A pioneer in the CEE region

We speak to our first Central and Eastern European REIT member, BIF, and discuss its growth strategy and positioning as well as opportunities and challenges in the Budapest market.

Anna Ungar

Dr Anna Ungar started to work in the Executive Board of the company established and managed by her father right after obtaining her degree in law. She has been the President of the Board of Directors of Budapesti Ingatlan Nyrt. since August 2016.

  • BIF is a pioneer in the CEE region when it comes to REITs. Tell us a bit more about that, your portfolio and strategy.

Budapesti Ingatlan Hasznosítási és Fejlesztési Nyrt. (BIF) has been an important player of the real estate market of Budapest for more than 25 years. BIF has been listed in the Budapest Stock Exchange since 1998; its shares have been traded in the premium category since October 2018 and its current market capitalisation is around EUR 270 million. BIF was among the first companies in Central and Eastern Europe to obtain the status of a real estate investment trust (REIT).
The REIT status ensures tax advantages, making BIF an investment target for real estate funds and offering a promising alternative even when compared to traditional real estate funds: open-ended funds have to hold significant liquidity buffers, while closed funds are only accessible for institutional investors. BIF enjoys a fundamental and preferential status among Hungarian real estate development companies on account of its portfolio, consisting of special and strategic buildings acquired during the last twenty years.
The company’s current real estate portfolio consists of 16 buildings in prime locations with historical significance. Many of the assets can be found in the inner city, close to a public transport hub or within the World Heritage Site of Budapest. The portfolio mainly consists of office buildings, along with two multi-storey car parks (one of them located close to the famous Váci shopping street and the business district). In addition, three buildings are rented to hotel operators. BIF has just completed the acquisition of its newest property, an office building near one of the major railway stations of Budapest.
BIF’s strategy is rooted in three pillars: leveraging the potential of its existing portfolio; highly efficient management of the buildings; and exploring acquisition opportunities that may contribute to strengthening its position in the market. BIF prefers value creation within its existing portfolio instead of buying completed, fully operating assets. The purpose is to develop buildings with lasting value and to serve the tenants and commercial partners to their satisfaction while keeping the shareholders’ interest always in focus. BIF’s strategy is primarily location-based; this is the principal factor when considering new acquisitions or developments.
Boutique hotel concept on the Andrássy Street World Heritage Site

  • What is the most interesting trend in your home market influencing your business and the wider real estate industry?

BIF is a Budapest-based real estate company with in-depth market specific specialisation. The most significant trend in the city is the evolution of the office market over the last few years, where the vacancy rate has decreased continuously to a record low of 5.6%. There is a growing development trend among investors and, therefore, hundreds of thousands of square meters of new office space was delivered in the last years; an additional 230,000 m2 are expected to be delivered in 2020 alone.
Despite developments of this magnitude, there is still a strong pipeline of demand from tenants with companies expanding and needing additional office space as well as more and more multinational companies choosing Budapest as a target destination for their service centres.

  • How would you describe BIF’s responsibility when it comes to the environment and your impact on society, at a local level? What is the most important way your business contributes?

Despite increasing rents, vacancy rates have remained low. However, occupiers are more and more demanding, looking for a higher level of service and more environmentally friendly buildings. The transformation of the office stock can be expected as a consequence. Investors like BIF with category ‘B’ office buildings as well are not immune to these challenges. They need to execute renovation, reconstruction or face-liftings of their properties. BIF has already started this repositioning with its new developments that are aiming for green qualifications and by improving the service quality in its operating office buildings.

  • BIF is active in the office, hotel and residential sectors. Which one of your developments excites you most?

BIF’s activity also extends to the refurbishment and redevelopment of properties or even entire districts, and we have several special developments underway. The company launched a development of 39 hectares in District III of Budapest where an entirely new suburban district is emerging just beside a nature reserve park but accessible from the inner city.
BIF has already started the works on an exclusive residential concept with loft apartments and the development of an 8,600 m2 office building with three parking floors just near its latest acquisition. But the most prestigious development opportunities in the portfolio are a 39,000 m2 multi-purpose (office, commercial and parking) concept in the Central Business District and a boutique hotel concept on the Andrassy Street World Heritage Site.
Bajcsy office building development