Development of apartment complex - Budapest (Madárhegy Project)
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The property is located in one of the most sought-after area in Budapest, the 11th district. This is all thanks to the suburban feeling that is still one of its unique attributes of this area. Also, this region has just been recently utilized by property developers meaning more and more new projects are brought here. It also benefits of the close vicinity of the city centre and has a good access to transportation (subway plus highway) means and commercial infrastructure.
The proposed development project is planned on 2 equally sized, connected plots. The area stands bare now, only requires ground work for the underground garages and the base of the buildings. The project is planned with the construction of almost identical 10 buildings. The new buildings are planned to extend on 6 floors, including ground floor and 4 above ground floors and an underground garage. The complete plans are waiting for the authority’s approval, this is still pending as the building regulations are about to change in the coming month, resulting in a more favourable regulation than the current one. The whole process is set to be done till the end of the year.
Under this scenario, we assume that the Property would have the following description.
• 316 apartments
• 22 offices
• 4 shops
• 333 parking spots
We are of the opinion that the development of the Property is feasible due to its excellent location in Budapest, Hungary and the return generated is reasonable.
The success of this Property relies on controlling the construction costs and develop an efficient building in order to limit further unnecessary development costs and leakage.
We would advise the Addressee to pursue the development of the proposed Property, and we would recommend a short-term holding strategy. We would recommend keeping the property as short as possible (selling the apartments before completion is the ideal). This will allow you to capitalize on higher EBITDA levels and maximise your exit.