BBJ: How is the retail market performing this year? How does this compare with previous years?

Anita Csörgő: While real income has risen by nearly 10% in the first five months of 2025, net retail sales have only increased by a bit over 2%. This is primarily due to the comparatively high 4.8% Hungarian inflation during this period, with an even higher 8.2% for food and 6.7% for energy, compared to a 2% average inflation in the EU. Rising prices erode consumer confidence and hold back spending. Stronger growth has been realized in the fashion, health and beauty, home and F&B sectors, where there has been stronger tenant demand to open new stores than in 2024. 

BBJ: How are the government-mandated price cuts impacting the retail sector? 

ACs: Certain products are subject to a 10% profit margin cap, but their retail prices may still rise in line with increasing wholesale prices. Energy price limits apply only to the household sectors and up to a specific limit, after which the much higher market prices come into effect. These higher-than-EU-average prices apply to industrial users, including those that produce household products such as milk, bread, eggs, etc. Furthermore, the 10% profit limit for these products does not cover the costs to retailers who have raised prices for other products to compensate for losses from the price-controlled products. As seen by the inflation numbers, these price controls have proved to be ineffective in controlling average food basket increases.

BBJ: What are the figures for new brands entering the Hungarian market? How does this compare with Hungary historically, and how does it compare regionally? In other words, is the Hungarian retail market under-performing, over-performing or in the middle?

ACs: New brands are entering the market this year in the accessories and H&B sectors, with leases signed but formal announcements yet to be made. New market entries remain lower than in other CEE countries, but we hope this will change at some point.

BBJ: We often hear from hoteliers that Budapest needs more luxury retail to attract more high-end travelers. Are there signs this is happening? Where on the market spectrum do most of these new brands sit? 

ACs: Leases have been signed for high-end jewelry brands and multi-brand high-end fashion stores on Andrássy, which will be a welcome addition for the guests of five-star hotels. Unfortunately, we cannot report any new entries by the major luxury fashion brands. This is due mainly to the 27% VAT that limits sales to locals and EU residents, and the lack of suitable premises. Many are turned away from Andrássy due to the inconsistent tenancy on the street, indicating that there are too many inappropriate shops, such as souvenir stores, drogeries, and service retailers on the street. Fashion Street (running behind the Kempinski and Al Habtoor Palace hotels) has become a magnet for aspirational brands, but there is a limited number of shops on this well-managed precinct. No other district in Budapest, including the area around the Parliament, has the critical mass of luxury brands to attract similar new niche brands.

BBJ: Health and beauty has been a growing sector in many markets. Is that also true in Budapest and Hungary? Does it have anything unique to offer in this sector? 

ACs: Rituals is a new health and beauty brand that will open its first stores in Budapest by the end of this year, and several niche perfume and skin care stores, such as Adrienne Feller, Belodore and Superz, are opening more stores throughout Hungary. Drogerie retailers have enjoyed above-average sales growth since COVID and have opened many new shops in the past three years. Unfortunately, they are feeling the effects of the government-imposed price controls and have had to decrease costs and slow new store openings in response to reduced profits.

BBJ: There have been no new shopping center openings in Budapest for several years, with a concentration instead on renovating (and repositioning) existing assets. What is the health of the mall market in the capital? Are existing centers doing well? When are the next major renovations due to be delivered?

ACs: Vacancies, even in “B” class shopping centers, are down, and the lack of new shopping center supply has allowed rents to remain stable and even increase in some cases, which provides revenues to owners to upgrade these centers. The Duna Plaza mall should be considered as a new shopping center rather than a refurbishment, but it will only open in 2028 if demolition and construction start next year. Tenant demand for this project is substantial.

BBJ: The other area where we see new retail is as part of mixed-development projects. When will we see the next openings from these developments? 

ACs: There are no significant mixed-use projects planned in Budapest following the opening of Bayer’s Zugló Város Központ, only residential and office projects with retail units on the ground floor. Very often, the retail units in such projects are more of an afterthought without sufficient preparation to make them more attractive to retailers.

BBJ: Are there any signs that the “Plaza-stop” legislation may be lifted or altered? What would you hope to see as a result of this? 

ACs: The Plaza-stop law modifications, although expected, have created uncertainty among developers, retailers and financing institutions and slowed retail development projects, including retail parks.

This article was first published in the Budapest Business Journal print issue of July 25, 2025.