BBJ: You became sales director at Metrodom over the summer but led the research and analysis department for several years before that. How have you seen the Hungarian residential market change over the years?

András Kígyósi: When I joined Metrodom in 2017, we were in the period of the so-called 5% VAT and Csok (Family Housing Allowance Program) era. Due to the inflexibility of the supply, the new build apartment market could not keep pace with the increased demand, meaning prices went up in the short term since the planning, launch, and implementation of projects span several years.

This housing market expansion lasted until the end of 2019. At the beginning of 2020, the first shock appeared on the market, as the COVID-19 pandemic broke out and the VAT on newly built apartments returned to 27%. The epidemic reorganized supply chains, which also caused an increase in the price of construction materials and costs. It also impacted the interest rate environment as corporate HUF interest rates started to rise. The energy crisis and uncertainty following the outbreak of the war between Russia and Ukraine was a further shock to the market.

Fortunately, since the beginning of this year, there has been a noticeable upswing in the market. A restrained optimism can be felt, which can be seen in the sales of apartments and the willingness of developers to start projects.

BBJ: And how has Metrodom changed over that period?

AK: Metrodom has always supported the goal of developing housing projects, even in challenging market conditions, since we are specialists in residential real estate. We adapted to the changing environment by concentrating our resources and focusing on projects with optimal locations. In the more restrained sales periods of recent years, our company focused on developing our internal structure, digitalization and innovation, which enabled the professional renewal and change of direction that is now not only present on the design table but also takes shape in a physical sense.

BBJ: Metrodom was known for affordable, compact, high-quality mid-level apartments but has started to develop premium, high-end, sustainable flats. What brought that change, and how has it been received in the market?

AK: The first step of the premium transition was probably our Metrodom Őrmező residential park, handed over in 2021. The great success of this project encouraged us to design others with higher technical content and added value. At the Metrodom River project in District XI, residents can already perceive the full spectrum of our premium quality; their lives are characterized by numerous green solutions, plenty of community services, comfort and a high standard of living thanks to planning awareness.

BBJ: Metrodom launched a rebranding campaign in September. What are the main elements of this, why now, and how has it been received?

AK: The slogan of our campaign is “Lift your life to a new level! Metrodom hi-life,” and you can meet it on TV, in the cinema, on outdoor surfaces, and, of course, in online spaces, too. The main aim of this campaign is to highlight our premium transition. It is designed to increase brand awareness for Metrodom; on the other hand, we would also like to educate potential buyers about the aspects that should be considered when choosing a newly built apartment.

BBJ: Your Metrodom Green development in Millennium City Center, District IX, will be handed over in Q1 2025. Are you targeting new homeowners or investors with these apartments? What would be the investors’ rationale?

AK: We design our housing mix on each project to be able to reach the broadest range of potential customers. For this reason, both investors and private buyers can be found among our customers. At the start of a project, the proportion of investors is typically higher due to the more favorable prices per square meter. As you get closer to the date of moving in and the predictable timing, those factors are more significant for private buyers, so they begin to dominate. It can also be observed that investors prefer smaller apartments, while private buyers look for larger homes. The overall ratio of investors at Metrodom is similar to the market average, which is around one-third of the total buyers.

BBJ: Have government policies like the 5% VAT on new homes helped your business grow? Are there other state interventions you would like to see, or should the market be allowed to operate more freely?

AK: The 5% VAT has contributed a lot to projects with approved plans appearing on the market. It is also worth mentioning here that the construction of 10,000 new apartments increases the GDP by approximately 0.8-1 percentage point, so it is in the interests of both the government and the real estate developers to establish a long-term, predictable incentive system for the sector. We would like to see additional market support interventions. As long as the interest rates for housing market lending are at the current level of around 6.5-7%, the market will stagnate or show only minimal growth. Fortunately, signs are already visible that this is changing, and we hope for a positive continuation of the trend.

BBJ: What projects does Metrodom have lined up for the future? Are you focused on Budapest, or are you also operating in other towns and cities in the countryside?

AK: We currently have two ongoing projects that we plan to continue, namely Metrodom River in District XI and Metrodom Green in District IX. We also have a completely new residential park in preparation in District XIII, which has been named Metrodom Beat. We plan to deliver approximately 1,500 apartments in the next couple of years, focusing on Budapest.

This article was first published in the Budapest Business Journal print issue of October 18, 2024.