Árpád Török: Potential obstacles to further improvement in the Hungarian market
“The Hungarian real estate market shows the signs of an awakening market, however there are some years ahead of us until the full reawakening. Economic expansion will most probably remain above-trend, macro-economic indicators are among the best in the region, and investor confidence is growing. Overall, there is a positive attitude on the real estate market, and the industry is back again.
While having only around 65,000 sqm new office space in 2015, the 2016 office pipeline reaches nearly 90,000 sqm that is the highest volume since 2010. However the 40% BTS / pre lease ratio is similar to this year’s level. This all can affect not just vacancy rates but rents, as well. I also expect large transactions next year – the big “stars” are all here in the region looking for good investments. As for the retail market, it’s a shame that, due to the ban on retail developments, no big shopping centres can be developed, as there is a definite demand and strong buying force on the market – with its approx. 270 sqm SCC place per 1,000 inhabitant, which is below the Central European average (360 sqm per 1,000 inhabitant), Budapest is far from saturation. The two known pipeline projects (Etele City Centre, 40,000 sqm and Árkád Aquincum, 48 000 sqm) and those assumed to be started in 2016 (IKEA Soroksár, Alba Plaza extension) also underline this demand. I assume that acquisition in retail of single assets will also continue. “
Source: The article was published in Budapest Business Journal, January, 2016