosing a property. Our experience is that in addition to the highly popular Váci út corridor the central districts are also fashionable – and we could make profit from that need. City Center office building on the Bajcsy-Zsilinszky út is in the heart of the city – this is one of the most popular locations in town. Podium office building's central location (Nagymező utca) acts as a magnet for creative professions and IT companies. We welcomed new tenants for 5,000 m2 in the last 12 months. Inner-Buda area is booming too, so hardly any rentable office space left. Buda Center on Hegyalja út is back again: a sleeping beauty that has been awakened recently. Its occupancy rate increased by 40% in 2016, and the year is not over yet.
–S IMMO celebrates its 15th anniversary on the domestic real estate market. How do you evaluate this period?
– We focused on renewal and development of our existing portfolio in the past few years, and this mission has ended in results. We closed several deals for 50,000 m2 over the past three years, and it makes us proud that we have an extremely high number of successfully extended lease agreements. After challenging years of crisis, Budapest office market is booming again, and we can call it a proper investment market. We are optimistic and I can promise you one thing: we will manage our buildings with the same enthusiasm in the future, just as we have done over the last 15 years.
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