Historic Krausz Palota Renovation now Approaching Completion


The modernization of the Krausz Palota at Andrássy út 12 is nearing completion. The listed building was acquired in 2019 by the investment manager AEW on behalf of its clients and is part of a trend for investors and developers purchasing such classic architecture in the historical center of Budapest and renovating for use as top-end offices and street-front retail complexes.

This requires the redevelopment of the building in accordance with third-party sustainability accreditation to attract tenants to the Class “A” office market strata and high-end retail and to comply with environmental regulations regarding emissions and energy usage.     

“We do not take any shortcuts when it comes to carefully repositioning such a prestigious building in the heart of Budapest,” comments Jake Lodge, principal of Avison Young Hungary, which is responsible for the renovation project. “In order to provide our future tenants with a combination of modernity and historic tradition, we did not shy away from hand-picking materials and selecting specialized architects while targeting a Breeam ‘Excellent’ certification to ensure the asset’s long-term attractiveness in the local market.”

The architects for the project are Bord Studio. Realiscon advised on and completed the Breeam assessment and also performed the project management.

“Renovating a heritage building has had many challenges, including undoing numerous changes inflicted on the building over the years, removing entire floor slabs, and replacing the building’s mechanics with efficient modern systems, thereby transforming Krausz Palota into a commercially viable and premium commercial property fit for modern businesses,” Lodge says.

Discussing the difficulties of redeveloping historic buildings, particularly one that has undergone several function changes, into sustainable offices as opposed to greenfield projects, he explains that the process can be very demanding and throw up many surprises, like unexpected supporting beams that were not on the historical plans.

Lodge says you only really get to know about these skeletons in the cupboard once you have pressed the button on the refurbishment and demolition works; therefore, a great degree of innovative thinking is required to solve these issues.

“There are very few opportunities (if any) to develop greenfield modern office buildings in the CBD [Central Business District]. Locations within UNESCO world heritage sites, especially on the famous Andrássy út, need to fully embrace the underlying architecture and heritage of these classic buildings. It would be a travesty to knock down these majestic buildings in the sole interest of generic office buildings in order to maximize buildable sqm,” he adds.

EU Taxonomy Adaptation on the European Market

“I see EU taxonomy adaptation on the European market as one of the major sustainability achievements of 2022,” says Zsombor Barta, president of the Hungarian Green Building Council (HuGBC). “Although many local real estate stakeholders might not yet realize the importance of this, in the midterm and on a larger scale, this is a very important framework towards a more sustainable future and aligned with the ambitious 2050 zero carbon targets as well,” he adds. Barta points out that financial institutions now need to report on their portfolio’s EU taxonomy ratio, and projects which comply with the Taxonomy criteria are eligible for financial incentives. He argues that this will have an enormous impact on real estate stakeholders and push the entire sector toward a more energy-efficient and sustainable future.

Additional EV Charging Points at Budapest Airport

Budapest Airport (BUD), the operator of Ferenc Liszt International, has added 83 electric vehicle charging stations resulting in 102 additional charging points at the airport. “E-mobility is a key pillar of Budapest Airport’s sustainability strategy, which is why the airport operator has placed emphasis on expanding its electric vehicle fleet and build an electric charger network. In 2022, Budapest Airport applied for the EU CEF 2 Transport – Alternative Fuel Infrastructure Facility funding program with its Net Zero Airport project, and a grant for the installation of 83 charging stations and 102 charging points was recently signed,” BUD said.

BMW Leading in EV sales

Dealerships belonging to the BMW group sold 550 purely electric models in Hungary in 2022, of which 460 were BMWs and the remaining 90 Minis. Sales of EVs thus increased by 119% compared to 2021, making BMW the most popular electric car manufacturer among premier brands, according to the automaker. The company is building a factory that will produce 150,000 electric cars a year in Debrecen (231 km east of Budapest by road) in a EUR 1 billion investment.

Increased Focus on Green, Efficient Buildings

Green and efficient buildings are in focus, becoming much more than a simple check mark that companies and investors include in their reports to shareholders, says Colliers in its “10 Predictions for the CEE-6” report. This is because efficiency can yield actual (and quite significant) financial benefits. Consequently, Colliers consultants expect to see a greater differentiation in the rent/value of a building based on how green/efficient it is for all countries in the CEE-6 group. This should apply to all real estate sectors, but particularly to offices and industrial. “ESG moves from ‘nice to have’ to a market standard in all RE [real estate] markets,” says Colliers. In Bucharest, the 28,000 sqm America House has become the first project in the Romanian capital to be awarded Breeam “Outstanding In-use” certification after EUR 10 million was spent on the development with the certification process undertaken by BuildGreen.

This article was first published in the Budapest Business Journal print issue of January 27, 2023.

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