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Budapest office construction activity drops 30%

If everything goes according to plan – 152,045 square meters of modern office space is expected to be delivered for the whole of 2010 in Budapest, which is just 70% of the total volume delivered in 2009, the Real Estate Research Association (RERA) said in a press release.

While 64%-more office space will enter the market during the end of the first half year than during the comparable period in 2009, this is largely due to deliveries postponed from last year and a significant decrease in new handovers during the second half of the year.

Preleases have already been signed for one third of these spaces, which therefore should not have a significant effect on the vacancy rate.

While no new projects commenced construction during the first half of 2010, many developers are actively working on new, quality projects which they hope to launch in the next 1-2 years. Several of these projects are being designed to achieve an environmental sustainability certification, as developers increasingly both understand the need to integrate sustainability goals into a project from conception and anticipate a sustainability premium from tenants and investors.

In particular, both SCD Group’s “Officium” scheduled for delivery at the end of 2011 and Skanska’s “Green House” which should commence construction at the end of 2010 in the Váci út Corridor are being designed to meet specified sustainability goals.

During the second quarter of 2010 the 2nd phase of Madarász Offices (17,000 sqm) and the 2nd phase of Office Garden (14,697 sqm) will finally be delivered after slight delays, bringing the total new supply for the quarter to approximately 76,000 sqm of office space. (press release)