Tópark: is it really coming back to life?
“Finally, people will come to live and work in the Tópark area, where highways M1 and M7 leave Budapest. The 350-apartment mini city will have a kindergarten, a clinic, its own bus service - and offices and stores of different sizes.”
“This ‘golden triangle’, bordered by highways M0, M1 and M7, is only a 10-minute drive from Budapest. An investment group whose ownership was unclear was planning a ‘Hungarian Las Vegas’ or ‘Dubai’ under the name ‘Tópark’ here, before the financial crisis. From the very beginning, the professional community had doubts about the project, which would mostly function as a shopping centre and which was started on an area of over 10 ha. For the ambitious plans the final blow was the economic downturn that started to worsen in 2009. The shells of the concrete buildings were transferred to the banks that provided the funding, the development was halted, and there were dozens of subcontractors whose bills were not paid.”
Before the tide of VAT rises
It was one of those subcontractors, the Lavinamix Group - which had built the concrete structure and the road network - that grabbed the opportunity. In lieu of their unpaid remuneration from the liquidation process, in 2015 they obtained the area, which has great potential. With this, the company, which had a track record of 20 years in road and highway construction, entered the risky area of property development. Preserving the structure of the existing buildings, but remodelling the interiors, they will build 350 apartments, 15,000 sq m of commercial space, and 55,000 sq m of office space by the end of 2019. Timing couldn’t be better: in the rush that started on the property market two years ago, (retail) investors dissatisfied with interest rates are buying almost anything. And almost immediately: from 31 December 2019, the reduced 5% VAT rate that now applies to newly-built apartments will increase to 27%, because of EU regulations and the record-high Hungarian tax rates. This is expected to cause a significant rise in prices, adding to the 20-30% increase in the price of building materials and in the fees of contractors, which is already noticeable.
Demand is increased by the great location of the “artificial city”, as it is bordered by 3 highways, to which it has 2 direct exits. The new owner, which has great experience in road construction, built these at the very beginning. Budapest is very close to the site: the new terminus of metro line 4 in Kelenföld is only a 10-minute drive from here. (People working there drive in the direction that is not affected by the morning and afternoon congestions.) There are plans to start a bus service for those who live, work or shop in the Tópark area.
Double digit gain
The complex belongs to Biatorbágy administratively, and it will have a kindergarten and a nursery run by the local government (this was necessary for the building permit of this large-scale plan) and a clinic, on 1,800 square metres. Prices are fairly attractive when compared to the area: they range from 430,000-600,000 HUF/ sq m. The latter is the price of the most beautifully located homes facing the private lake. According to data provided by Ingatlan.com, similar homes cost HUF 650,000-750,000 per sq m in Újbuda (Budapest, 11th district), HUF 577,000 per sq m in Budaörs, HUF 679,000 per sq m in Biatorbágy and HUF 519,000 per sq m in Törökbálint. Since the majority of the Tópark development is office space, demand is expected to be higher among buyers looking for investment property.
Calculating with current prices, the amount invested can be recovered in 8-9 years if the properties are let at a good price to the - mostly foreign - managers and employees of multinational companies that are moving here. This is an annual yield that exceeds 10%.
In addition to apartments, business owners may also find the stores for rent attractive. Commercial properties and offices will be let by the owner itself. The average rent is EUR 10/sq m/month. This means that you can rent a store with an area of 100 sq m for HUF 300,000 per month. In light of this, it is not surprising that there is a wide range of interested businesses, from confectioners to fashion stores.
Opening a store may be very profitable, provided that people move into the apartments and offices as planned. This is the trickiest issue of the project: those who buy the apartments get good yields if the companies mentioned earlier move to the offices, and rent apartments for their foreign employees at a good price. Similarly, those who own retail units can make a profit if the streets of Tópark are crowded with residents and office workers every day.
However, for the retail units people driving by are also ‘natural’ potential customers, as 210,000 vehicles use the three highways every day. (This is also the route Turkish and Bulgarian guest workers, with their pockets full of euros, take to bypass Budapest as they travel between their homeland and Western Europe several times a year.) Similarly, a critical number needs to be sold before the sales of the apartments kicks off, as no-one wants to buy in a huge but half empty residential area.
Business Development Manager Balázs Csendes says Tópark can be fully populated by the end of 2019. However, he does not deny that until then the sales of offices, commercial spaces and apartments, one depending on the other, will resemble a kind of tightrope walking. The first 141 apartments will be completed in late 2017, and the delivery of offices will start in early 2018. The rent of the offices is also competitive: the average monthly rent of 15,000 sq m of the best, category ‘A’ office space is EUR 12 / sq m. This is 2 euros lower than the office buildings in Váci Street, which are used as a benchmark. In addition, a drive to the western border and the cities of Győr and Székesfehérvár is 40 minutes shorter from here. Liszt Ferenc Airport is a mere 30-minute drive without traffic lights.
Edited version. The whole article was published: Haszon.hu – 10 August 2017