Mammut III to be built next year

Owners of the Mammut I and Mammut II shopping malls are in talks about developing a new shopping center, on a plot adjacent to the two existing ones, Sándor S. Nagy, owner and CEO of Mammut Rt, told the BBJ last week.
S. Nagy and Sándor Kenyeres are the owners of Mammut Rt, the company that built and operates the malls.
S. Nagy said talks are underway with government agencies about the sale of a plot next to Mammut II, which is planned to accommodate the new mall, dubbed Mammut III.
“The idea of expanding the mall has been on the agenda for a long time, but now it seems that there is a possibility to turn this into reality,” S. Nagy said. “We are negotiating with state representatives about the acquisition of the property behind the building used by the Economy and Transport Ministry. If the talks end in a deal, we can launch the project early next year.”
S. Nagy said the new facility either will be located behind the ministry building or will replace it.
The new facility, planned to be connected both with the neighboring Milennáris Park and the existing Mammut malls, will add a net lettable floor space of 28,000 square meters to the complex’s current stock of around 55,000 square meters. The development of Mammut III is planned to finish by the spring of 2006.
“Unlike the first two Mammut malls, the new facility is mostly expected to host retail units with large floor space – those of [Spain’s] Zara, [Sweden’s] H&M, [Germany’s] Peek & Cloppenburg and similar fashion retailers,” S. Nagy said.
“Currently, it is quite difficult to find a prime downtown location in Budapest, so Mammut III could serve as an alternative,” he added.
S. Nagy said Mammut Rt plans to finance the roughly Ft 20 billion project from its own funds and a bank loan.
An increasing number of international retailers are seeking representation in the Hungarian market, according to the latest retail snapshot prepared by the Budapest office of international property consulting firm Healey & Baker Cushman & Wakefield (H&B/C&W). These retailers are primarily attracted by the rising incomes enjoyed by young professionals, the study surmises.
The key target locations remain focused narrowly on the top pitches, which are Váci utca, the WestEnd City Center and ECE Project Management Budapest Kft’s Árkád center in Pest, the report said.
In Buda, the Mammut complex continues to dominate the market, it added.
According to H&B/ C&W, 2004 will see Hungary’s first factory outlet center, while other niche centers are expected to follow. There have been recent plans to develop regional shopping centers in a number of out-of-town locations, the study observes.
However, despite high existing levels of stock, the report said, there are questions as to whether these schemes will actually get built because the lack of A-grade stock is holding back the investment market. Whilst there is a good level of investor demand, the market remains developer-led and few large standing investment transactions have taken place, it said.
However, the medium term is expected to see the emergence of a retail investment market, as more stock comes up for sale and owner-occupiers release their real estate assets to focus on core activities, the report said. Some smaller investors are focusing on high-street property in order to build up portfolios, it added.
According to H&B/C&W, the retail sector continues to expand and an increasing number of international retailers are active on the market.
“Rental growth and further yield falls are anticipated as EU accession approaches and the market becomes more mature and sophisticated,” the report said. “Indeed, the prospects for rental growth should be boosted by the lower development pipeline for the coming year.”


by Péter Oláh

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