Like many CEE investors, Futureal has adopted a wait-and-see policy, but when prices dive further, they are ready to step in if a suitable asset is seen on the horizon. Property Forum asked Gábor Futó, Co-Founder and Co-Owner of the Group about the company's future projects and investment drives in CEE.
Some experts say there is no need to develop more new office buildings in Budapest. Instead refurbishing the huge old stock will give plenty of profitable work over the next decade. Do you share that view as a developer?
Due to the changing market demand, there will be a stronger focus on refurbishing projects and high-quality, sustainable office developments. If you realize a new project or renew any old office building, you must meet the highest environmental standards to create future-proof assets. Location and easy accessibility remain the most important factors, accompanied by a high level of tenant expectations regarding the quality of office buildings, to lure back their employees to the office. The workplace has become a creative community space that allows colleagues to work efficiently in a pleasant, inspiring, healthy, and safe environment. Solutions to these demands can be found in BREEAM, WELL certification systems, or our Stay Safe initiative.
Futureal is currently developing the second phase of the Corvin Innovation Campus in the heart of Budapest. The complex is one of the most energy-efficient office buildings in Hungary, it has been designed to meet the needs of energy-cost-sensitive tenants. The human-centred building situated near Corvin Promenade was developed according to BREEAM Excellent and WELL Platinum certifications to ensure it has a positive impact on the well-being and health of the people that work there. Futureal is also focusing on value-add and opportunistic investments in Europe, and the company has already invested in three valuable projects in Poland with an aim of repositioning.
What is your answer to critics of developers doing simply greenwashing when they speak about their engagement with ESG and green development?
Today companies must meet ESG requirements to ensure that they are operating sustainably and responsibly. These standards help firms mitigate risks, enhance their reputation, and attract and retain investors who are increasingly focused on sustainability. Therefore, companies are also adapting to ESG guidelines in Hungary, which are closely linked to the location and carbon footprints of their offices. If an international company wants to achieve its sustainability targets, it needs energy-efficient, green, and future-proofed office buildings.
The environment, energy efficiency, carbon emissions, and embedded carbon will be major drivers of the office development industry over the next decade, and Futureal intends to be a leader in this.
The industrial and logistics segment is a clear winner in the last 3-4 years in CEE including Hungary. But economies have lost steam across the region so how long can this hype go?
Hungary's industrial and logistics market is thriving due to global trends and Hungary's central location in Europe. Supply chain optimization is no longer the main driver due to the pandemic, and companies are now focused on making supply chains more resilient, which requires more stock and manufacturing closer to home. Political polarization is increasing, causing companies to avoid China and look for manufacturing options closer to Western and European markets. Hungary's educated workforce and cost advantage make it an attractive option for US, European, Korean, and Chinese companies. Eastern European countries are competing for this industrialization, but only those with high-quality, green, and available large spaces will succeed.
Co-Founder and Co-Owner
We recognized the changing trend and in 2020, we responded by establishing HelloParks, an industrial developer that caters to the logistics sector. It has quickly become one of the most promising branches of our portfolio. We’ve created an amazing team that has already turned HelloParks into the market-leading industrial and logistics developer in Hungary in terms of market share. Today, HelloParks is responsible for 40% of all industrial and logistics projects in the country that are for rent.
Residential markets are desperately seeking another push from governments to expand in many countries. What would you expect from the local government in Hungary?
The implementation of long-term loans at affordable interest rates of around 5-6% for potential homebuyers could significantly boost the local residential market. This would not only increase accessibility to the housing market for a wider population but also stimulate further development within the real estate sector.
The investment market has slowed down sharply over the last 10-14 months. Some investors follow a wait-and-see policy looking for a smaller price tag on offices or retail centres. Is Futureal one of them?
Yes. As a forward-thinking organization, we recognize the importance of adapting our strategies to align with evolving market conditions. By adopting a wait-and-see policy, we aim to capitalize on potential opportunities that may arise from lower valuations of office and retail properties. This approach ensures that our investments remain prudent and well-positioned for long-term success while safeguarding the interests of our partners.
Futureal Group has always adjusted its activity and company structure to the changes in the commercial real estate market. What were the major reasons to announce the merger of Futureal Development and Futureal Investment Partners in February 2023?
Futureal Group has restructured its commercial development business and asset management business into one efficient pan-European platform. Futureal Development and Futureal Investment Partners now operate as an integrated business line, to capitalize on the operating and management synergies and further strengthen its presence in the international real estate market. We see tremendous opportunities for international expansion, as well as further green investments. The integrated operation made possible by the new organizational structure will be a competitive advantage for our group.
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