Budapest - Hungary dumps new government quarter project

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UrbanDev

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Bad news for the people who invested in Budapest districts 13 & 14!

The hopes of those offering their property near the “future government quarter" above market price have now been crushed. The price hike bubble already burst last year when the location of the government quarter was announced and investors failed to rush to the seen to pluck up available real estate.
Last week the government called off the project, and now they made official anouncements that the construction will not happen - at least not there!

The Hungarian cabinet has called off the construction of a new government quarter in downtown Budapest. The project has cost around HUF 450 million so far.

The new government facilities would have been built at Nyugati Railway Station, adjacent to WestEnd shopping mall, but a government official confirmed that “there will certainly not be a government quarter at Nyugati, according to current plans".

“The government quarter project is suspended by the cabinet, but planning will continue," spokeswoman Bernadatt Budai told a press conference after today's government meeting.

A total of eight consortia put in bids in the first round of the tender for the construction of the complex and the winner was to be announced on 29 December 2007, but the decision was later put off to 16 January this year. The government quarter was scheduled to be completed by the end of 2009.

The construction, that was to be carried out in public-private-partnership (PPP), was to cost up to HUF 142.5 bn, with the winning general contractor financing the entire cost of construction and operating the complex for 25 years.

The government planned to partly finance the project from the sale of its expensive downtown office buildings, but real estate experts estimated that the buildings would fetch much less than the planned HUF 103 billion.

The hopes of those offering their property near the “future government quarter" above market price have now been crushed, Duna House said in a flash comment today. The price hike bubble already burst last year when the location of the government quarter was announced and investors failed to rush to the seen to pluck up available real estate. “Due to the (government's) decision this will probably not happen for now," Duna House said.

In 2008, the Hungarian government expected revenues of around HUF 30 billion on the sale of its ministry buildings that would have been moved to the new government quarter. Costs of the moving were estimated at HUF 8.2 bn. The project, however, has been suspended, but the Finance Ministry does not believe the HUF 22 bn “lost" budget revenue will not any serious trouble if other budget revenues come in as expected, broadsheet Népszabadság reported on Thursday.

Real estate experts earlier estimated that the buildings in state ownership giving home to government institutions were worth about HUF 103 billion, but in the current market environment it is highly improbable that they could be actually sold for this much.

Source Index Hungary / Portfolio.hu
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Is this saying that the Government building will no longer go ahead, or just that it has been delayed for the time being? I was under the impression that they did not receive enough replies from tender and thus it needed to go out to tender again in order for the Government to be able to choose a successful bid?
 
The government used the word 'suspended', but it's pretty much not going to happen anytime soon, if at all. The money just isn't there (new transport links was a major stumbling block). There was no issue with tenders.

However, the 'Eiffel' project is going ahead and is currently being constructed in this area. West End 2 on the other side of the Ferdinand Bridge is also going to happen in the not-too-distant future.
 
Thanks for your reply Budapest. As you are probably aware from another thread, I have just bought at the Atrium in district 13, and one of my reasons for this was due to the proposed Government Buildings.

I am looking at this as a long term investment though, so I'm not too concerned if there are delays in the Government Buildings so long as they are built eventually. Do you think they will still be built in this area? Or are they considering moving it elsewhere?

Also, can you tell me any more about the Eiffel project and West End 2?

Thanks again
 
Dude,

You're supposed to do your research BEFORE buying! You have lots of reading to do ....

http://www.skyscrapercity.com/showthread.php?t=414682

That thread will take you about 4 hours to read from start 51 pages of development info - designs for Westend 2 / Government area (dead) and many other projects including info on the Danube front between Karolyi gardens (360 project) all the way down towards Atrium.

As you read it - could you note down the pages numbers of relevance - its been awhile since I read them - but I can never find the time to go through the whole thread all over again.

Atrium is in a great location ..... walking distance to the Zoo and Museum / Castle, Heros square and of course the Westend mall but it is also close to a whole host of hospital and teaching facilities. Check it out on this http://wikimapia.org/#lat=47.513795&lon=19.06173&z=17&l=0&m=a&v=2 - I marked Atrium and Karolyi Gardens on that map.

There are some links from that site that I would not have found without it.
 
BudaRich you are probably right, I should have researched more. This is the first time I have done this and I thought that I had carried out a fair bit of research! I obviously have a lot to learn... I will read over these when I can and take note of any page numbers relevant to you. Thanks again
 
Incidently, I've been meaning to post this link for ages. Maybe its worthy of a separate thread:
[broken link removed]

Its the Hungarian equivalent of the ESRI, covering the core economic forecasting sectors and indices:
Consumer sentiment Index
Overall Economic Outlook Forecast (monthly and annually)
Real Estate index (includes past price increases and forecasts)

I'm not going to harvest the figures into this post, but in general the harsher economic polocies are starting to get results, inflation is forecast to keep dropping(7% -> 4% at EoY, 5.7% avg), and the GDP deficit gap is reducing.

New house prices '07: +5.3%. the '08 forecast is 7%. Less for 'existing' property. There a bit of a bounce forecast in the wider construction industry index, from 87 -> 108
Certainly nothing in there that would scare anyone with a hungarian-based property into getting out

EDIT: combine the above info with this link, posted by Budapest a few months back, (equivalent of daft report, for Budapest), which shoulds give a reasonably accurate valuation of properties.


For example, I'm interested in the figures for District 6. Ingatlan say the average sq.m is currently costing 365k HUF, or about €1,400 sq.m. Note, my reading of this is that its the average, so new (quality) apartments will buck this upwards by a little.

Note: the column entitled 'average price m² (EUR)' is actually HUF.
 
This is probably a ridiculous question, but what is the difference between new property and existing? Does existing refer to classic buildings, and completed new buildings whereas new property is off plan buildings that haven't been completed yet?
 
I think those figures cover 'everything'; using district 6 as an example, existing classic property is in the 250-350k HUF sq.m range perhaps, and new property is in the 380k-480k, so a 362 avg for dis.6 sounds about right to me.

Incidently, I got a brochure from the agent I used a few years ago just yesterday, and its 411k huf sq.m for a new build in dis.13 (about €1550 sq.m)
 
I've heard that West End 2 is no longer going ahead at this stage, and it has also been spoken about the Government quarter no longer going ahead.

Does anyone have any further updates on these and whether they will go ahead once the economy improves or whether they have been suspended indefinitely?

budapest said:
West End 2 Original Plans - close to bottom of page (post 275):
http://www.skyscrapercity.com/showthread.php?t=414682&page=14

West End 2 Visualisations - middle of page (post 818)
http://www.skyscrapercity.com/showthread.php?t=414682&page=41

Eiffel Square Plans (Under Construction) - middle of page (post 45 end):
http://www.skyscrapercity.com/showthread.php?t=414682&page=3
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The story I have heard on Westend 2 is that it has been postponed, not cancelled -- not yet anyway. Lack of interest by retailers in taking space was the reason I heard for the deferral. The big names that were needed weren't prepared to pay the kind of money that was needed to justify the cost of the development, and quite a few just weren't interested at all.
 
Discussion of particular developments is not allowed anymore on AAM.

This subforum is only for the discussion of the general principles of overseas property investment.

Brendan said:
This forum has become extremely time consuming for the moderators.
.............

1) The forum is to be used only to discuss the general principles of overseas investing.

2) It is not to be used to discuss particular developments

3) It is not to be used to discuss particular developers

.........

If someone wants to set up a new website to discuss developments, then we will provide a link to that website.

Brendan
Click to expand...
 
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