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Bloomberg interview with Gábor Futó, Founder of Futureal Group

(Bloomberg) -- Hungary’s largest real-estate developer is insulating itself from risks sparked by U.S. President Donald Trump’s anti-trade comments, Russia’s growing influence and the U.K.’s move to abandon the European Union, by expanding, the company’s co-founder said.

The Budapest-based company, which has operations spanning ex-communist central and eastern Europe, Germany and the U.S., should withstand a temptation to hold off from adding to its holdings because of uncertainty that the worldwide wave of populism threatens to crimp economic growth, Gabor Futo, the Harvard-educated chief executive officer of developer Futureal, said in a video interview from Israel.

"Trump’s presidency is a very serious risk factor not only for the U.S. but also for Europe because protectionism and the sweep of nationalism fuel the risk of EU disintegration,” Futo said on Thursday. “We are presuming that lightning won’t strike in all the markets that we working in at the same time.” Central and eastern Europe is increasingly seen as a safe bet for property developers amid rising uncertainty across the EU and as competition flares up to lure businesses from London because of the U.K.’s breakaway plan, or Brexit. In the U.S., the expected fiscal stimulus will add to inflationary pressures, driving rate expectations higher and triggering a drop in prices, according to Futo.

Worldwide Projects

With 39 new real-estate projects in the pipeline at a value of 1.4 billion euros ($1.5 billion), the 14-year-old Budapest- based company is already spread beyond its home country. It has residential, retail and office developments in Poland, Hungary and Romania, and a U.S. portfolio of more than 500 single-family homes, office building investments, and plots in the states of Georgia, Indiana and Michigan.

Futureal is mulling several new U.S. projects, including one in New York City, "but at this point, we definitely want to err on the side of caution," Futo said.

Not so in central Europe. The company is in the midst of a "very serious" regional expansion, buying a new project every three weeks, while last year, it acquired 17 new development projects.

"Currently I see Hungary as the most promising market, but central and eastern Europe in general is a very good market to be in as a developer," he said.

Futureal’s track record shows more than 800,000 gross- completed square meters with a value of more than 1.1 billion euros, including central Europe’s largest inner-city regeneration project in Budapest. The company ran 15 projects during the financial crisis without ever defaulting on a bank loan, according to Futo.

"We have to be extremely cycle-conscious because the survival rate in our business is very low," Futo said.

To contact the reporter on this story:

Edith Balazs in Budapest at ebalazs1@bloomberg.net

To contact the editors responsible for this story:

James M. Gomez at jagomez@bloomberg.net

Elizabeth Konstantinova

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