Hungary Showing Strong Investment Growth

Office Market

The Szervita Square Building in central Budapest, sold by Horizon Development to Union Investment.

Total investment for Hungary is expected to be in the EUR 1.4 billion-1.5 bln range for the year with most deals for offices, Tim O’Sullivan, head of investment properties at CBRE Hungary, said at “2022 Hungary Market Outlook,” the annual event organized by the consultancy.

The office sector has continued to dominate activity, followed by industrial; although properties in this latter sector are highly sought after, the lack of available investment-grade assets is a limitation.

Office was thus the driver of the investment market in 2021 with 82% of investment activity(worth a total of EUR 1 billion), compared to 9% for industrial. Retail has been the big loser regarding investment since 2019.

CBRE puts current prime office yields for Hungary at 5.25% and stable, 5.75% and compressing fast for industrial, with shopping center yields at 6.25% and under pressure. A significant yield gap between Hungary and the Czech Republic and Poland remains.

“The difference between Hungary and Czech and Poland is relatively stable at 100-150 basis points; the yield gap with Czech is larger and there has been no change throughout the pandemic,” commented Gábor Borbély, head of business development and research at CBRE Hungary.

Domestic investors are expected to continue to dominate activity despite increasing interest in the Hungarian markets from international money. Of the EUR 1.17 bln in investment activity recorded for 2021, 70% was undertaken by home players. Of the cross-border investors active in Hungary, 24% were from the Czech Republic, 23% from Austria, 22% from Germany and 14% from the United Kingdom.

On Trend

Large office occupiers are delaying decisions. Demand on the Budapest office market fell by 42% for 2021 compared with 2019, as was the trend throughout major European capitals. Although there was only 50,000 sqm in completions for 2021, there is currently 512,000 sqm under construction, of which 226,000 sqm is preleased, with a further 435,000 sqm planned. According to Anikó Kovács, head of offices advisory and transaction services at CBRE Hungary, transactions take much longer and there are delays in completions.

The industrial sector is going through a boom in the Greater Budapest area and regional industrial and logistics hubs. Industrial take-up for Hungary increased by a massive 114% in 2019-2021, while developer-led completions for last year reached 340,000 sqm in Greater Budapest, representing a 165% increase over 2020.

In a significant development for the industrial market, Hungary is seeing growth in the regions outside Budapest. However, 57% of completions were in Central Hungary in 2021 and it has 49% of the pipeline under construction. Western Hungary has a pipeline of 373,000 sqm and Eastern Hungary 190,000 sqm.

In the absence of any shopping center pipeline, owners are undertaking refurbishment. Around 25% of retail mall stock is older than 10 years, with 13% older than 20 years; new stock contributes only 6%, according to Erika Garbutt-Pál, head of retail advisory and transaction services at CBRE Hungary.

Online penetration into Hungarian retail is expected to continue growing from 10% in 2021 to a forecast of 14% in 2025, according to Euromonitor. Meanwhile, turnover in Budapest shopping centers is 25% down on 2019 levels, although there was a 20% recovery in footfall and turnover towards the end of 2021 compared to 2019.

Péter Virovácz, a senior economist at ING Hungary, sees the hot topics for the year as inflation, monetary and fiscal consolidation, the general election and politics, the rule of law debate and EU funds, and wages and labor shortages. Economies also need to take green transition and climate action into consideration.

This article was first published in the Budapest Business Journal print issue of February 11, 2022.

ÁKK Sells HUF 82.5 bln of Bonds at Auction, Above Plan Debt

ÁKK Sells HUF 82.5 bln of Bonds at Auction, Above Plan

EC Puts Hungary 2024 GDP Growth at 2.4% EU

EC Puts Hungary 2024 GDP Growth at 2.4%

HU-rizon Program: HUF 8 bln Funding for International Resear... Science

HU-rizon Program: HUF 8 bln Funding for International Resear...

Inspiring Women at the Focus of Gourmet Fest In Budapest

Inspiring Women at the Focus of Gourmet Fest


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.