22 July 2018

Why we need to see danger all the time?

03 October 17 |
Arpad Torok



Consultant - GREECE


Public entity - GREECE

Solum Property Solutions

Consultant - GREECE

IBI Group

Consultant - GREECE


Antulio Richetta

Director IBI Group
The CEO of TriGranit, Árpád Török, is still optimistic for 2017 on the Budapest property market, but he expects some kind of correction in the coming years.


In which countries are you looking for development and investment opportunities?

We are mostly looking into Southeastern Europe. We analyse Romania and Bulgaria intensely for both purposes, Serbia can be interesting as a development location.

Last year you said that Serbia had great potential, but there are no possibilities for exit. Have the news of recent transactions in the country changed your mind?

No, my previous opinion stands. I don’t see Serbia as an investment destination for TriGranit, but we are open to development opportunities.

Many investors are under great pressure at the moment. If they don’t purchase new assets they won’t be able to bring the returns they promised.

Exactly. Even though, the Hungarian property market is over 20 years old, lot of people begin to understand only now that there are different types of investors and developers, and they have very different business models. We, for instance, don’t develop speculatively because I personally don’t see the point of launching a multi-million euro project without any leased square meters.

In your opinion what is currently biggest risk for regional property markets?

Our head of acquisitions always brings up Kim Jong-un, but what I always ask, is why we need to see danger all the time. The question of low interest rates and how long will they last is important, of course, as increasing interest rates would have an impact on returns.

Getting back to developments, how the labour shortage in construction and the increase in construction costs have impacted TriGranit’s business?

We don’t see costs rising yet, but we do face a shortage of labour in construction. We don’t work with general contractors, we directly negotiate with subcontractors which means, that we can get a better guarantee on quality, prices and deadlines. As we see it, capacity in construction gravitates towards projects that are more certain. Furthermore, there is nothing wrong with costs rising by 15 or 20 percent. The market always balances itself. Yields are compressing, which means that developers can sell their products at higher prices.

Will the increasing construction costs result in higher rents on the Budapest office market?

I don’t agree with those who think that rents will increase just because it costs more to build an office building. The higher the completion, the better position tenants are in and the better deals they can get. If 50 or 100 thousand square metres of new office space are being built in the same location at the same time, I don’t understand why developers find it evident that rents will increase.

(Interview by Ákos Budai, property-forum.eu)


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