Corvin Development in Budapest

What is the opinion on the large Corvin Promenade Development in District VIII Budapest. Has anyone out there invested or is considering investing in this area. What would be a realistic price range per m2 and is there good rental potential?

Cheers

The Corvin Promenade is an urban re-generation scheme and is located in what is currently a fairly rough area of District VIII. It will be built from scratch, so it's difficult to envisage what it will look like when finished. The marketing photos of outdoor cafes and restaurants try to create what developers are calling the 'new city center'. This term is getting very tiring as almost every new project over here tries to be the new centre, regardless of their geographical position. While the Corvin Setany won't be particularly central, it is no doubt an ambitious project and could be successful. I think it's a bit of a risk, particularly in terms of location, but who knows. It might work. It might not. A lot depends on the commitment and efforts of the development team.

The scheme is huge, which would worry me a bit - something close to 3,000 apartments. The area is not particularly close to universities, apart from part of the medical faculty at Nagyvarad Ter, but I can't see expat students or younger professionals being particularly interested in renting here. Corporate tenants may be interested as it's close to various businesses.

Best of luck,
Budapest

Hello Nomad1,

Corvin Promade will be an office centre and a re-designed area of district 8 as well. In contrast to budapest, I think this is good location in terms of public transport and access to the airport and close to all universities(universites such as Medicine, Economics and Faculty of arts and natural sciences are in district 8 and 9 and University of Technology in district 11 - 3 stops with tram). It is a PPP project with min. 3 phases. It would be a silly thing to evalute max. business potentials from Corvin Promade but it seems the local government and developer are anxious to re-build this area in the city. Return to location, the main tram line (tram no. 4-6), metro 3 line (the development is placed between 2 stations), are available. Further to that, 2 main roads (ring road and Ulloi - the longest road in Budapest is next to the development). Finally, Corvin Cinama (the development is being built back of the Cinema) is a famous place for movie viewers.

The area is now not popular because of residents and conditions. But the 3 phase development will re-value the whole area and outlook of renting potentials is also favourable. Both students and corporate tenants now prefer new build apartments and thanks to fairly good location for students and professionals may provide you good return.

A good example is Ferenc ter in district 9 (very close to this area) that looks very nice because of new developments redesigned steets. When you have a chance look around in this area and you will see what has happend so far. Nodody thoughts Ferenc ter, Pava u. , Angyal u., Tompa u would be ever nice and attractive. And now this area is a nice part of the City.

If there is potential in district 8, Corvin Promanade is one of them because this is not only a simple residential or commercial project but also renovation of streets and re-design the area with new green fields and other decoration. If you had a chance, do research in this matter and share with us. What I know about it:

19,000 sqm office (€20 millions development) will be handed over in March 2008. DTZ Hungary and GVA Hungary are responsible for looking for tenants. Sqm price is arranged between €13.5-€15.5. The builder (Futureal, Hungarian company) wants to build 150,000 sqm office and 30,000 sqm retails in Corvin Promanade.

I think this has a message...

Hungary said:

When you have a chance look around in this area and you will see what has happend so far. Nodody thoughts Ferenc ter, Pava u. , Angyal u., Tompa u would be ever nice and attractive. And now this area is a nice part of the City.

Click to expand...

I think 'nice and attractive' are subjective terms. The best I could say about it is that it's a clean part of the city and IMO the new buildings on Pava utca, etc. don't have good long term potential.
e.g. http://www.homemanagement.hu/site/slideshow.php?inID=403&imID=1194691296

I agree though that rougher parts of the city can be changed quite substantially after regeneration, but whether the Corvin Promenade will be successful or not depends a lot on unknown variables. It could be great or it could fail to deliver. I think it's quite a risky prospect and I personally would not invest there.

We do not know future and it is hard to say that it has long term potential or not but business areas usually have potentials in long term. 150,000 sqm office plus retails should have impact on renting and re-sale potentials in Corvin.

This is the main difference between Corvin and other developments in Budapest. This will be a business area not a residential. And business areas can be popular parts of the City.

All new developments have high risk but property investment is a risky business. I do not think it would be more risky than invest into a classic apartment and wait for appreciaiton especially now when classic apartmetns price is stable and decreasing. What is more, tenants have turned to new build apartments.

As far as I know you would not invest in new build develepment personally at all.

But let us see the facts again:

- First residential tower called Premier House: it was sold out in 4 months the Spring 2006 but developing started February 2007

- Second residential tower called Fontana House: 70% of apartments sold out but developing will be started in the Spring 2007

To be honest there are a few new develepments that are sold out before developing are started or completed. These projects' potentials are unknown but time will show.

Anyway, all segment is risky in Budapest.

Personally I wouldn't touch this project. The area is not only rough, it has a local reputation that means that locals either won't buy it, or at best will not pay anything except low prices for it. The exit strategy for this project is therefore poor; it relies almost entirely on expat customers and the prices either now or at profitable exit do not relate to local realities.

Plenty of better value in the market in many better areas right now, no need to get into this kind of high-risk stuff.

I did a research to get a plenty of extra information about this project. It seems there are a few things we should know before go into details which area has long term potential or not. Since district 8 has been an issue for years we need to know more about it even if it was not recommended.

According to location of district 8 in the city and business opportunities in district 8, this area of the city must have long term potentials. Corvin Promanade plan was developped for 10 years. This development is a 10 year project with approx. 365,000 sqm residential and commercial property plus approx. 20,000 sqm re-designed streets and green field.

As I do not see the future but Corvin Promanade will bring new value for district 8 in this particular area. Today is 2007. I do not know what will happen in the next 10 years in Corvin Promanade but personal opinon without supports and accurate information might lead to wrong way.

I remember well when all investors purchased apartments in district 5 and 6 only from 2000-2002. At that time everybody said: No way to purchase in district 9 at all. Raday street and and new developments such as DunaPest Residences and Castrum made the situation new. This was the same with district 7 and 13 as well. Noboday wanted to purchase apartment in these areas. Kiraly street has changed everything in district 7 since 2004. New developments has changed everything in district 13 since 2003. If you had a look at these districts now, you can see high prices such as Gozsdu Court, Prestige City etc.

Please note that district 5 is the lowest developped area in the city. Offices and retails are built (Fashion street, Roosevelt ter 7/8) but slow progress in rehabiltation of buildings. Dorottya Court, Vaci 82 and new building in Vorosmary ter are another stories. They are very expensive developments comparing to current market price in district 5. This can be an issue: Re-designed classic buildings with new apartments vs. Classic apartments in normal buildings. Nobody knows what future brings to us but there is no capital appreciation in district 5 from 2002-2003. This is the reason why this district seems to be a good investment becasue prices are low in terms of location. However, According to current economic environment and budget deficit, local government is unlikly to spend more money in district 5 for renovations that it did it before.

Déjavu, Déjavu, Déjavu