Buildings that are not ESG compliant are at risk of becoming obsolete.
The more interesting question is the role ESG issues play in whether an investment deal goes forward. They are certainly a decisive factor in the availability of debt finance for a developer or investor. From a positive perspective, as investors become more selective about sectors and development vehicles, developers and asset owners need to offer higher-quality, more ESG-compliant products.
ESG has clearly moved beyond pure regulation and is now increasingly driven by capital markets, including those in Central and Eastern Europe. While EU frameworks initially positioned ESG as a compliance exercise, financial institutions and investors are now actively pricing sustainability performance into their decisions.
Access to financing, the cost of capital, and asset liquidity are all increasingly linked to ESG alignment. In CEE, international capital is largely driving this shift by importing expectations from more mature Western markets. As a result, ESG is becoming a key factor in distinguishing between assets that remain investable and those at risk of obsolescence, argues Zsombor Barta, founding partner at Greenbors Consulting.
“ESG has moved from being a point of differentiation to being a basic condition of doing business. For offices, logistics and retail, the relevant question is no longer what premium a certified building might command, but whether an uncertified one will still be marketable and financeable in five years’ time,” agrees Máté Szoboszlay, business development and investment director at Faedra Group.
“Lenders have, to a large extent, settled that question on the market’s behalf, since sustainability criteria are now embedded in credit approval, and access to the most competitive terms increasingly depends on demonstrating alignment with recognized [ESG] standards,” he adds.
ESG is now a pricing factor, not a checkbox exercise, in the view of consultancy CBRE. Its Global ESG Survey found that 84% of investors and occupiers say energy-efficiency features affect real estate decisions, and 79% say the same of green building certification, with sustainability-certified offices in Europe commanding a clear rent premium over uncertified peers.
CBRE’s European Investor Intentions Survey 2026 found retrofitting has overtaken acquisition and development as investors’ top sustainability priority, which matters in Hungary, where much office and retail stock predates modern energy codes and must now meet the EU’s revised buildings directive.
[Editor’s note: The deadline for Member States, including Hungary, to transpose the EU’s revised Energy Performance of Buildings Directive (Directive (EU) 2024/1275) into national law was May 29, 2026. On July 15, the European Commission announced that it had opened infringement procedures against all 27 member states because they had not fully transposed the Directive. That gave countries two months to respond, complete their transposition, and notify the EC, which is due around now. If the response is unsatisfactory, the EC may move to a reasoned opinion, followed potentially by referral to the Court of Justice.]
In the current environment, Colliers says H1 2026 marked a clear turning point for the Central European real estate market.
“Improving financing conditions, decreasing inflation and solid domestic demand are bringing big money back into the game,” comments Josef Stanko, director of market research at Colliers. “However, this is not a broad-based market recovery like those we have seen in past cycles. Capital is flowing very selectively. Investors are primarily targeting high-quality properties that are resilient to economic fluctuations, meet strict ESG criteria and offer secure long-term returns,” he explains.
From a broader perspective, real estate investment in CEE continues to grow faster than in Western Europe, despite the challenging global situation. However, banks’ approach to investment support is changing. While financing terms are improving, lenders remain highly selective.
“Anyone seeking favorable financing today must present a project with stable income, a strong owner and a clear sustainability strategy. Properties with high energy consumption that require modernization face significantly greater challenges when negotiating with banks,” says Colliers.
MBH Bank, Hungary’s second-largest commercial lender, argues that banks have a central role to play in financing Hungary’s transition to a lower-carbon economy by supporting credible transactions across the economy.
Barta, of Greenbors Consulting, says lenders must move beyond merely offering preferential terms for newly built “dark green” assets and focus heavily on transition finance. Lending conditions should incentivize brown-to-green retrofits by offering margin discounts linked to verified operational KPI improvements (for example, alignment with CRREM, or Carbon Risk Real Estate Monitor, decarbonization pathways). Furthermore, automated, continuous energy and carbon data verification tools should be integrated into credit risk assessments to lower bank administrative costs and risk weights, he argues.
Banks could further differentiate their financing programs by rewarding projects that address country-specific sustainability priorities, according to Norbert Szircsák, head of sustainability services at Colliers Hungary.
Banks could offer additional financing benefits for measures such as exceeding energy-efficiency regulations, implementing onsite water reuse and storm water infiltration systems, or delivering meaningful biodiversity enhancements. This would encourage more holistic ESG performance beyond minimum compliance, Szircsák says.
THE EU taxonomy is seen as directly linking sustainability performance to capital allocation, adds Barta. “It provides a common, finance-grade definition of what qualifies as ‘sustainable,’ which banks and investors can use in lending, underwriting, and portfolio construction. This makes it a practical decision-making tool rather than just a reporting framework,” he says.
“In CEE, where markets are still developing, this clarity is critical. The taxonomy is increasingly shaping which assets receive favorable financing and which do not, effectively steering investment toward more sustainable projects. In that sense, it is currently the strongest mechanism for translating ESG ambition into measurable market behavior,” Barta adds.
What has changed most in practice is that ESG has become as much a data discipline as a construction one. Investors want measured, verifiable performance rather than design intent, and reliable regional benchmarks are still harder to come by in Hungary than in Western Europe, Szoboszlay of Faedra Group argues.
“ESG has already become a core determinant of asset value, liquidity, and financing access. Buildings that fail to meet sustainability expectations increasingly face stranded asset risk, with limited ability to lease, refinance, or exit. In the CEE context, this effect is even more pronounced because ESG requirements are largely driven by international capital. As long as financing and investor mandates remain ESG-linked, local markets will continue to follow, regardless of political rhetoric,” concludes Barta.
This article was first published in the Budapest Business Journal print issue of September 18, 2026.
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