Opportunities Exist, But Market Becoming More Cautious

Office Market

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With economic, financial, and geopolitical uncertainties acting as barriers to development and demand in office, retail and hotel, future development patterns look uncertain. Although the industrial sector is booming, here, too, rising construction and energy costs are acting as a brake. Further, investors are adopting a wait-and-see approach to the markets. The Budapest Business Journal asked several leading developers and consultants to give us their take on Hungary’s real estate market.

The office leasing process has undoubtedly slowed down. With regard to size, there has been little to no change when it comes to more significant leases; indeed, it is often more straightforward to negotiate larger transactions such as the 16,200 sqm E.On deal. More urgent transactions can take two to three months to negotiate, and the longest deal I have been involved in took almost two years. The average size of transactions in our buildings is about 1,500-2,000 sqm. Tenant specifications include more open space, more collaborative space, focus rooms and private spaces.

The office market has slowed down and many new developments will not be initiated, although those that have already started are ongoing. Given the right opportunity and a good development plot, we would consider launching a new development project. With the increase in costs, we need to procure materials and conclude the fit-out provisions well in advance and therefore, close cooperation with tenants is of the essence. Concerning demand, sustainable projects are more future-proof; in my opinion,it is the older generation stock that will suffer in the current climate. 

Máté Galambos

Director of leasing

Atenor Hungary


The figures in the office market are inflated due to several owner-occupied developments being completed and projects slipping forward; therefore, delivery will be around the 200,000 sqm mark. The level will fall in 2023 and 2024. In general, developers are not undertaking new projects due to the uncertainty caused by the war in Ukraine and the energy crisis. Finance is also hard to access, as banks act cautiously even for projects with a solid business plan. Therefore, there is a wait-and-see attitude until possibly next spring, when the conditions may change. There are opportunities for small niche projects and quality refurbishments.      

There is a big catch-up ongoing in the industrial market, with around 400,000 sqm of space due to be delivered in the Budapest area. The pre-lease ratio is high, but there are bottlenecks in the construction process, for example, the availability of materials. Development has also spread to the countryside, to cities such as Miskolc, Debrecen, Székesfehérvár and Kecskemét.

Retail is limited to developments where it forms part of a wider mixed-use project or smaller regional retail complexes with a significant hypermarket component. Shopping mall development is essentially limited to the refurbishment of existing centers.

Gábor Borbély

Director of research and business development

CBRE Hungary


Most probably, both demand and, subsequently, supply in the market will decline in the following months. Developers will only undertake new projects where cash flow projections confirm the long-term profitability of the planned development. I expect that, in the short term, many planned projects will fall short financially, and they are going to be postponed or suspended. The development process is facing several problems: the war with Russia dragging on in neighboring Ukraine, soaring construction and utility costs, high inflation, the quick devaluation of the forint to the euro and U.S. dollar, and the fear of a recession and an economic downturn. It is not looking good now.

Developers and asset holders inevitably should turn to their actual portfolio and try to make the best of it. Redevelopment can be an excellent answer to the current challenges. For example, Horizon Development has just started redeveloping the former Henkel HQ building. By the end of the first quarter of 2023, it will open as Villányi Gardens offering flexible, quality and reasonably priced office spaces in an already popular and up-and-coming Buda location.

Tamás Ádány

Business development director

Horizon Development


With regard to an exit strategy for developers, investors are exercising caution when it comes to Hungary due to concerns over inflation, the falling value of the forint, the prospect of rising interest rates, and the war in Ukraine. Deals are on-hold in the office and industrial sectors, and, at the same time, investors are adopting a cautious wait-and-see approach.

Developments, in general, now take two to three years to get off the ground to produce assets that provide investment opportunities. There is interest from investors in logistics, and in development land from logistics developers. For hotel developers, now is a good time to purchase standing assets for value-add investment.

Major domestic investors and developers such as Adventum, Futureal, and Wing have been looking abroad due to the limited possibilities in Hungary and the greater choice elsewhere. Concerning financing, banks are changing their lending conditions, making it more difficult for buyers to obtain finance, even for a standing asset.

Péter Takács


Newmark VLK Hungary

This article was first published in the Budapest Business Journal print issue of October 21, 2022.

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