Futureal has started construction of the 53,000 sqm Etele Plaza next to the Kelenföld railway station and adjacent to the 65,000 sqm Budapest One business park office project, which is being built by the same company. The shopping and entertainment center is scheduled to open in 2020.
This will be the first major shopping center completion in several years as projects have been put on hold due to concerns over economic issues and consequently consumer demand and spending power. The three current pipeline projects are all by experienced regional retail developers.
Etele Plaza will be located at a multimodal transport intersection that includes a Metro 4 stop, Kelenföld railway station and the M1 and M7 motorway links, and is ten minutes from the center of Budapest.
According to Futureal, 165,000 people use the Kelenföld bus, rail and metro terminals on a daily basis. The complex is projected to attract around 40,000 daily customers from the capital, the suburbs and towns outside Budapest that are accessible from the transport hub. The immediate catchment area of the new center consists of a population of around 235,000.
Futureal says it aims is to create a business, service and leisure hub on the 22-hectare site along the lines of its Corvin Promenade urban regeneration project, that has delivered a 44,000 sqm shopping center and 10,000 sqm of street retail in addition to office and residential space.
Although Budapest was the first cities in the region where Western-style shopping centers were developed, it has one of the lowest such provisions in Europe. However, market conditions are now regarded as appropriate for the delivery of new malls that would freshen up the market. Shopping center stock in Budapest has not changed in several years; JLL puts total modern shopping center stock in Budapest at around 770,000 sqm. Shopping center density for Budapest is put at 443 sqm per 1,000 inhabitants.
In the other announced project, the German retail developer and center operator ECE says it is finally planning to move ahead with the 50,000 sqm Aquincum Center on the site of a former textile factory in the Óbuda area of Budapest. According to ECE, the complex will deliver more than 170 retail units and construction is scheduled to commence this year with a proposed completion date for 2021. ECE says the center has more than 640,000 inhabitants within a 30 minute driving distance.
“There is little competition in the catchment area, and the purchasing power for the planned project is very good. Because of its excellent quality, we secured the location long ago. In recent years, the macroeconomic figures and retail sales in Hungary have developed very positively, leading us to develop the project now with new and modern planning,” commented Christoph Augustin, managing director of ECE Hungary. According to Balázs Bús, Mayor of District III, the retail project will create as many as 1,000 jobs and rehabilitate the brownfield site next to Szentendrei út. Although there is no metro link in the area, there is the Hév suburban railway.
However, one seemingly significant complication has materialized. Kristóf Szatmáry, the government commissioner for trade policy, says the development will not happen in its present form since it lacks the necessary construction permit. The day after the ECE announcement, Szatmáry said that the developer only holds a permit from 2013, which was overridden by newer regulations in force since the beginning of 2015. The latter, commonly known as the “plaza stop”, aim to ensure sustainable development according to guidelines based on EU laws, he added.
The commissioner said this means, the entire process of obtaining a permit needs to begin again. Szatmáry stressed that had the company already begun work based on the 2013 permit, then it would be able to claim the latter’s validity; however, because this did not happen and the investor had not requested a new permit after 2015, the newer regulations invalidate any exemption from “plaza stop”.
ECE and its partners have invested more than EUR 600 million into Hungary since the company began its activities in 1996. It now operates five shopping centers with a total leasable area of 210,000 sqm including Árkád Budapest, currently the largest shopping center in the capital at 68,000 sqm. ECE also operates centers in Pécs, Győr, Debrecen and Szeged.
The other significant Budapest pipeline shopping center project is the 37,000 sqm Mundo by Poland’s Echo Investment in Pest that has also been on-hold for several years and is now reportedly scheduled for delivery in 2020/2021.