Hungarian Investment Promotion Agency - General overview … Real estate HIP projects82.pdfBUDAPEST...

General overview forinvestors in Hungary’sReal Estate market

WHY INVEST?

• Thereissizeablegapinthemarketsignallinganeweraforqualitydevelopmentsand

uniquesolutionsthatarestillsoughtafter.

• Ingeneraltherealestatesector’sprimesubmarketssawgrowthinrentlevelsthus

decreasingvacancy ratios leading to increased investorappetiteand transaction

volumes.

• By investing intorealestate,thehighestreturnscanstillbeachieved intheCEE

region.

• Tourism volume and hotel performances show continuously increasing tendency

since2009bothintermsofBudapestandthecountrysideconvergingintosolidly

performinghotelsyearinyearout;

• Highinvestmentappetiteexperiencedforqualityincomegeneratingproductsmeets

limitedsupply.

• Hungaryisconsideredtheifthstrongesthealthandmedicaldestinationintheworld

duetoitsexcellentgeographicallocation,outstandingqualityofthermalwatersand

abundantgeothermalresources;

• Thereisanincreasingvolumeofinvestorseyeingthemarketandamongstthehotels

theupscale/luxurysectorisverymuchfavoured;

• ImprovingimageandincreasingpopularityofBudapestasacity-breakdestination;

• ThereareanumberofseasoneddestinationsinprovincialHungarythatcouldsupport

theadventofnewhotelsandresorts;

• Thecountryisapoliticallyandeconomicallysafedestination.

The dynamics of the real estate market during the past 25 years were inluenced by the general

economic conditions in Hungary. Signiicant and long-lasting GDP growth started in 1997 and

lasted until 2007. As major real estate segments (ofice, retail, logistics) were operated on a

non-market basis before 1989, the changes resulted in signiicant improvements in this sector.

Major existing stocks lost their past function and became unused and large scale new and

modern developments entered the market. As Hungary transformed to a market economy, the

real estate market emerged to western standards.

Subsequent to the effects of the crisis Hungary is slowly returning to international property

investment map. Along with stable economy, many attributes of Hungarian property market

promise remarkable growth potential in the future. Decreasing risks and increasing demand for

property market is relected by decreasing investment yields as well.

Both transactional and sentiment data shows prime yields ranging 7.00%-7.10% for ofices,

8.50%-8.75% for logistics, and 6.50%-7.00% for shopping centres. Overall market climate

is becoming brighter, measurable with decreasing vacancy, slightly increasing rents in some

market segments and increasing pipeline in most sectors. Highest development volume is

forecasted in class “A” ofice segment, while lowest in retail (shopping centres).

Similarly to 2015, investment activity remained strong in irst half of 2016. The total volume

of investments exceeded past year igures by 13%, resulting highest investment record since

2008.

Transaction market activity was dominated primarily by Hungarian investment funds

representing 84% of the total invested volume, but the interest of foreign investors is increasing

and expected to be realised in more transactions in 2016. Q2 investments are dominated by

ofice market (over EUR 191 million) and by retail market (nearly EUR 278 million).

OFFICEMARKET

The total Budapest ofice stock (including owner-occupied and speculative buildings) reached

3,297,362 sqm in the second quarter of 2016. Total modern stock comprises 2,632,781 sqm

of ‘A’- and ‘B’- category speculative ofice buildings and 664,581 sqm of owner-occupied

buildings.

The development pipeline – in contrast with previous years – looks healthy, projected handover

for 2016 is 97,800 sqm, while, 149,000 sqm for 2017 and 97,000 sqm for 2018. Demand for

green (sustainable) certiication of new and existing buildings is continued to grow, 25% of

total stock is certiied already, and this ratio is expected to reach 30% by year-end.

Vacancy rate has been declining continuously since Q2 of 2012, and reached its lowest igure

of 10.3% of past years.

During the second half of 2015 an overall increase has been monitored in average asking

rents, which continued in 2016 with rent levels growing between 5 and 15%. Segmentation

between „ A” and „B” categories observed is relected by growth pricing differences these

buildings.

In the second quarter of 2016, the gross take up totalled 129,172 sqm relecting an 40%

growth on the corresponding period of 2015. This volume contained 37% new leases, 8%

expansions, 4% pre-leases, whereas the share of renewals was 51%.

Similar to past year, due to continuous ageing and permanent deiciency of new premises,

potential future demand will not be adequately supplied if the construction pipeline remains

at the current level. This will leave a sizeable gap in the market and signal a new era for quality

developments and unique solutions that are still sought after. Moreover supply of contiguous

spaces over 1,000 sqm is very limited, therefore tenants should accept decreasing level of

incentives and in-time planning prior to extension plans.

BUDAPESTMODERNOFFICESTOCK(M2)

3500000

3000000

2500000

2000000

1500000

1000000

500000

0

2010201120122013201420152016

24.00%

22.00%

20.00%

18.00%

16.00%

14.00%

12.00%

10.00%

Owner Occupied StockSpeculative StockVacancy

Q2

RETAILMARKET

The retail market experienced the most signiicant structural and volume change, among all

segments as new retail types entered the market, and covered the whole country with shopping

centres, hypermarkets, DIY stores, thematic stores, supermarkets, discount stores etc. over a

very short time period. Almost all modern retail types appeared and expanded until 2008.

Following the years of 2008 and 2009, the retail market in Hungary stabilised during 2010

as market players adjusted to the changed conditions. According to Hungarian Council of

Shopping centers, the total shopping centre stock in 2015 remained 2,068,000 sqm and the

supply pipeline for new retail space remains fairly muted. Budapest represents more than 31%

of total Hungarian modern shopping centre stock.

Supply remained unchanged in the last years and no new larger scheme opened in H1-H2 2016.

However, the signiicantly improved market conditions motivated developers to commence a

series of new schemes including the 34,000 sqm IKEA retail warehouse in Budapest (2016), the

18,000 sqm Alba Plaza 2 in Székesfehérvár (late 2018), and the 45,000 sqm Etele City Center

in Budapest, which is planned to be completed in 2019.

BUDAPESTSHOPPINgCENTRESTOCK(M2)

1000000

900000

800000

700000

600000

500000

400000

300000

200000

100000

0 2010 2011 2012 2013 2014 2015 2016 2017

New

Sup

ply

Exis

tin

g S

tock

Transaction activity in the Hungarian market in irst half of 2016 was strong. Investor interest

is expected to increase throughout the remainder of 2016 with a number of deals already well

progressed, with demand from international investors seeking large shopping centres or retail

portfolios, while local Hungarian investors focus on smaller single asset deals.

Occupier demand remains healthy, with a growing number of international mass-market and

high end operators actively looking for space in key high street locations and in dominant

shopping centres.

Typical monthly rental rates for shopping centres fall in the range of 20–65 EUR/sqm, for high

streets 40–90 EUR/sqm, in retail parks 5-8 EUR/sqm while in outlet centres 15-20 EUR/sqm.

INDUSTRIAL/LOgISTICSMARKET

As most of the brownield industrial sites were insuficient for modern production and logistics

purposes, high numbers of modern industrial premises were built over the past 25 years.

Almost every larger city established new industrial and logistics parks. In 2014, more than 220

industrial parks existed in Hungary.

The highest volume of modern industrial/logistic stock is located in Budapest, but Győr and

Kecskemét (due to stable demand generated by large automotive industry) are also important

industrial locations.

Total area of the Budapest speculative stock is 1,887,798 sqm, 10% of the stock is represented

by premium quality city logistics.

The construction activity – similarly to other market segments – is low.

The Hungarian industrial market has seen good levels of activity over the irst half of 2016.

Total take up reached 210,000 sqm. Market demand is dominated by renewals, as 65% of the

total demand. As in the previous quarters, the automotive sector, along with occupiers from

the pharmaceutical and FMCG logistics segments are the main drivers of demand.

BUDAPESTMODERNINDUSTRIAL/LOgISTICSTOCK(M2)

1950000

1900000

1850000

1800000

1750000

1700000

1650000

1600000

1550000

1500000

1450000

0200820092010201120122013201420152016

28.00%

23.00%

18.00%

13.00%

8.00%

3.00%

New SupplyExisting StockVacancy %

Vacancy stands at 9.7% - as the second lowest igure since 2008 – despite of 1.1% temporary

growth in Q2 compared to Q1. For the second half of 2016 growing demand and further

decline for vacancy rate is expected by most of market participants.

Key market players forecast market rent increases in the mid-term for the modern stock. The

most successful submarket is the city logistic, with low luctuation, stable rental fees, and low

and decreasing vacancy levels.

It remains dificult to ind appropriate size and quality areas for new tenants, as no large vacant

and contiguous areas are available on the market. There is around 57,000 sqm of new space

scheduled to enter the market by the end of 2016 (79,000 sqm for full year of 2016) which

may bring some temporary relief to the occupier market. Developers are beginning to assess

speculative build options but this is from a low base and any schemes are expected to be

absorbed with relative ease.

TOURISMANDHOTELMARKET

Tourism is one of the leading economic sectors worldwide, which is illustrated perfectly by

its contribution of about 9.8% to the global GDP. The sector has shown continuous increase

ever since the economic recession in 2009 with the number of international tourist arrivals

reaching 1.2 billion in 2015 according to UNWTO. This means a 4.4% increase compared to

the previous year and it is forecasted to continue in 2016 as well with an expected 4% y-o-y

growth rate.

At a global level, the most visited region is Europe accounting for over half of the international

tourist arrivals. In 2015, the number of international arrivals in Europe increased by 5% and

is expected to grow further by 3.5% to 4.5% in 2016. According to WTTC, tourism is one of

most relevant economic sectors in Europe in terms of GDP impact.

The positive trends are relected in the Hungarian tourism sector as well: inbound tourism volume shows an uninterrupted increase over the past ive years, with rates above the European average!

The number of guest nights spent in Hungarian commercial accommodation establishments reached 25.9 million nights in 2015, representing a 6% growth on 2014 and a dynamic close

to 25% improvement on 2011 igures.

According to the latest data, further growth is expected for 2016, with the number of guest nights reaching 10.98 million in the irst half of the year, an increase of 4.5% compared to H1 2015.

The development of gross room revenue of hotel establishments was in line with the dynamically growing demand, and increased 37.8% to reach EUR 613,193,000 in 2015, and continued to rise in H1 2016, with a remarkable growth of 6.4% compared to H1 2015.

BUDAPEST

Budapest is the most visited destination of the country realising almost 41% of total guest nights (about 8.7 million in 2015) spent in Hungarian hotels. In 2015, from the national total, 67% of foreign and 9.3% of domestic hotel guest nights were registered in the capital. As per a recent publication, Budapest is one of top 10, most popular city break destinations in Europe, due to its vast offerings, cultural heritage, exciting gastronomy, quality of hotels and buzzing nightlife.

To date total hotel supply in Budapest amounts for nearly 19,500 hotel rooms at all levels of which nearly 50% are classiied by the Hotelstars Union (HSU) standards, allowing for a pretty transparent picture of the capital’s roomstock.

gROSSROOMREVENUESOFHOTELESTABLISHMENTSINHUNgARY,THOUSANDEUR(2011-2015)

Gross Room Revenues of hotel establishments Change in %

800000

600000

400000

200000

0

15.0%

10.0%

5.0%

0.0%

5.3% 7.0%8.6% 12.6%

2011 2012 2013 2014 2015

Source: HCSO

DEVELOPMENTOFTOURISTSVOLUMEINHUNgARY(2011-2015)

Number of guest nights spent In commercial Change in %accommodation establishments

30000000

25000000

20000000

15000000

10000000

10.0%

5.0%

0.0%

-5.0%

-10.0%

-15.0%

5.4% 5.8%5.3% 6.4% 6.0%

2011 2012 2013 2014 2015

Source: HCSO

NUMBEROFgUESTSANDgUESTNIgHTSSPENTINCOMMERCIAL

ACCOMMODATIONESTABLISHMENTSINBUDAPEST,2011-2015

10000000900000080000007000000600000050000004000000300000020000001000000

0 2011 2012 2013 2014 2015

Number of Guests

Number of Guest Nights

Demand in Budapest grew by 6.9% in 2015 compared to the previous year in terms of guest

nights (reaching 8,712,571), underlining the continued demand growth for Budapest in 2015.

Budapest saw 4,041,967 guest nights in the irst half of 2016, representing a growth of 2.2%

compared to the same period in 2015.

The 5 largest foreign feeder markets of Budapest were the UK (9.3%), the USA (7%), Germany

(6.9%), Italy (6.8%) and Spain (3.8%). The 5 main feeder countries and domestic tourism

dominated nearly 44.3% of the market.

Statistics by category show that 4-star hotels registered a total of 3.5 million guest nights in

2015, an increase of 19.4% compared to 2014. Demand for 5-star establishments was quite

steady, the top category realised approximately 670,000 guest nights in 2015.

Highest occupancy and average daily rates can be observed in the 5-star category (occupancy:

78%, ADR: EUR 128.9 as of 2015). In the 4-star segment average occupancy was lower

(72.6%) but still above the Budapest average (69.1%), while the ADR was EUR 56.1. The 3-star

segment was characterised by an average occupancy of 68.5% and an ADR of EUR 35.4.

When evaluating rates at a much closer look, hotels in downtown Budapest (District V) have

traditionally overperformed market averages by a good 11-20% in terms of occupancy and

over 50% with regards to ADR.

In the irst six month of 2016, the gross average daily rate of hotels achieved a 5.4% growth

compared to the same period of 2015. In terms of gross average daily rate the 3-,4-, and 5-star

hotels realised an increase of 10.3%, 5.6% and 7.6% respectively compared to H1 2015. In the

irst three months of 2016, the OCC level of hotels overperformed the registered performance

indicator of Q1 2015, while it saw a decrease in Q2 2016 compared to the same period of

2015.

2016 is anticipated to show gradual, further growth in performance and proitability igures,

although rate of growth is perceived to be lower than in 2015.

Positive factors contributing to the rise in demand include the continued passenger volume

increase at Liszt Ferenc Airport. Since 2013 the number of passengers at the airport has been

showing an uninterrupted increase reaching an all-time peak (app. 10.3 million passengers) in

2015. The airport achieved a remarkable 12.5% growth in 2015, which can be regarded as an

outstanding performance even at an international level as the number of passengers increased

by 4% on average in 2015. In the irst seven months of 2016 the passenger volume of the

airport continued to rise. The number of passengers increased by 11% compared to the same

period of the previous year. According to the information received from Budapest Airport the

number of passengers will exceed 13 million by 2020. As of 2015, there were 95 destinations,

served by 44 airlines available from Budapest Airport.

The advent of new airlines (Emirates, Air Canada Rouge) or new routes (e.g. Toronto) are signs

of sustained growth and if accompanied by targeted marketing will make their mark on the

hotel scene.

The upturn in the hotel and tourism market in Budapest, accompanied by a sustained price

increase has led to both foreign and domestic investors investigating the development

possibilities at all levels. On the one hand the advent of the Ritz Carlton in 2016 (replacing Le

Meridien) fuels other luxury developments including the Ballet Institute on Andrássy Avenue, the

‘Párizsi’ Court on Ferenciek Square and eventually the Matild Palace– all owned by international

investors, on the other hand the appearance of Marriott International’s luxury brand on the

Budapest hotel market scene is generally expected to increase the high-end travellers’ demand

in the hotel market thereby contributing to the increase of ADRs.

PROVINCIALHUNgARY

The most visited region in Hungary is the Budapest - Central Danubian Region accounting for

about 38% of total guest nights spent in the country (as of 2015). Over 20% of total guest

nights are registered in the Balaton Region, while Western Transdanubia – a renowned thermal

spa and medical region - attracted over 11% of total guest nights.

Despite the setback of foreign demand tourism volume has shown an uninterrupted, but

slowing increase over the past ive years at Lake Balaton. The number of guest nights exceeded

3.39 million in 2015 showing an increase of 0.5% y-o-y - while the growth rate of guest nights

was 6.9% in 2013.

Budapest and Central Danubian Region

Lake Balaton

Western Transdanubia

Northern Hungary

Northern Hungarian Plains

Southern Hungarian Plains

Central Transdanubia

Southern Transdanubia

Lake Tisza

SHAREOFTOURISTICREgIONSBASED

38%

20%

11%

8%

8%

6%

4%4% 1%

Source: HCSO

THEOVERVIEWWASPREPAREDBY:BDOHungaryHotelandRealEstateServicesLtd.

Tel:+3612353010Address:1103–Hungary,Budapest,KőérStreet2/a,LaurusOfices,BuildingCContact:Mr.györgyRábai([email protected])andMr.AttilaHegedűs

([email protected])www.bdo.hu

Average hotel occupancy was also highest in Budapest - Central Danubian Region with 66.3%

in 2015 which is over 12% point higher than the national average (53.9%). The second

best performing region in terms of hotel room occupancy rates was Western Transdanubia

performing slightly under the Hungarian average with 50%, while the hotel units of Balaton

Region had an average room occupancy rate of 49.7%. The performance of other touristic

regions ranged between 37.1% and 48%.

MEDICALTOURISM

Medical tourism can be considered as one of the most relevant touristic subsectors based on

the high performance of medical hotels. In the last three years the share of medical hotels

increased further, accounting for 8.2% of total hotel guest arrivals (662,939 arrivals) and

11.4 % of total hotel guest nights (2,223,220 nights) in 2015.

Medical hotels achieved an average room occupancy of 61.8% in 2015 (7.9 percentage points

higher than the national average occupancy of the hotel sector), 9.8% higher REVPAR and are

historically characterised by lower seasonality and a remarkably longer average length of stay

as the hotel segment in general (3.5 nights versus 2.4 nights).

CONCLUSIONS

It is expected that the 2017 FINA World Swimming and Water Championship held in Budapest,

the Youth Olympics in Győr the same year, the 2020 Foorball Euro Championship will give a

boost to the inward tourism to Hungary, and other developments such as the conference

centre planned to be completed by 2019 will lead to sustained growth in both leisure and

business visitation.

The positive expectations around tourism have materialised in the Government restructuring

the public sector involved in tourism by appointing a government commissioner to oversee

tourism and help the sector to contribute to the national GDP in the share of more than 10%

on a sustained level.

Also the 2014-2020 period is to see a number of infrastructural and complex tourism product

developments supported by EU funds and these, primarily public sector projects are to assist

the Hungarian tourism’s evolution going forward.

I. PROJECT BACKGROUNDThe project owner is a project company created to successfully implement the 3* Congress Hotel project. For the required EUR 3.5 million investment, the project owner would sell 100% shares representing full ownership of the project company, in possession of development rights.

The owners signed a contract with KRAFT & Associates – Tourism Development

SHORT DESCRIPTION

Funding requirement

Unique opportunity to develop a 3* Business Hotel with 125 rooms in Budapest. The hotel will be located within 200 metres of the new Budapest Congress Centre. It will include meeting facilities, fi tness room, wellness centre and restaurant.

BA

SIC

PR

OJE

CT

DA

TA

EUR 3.5 M

Sector Location

Implementation period Operator search

Raising bank fi nancingConstruction

Overall Budget of the ProjectBank fi nancing

TourismDistrict IX, Vágóhíd Street, Budapest30 - 36 months4 - 8 months4 - 8 months18 - 24 monthsEUR 7 millionEUR 3.5 million

3* Congr ess Hot el

(representing 100% of Equity)

(www.kraftassociates-td.com) to prepare the Business Plan and the fi nancial projections for the project. KRAFT & Associates is also responsible for the hotel operator search. Several international hotel chains have expressed interest.

This is a unique investment opportunity to develop a 3* business hotel in Budapest, ideally located within 200 metres of the planned new Budapest Congress Centre. The future hotel is located close to several important cultural sites, such as the Hungarian National Theatre (www.nemzetiszinhaz.hu) and the Palace of Arts (www.mupa.hu). Several offi ce complexes have been built in the neighbourhood with major international tenants such as Morgan Stanley, Vodafone, IBM and Nestlé.

The dynamically developing District IX attracts increasingly more business and leisure tourists, creating growing demand for a branded hotel. This hotel could become one of the fi rst – if not the fi rst – internationally branded hotels in the close vicinity of the planned Congress Centre.

The hotel is planned to feature 125 guest rooms, meeting facilities on 130 m2, an80 m2 fi tness centre, breakfast area and private parking facilities.

The project planning and preparation phase (including operator search, obtaining necessary permits and raising bank fi nancing) is expected to be completed within 12 months while construction will take approximately another 18-24 months after that. Once an investment decision is made, the new hotel could be in operation within30-36 months.

II. PROJECT DESCRIPTION

COMPETITIVE ADVANTAGES• Forthcoming development of the Budapest Congress Centre

with a capacity of 4-5,000 people• Limited competition in the area• District IX is a dynamically developing district• Easy access to Liszt Ferenc International Airport (17 km)• Proximity to the Palace of Arts

(www.mupa.hu)• Proximity to the National Theatre (www.nemzetiszinhaz.hu)• Signifi cant presence of multinational companies• Proximity to Budapest’s largest open air club (www.budapestpark.hu)• Suffi cient parking facilities• Good accessibility and high profi le visibility from all directions• Effi cient public transportation

PROPERTY RIGHTS, LICENCES, CERTIFICATIONSThe project developer owns the 1,250 m2 project site. A set of architectural plans for the project were prepared in 2014 and are available for evaluation; it is understood that the fi nal concept will be prepared in conjunction with the selected international hotel operating company to comply with the relevant brand standards and specifi cations.

In terms of any building permit, there has been an initial building permit issued for an earlier concept, which has now expired, but once the new scheme has been fi nalised it can be re-issued within 6 months.

CURRENT POSITION IN THE MARKET – EXPECTED SHAREThe project aims to fi ll a market niche for a business hotel in the vicinity of the future Budapest Congress Centre. The Budapest Congress Centre is an approximately EUR 80 million development, which will be fi nanced from government funds and is planned to open in 48 months (2018-2019). For the realisation of the multi-thousand seat congress centre, the Government of Hungary has issued a governmental decree under registry number 1359/2014 (dated 30 June 2014), regarding many major developments and identifying the tasks and the deeds to be performed by the government commissioner assigned to manage ‘Large scale development projects in Budapest’.

Since the surrounding area is home to many international companies with their headquarters located in the various offi ce complexes along Soroksári út, and with easy access to the city centre, the area will attract a signifi cant number of leisure and business tourists.

TARGET GROUPSBusiness travellers, attendees of conferences and other events held in Budapest Congress Centre, visitors of cultural events.

WHY INVEST?

In general, the growing Budapest market justifi es the advent of new hotels in town and those, located in upcoming or mature areas of town – for example the broad vicinity of the development - will see successful and sustained operation going forward.

As per the assessment of the project’s status, the future investor can take over a project that is ready for development and in possession of development rights. The hotel will benefi t from the adjacent conference centre, driving substantial demand for the subject hotel, which until the advent of additional properties will be the only branded property in the area.Even beyond the opening of other hotels, it can remain a good price value proposition with a sustained position and solid income stream.

ASSUMPTIONS AND MAIN INDICATORSKRAFT & Associates – Tourism Development lead by its CEO Dr Péter Kraft (Vice President and Country Manager of the American Express Hungarian Subsidiary 1990-1997 and Tourism Secretary of Hungary 1999-2000) prepared the fi nancial projections of the project.

MAIN INDICATORS

Year 1 Year 2 Year 3 Year 4 Year 5

Number of Rooms 125 125 125 125 125

Average Daily Rate (ADR) (in EUR) 41 42 43 44 45

Occupancy Rate 55% 57% 60% 63% 63%

Revenue per Available Room(RevPAR) (in EUR) 22 24 26 28 29

MAIN COMPETITORS:• Ibis Budapest Aero Hotel (www.ibis.com) • Mercure Budapest Duna (www.mercure.com) • Leonardo Budapest

(www.leonardo-hotels.com)• In terms of future supply, there are currently

no announced projects in close proximity.

It must be noted that until the advent of another internationally branded hotel in the area, the subject property will be the only quality hotel in the area. Even beyond this point, it can remain the key midscale product offering a competitive price value proposition to its customers.

III. FINANCIAL INDICATORS

QUANTITATIVE AND QUALITATIVE INDICATORSQUALITATIVE INDICATORS

All fi gures in EUR Year 1 Year 2 Year 3 Year 4 Year 5

Sales (1000) 1,509 1,609 1,739 1,880 1,935

EBITDA (1000) 479 526 573 649 656

Free Cash Flow (1000) 212 65 129 208 249

SHORT MARKET DESCRIPTION, MAIN COMPETITORSAccording to current market trends, there is a growing demand for international conferences in Budapest. Based on the number of international conferences held in Budapest, the city is ranked 9th in Europe while Hungary is the 18th most preferred conference and meetings destination in Europe (Source: www.iccaworld.com). In 2013, there were 1,017 international conferences held in Hungary (Source: www.turizmus.com). The number of conferences is expected to see an immediate and signifi cant increase once the Budapest Congress Centre enters the market, driving substantial demand for quality hotels in the city.

IV. INVESTMENT OFFER

Required amount of investment EUR 3.5 million (representing 100% Equity)

Form of investment Cash

THE INVESTED CAPITAL (EUR 3.5 MILLION) WILL GENERATEAN INTERNAL RATE OF RETURN (IRR) OF 13 %.

CONTACT DETAILSMR. KRISZTIÁN BELLON, Project Manager

+36 20 446 [email protected]

MR. AMBASSADOR PÉTER KRAFT, CEO+36 20 938 0737

[email protected] www.kraftassociates-td.com

2125

100

210

100

210

100

2125

100

210

100

2125

100

személy liek

főlépcső

gazdasági li

gazdasági lépcső

BEVILÁGÍTÓ UDVAR

RECEPCIÓ11,68 m2

WC6,12 m2

WC6,12 m2

ELŐCSARNOK131,47 m2

ÉTTEREM150,88 m2

POGGYÁSZ3,96 m2

MOZGS. WC6,20 m2

MELEGÍTŐ KONYHA36,18 m2

RAKTÁR6,91 m2

RAKTÁR12,24 m2

HULLADÉK6,52 m2

KÖZLEKEDŐ37,72 m2

ÖLTÖZŐ24,12 m2

ÖLTÖZŐ23,79 m2

TAKSZER3,92 m2

RUHATÁROLÓ10,22 m2

NEARBY BUILDINGS

Offi ce Towers (Infopark) National Theatre

4* Br anded Lif est y le

Select -Ser vice Hot el

SHORT DESCRIPTION

Funding requirement

Unique opportunity to develop a 4* internationally branded upmarket select service, lifestyle hotel with 140 to 143 rooms in Budapest. The proposed hotel will be l cated in close proximity to the city’s upscale promenade, Andrássy út, which is home to an array of luxury boutiques, in a very convenient location close to major sights.

EUR 4 M (50% equity) or EUR 7.8 million (100% equity)

SectorLocation

Implementation periodOperator search

Raising bank fi nancingConstruction

Overall Budget of the ProjectBank fi nancing

Tourism

Budapest, 6th District, Nagymező utca

18-22 months

4-6 months

2–4 months

16–18 months from the availability of fi nancing

EUR 13,6 million

Up to EUR 9.5 million – subject to equity input

BA

SIC

PR

OJE

CT

DA

TA

I. PROJECT BACKGROUND Short background

The project owner, Rockwood Real Estate Ltd., is an SPV created for the NM38 hotel project. The owners of the company are active players in the Hungarian Real Estate scene, and have gained substantial experience in commercial and residential projects.

This is a unique investment opportunity to develop a 4* internationally branded upmarket select service, lifestyle hotel in Budapest, located at Nagymező utca 38., a frequented area with small pubs and bars, running into Andrássy út, which provides a great opportunity for shopping, as world renowned brands (Louis Vuitton, Gucci, Armani, Burberry, etc.) have opened stores there, thus enhancing the overall recognition of the area as an upmarket and trendy hub. The future hotel is situated close to several important cultural sites, such as the Opera (www.opera.hu), the Music Academy (www.zeneakademia.hu), the Thalia Theatre (www.thalia.hu) and the Operetta Musical Theatre (www.operettszinhaz.hu). The site is located in a convenient and ideal destination for both business and leisure travellers, serviced by excellent infrastructure; the Metro, bus and tram lines make the various parts of downtown easily accessible.

The hotel is planned to feature up to 143 guest rooms (133 standard and 10 deluxe rooms), small but compact meeting room/boardroom facilities on 50 m2, a 91 m2 recreational area (including a small-sized pool/whirlpool/sauna and fi tness centre), a breakfast area, a 24/7 grab’n’go style outlet, a spacious bar lounge area and underground parking facilities.

For the subject project, depending on the proposed investor’s consideration, either 50% and equity partnership or full ownership is available, when the current owner will hand over the building site, preliminary concept plans, other documents and all the necessary offi cial permits needed for construction.


WHY INVEST?

The 6th District is a classic example of a diplomatic district and, through Andrássy út, a frequented area of Budapest, it attracts more and more business and leisure tourists, thus creating growing demand for a branded hotel. This hotel could become one of the fi rst internationally branded lifestyle hotels in Budapest’s downtown hotel sector. In general, the growing market justifi es the advent of new hotels in the heart of the city, and one could foresee successful and economically viable operation going forward especially in the lifestyle sector, which is currently under-serviced in Budapest.

Based on the assessment of the location and future market environment, the property has the potential to become one of the leading city centre upscale hotels in Budapest. The hotel will immediately be able to compete head-to-head with its competitive set and, by representing a unique product mix and design, could outperform some hotels located in the area.

Competitive advantages

• Managed by an International Hotel Company• Central location next to Andrássy út with excellent accessibility• ‘Lifestyle’ hotel, new, contemporary design and layout• Fresh and unique design, making the property stand out from the crowd• High quality materials, continuous refurbishment due to larger FF&E reserve• Immediate surrounding offering a variety of activities, adjacent to high-end shopping lettings• Good accessibility on foot, by car or via public transport• Effi cient public transportation

Property rights, licenses and certifi cates

The 1,190 m2 project site is owned by the developer. A set of architectural plans for the project have been prepared and are available for evaluation, yet it is understood that the fi nal concept has to be prepared in conjunction with the selected international hotel operating company to comply with the relevant brand standards and specifi cations.

Current position in the market and expected share

The future hotel will be able to capitalise on a gap between the mainstream hotels of the existing four- and fi ve-star hotels and to remarkably differentiate itself due to its design-savvy and trendy development approach accompanied by the proposed strong brand message provided by the future operator.

Target groups

They include leisure and business segments, including FIT guests, leisure groups, MICE and corporate guests. The most signifi cant market segment will be independent travellers (FIT). The property will also attract an element of demand from the centrally located core fi ve-star branded hotels, and mainly FIT and corporate clients who are seeking new experience.

Short market description, main competitors

According to current trends, there is a growing demand for Budapest, and continuous demand and rate improvement characterise the market since 2009. In terms of occupancies, the average of commercial accommodation establishments in the 6th District was 69.6% in 2014, which is substantially higher than the city’s average, and even hotels of good quality were able to outperform this indicator by 10% to 15%, which justifi es any hotel development in the area. As the market seems to have revived after the economic crisis, there are new hotel openings in the pipeline for the following years. The new development projects are concentrated in the central parts of the city, including three-, four- and a few fi ve-star hotel projects.

Main competitors

Overall, it can be said that there is no ideal competitive set for the future hotel. Hotels of relevance include primarily four-star properties situated in central Budapest, complemented by two fi ve-star properties.

• Iberostar Grand Hotel• Hilton Budapest City• Mamaison Hotel Andrássy• Art’otel Budapest• Lánchíd 19 Design Hotel• Zenit Budapest Palace• Continental Hotel Budapest• NH Budapest City• Courtyard by Marriott• Radisson Blu Béke Hotel Budapest• MGallery Hotel Nemzeti• In terms of future supply, there are some announced projects that can be relevant regarding the

proposed hotel: Hotel Ária, Zara Hotel Prestige and Andrássy A8.

CONTACT DETAILSMRS. ÁGNES ZÁSZLÓS

+36 30 600 7868offi [email protected]

www.rockwoodholding.com

III. FINANCIAL INDICATORS Assumptions and main indicators BDO Hungary Hotel and Real Estate Services Ltd. prepared the fi nancial projections of the

project.

year 1 year 2 year 3 year 4 year 5

Number of rooms 143 143 143 143 143

Average Daily Rate (ADR)(in EUR)

71 73 75 78 80

Occupancy Rate 58 % 62% 67% 71 % 75%

Revenue per Available Room (RevPAR) (in EUR)

41 45 51 56 60

Main indicators

Quantitative and qualitative indicators

All fi gures in EUR ‘000 Year 1 Year 2 Year 3 Year 4 Year 5

Total Revenues 1,937 3,179 3,561 3,877 4,184

EBITDA 299 656 835 981 1,121

Qualitative indicators


Required amount of investment EUR 4 million (50% equity) or EUR 7.8million (100% equity)

Form of investment Equity participation/Full takeover

SHORT DESCRIPTIONVacant land – with offi ce building project.The new Ecodome Offi ce Building offers high quality, LEED Platinum certifi ed offi ces, providing 4,946 sqm gross lettable area and 90 underground parking spaces.The building provides a highly liveable environment on the Buda side of the city, with a breath-taking panoramic view from the upper fl oors. As a result of the wide development experience, conscious and consequent planning, the maintenance of EcoDome will be highly cost-effi cient.

Sector

Project owner

Location

Implementation period

Overall Budget of the Project

Investment need

EcoDome

Of f ice building The Liv ing Of f ice

Real Estate

B&L Estates Real Estate Investment Ltd.

www.rockwoodholding.com/ecodome

District 1, 13 Mészáros str., 2/a Pálya str.,

1012 Budapest, Hungary

Completion: 15-16 months from the start of

construction.

EUR 9 million

Based on selected options:

1. Finance (possible as a partner) the

development of the project: EUR 1-2 million

2. Pre-Lease the project from 1,500 up to 4,900 sqm

3. Sale when completed: EUR 12 million

Funding requirement

EUR 9M BA

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I. PROJECT BACKGROUND


Ecodome will be the ultimate unique and effi cient green offi ce building investment in Budapest,

in an especially prestigious location in Central Buda. It will be ideally suited as a headquarter

building operating with customised solutions

The projected building is located in the Central Buda side of Budapest, in close proximity to Déli

Pályaudvar (railway station) and an M2 metro station The Buda Boulevard (Alkotás street), Krisztina

ring road and Déli Pályaudvar are all nearby. Mészáros street is directly connected to Lánchíd (the

Chainbridge), making central Pest (CBD) easily accessible through the Várhegy (Castle Hill) tunnel.

The M1 and M7 motorways are also readily accessible.

The Ecodome Offi ce Building offers high quality and environmentally conscious offi ces for

companies requiring a liveable environment in Buda, together with a breath-taking panoramic

view from the upper fl oors. The offi ce areas are planned to be very bright in the modern-looking

building thanks to the optimal depth; furthermore, they are able to satisfy bigger offi ce needs on

one fl oor of up to 1000 sqm. As a result of the consequent planning and long term development

experience, the maintenance of EcoDome will be highly cost-effi cient.

A LEED certifi cation with a “Platinum” score is planned.

Introduction to the Project owner

B&L Estates Real Estate Investment Ltd. is an active player in the Hungarian real estate market

and has signifi cant experience both in commercial and residential projects. The owner has been

involved in luxury residential developments in central Budapest, fi ve star leisure projects in the

countryside of Hungary and has substantial experience in the fi eld of facility management.

Key People: • Bálint Erdei, Chief Executive Offi cer B&L Estates Real Estate Investment

Why invest

• Central Buda is a prestige offi ce building location.

• Sustainable (LEED) certifi cation provides competitive market advantage.

• Low service charge level is very favourablefor potential buyers.

• No similar projects are in progress in the catchment area.

Competitive advantages• Central Buda is a prestige location for small

and modern offi ce buildings

• The building will be installed with the most

advanced green technologies, and will

ensure low service charges, attractive for

both potential occupiers and investors

• A New building with an existing building

permit that determines building shape but

also provides the option of built to suit

solutions for tenant needs

Property rights, licenses certifi cations

• Final building permit,

• LEED Platinum Classifi cation,

• 100% property rights.

Current position in the market – expected share

“A” offi ce segment, limited competition in

the future.

Target groups

Large multinational companies, law fi rms or

start-ups looking for an offi ce building in a

good location and green environment for their

HQ.


As the current offi ce development pipeline is

very tight in Budapest, and market occupancy

has grown remarkably in the past year, no

primary competition is expected for the

project. The building has few secondary

competitors (existing offi ce buildings in the

Buda area), and the majority of which provide

signifi cantly larger, older, less fl exible spaces,

generally with higher service charges, and

lack a sustainable certifi cate, which already is

a must for new offi ce buildings.

Key strategic partners

(included: involved in project fi nance):

• Major Hungarian banks (fi nancial side),

• Jones Lang LaSalle and Robertson

(BNP Paribas Real Estate) (real estate side).

Key risks and measures to prevent

risks

market risk – relatively small building does not

result in a signifi cant increase in total stock,

moreover, there is very limited new supply in

the pipeline.

III. FINANCIAL INDICATORS Assumptions and main indicators

Proposed income levels: The estimated/targeted average offi ce lease is EUR 13/sqm/month.

Construction cost: approximately EUR 9 million (including land cost)

EBITDA Gross Potential Income is projected to be in excess of EUR 771,500/year from the second

year of operation of the completed building.

IRR, NPV (based on current market levels):

• Yield 7.25%-9.8% based on selected option

• Estimated Market Value : EUR 12 million (when completed)

Quantitative and Qualitative Indicators

QUANTITATIVE INDICATORS

Revenues / year 2015 Not relevant (development phase)

Mid-term revenues/year expectation

Gross Potential Income is projected to be in

excess of €771,500/year (stabilized) from the

second year of operation of the completed

building

Mid-term market penetration expectation (%) N/A

Available owner’s resources /available fundsproperty(land) ownership, project plans,

building permit, LEED certifi cation

QUALITATIVE INDICATORS

poor adequate high

Elaboration level X

Existing client relations X

Level of sectorial/market competition* X

Owner’s background

(market presence, experience)X

Management background

(knowledge, experience)X

Level of innovation in the

Project idea /Added valueX

Risk management plan X

* poor = high competition


CONTACT DETAILSMR. BÁLINT ERDEI, Chief Executive Offi cer B&L Estates Real Estate Investment Kft.

+ 36 30 999 [email protected]

www.rockwoodholding.com/ecodome

Required amount of investmentBased on negotiation with the project owner,

see various forms of investment

Form of investment

• Finance the existing project, EUR 1-2 million.

Estimated return: 9-10% / year, in 24-36

months;

• Leasing (pre-leasing) of the completed

project, rate: 13 EUR/sqm /month + VAT

1,500 sqm - 4,900 sqm

• Invest in the completed project,

EUR 12 million + VAT. Estimated return:

7.25%

Guaranteed profi t / estimated return

7.0-18.0% based on selected investment type

Estimated exit time Approximately 36 months

Proposed capital/equity structure:

• Based on the form of investment.

• Equity/loan structure based on fi nancing negotiations

Investment schedule: see above

Proposed exit policy: • Subject to negotiations. Sale as completed and fully let in an approximately 36 month period.

SHORT DESCRIPTIONEuropean Retirement Lifestyles is the proposed development of a privatised active independent senior living community in Western Hungary, targeting European senior citizens looking for active retirement and taking advantage of favourable real estate prices and cost of living compared to their current residence. The development would consist of approximately 350 to 375 single level units, an Activity Centre and on-site amenities, and would offer units for sale.

Sector

Location



European Retirement Lifestyles

Real Estate/Tourism

Aranyossziget, Máriakálnok, Western Hungary

Maximum 60 months

EUR 83.7 million + VAT

Funding requirement

EUR 13.23M BA

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as construction

loan or negotiated

settlement as a

buyout of the

project


European Retirement Lifestyles is an American/Hungarian partnership with substantial real estate development experience in Eastern Europe. The Developer is proposing to establish a Hungarian legal entity to develop the real estate constituting the subject of this project or to sell the concept ‘as is’ and to participate in the project as a project manager. Currently, the scheme is in the planning phase, with available preliminary development plans and a market snapshot study (detailed below).


II. PROJECT DESCRIPTIONThe project outlines the development of a senior living community in Western Hungary,

offering Western European (Norwegian, Finnish, German, Dutch, Swedish, Danish,Austrian

and French) senior couples and individuals looking to capitalise on the favourable real

estate prices and cost of living in Hungary and a chance to buy real estate in this centralised

community. The concept is based on similar communities that have been very successful

in the United States and Canada, aiming to focus on active and independent seniors, and

have provided substantial returns to developers.

The development would consist of 350 to 375 single family units, i.e. one- and two-

bedroom villas, and an Activity Centre that houses common facilities and activities (gym,

swimming pool, board games, lounges/craft rooms, library, etc.). The facility is proposed

to be developed gradually in ive phases. Phase 1 and 2 would comprise 36 single-family

units and 100 one- and two-bedroom villas. Sales and development would commence

upon securing inancing for the expansion of the development.

The proposed location, Aranyossziget, is

situated in the very Western part of Hungary

near the Austrian border with convenient

access via the M1 Motorway that crosses

the area and connects Budapest and

Vienna. The Hungarian capital could be

reached within two hours, whilst Vienna

is about less than one-hour drive from

here. Other noteworthy destinations

nearby include Bratislava, the Slovakian

capital, and Győr and Pannonhalma, the

latter being an important sanctuary for the

Catholic Church.

Besides convenient car access, the Liszt

Ferenc Budapest International Airport

is about 2.5 hours’ drive, whilst the

Schwechat Airport (Austria) is about 35

to 40 minutes away only, both options

allowing for convenient access to short-

and long-haul lights.

The project owner proposes to work closely

with sales & marketing agencies specialised

in pre-development sales and primary sales

of real estate as well as with agencies and

organisations with direct reach to senior

communities in the target countries. The

Unique Selling Point of the complex is

the lifestyle concept and the community

of like-minded senior individuals with a

similar background, who could participate

in a collective lifestyle experience, along

with local entertainment and excursions.

The project is currently concentrating on

active seniors who do not need assistance,

but possible future expansions may include

an assisted living facility on the premises.

Why invest:

This is the first facility of its kind in the

region: Europe has lagged the United States

in developing and operating privatised

senior living communities catering to the

lifestyle of retired Europeans over the age of

55. While there are skilled nursing facilities

and assisted living facilities throughout

much of Europe, the idea of activities that

you control at your own pace and follow

your interests is unavailable.

With the cooperation of the HIPA and other

entities and government bodies promoting

Hungary as an investment destination, a

high number of tourists who belong to the

target market can be made aware of the

opportunity.

The project owner has vast experience in

real estate development and operation as

well as senior living communities in the US,

and even in the case of selling the concept

altogether, it would commit itself to a

hands-on consulting role, overseeing the

development step by step.

Competitive advantages:

•Nocurrentcompetitors.

•Themarketsnapshotstudyprepared

by Brooks Adams Research conirms

the viability of the project by comparing

cost of living and real-estate prices

of the target markets and those of

Hungary, with the latter being

exceedingly preferable for the target

market.

•Thedeveloperhasexperiencewith

similar facilities in the US.

•Duetoitscentrallocation,Hungaryis

an ideal location for such a facility.

Proximity to both Budapest and Vienna,

allowing for the easy accessibility of the

facility.

•ThereisalreadyatendencyofWestern

European seniors retiring to Hungary.

•Ahighnumberofexpatswhohave

worked here in the past two decades.

•AlargenumberofHungarianslivingin

foreign countries, but looking to settle

down in Hungary later on.

•Possiblefutureexpansioninthe

direction of assisted living.

•Alargeproportionofthetargetmarket

is already aware of the favourable

conditions in Hungary.

Property rights, licenses, certifications

• asofnow,theproposeddevelopmentsite has been selected and thoroughly scouted,

and upon acquiring the development

funding/investment, the developer

pledges to ensure the required land;

• preliminaryarchitecturalplansare available;

• site–Aranyossziget/Máriakálnok(28 Hectares)

•letterofoptionfromtheownerasof May262016,

•thedevelopmentissupportedbythe local municipality, the site is both

secluded and accessible

ERL Commitment towards likely

Investors

•Tosupporttherealisationoftheproject

and when reaching the stage of investor

discussions, ERL, the initiator and

current owner of the concept, would

commit itself to:

•presentingadetailedmarketing

strategy and sales concept for the

target markets and sales scheme;

•providingexclusivityforaccessingthe

site;

•aformofLOIorothertypeof

commitment document from current

landowners to sell the designated

plots at a ixed price to ERL or any

successor;

•obtainingzoningandbuildingpermits

from local authorities;

•atleastpreliminaryagreementswith

health service providers (ambulance,

medical assistance, transportation

irms [land, air etc.])

Currentpositioninthemarket– expected share

Once completed, the proposed senior

living community would be the irst of its

kind in Hungary and Europe, providing an

advantage over possible future entrants.

Target groups

The primary target market consists of Western European (Norwegian, Finnish, German,

Dutch, Swedish, Danish, Austrian and French) senior couples and individuals (55+),

looking to capitalise on favourable real estate prices and cost of living compared to their

current residence. According to the project owner’s estimates, the above market would

comprise 85% of the residents. The secondary target market includes wealthier Hungarian

seniors (10% to 15%) and residents of North America (USA and Canada) with Hungarian

relatives or historic ties.


The proposed development would be the irst of its kind based on similar facilities in the

United States, where there are a large number of such communities operating successfully.

The basis of demand is the fact that in the past decade Hungarian real estate both as

investment and temporary or permanent residence has been in high demand amongst the

target market. Hungary is home to more than 400,000 expatriates and a large number

of businesses with foreign interests. There are Austrian, Finnish and Dutch expatriate

communities in Western Hungary consisting of seniors that chose to retire to Hungary due

to the favourable conditions. However, these are not centralised communities, but a group

of individually purchased properties unlike the proposed development.


Projections and main indicators

The financial indicators were prepared as part of the preliminary feasibility study by ERL and

comprise benchmark figures for the proposed development and real estate sales excluding

operational costs and revenues.

MAinindiCAtors

All figures in EUR Phase 1 & 2 Phase 3 Phase 4 Phase 5

Sales Revenue 30 644 000 16 791 000 21 221 000 14 449 000

Costs 15 635 000 8 762 000 10 821 000 6 959 000

Total Planning and Development

Costs24 885 000

Financing and Administrative

Costs(incl.loanrepaymentinterest)

4 004 000

Projected Net Profit 12 079 000

IV. investMentoffer

Required amount of investment

About EUR 13.23 million as construction loan or

investment representing 50% Equity or Negotiated

Settlement to buy out the project or another form

of investment can be considered

Form of investment Construction loan/Investment/Buyout

Estimated return

Construction loan: two to three years at a 6% to

8% interest rate; the return for other forms of

investments are subject to negotiations

Estimated exit time subject to negotiations

CONTACT DETAILSMrGArryJ.tAkáCs,MAnAGinGPArtner

Phone:+1(615)[email protected]

www.europeanretirementlifestyles.com

Note: Amounts shown above have been rounded to the nearest 1K – Conversion 1USD = 0.9EUR

SHORT DESCRIPTION

Funding requirement

Construction and operation of a 214-room 5-star hotel

and 60 apartments with an exclusive medical and spa

complex, sports and recreational facilities, a live casino

and a 6-hole golf course. An ideal location for business

purposes with a conference hall accommodating 760

guests.

EUR 4 0 MSector

Project owner

Location


Investment offer

Overall budget of the project

Tourism (medical)

Arbo Invest Ltd.

Debrecen is located 102 km from Satu Mare (RO),

194 km from Kosice (SK), 154 km from Uzhgorod

(UKR) and 237 km from Budapest (HU).

18 months

85% of the company through capital increase

amounting to EUR 40 million

EUR 47 million

BA

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Hot el Ar bor et um

Hotel Arboretum aims to offer multiple recreational, medical and spa services along with various

sports and entertainment facilities to its visitors. The hotel comprises 214 rooms and 60 apart-

ments, a main conference hall holding up to 760 guests, a spa and aqua park, a sports centre

equipped with a bowling alley, a squash court, a golf simulator and a golf course for trainees plus

a live casino. As part of the project, Hotel Arboretum was awarded a non-refundable grant to

build a geothermic energy system, which will reduce the expected energy costs of the complex

by approximately 60 to 70%.

WHY INVEST?

Hotel Arboretum will be a luxurious spa, sports and entertainment hotel complex. The planned facili-

ties and services are in line with the current trends, which are showing a growing demand for pre-

mium medical, recreational and spa tourism. Demand for good quality and exclusive 5-star hotels is a

rapidly growing segment in Hungary. Hotel Arboretum will be a spectacular complex with an easy to

reach location not only from Hungary, but also from the neighbouring countries. Tourists are expected

to come from Romania, Slovenia, the Ukraine and Russia with a rapid transfer from Debrecen Inter-

national Airport. The casino, spa and conference complex will attract many of the wealthier traveller

segments including recreation tourists, business travellers and high spending gambling tourists.


The complex offers excellent spa and medical services; it is also ideal for sports lovers, business

travellers, families, and tourists requiring premium services. The complex has promising

development potential as the currently planned 9-hole golf course can be further developed into

an 18-hole golf course, making the complex an ideal place to host professional golf tournaments.

Debrecen International Airport is in close proximity to the planned hotel. The area and the site

are rich in valuable quality mineral water resources (certifi ed by balneological surveys), which can

also be exploited and bottled for commercial purposes.

Property rights, licences and certifi cations

The project has all the necessary building licences and permits. The planned casino complex is

yet to obtain a gambling licence.

Current position in the market

The project is a greenfi eld investment opportunity that aspires to be a leading luxury hotel in a

region with strong international recognition and tourist base.



Short background

Arbo Invest is a project company dedicated solely to successfully develop the Hotel Arboretum

investment project.

Organisation

• Nóra Tanka-Pocsai, project owner o Levente Nagy, project manager

• István Ceglédi, technical director o József Attila Pocsai, consultant

Management background (including partner companies and relations)

The company has over 10 years of experience in developing and implementing various tour-

ism development projects. IavnCeglédi is a well-known and acknowledged expert with a vast

experience in building and operating large scale construction projects. His references include

Arbo Ranch, Hotel Balmaz****, Stop Shop Shopping Park, Fontana Restaurant and Leisure Park

and Erdőspuszta Club Hotel****. All members of the management team are in possession of the

necessary marketing, sales and international background to elevate the project to the realisation

phase.

Target groups

Hotel Arboretum targets spa and medical tourists including senior travellers, business travellers,

tourists seeking high spending weekend casino getaways, sports lovers and families. Current

trends show that there is an increasing demand for premium accommodation and services, while

Hungary has a great reputation among international travellers. Debrecen International Airport

provides easy access for foreign tourists who typically have twice the average spend of domestic

guests. The planned casino complex has an enormous revenue generating potential.

Short market description and main competitors

Overall growth in the tourism sector in Europe has had a favourable effect on the Hungarian tour-

ism industry. The volume of tourism in terms of guest nights has been steadily rising since 2010

in the country, surpassing 24 million guest nights in 2014. The Northern Great Plain tourist region

had a share of 8% in terms of total tourist demand in the country in 2014. Average daily rates

of the 5-star hotel segment have been steady in the last few years, reaching EUR 112 in 2014.

Medical hotels achieved an average room occupancy of 61.9% in 2014 (19.5% higher than the

national average occupancy of the hotel sector), and a revenue per available room of EUR 30.3;

they are also characterised by lower seasonality and a remarkably longer average length of stay

compared to the hotel segment in general.


Assumptions and main indicators

All fi gures in EUR year 1 year 2 year 3 year 4 year 5

Number of rooms

in the hotel 214 214 214 214 214

in the apartments 60 60 60 60 60

Average Daily Rate (ADR) 102 106 111 115 120

Occupancy 45% 55% 57% 59% 60%

Revenue per available rooms (RevPAR) 46 58 63 68 72

Revenue from hotels in total revenues 82% 81% 80% 80% 79%



Sales 5,029,531 12,544,309 13,733,697 15,005,614 16,033,198

EBITDA 2,638,927 7,177,922 7,926,044 8,687,987 9,267,608

After tax operating cash fl ow

1,387,038 4,705,938 5,777,345 6,609,935 7,320,858


Required amount of investment EUR 40 million

Form of investment 85% of the company through capital increase

amounting to EUR 40 million.

CONTACT DETAILSMR. LEVENTE NAGY

+36 20 429 4878

[email protected]

SHORT DESCRIPTIONThe project is a compact city next to Budapest, the capital of Hungary. The project embraces a built-up area of 200,000 m2, which includes offi ce buildings, apartments, shopping opportunities, service industry units, as well as facilities for sports and recreation. There is a conference hotel with an additional conference center. Each segment of this property has been designed with environmentally conscious solutions and green energy.

Sector

Project owner

Location



Investment need

Lak e Par k Of f ices

and Residences

Real Estate

ÚtnetÉpítő Kft.

(subsidiary of Lavinamix Group)

Biatorbágy, Hungary

Development period of 5 years

(2015-2020 - ongoing project)

EUR 101.5 M EUR (excluding industrial land)

Sale price is 52 M EUR (with motorway connection and internal roads completed)

Cost of completion: 49.5 M EUR

Total: 49.5 M EUR to complete the whole project (cost of completion)

Funding requirement

EUR 49.5M BA

SIC

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VIENNA

ZAGREB, LJUBLJANA


Lavinamix Építő Kft. was involved in almost all signifi cant road and motorway construction projects in the past 20 years in Hungary. The very large volume of assets – consisting of close to 300 pcs of heavy duty and transportation vehicles, a metalworking unit and service background – owned by Lavinamix, qualifi ed and experienced staff and major efforts to continuously renew the company resulted in its successful participation both in specialty and complete road construction projects.

Main activities of Lavinamix:

• Complete implementation of expressways and public roads

• Construction of embankments and dams, fl ood prevention

• Mining exploitation and quality processing of raw materials

• Manufacturing of fresh concrete

The Lavinamix Group holds an interest in several companies (in addition to Lavinamix Kft.):

• ÚtnetÉpítő Kft.– Tópark real estate development

• CEVIAÚtépítő Kft.– Concrete technology

• Arany-Fény Kft. - Gastronomy

• FogasHalászcsárda Kft. - Gastronomy

• N-Zoll Trans Kft.– Renewable energy

• Premier MinőségvizsgálóTechnológiai Kft.– Concrete technology

• Euro Basalt a.s.- Mining

• Lavinamix Slovakia s.r.o.– Mining and concrete mixing plant

• SC Lavinamix Construct s.r.l.– Mining and concrete mixing plant


II. PROJECT DESCRIPTIONThe multifunctional Tópark real estate complex consists of 9 attached buildings with a total gross fl oor area of 90,000 sqm, plus two-story underground parking (60,000 sqm). The total fl oor area is allocated to offi ce (45,000 sqm), residential (30,000 sqm) and commercial (15,000 sqm) functions, allowing the implementation of a conference center with a 800-1,000 person capacity and a business hotel with 140 rooms.

As Lavinamix Group owns a further 13 hectares of industrial land with an existing road connection at a few hundred meters’ distance (along motorway M0), the main functions can be supported with production/logistic or R&D developments, if required.

The Tópark project is a unique development opportunity, considering its location, size and potential to provide an optimal mix of functions in one location, delivering high standards of a built environment and meeting modern, contemporary tenant demands.

One of the main advantages of the property complex is that it is situated immediately next to the lake of Törökbálint, providing numerous recreational opportunities for visitors of Tópark, as well as the people living and working here. The project includes the development of a 3 hectare green park area around the real estate complex.

Exceptional visibility and advertising value for companies renting offi ces here, where 180,000 cars/day drive by on the motorways.

Downtown Budapest can be reached in 15 minutes by care on the motorway. Public transport: a nonstop bus line can be operated.

Opportunities to expand development sites to neighboring areas.

Why invest:

• Unique opportunity for large scale

investment in the CEE region;

• Professional partnership with experienced

construction company (project owner);

• Flexibility of functional breakdown, based

on tenant needs;

• Additional development plots are available

through acquisition;

• Direct access to two motorways that serve

heavy domestic and international traffi c

(Budapest-Vienna and Budapest Zagreb

/ Ljubljana connection), providing a high

volume of potential customers/tenants for

commercial spaces;

• Due to the good location, considerable

purchasing power and a market for a highly

qualifi ed workforce is available in the

catchment area.

Competitive advantages:

• Limited number of similarly sized development areas in the CEE region (development timing also considered);

• Excellent geographical location in CEE;

• The current development phase is at 55% (construction is in progress);

• Timing advantage because building structures are already completed;

• The competitive advantage of Tópark is that the construction of the offi ce buildings is relatively cheap because of the construction-ready status, offering offi ces with downtown standards but below downtown rental rates;

• Experienced support provided by the project owner and the government to complete the development.

Property rights, licenses, certifi cations

• 100% property rights

• building permits

• LEED pre-certifi cation.

Current position on the market:

– expected share: Tópark is the fi rst “out-of-city small town property development” in Hungary, therefore its position is unique on the market

• Experienced support provided by the project owner and the government to complete the development.

Target groups:

• Apartments: potential buyers are expected from surrounding settlements and from west Hungarian cities. There is signifi cant interest in the apartments for investment purposes. End user buyers are targeted from the younger generation (aged 20-30) and young families applying for special government housing subsides. The 50-60 age group is targeted as second home owners and investors.

Based on the anticipated large volume of the workforce in the offi ce buildings, additional rental demand is expected.

• Offi ces: A+ category offi ce buildings with a LEED certifi cate will be developed in an urban environment (similarly to the offi ce district of Budapest). In terms of potential tenants, the project is expecting mainly multinational tenants who will outsource their background activities or SSC services to the agglomeration areas.

• Interest shown by the IT sector is also considerable, where there is a need to increase offi ce fl oor space from one day to another, with a demand for a high level of offi ce services, and the workplace must not necessarily be located in the city center.

• Conference center: medium sized conferences targeted (800-1,000 persons) – low competition, as very limited supply is on the market in this segment.

• Business hotel: clients/partners of offi ce tenants, conference guests, tourism guests.

Short market description, main

competitors:

The Hungarian investment property market experienced a rapid recovery from 2013, with a strong increase in demand for good quality products. The occupier market in some segments (modern offi ces and logistics) remarkably strengthened at the same time. The number of property transactions in urban residential markets (in major cities) increased strongly in parallel with investment demand for new construction.

Residential:

• New legal regulations and statutory amendments provide resources for apartment purchases for families with several children;

• Low prime rates prompt individual investors to invest in real estate;

• In the past 7 years, a number of individuals planning to purchase apartments postponed their plans as a result of the economic recession;

• No signifi cant condominium development projects in the pipeline in the western agglomeration of Budapest.

Offi ce:

• Lowest vacancy rate in the past 8 years on the Budapest market;

• High demand for good quality investment projects;

• Very limited number of offi ce development projects are in progress;

• Need for large space in one location, but existing buildings unable to provide adequately sized offi ces.

Key strategic partners (also

involved in project fi nancing):

• HIPA, strategic advisors, professional real estate agencies for sales and rental.

Key risks and risk mitigation:

risk to identify reliable and creditworthy investment partner for very high scale development.

Construction cost risk:

as the construction industry gained momentum in several areas, prices are expected to increase. The probable additional costs are included (as reserve) in the investment calculations.



• Proposed income levels: Sales revenue - residential (in the period 2017-2018) 42.8 M EUR

Rental revenue - offi ce/retail (stabilized from yr. 2020) 6.1 M EUR/yr.

• Construction cost: 49.5 m EUR (excluding sale price)

• EBITDA Gross Potential: N/A

• IRR, NPV (based on current market levels):

Expected Return On Investment 10.39% )


QUANTITATIVE INDICATORS

Revenues / year 2015 Not relevant (development phase)

Mid-term revenues/year expectation Based on future development plans

Mid-term market penetration expectation (%) N/A

Owner’s available resources /available funds

property (land) ownership, zoning plans, public utility connections, existing road connections, existing building structures.

QUALITATIVE INDICATORS

poor adequate high

Elaboration level X

Existing client relations X

Level of sectorial/market competition* X

Owner’s background

(market presence, experience)X

Management background

(knowledge, experience)X

Level of innovation in the Project concept /

Added valueX

Risk management plan X

* poor = high competition


CONTACT DETAILSMRS. ADEL CARLSON PROJECT MANAGER

Phone: + 36 70 948 3687

[email protected]

www.topark.hu www.utnet.hu

Required amount of investment

• 52 M EUR for property purchase,

• +49.5 M EUR for construction costs based on existing development plans

Form of investment • Sale of property as is (land + building structure)

• Potential long-term partnership in construction phase

Guaranteed profi t / estimated return 10.39%

Estimated exit time 4 years for full development and exit

Proposed capital/equity structure:

• Based on the form of investment.• Equity/loan structure based on fi nancing negotiations

Investment schedule: see above

Proposed exit policy: • Residential: sale

• Offi ce/retail: lease or sale

SHORT DESCRIPTION

Funding requirement

Construction and operation of two hotels (a 5-star hotel with 200 rooms and a 4-star hotel with 200 rooms), a 50-apartment medical village and a complex therapeutic and spa centre. Total development area is 500,000 m2.

EUR 63 MSector

Project ownerLocation

Implementation periodInvestment offer

Tourism (medical)

Kaputherm Ltd.

Kapuvár is located 15 km from the Austrian border, 100 km from Vienna and 170 km from Budapest. It is an internationally well-known location for vascular patients due to its unique carbon-dioxide baths and medical services.

24 months 90% of the company through capital increase

amounting to EUR 63 million

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Pr emium Healt h Par k Kapuvár


Short backgroundThe project company was set up by private investors and is supported by the local municipality in a written agreement. This provides a safe business environment for the potential investor from legal aspects and ensures an effi cient and pro-active support to the investment.

General background of the managementThe management of the project have a wide range of experience with local and international projects. Mr. Sándor Kiss-Mihály, CEO is a well-known and respected local opinionleader. Mr. György Sztranyák was senior engineer at the construction of the National Health Centre in Baku, Azerbaijan and also worked on construction projects in Dubai. Dr Károly Salamon was chairman and CEO of Allianz Hungária, the largest insurance company in Hungary. Currently he is chairman and CEO of the insurance company of the MKB Bank Group.

The aim of the project is to develop a ‘health park’ in Kapuvár including a 5-star and a 4-star hotel, a medical bath and an apartment complex with 50 units. Each hotel consists of 200 rooms and all buildings and facilities are located within a 50 hectares area.

The Premium Health Park provides unique services such as medical water treatments, carbonic acid gas bath therapy, hydrotherapy, electrotherapy and other local special therapies along with auxiliary medical activities. The successful operation and overbooked carbon-dioxide treatments at the Angiological Department of Kapuvár Hospital and Clinic show that Kapuvár is internationally known among vascular patients.

Besides the recreational and wellness services, the Health Park offers different sports activities (such as horse riding, tennis and swimming) and facilities suitable for conferences and cultural events.

WHY INVEST?

• Kapuvár has wide international recognition in curing vascular diseases. The “miracle of Kapuvár” refl ects the reputation deserved by the Kapuvár Hospital with the use of carbon-dioxide bath therapy and carbonic acid snow to treat circulation and respiratory diseases. Over past decades, nearly 30,000 patients were treated and healed with the therapy, which is also acknowledged by the Hungarian Cardiology Institute.

• According to the forecast of the World Health Organisation, health and medical tourism will become one of the leading sectors of the world economy by 2022. Hungary is considered to be the fi fth strongest health and medical destination in the world due to its excellent geographical location, outstanding quality of thermal waters and abundant geothermal resources.

Competitive advantagesCarbon-dioxide baths have a centuries old tradition, which goes back even to Roman times. Kapuvár is an internationally known medical centre among vascular patients who are willing to stay for even 2 to 3 weeks to receive a full therapy. The state-owned Kapuvár Hospital provides the skills and expertise necessary for these unique therapies. Capacities at the Kapuvár Hospital are not suffi cient to satisfy the increasing demand leading to constant overbooking. There are no similar investments known in the surrounding area that would be able to offer high quality accommodation and carbon- dioxide treatment in one place.

Demand for these medical services is both fromthe domestic market and from the neighbouring countries. The demand for medical therapies surpasses the capacity of hospitals. Geothermal treasures provide a unique basis for medical tourism.

Property rights, licenses and certifi cationsLicenses related to the utilisation of thermal water and the carbonic acid gas bath therapy used at the local hospital are held by the project company.



Location Budapest Hévíz Other

5-star thermal hotels Aquincum Hotel

Budapest

Danubius Hotel Gellért

Lotus Therme Hotel

4-star thermal hotels Danubius Health Spa

Resort Helia

Danubius Health Spa

Resort Margitsziget

Danubius Health Spa

Resort Aqua

Danubius Thermal

Hotel Hévíz

Greenfi eld Hotel Golf & Spa,

Bükfürdő Danubius Health

Spa Resort, Sárvár Danubius

Thermal and Sport Hotel,

Bükfürdő Hunguest Hotel

Répce Gold, Bükfürdő

Short market description and main competitorsThe main competitors are the thermal hotels of Budapest, Hévíz, Bük and Sárvár.


Number of rooms

5-star hotel 200 200 200 200 200

4-star hotel 200 200 200 200 200

Average Daily Rate (ADR)

5-star hotel 110.9 110.9 110.9 110.9 110.9

4-star hotel 87.2 87.2 87.2 87.2 87.2

Occupancy

5-star hotel 40.0% 45.0% 50.0% 55.0% 60.0%

4-star hotel 40.0% 45.0% 50.0% 55.0% 60.0%

Revenue per available rooms (RevPAR)

5-star hotel 44.4 49.9 55.5 61.0 66.5

4-star hotel 34.9 39.2 43.6 48.0 52.3

Revenue from hotels in total revenues 60.1% 66.6% 73.9% 73.9% 73.9%

Current position in the marketThe project is a green fi eld investment opportunity, which aims to be an internationally recognised spa and medical centre themed around the certifi ed cardiovascular healing effects of carbon dioxide baths and therapy.

Target groupsPatients with arterial diseases. There are approximately 400,000 vascular patients in Hungary, 60to 70 million in Europe and tens of millions globally. Demand for artery disease treatments is ever increasing from all social groups including elderly people from developed countries who are looking for premium services and accommodation when booking a treatment.

Key strategic partnersThe municipality of Kapuvár provides the project company with essential support ensuring the local regulatory background, and is committed to the developments targeting health care and tourism. State-owned Kapuvár hospital provides the skills and expertise for the unique therapies. The workforce is planned to be recruited from the medical staff of the hospital.



Sales 11,675,869 11,856,270 11,870,003 13,050,404 14,230,804

EBITDA 7,606,439 7,551,760 7,430,415 8,475,737 9,521,058


6,738,515 6,692,585 6,590,655 7,468,725 8,346,795



Form of investment 90% of the company through capital increase amounting to EUR 63 million

CONTACT DETAILSMR. GYÖRGY SZTRANYÁK

+36 30 446 6400MR. SÁNDOR KISS-MIHÁLY

+36 20 964 [email protected]


Scar bant ia Hot el * * * *

SHORT DESCRIPTION

Funding requirement

Unique opportunity to develop a multifunctional

complex including a 4 star hotel with 142 rooms and

a modern spa/wellness centre in the heart of Sopron.

The planned hotel will be located in a central area of

the town, in close proximity to downtown.

EUR 7 M

Sector

Location


Operator search

Raising bank fi nancing

Construction


Bank fi nancing

Tourism

II. Rákóczi Ferenc Street, Sopron

24-30 months

8-12months

6–8 months

16-18 months from obtaining fi nancing

EUR 32.5 million

EUR 25,5 million

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Brief summary of background

The owner of the project is MH Scarbantia Hotel Ltd. The full ownership of the project subject to

this teaser is available as the current owner would hand over the construction site, preliminary

concept plans, other documents and all the necessary offi cial permits required for the construction.

This is a unique investment opportunity to develop a multifunctional complex including a 4 star

hotel with 142 rooms and a modern spa/wellness centre in the heart of Sopron, located at II.

Rákóczi Ferenc Street, in a central area of the town. The nearly 125 years old buildings on the

property must be preserved to conserve the traditional landscape of the town, but the other

buildings will be demolished and replaced by new wings with a contemporary design.

The multifunctional complex is planned to feature a hotel with 142 rooms, a 900 m2 spa unit,

compact meeting/boardroom facilities with a seating capacity of 150 people, a wellness and

fi tness centre, and a 2,030 m2 multifunctional area.

The hotel is planned to feature an a’la carte restaurant, a pub, a drinkbar, retail units and leisure

rooms.

Since Sopron lacks modern, international quality hotel complexes and adequate spa and wellness

facilities that target local and regional day visitors, there is a gap in the market this project may

be able to fi ll.

WHY INVEST?

Sopron is part of Lake Fertő tourism destination; the city and its immediate surroundings have a wide

range of cultural, historical and natural values, making Sopron a city that warrants a multi-day stay.

This hotel could be the leading modern, high-quality accommodation unit in Sopron. The revitalisation

of the city centre and the implementation of the multifunctional complex would contribute to the

recovery of tourism in Sopron.


• Wide range of high-quality services

• First modern accommodation unit in Sopron

• The proposed hotel will be very close to the historic city centre, as well as to the Lövérek,

a favoured excursion area of the city

Property rights, licenses and certifi cates

The 13.322 m2 project site is owned by the developer, MH Scrabantia Hotel Ltd. A set of

architectural plans have been prepared for the project and are available for evaluation.

Current position in the market and expected share

The wide range of services of the multifunctional complex guarantee a unique market-leading

position.

The location of the project and the current structure of the buildings may also allow for residential/

apartment development, an area in which the city shows a great defi cit.

Target groups

Leisure segment. The most signifi cant market segment will be the independent travellers (FIT).

In addition the proposed hotel would also be appealing for the local corporate traveller

segment.


Subdued demand characterises tourism in Sopron, related to the lack of signifi cant touristic

attractions and adequate promotion.

Once the local products become reinvented and more sophisticated, Sopron can return to being

one of the most visited cities in Hungary where it was ranked before.

Main competitors

In terms of local competition the closest relevant establishments in town are Hotel Fagus – in

need of improvement and repair, and small properties like Hotel Wollner. Other, higher quality

accommodation only exists in the nearby Austria (Lutzmannsburg, Mörbisch or properties around

the Neusiedler See).


Updated fi nancial projections shall be made available before the fi nal investment decision by the

prospective buyer, parallel with completing the due diligence procedure.

CONTACT DETAILSMRS. IBOLYA JAKUS

+36 20 919 9717

[email protected]




Form of investment Full takeover

SHORT DESCRIPTION

Funding requirement

The project is a complex development programme consist-ing of various facilities. A new, luxury 5-star hotel with spa, villas, apartments, and the fi rst RTJ II golf course in Central-Eastern Europe to comply with the highest international standards, will all be constructed in Hévíz - Zalacsá ny. The project owner has already started part of the investment and seeks investors only for the implementation of the lux-ury hotel and the spa.

EUR 36 M (hotel and spa facilities)

Sector

Project owner

Location


Investment offer

Tourism (wellness, recreation)

SGHBIRDIE Ltd.

Zalacsá ny is 200 km, about a one hour forty minute

drive from Budapest, and 200 km or two and a half

hours drive from Vienna. The Resort is only 10 min-

utes from Hungary’s second largest international Air-

port, co-owned by the Promoter, 5 minutes from Hé ví z

and a 15-minute drive from Lake Balaton. It is located

in the centre of a famous wine and thermal region.

18 months

The project owner seeks an investor solely for the hotel

and spa elements where 100% of the hotel and spa will

become the investor’s property.

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Zala Spr ings Golf Resor t

I. PROJECT BACKGROUNDThe project was conceived and initiated by an Irish consortium in 2005. The investment reached

its initial phase, but the investors froze the project due to the economic crisis. The 160-hectare

project site was purchased by the current project owner in 2013. In March 2013, the development

restarted. The 9-hole golf course opened on the 1st of April 2014 while the 18-hole championship

Robert Trent Jones Jr. golf course and the state of the art clubhouse will be completed by July 2015.

General background of the managementMr. Gá bor Szé les is one of the best-known and acknowledged businessmen in Hungary. He holds

the position of being the 4th wealthiest person in Hungary in 2014 (Forbes). His major enterprises

include Ikarus bus manufacturing and the electronics company Videoton Holding Zrt. His media

portfolio includes a daily newspaper and a nation-wide TV channel. GáborSzé les was Chairman of

the National Association of Manufacturers for 18 years.

Zala Springs Golf Resort will be a unique destination with golf, hotel, spa and residential elements,

since it is expected to be the single championship golf course in Central-Eastern Europe that com-

plies with the highest standards required to host international golf tournaments. It is expected to

raise demand among golf lovers not only from Hungary, but also from the international golf com-

munity. International golf tournaments are expected to be organized here from 2016. Zala Springs

Golf Resort is strategically located close to the thermal spring and wine tourist region around Lake

Balaton, which will make it a popular tourist destination.

The hotel and spa development is part of a complex project consisting of the following facilities:

• a 5-star luxury hotel and a connected spa building

• 600 residential apartments and villas for sale

• an 18-hole Robert Trent Jones Junior golf course

The project owner seeks investors only for the hotel and spa project element. The hotel is planned

to have an interior space of 10,500 m2 and 200 rooms. The spa is planned to be 3,000 m2. There

are four thermal wells drilled on site with the relevant permits available to utilize the natural hot

thermal water in the spa.

WHY INVEST?Zala Springs Golf Resort will be a unique spa and golf complex with an exclusive golf course designed by Robert Trent Jones II. It is also strategically located close to Lake Balaton and surrounded by a popular thermal and wine region. The project will strengthen the image of Hungary to become an internation-ally acclaimed “Paradise of Thermal Springs”. The exceptional golf and spa theme with the 5-star luxury hotel and the villas will make this project a remarkable location among Central-Eastern Europe spa and golf tourism destinations. The complex will be situated on 160 hectares surrounded by a beautiful natural landscape.


Zala Springs Golf Resort will be located in the wellness region of Hungary with excellent amenities

and luxury services. There is a high demand for quality services not just from international but also

from domestic tourists. The golf course will satisfy international standards thus it will welcome large

international golf tournaments. A few additional advantages are as follows:

• proximity to an international airport (Hé ví z–Balaton Airport) co-owned by the Promoter

• proximity to the spa town of Hé viz and also Lake Balaton, one of the most popular domestic tour-

ist destinations in Hungary

• the Zala Springs product concept, which aims to deliver international 5-star standards

• the diversity of activities to be provided at Zala Springs Golf Resort will attract visitors from various

target markets

• natural hot thermal water available on site (with four wells already permitted and drilled)

• the presence of international brands (i.e. the international golf course developer brand Robert Trent Jones Jr.)


Property rights, licenses and certifi cations the 160-hectare project site is the property of the project owner.

Current position in the market The project is a greenfi eld development, which aims to be the highest standard golf course in

Hungary with an exceptional luxury hotel and spa.

Target groupsWellness, spa and golf lovers, business travellers. After Budapest, the Balaton region is the second

most visited tourism destination in Hungary, generating 20% of total guest nights of the country

with an average occupancy rate of 49.3%. Tourists from the key golfi ng nations, namely Germany

and Austria, are the primary markets for the Balaton Region and are directly connected to the

region by air. Further opportunities to attract visitors from Scandinavian countries (also golfi ng

countries) are being explored.

Short market description, main competitorsAccording to current market trends, there is an increasingly strong demand for 4 and 5-star hotels

in Hungary. The highest average daily rates (ADR) experienced in the 5-star luxury hotel segment

were EUR 112 in 2014, which is expected to grow further in the coming years. Demand related

to spas and medical hotels has also increased steadily and is responsible for 11.6% of total guest

nights. In order to reduce seasonality in the golf and sport tourist segment, Zala Springs Golf Re-

sort intends to enter the Meetings, Incentive, Conference and Exhibitions (MICE) market combined

with the spa and medical tourism segment. The MICE market in Hungary is rather large with ap-

proximately 28,000 conference related events each year.

The hotel complex with its state of the art and unique amenities and golf course will be unmatched

in the Central-Eastern European region and targets mainly international tourists. The region of Zala

is famous for its springs and bathing culture but lacks the complex services to be offered by Zala

Springs Golf Resort. The main competitors, therefore, are only the thermal hotels of Budapest, Hé ví z,

Bü k and Sá rvá r.



Number of rooms 200 200 200 200 200

Average Daily Rate (ADR) 220 220 220 220 220

Occupancy 30% 40% 45% 55% 55%

Revenue per available rooms (RevPAR)

66 88 99 121 121

Revenue from hotels in total revenues

69.14% 69.14% 69.14% 69.14% 69.14%


Quantitative and qualitative indicators

Quantitative indicators

All fi gures in EUR

year 1 year 2 year 3 year 4 year 5

Sales 10,452,273 13,936,364 15,678,409 19,162,500 19,162,500

EBITDA 3,174,505 4,232,673 4,761,757 5,819,925 5,819,925


3,034,054 3,938,645 4,383,076 5,271,937 5,271,937


Form of investment 100% of the hotel and spa


CONTACT DETAILSMR. TAMÁ S BENKÓ CS

+ 36 30 934 [email protected]

www.zalasprings.hu

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