Skanska Commercial Development Europe, the office developer with the largest presence in the CEE region, has summarized its 2016 performance and the year-end results couldn’t be better. The company leased almost 170,000 sqm GLA of office space in ten CEE markets. This is the best ever leasing result for the office sector of any region in the Skanska Group. This success illustrates CEE's strong position and the region's attractiveness.
After Skanska’s divestment record in 2015, last year was the time for exceptional leasing activity. With a volume of 170,000 sqm GLA leased, the company beat its own records, and has now set ambitious goals for 2017.
We had a fantastic year with many great successes and historically high leasing results in the region. It was the best year ever for our unit in Hungary – with an improving market and the impressive divestment of Nordic Light as well as record leasing activity. We also acquired impressive land plots for future investments, such as the one on ONZ roundabout in Warsaw. Almost 200,000 sqm are under construction and other projects are set to commence this year. Another important move was establishing our own investment fund management company in Poland. CEE is a great region to invest in, with fantastic potential to grow even more, and such performers as Romania, whose GDP growth of up to 5%, only confirms this positive momentum,” says Katarzyna Zawodna, President of Skanska CDE.
Hungarian real estate market
In the last few years Budapest became an inspiring place for the tenants and investors who are expanding their business or diversifying their real estate portfolios within the CEE region.
According to Colliers International, the level of construction activity resulted in approx. 100,000 sqm new supply in 2016, which represents an 89% increase compared with last year’s new supply.
Tenants from the SSC/BPO and IT sectors remained the main drivers of the office leasing market with notable activity in Budapest.
When it comes to the drivers for companies to change office buildings the tendency is nowadays connected to the employee engagement, floor planning and flexibility. Retaining the employees is becoming a challenge so having engaged, inspired and motivated people becomes essential in increasing revenues for the businesses.
“2016 was a very successful year for us. We delivered and sold Nordic Light project which was awarded with several sustainability awards. Last year we also started the construction works for Mill Park, our new futureproof project in the 9th district of Budapest. Moreover, our leasing activity registered a record level in our business, so we definitely have many reasons to be proud. We have a great and professional team that made all these happen, trusting and living by Skanska values. We are grateful to the real estate agents who significantly contributed to this success.” says Marcin Łapiński, Managing Director Skanska Property Hungary & Romania.
Attracting newcomers, building relationships
Investment funds also appreciate the high standard of Skanska’s assets. In 2016, Skanska sold three buildings (two offices and a hotel) worth EUR 211m and attracted new players to the company’s markets.
“It was a great success for us to establish a new partnership with three investors. HANSAINVEST Real Assets acquired the Atrium 2 office project in Warsaw’s city center, its first investment in the Polish market. Erste Alapkezelő Zrt selected the Nordic Light office building in Budapest, and a Quatari player, Al Sraiya Holding Group, purchased the Westin Hotel in Warsaw. The quality of Skanska’s assets and favorable yields in CEE attract investors, while Skanska’s working standards and good reputation build trust. These factors definitely give us a competitive advantage over the competition in the CEE investment market,” says Adrian Karczewicz, Head of Divestments CEE at Skanska CDE.
A new investment approach and plans
Another big move for the company in 2016 was the establishment of Skanska TFI S.A., the first investment fund management company for the Skanska Group worldwide. Skanska TFI S.A. will manage a closed investment fund locating its assets directly in real estate. Units from the Skanska Group in Poland will be the sole participants in the fund.
Additionally, the company has started five new projects in four countries with a total of 88,000 sqm GLA. The developer is working closely not only with its business partners but also with local communities in all CEE countries where it operates. By analyzing people’s needs and habits, the company is trying to fit in with the city landscape, according to its purpose “We build for a better society”. Every solution implemented in our projects, such as LEED certifications, accessibility audits of buildings, placemaking, aims to improve the quality of life in the neighborhood, and provide an attractive, futureproof workplace.
“Our unmatched team, fantastic business partners, and a buoyant CEE region have been integral to Skanska's performance. These factors combined with focusing on delivering futureproof projects in the best locations with top-notch working conditions for people, and underpinned by Skanska’s core values have all contributed to Skanska's success. We now have 12 new projects in the pipeline. Watch for further developments, we will keep you informed,” adds Katarzyna Zawodna.