Hungarian property developer buys offices in Serbia
Indotek Group will buy GTC’s office portfolio in the Serbian capital. The 11 buildings, scattered across 5 business parks, have combined gross floor area of 11,175 sqm. The HUF 267.5 mn price is the highest in any property deal in the CEE region in the past five years and is slightly above the EUR 265.6 mn book value as of 31 December 2020.
This is the biggest property deal in the CEE market in the past five years.
“The sale of the Serbian portfolio couldn’t be timelier as we are currently in process of redefining market strategy and advancing our operations to be more sustainable and futureproof. Selling some of our assets and relocating the free cash flow for the development of brand-new, ambitious projects, said Yovav Carmi, President of the Management Board of GTC.
“One of the pillars of Indotek’s strategy is diversifying its property portfolio, both geographically in terms of property types. As such we have been eyeing regional opportunities for a long time, including the Serbian market. The current deal allows us to not only enter the Serbian market but also to occupy a key position from the start,” said Dániel Jellinek, founder and CEO of Indotek Group.
Indotek has been active in property investment and development in Hungary for more than 20 years. The group has started geographical expansion in Central and Eastern Europe and Southern Europe, recently entering the Polish market before the Serbian deal. In Poland, Indotek bought 4 office buildings from Austria’s Immofinanz. Both acquisitions have been financed by the OTP Group. Indotek is now active in 10 countries and its portfolio includes more than 300 properties.
What did this mean in the Belgrade market?
Belgrade’s office market is developing at a fast pace, although it is still well behind other capitals in the region in terms of office space. Total office space in the fourth quarter of 2020 was 938,000 sqm according to CBRE, less than a quarter of Budapest’s.
The current deal involves 13%, or more than an eighth, of office space in Belgrade.
The Belgrade office market typically has a vacancy rate of around 7%, premium rent is between EUR 15.5 and EUR 16.5, while prime yields are 8.5%, significantly higher than in Budapest.
Belgrade’s office market is expected to expand further as there were 130,000 sqm of office space under construction in Q4. Demand for offices is driven by businesses already active in Belgrade, but business relations with a Chinese background, including the Budapest-Belgrade rail project, could further prop up the market.
Cover photo: Getty Images
