Retail was once the place where everyone wanted to be. Until they didn’t. The slow rise of e-commerce (given a massive boost by the pandemic, of course) led to uncertainty about how much time shoppers would want to spend in bricks and mortar buildings. The government’s “plaza stop” legislation didn’t help, nor does the fact that sizeable plots with good public transport and road links, not to mention high pedestrian footfall, aren’t exactly two-a-penny. More than a decade separated the opening of Corvin Plaza in 2010 and Etele Plaza in September 2021. Lord alone knows when the next mall might open.
Hotels were the next big thing, propelled by growing tourism numbers, which seemed to break records year after year until the COVID-19 outbreak. Its time will undoubtedly come again, and the latest luxury entrant, the W Budapest, only officially opened on July 10. Let’s hope pandemic-induced lockdowns really are a once-in-a-century event.
COVID also made its presence felt in the office market, and while no one is predicting a collapse, neither is anyone denying that the market is uncertain right now. High-interest rates are making finance more expensive, and unknowable issues like who will need how much space on the back of changed work patterns and the rise of home office are making it harder to get. Most people agree the obituaries for the office published in the first days of lockdown were premature in the extreme. That the office is here to stay is certain. How and when we use it is not.
The subject of our Special Report this issue, logistics, has been on an upward trajectory for some time, however. Let’s cycle back to the growth in e-commerce that has been problematic for bricks and mortar retail: all those goods need to be housed somewhere before being sent on their way. Then there’s the growth in e-mobility and the rush of Asian battery and battery parts manufacturers to Hungary. Even the shortening of supply chains and the reshoring of some business units have benefited logistics and its wider industrial sector. It’s a slightly crude description, but logistics is growing in the west of Hungary (think of all those big box buildings you can see being built as you travel along the M0 orbital motorway around Budapest) and light industrial in the east.
Black Swan sightings to one side (I know, who foresaw the pandemic or the war in Ukraine?), there doesn’t appear to be anything in the immediate future that could disrupt this happy scene. As long as Hungary’s government continues to snuggle up to China (Minister of Economic Development Márton Nagy has just returned from a five-day trip), and China is happy to use Hungary as part of its Belt and Road initiative to create a new Silk Road connecting Eastern goods with Western markets, perhaps this is one real estate sector that will continue to grow.
Robin Marshall
Editor-in-chief
This editorial was first published in the Budapest Business Journal print issue of July 14, 2023.
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