Meeting of Investment Minds
19 Tuesday, May 2009
BBR Cluster Management also participated in the CED-Invest 2009 Conference, organized by Roberts Publishing, publisher of CIJ, Central Europe's leading property investment and development magazine. The highlights of the conference were the current perception of Hungary and the evaluation of Budapest as a destination for investors.
According to Gusztáv Bienerth, president of the American Chamber of Commerce in Hungary, Hungary is currently in the midst of a crisis similar to the one faced by American astronauts during the Apollo 13 mission.brBienerth started off CED-Invest 2009, held May 14 at Budapest’s Gerbeaud House, with his keynote address comparing the current downturn to the 1970 thriller. At the time, the situation seemed utterly hopeless, much like the current state of the economy. Bienerth said Hungary needs to follow the lead of the cool-headed astronauts and remain calm, be creative and “work like hell” 24 hours a day, seven days a week to turn things around.
Hungary is dealing with a dual problem: not only has the global economic downturn run roughshod over the country’s economy, but Hungary was already facing major economic difficulties of its own before the downturn even hit.
“The status quo is untenable,” said Bienerth. He said the country needs to work on its credibility, trust and transparency issues and regain its competitive edge, to show the world that Hungary knows what it's doing. “The country will only be successful if businesses are successful.”
The day’s first panel took on the timely topic of valuations, examining how they were done in the past and how current standards are coping with today’s challenges. Moderator Mike Edwards (Cushman & Wakefield) wasted no time asking the speakers where they thought current yields stood in Hungary. After some back-and-forth, from a low of 7 percent to as high as 15 percent, panelists eventually agreed on a current yield of about 8.5 percent, though they stressed that without transactional evidence it was difficult to be more precise.
The panel also took on the negative perception of Hungary that is currently scaring off buyers, a topic that spilled over into the next discussion moderated by András Sütő (Naos). Attila Szalay-Berzeviczy, (UniCredit Bank, Budapest Olympic Movement) pointed out that psychological factors are playing a big part in the downturn. The developers on the panel generally agreed that an Olympic dream would give the city a common goal and promote development, once they emerge from the current downturn.
When asked by moderator Patrick Kirwan (Newland Estates) whether the banking representatives on the next panel were working on any specific financing deals at the moment, the answer was an emphatic no. Talk then turned to LTV agreements, new banking conditions and the importance of being open to a tenant’s needs.
The day’s final panel was a discussion of Budapest's standing in the world. Moderated by Robert McLean (CIJ), the discussion focused less on the causes of Budapest's problem and more on the impact it had on developers and investors and how to remedy the situation. Many agreed that though improvements to the city's marketing campaign at this year’s MIPIM had been substantial, the city's reputation was still taking a beating in large part because of the difficulties of Hungary as a whole.
(BBR/CIJ)
