Although Hungarian GDP was lower than expected in 2024, Kristóf Tóth, head of research at Colliers Hungary, is optimistic about economic growth and overall productivity in the upcoming years.
“In the beginning of 2024, a 2-3% GDP growth was expected among professionals; however, this number turned out closer to 0.5% by the end of the year,” he notes. “For 2025, we expect about 2-3% in GDP growth and the same for 2026.”
This predicted boost in GDP is primarily due to international companies with Hungarian locations, whose investments are expected to start yielding significant results this year. These mostly center around electric vehicles and EV parts production (especially batteries) by companies such as BMW and CATL in Debrecen (233 km east of Budapest by road) and BYD in Szeged (176 km southeast).
These companies were also the three most significant contributors to Hungary’s FDI in the past five years, totaling nearly EUR 40 billion. CATL provided the largest investment of EUR 7.4 bln, with BYD next at EUR 5 bln and BMW EUR 2 bln.
Regarding the industrial market, 2024 saw a significant increase in net absorption. There were 14 main industrial completions of more than 10,000 sqm last year, with the CTPark Szigetszentmiklós covering the largest territory at 120,880 sqm. Only five of those 14 completions are located within Budapest, while the rest were spread across the countryside.
“In the past year, developers became hesitant with large projects; vacancy rates were high, and tenants were harder to find compared to previous record years, so they restricted developments within the Budapest area. I think this caution will become a tendency in the near future. They won’t jump into purely speculative 30,000-60,000 sqm developments,” predicted Tamás Beck, Colliers Hungary’s head of industrial agency.
There is also an extensive industrial pipeline until Q2 2026, covering a combined 587,300 sqm, 43% pre-leased. The size of the developments under construction for the Budapest area is 373,844 sqm, with 22% pre-leased, while those in the countryside represent 213,456 sqm, 38% of which is pre-leased. The largest single development is expected to be the HelloParks Alsónémedi warehouse (just 24 km southeast of Central Budapest) at 59,697 sqm.
“Hungarian investors are both stable and continue to dominate at the moment,” says András Dallos, head of valuation services at Colliers Hungary, referring to the fact that nearly 78% of all domestic real estate-based investments were made by Hungarian entities.
“Solid yields [from investments] are expected to encourage Western European countries, especially Germany, to refocus on Hungary,” he adds. “Asian investors anticipate continuing their activity in the upcoming years, and the outcome of these predictions will be observed in late 2025 through the beginning of 2026.”
The office market will see a drop in completions; only two significant speculative developments of more than 20,000 sqm are in the pipeline. In terms of square meters, the largest office building scheduled to be unveiled this year will be the Centerpoint III project by developer GTC, located near the Árpád Göncz City Center. The building will cover 37,208 sqm, with an expected handover in Q2 2025.
The total market speculative office vacancy rate was projected at 17.5% in the last quarter of 2024, with only a few areas (Central Pest, Non-Central Pest and periphery locations) surpassing the average. All areas of Buda, as well as eco-friendly and newly built buildings, had office vacancy rates lower than the average.
“There was a double surge of why tenants started to move into green buildings,” explained Miklós Ecsődi, head of occupier services at Colliers.
“The first reason was an internal factor; ESG requirements regarding the type of office occupied by the organizations became an increasingly strong factor in the past three or four years, […] while the second reason was the energy crisis in Hungary. At the time in 2022 when electric energy prices rose 10-fold and gas energy rose 16-fold, a chance to save even 20% on energy was a good enough reason to move into newer, green buildings. Since then, although a market correction has occurred, prices are not expected to return to pre-2022 level even in the mid-term,” he details.
Head of valuation services Dallos also notes: “The sentiment towards retail spaces is taking a positive turn; therefore, hotels, retail locations, and strip malls are becoming more attractive investments once again.”
In terms of location, demand within the retail industry is centered around Váci utca and Fashion Street, with “virtually no vacancy” and tenants renewing leasing contracts “two to three years prior to current lease expirations.”
Colliers Hungary’s head of retail agency, Anita Csörgő, strengthens the idea that the retail sector is on the rise. “No one is leaving Váci utca,” she says.
“The foot traffic from customers is highest there, even higher than in the Westend Shopping Center, so companies are able to produce more income at a smaller location,” she adds.
Adjacent streets, such as Petőfi Sándor utca, Bécsi utca and Fehérhajó utca, are also experiencing lower vacancies and increasing traffic. According to Csörgő, the “biggest change last year was observed on Andrássy utca. There were a lot of vacancies with many buildings under renovation; a lot of new contracts were signed this month for those locations,” she explains.
There are also plans to expand and refurbish multiple shopping centers and retail locations around the city, with expected handovers starting in 2025 and lasting until late 2028.
This article was first published in the Budapest Business Journal print issue of February 7, 2025.
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