Real Estate Year Ahead: Office and Industrial to Remain the Sectors of Choice


Work is ongoing in 2022 on Skanska’s H2Offices project.

The industrial sector is expected to continue to return buoyant demand and supply indicators, with non-specialist industrial developers having moved into the field, although office remains the sector of choice for both developers and investors.

Longer-term, favorable prospects for the hotel sector remain a clear possibility, while questions remain over the medium- to longer-term outlook for retail development and investment.

Sustainability accreditation is playing a prominent role in the office market, with developers increasingly designing projects according to BREEAM or LEED alongside WELL accreditation.

The investment market is attracting international and local capital, with competition increasing for the limited supply of suitable assets.


The most active office developers are all continuing with projects. Atenor has announced that RoseVille on Bécsi út is expected to be handed over in the third quarter this year. Skanska, meanwhile, is due to deliver the first phase of its H2Offices scheme this year, its tenth office project in Hungary.

Developers are undertaking more sustainable and imaginative office designs to meet changing demands from companies and office occupants. Total modern office stock in Budapest now stands at approaching four million sqm of class “A” assets according to the Budapest Research Forum (consisting of CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL, and Robertson Hungary).

The overall vacancy rate of close to 10% is expected to increase further in 2022. However, the relatively small pool of Hungarian and regional office developers operating in Budapest had already been undertaking restrained development policies for several years and, therefore, oversupply against the background of the pandemic and its negative impact on the market is not expected.

Office delivery for this year is expected to be low; the overall pipeline expectation is around 270,000 sqm, as several projects have been delayed. CBRE has estimated around 450,000 sqm under construction in Budapest.

“Office developers will be more careful, some planned projects may not turn into real development, and it is anticipated that very few pure speculative projects will be started. At least a 30-40% prelease will be required to get started with a new office building project. But developers are eager to build, so I will not be surprised to see some exceptions,” comments Valter Kalaus, managing director of Cresa Hungary. 

In the serviced offices sector, the leading CEE provider New Work Offices has a 2,000 sqm office at the Science Park Business Center at Irinyi József u. 4-20 in District XI, with 68% occupancy in its projects. According to Hubert Abt, founder and CEO of the company, this brings the company’s presence to 11,000 sqm in Budapest, which will grow to 20,000 sqm in 10 locations this year. Contracts have been signed with the accessibility organization access4you for the operation of the flex offices, he adds


A boom in the industrial and logistics sector is predicted. According to the Budapest Research Forum, modern industrial stock in the Budapest area stands at a little over 2.5 million sqm. There is an overall vacancy rate in the industrial market of less than 4%, about as low as it can realistically get. Last year, the sector began attracting developers beyond the traditional market players.

Developers are committed to constructing at key regional logistics hubs, although the greater Budapest area will remain the dominant industrial development area. CBRE has traced a one million sqm industrial development pipeline across Hungary, which it says represents the highest volume on record.

The opening phase of HelloParks Maglód, part of the Futureal Group, has taken in its first big tenants, and the complex has received BREEAM “Excellent” certificate for the design stage in the New Construction category. The company has undertaken the development of three so-called mega parks with a capacity of 884,000 sqm of warehouse and industrial space on 219 hectares, according to Futureal.

Elsewhere, the leading CEE industrial park developer and operator, CTP, is committed to developing built-to-suit and speculative space in both the Budapest area and at key logistics and industrial hubs across the country, such as Tatabánya, Komárom, Győr and Székesfehérvár.

“Leasing activity is likely to remain strong with a high share of preleases that are expected to keep rolling in as occupiers flock to the new availability after years of undersupply. There is further upside from potential new entrants as the current market dynamics are trending towards more competitive terms from a regional perspective. Further vacancy increases are likely over the next quarters, but the vacancy rate is expected to remain in single-digit territory,” comments CBRE.


The hotel sector has been severely hit by the lockdowns and restrictions on travel following what had been a boom period for the CEE hotel markets, including Hungary. A pick-up in the hotel market is not expected until at least spring this with the return of international tourists and business travelers. A fuller market recovery that would once again make the sector attractive for investors will take even longer.

There is a substantial hotel pipeline with more than 2,000 rooms in the active pipeline across Hungary that is due to be delivered by the end of this year, according to CBRE. Over 1,000 rooms will have been handed over in Budapest by the end of 2022, according to the consultancy.

DVM group started construction works on the Drechsler Palace in Andrássy út last year. The historic, protected building, also known as the former Hungarian State Ballet Institute, is owned by the hotel developer and investor QPR Properties and is being redeveloped into the first W Hotel in Hungary. The W Budapest is currently due to open this year, though the official website ( still proudly proclaimed “opening 2020” when checked on Jan. 10.


Retail development in Hungary has been very low in recent years as developers have had concerns over the level of consumer spending following the global financial crisis of 2007-2008, stringent planning regulations regarding shopping center development, and subsequently the impact of COVID and the further rise of online retail and its adverse effects on demand and footfall at bricks & mortar retail. After the launch of the Etele Plaza mall in 2021, there are no new Budapest shopping centers in the pipeline, although Wing and CPI have ongoing refurbishments of existing centers continuing this year. Other center owners are considering redeveloping their assets.

Hungarian developer Futureal has extended its activities with the establishment of Futureal Investment Partners, which will deal with investment and asset management in Europe. The company has purchased the 25,000 sqm Manhattan shopping center project in Gdansk, completed in 2004. Futureal follows a strategy of generating above-average returns from value-add and opportunistic situations. This is part of a growing trend for Hungarian developers and investors to look at possibilities elsewhere in the region.


Hungary is expected to remain in third place after Poland and the Czech Republic as a preferred CEE investment destination in 2022, as has been the established pattern in recent years. CBRE puts current prime office yields for Hungary at 5.25-5.5% and 6.15% for industrial, with a significant gap between Hungary and the Czech Republic and Poland, as well as Western Europe. This provides a yield premium for acquisitions in Hungary. However, the problem remains a low supply of suitable assets available, particularly in the industrial and retail sectors.

Colliers similarly puts prime office yields at 5.25% and 6% for prime industrial, where compression is anticipated. This compares to 4.25% and 4.5% for prime office and industrial in the Czech Republic.

“There has been sufficient liquidity to confirm or guide pricing levels in the office and industrial sectors, but the situation in retail and hotels remains more difficult to gauge and generalize,” comments CBRE.

Hungarian capital is expected to remain dominant in the investment market, although investors from the region and Western Europe are stepping up their activities, according to CBRE.

In what was described as a benchmark transaction at the end of last year, Union Investment, one of the leading European investors, purchased the commercial element of the mixed-use Szervita Square Building developed by Horizon Investment.

“We are re-entering the Hungarian property investment market with the current purchase of Szervita Square Building. This exceptional technical and quality downtown Budapest asset with its diverse tenant mix and over 95% commercial occupancy level convinced us to return to Hungary,” comments Adam Irányi, head of the investment management office for Europe at Union Investment.


Sustainability accreditation to WELL, in addition to BREEAM or LEED, is an increasing trend for high-end office developments, reflecting the growing concern from tenants and staff about interiors, the provision of amenities, location and ease of transport, and, given the current environment, anti-virus measures within the office environment. Sustainability accreditation is now a basic requirement from investors when making an acquisition.

A successful year for the various sectors depends very much on how well the economy and society recover from the effects of the coronavirus in Hungary and abroad. Provided that goes well, it would maintain strong demand in the different property sectors that in turn encourages development, providing assets for investors.

The Drechsler Palace W Budapest is due to open in 2022.

This article was first published in the Budapest Business Journal print issue of January 14, 2022.

General Gov't Deficit at HUF 2.6 tln Debt

General Gov't Deficit at HUF 2.6 tln

EC Advances Infringement Procedure Over Hungary's Sovereignt... EU

EC Advances Infringement Procedure Over Hungary's Sovereignt...

Hell Energy Inaugurates HUF 80 bln Capacity Expansion Manufacturing

Hell Energy Inaugurates HUF 80 bln Capacity Expansion

Puskás Arena to Host 2026 Champions League Final In Budapest

Puskás Arena to Host 2026 Champions League Final


Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.