Regional Real Estate
MI business park lands Stora
Stora Enso Packaging will occupy a new 4,500 square-meter building in the M1 Business Park, according to a prelease contract signed with developer AIG/Lincoln Hungary, company executives said in early February.
A subsidiary of Finland's publicly traded Stora Enso Group, Stora will use about 10% of the space as offices and the rest for light paper converting purposes. The building is due for completion in July.
According to Stora Managing Director Veli-Jussi Potka, greater flexibility in both the timing of completion and the layout of the building gave AIG/Lincoln's project an advantage over others. He added that the developer, the real estate arm of the American Insurance Group, has a good track record.
The park's location, 21 kilometers west of Budapest along the motorway in the suburban town of Paty, is also a convenient transport point, Potka said.
According to Chris Naylor, joint managing director of the project's leasing agent, DTZ Hungary, the lease term is 10 years and the rent will be "close to" the monthly asking price of DM 12 per square meter for warehouse space and DM 22 per square meter for office space. Naylor declined to provide exact figures.
The Stora building will be the third in the park, which comprises a total of some 70,000 square meters of logistics and distribution space and offices.
AIG/Lincoln has already signed up MSAS Global Logistics for a 6,500 square-meter space in a 16,000 square-meter building, and ADM Wholesaler as the single tenant for another, 7,500 square-meter building.
According to DTZ's Naylor, the developer expects to soon seal a pre-lease contract with another company to occupy the remaining space in the building partly used by MSAS.
In addition to the three buildings, two more are expected to be constructed later this year.
Budapest building code obsolete
Maghaz Property Development recently declined to construct 48 out of 105 parking spaces along with a 72-flat building containing a few hundred square meters of retail space it is developing in District 7, as mandated by law.
Instead, it is providing underground parking spaces for only 57 cars, and paying the municipality Ft 45 million ($156,000) in penalties.
"We are not talking about 400-square meter houses, but 30-square meter or so studio apartments. Not everyone needs parking space," said Gyorgy Ivanyi, general manager of the company. "This regulation is extremely rigid."
By law, developers must provide one parking space for every newly built residential unit or 10 square meters of retail space.
Maghaz is not the only one frustrated by what developers consider an unreasonable burden.
Under the same law, newly constructed buildings must provide parking spaces according to a strict ratio of one slot for every 20 square meters of "net office space" or 10 square meters of retail space.
"Net office space" means the areas of an office building devoted to workers, but does not count meeting rooms, kitchen or bathrooms, for instance. Therefore, when submitting a building plan for a construction permit, developers often try to minimize net office space by classifying some working areas as storage or archive rooms.
Older buildings that are refurbished are not subject to the parking requirements, unless the function of the building changes.
But the "opt-out" fee apparently differs from one district to another.
For instance, District 6 charges Ft 1.5 million for every mandated space not built in the inner area of the district, and Ft 1.2 million in the outer areas.
If a developer comes up with the required number of parking places within five years of receiving a usage permit for the building, the district will pay back the sum, though without interest. An administration fee is also deducted from the sum.
According to Krisztian Zettner-Kovacs, a deputy mayor of the district, 90% of new developments end with developers choosing to pay a penalty rather than build or rent additional spaces.
New tax code boosts local market
As far as their homes go, most people tend to believe that bigger is better. Not so in inner city Budapest, according to local developers and brokers, who have seen smaller flats being snapped up while larger ones remain unsold.
"Most of our small flats were sold in one week," said Peter Illy, general manager of Angyalfoldi Lakasepito, which has sold all of its 132 recently completed flats in the first phase of a 600-unit project on District 13's Gomb utca.
The flats range in size from 32-120 square meters. After the smaller apartments proved to be more popular, the developer decided to build more 33 to 55-square-meter units in the second phase. About 35% of the flats available in the second phase have already been sold, according to Illy. The units cost Ft 210,000-Ft 250,000 ($736-$877) per square meter.
Inside the large ring road, which links Arpad hid and Lagymanyosi hid, the 9th and 13th districts are perhaps drawing the most projects, although developments are underway in other districts. Zsolt Perlaky, marketing director of Mareco Real Estate, said that all the small flats in a 27-unit building on District 9's Mester utca for which his company acts as the agent are already sold, while the larger units have been more difficult to move.
The main reason is obvious, according to agents and developers. Most smaller flats carry price tags starting from Ft 10 million. And thanks to a mortgage loan program begun last year, would-be homeowners can buy flats with just 30% down, instead of paying the whole sum in one or two installments, as used to be the case.
Buyers of such flats are mostly "yuppies," young Hungarian couples with one small child or none at all, said Perlaky.
Another major group of buyers includes parents who purchase flats for their twenty-something children. To a lesser extent, there are foreign and Hungarian investors who buy such flats to rent them out.
The financial benefits conferred on the purchase of new flats by the government is a key factor behind the popularity surrounding such properties, as opposed to old ones in the same neighborhood, said Mareco's Perlaky.
In addition to the subsidized mortgage loan program, the government also exempted buyers of new flats from transfer fees, currently set at 2% on sums under Ft 4 million and 6% on amounts above that.
For new flats, the government also allows the 25% VAT tax to be discounted up to Ft 400,000.
That means that when buying a new flat priced at Ft 10 million including VAT, the new owner avoids transfer fees of Ft 440,000 while saving another Ft 400,000 from the gross sum by getting a reduced VAT charge, Perlaky said.
Many people also prefer newly built flats because old ones often require expensive refurbishing and are not equipped with modern heating or water systems, according to Illy.
