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Office space market expands fastest in five years in 2006

Property investors completed 182,000 square meter of A-category office space in Budapest in 2006, the most since 2000, according to a market analysis by real estate company CB Richard Ellis (CBRE).

The new completions brought the capital's A-category office space market to 1,729,000 square meter. Investors spent €880 million on property market developments in Hungary last year. In the past four years, they spent €3 billion, the third most in the region after Poland and the Czech Republic. Annual yields for office space are about 6.5%. CBRE analyst Gábor Borbély said Budapest's office space market could grow as much as an annual 300,000 square metres in the coming two years. Contracts were signed for 248,000 square metres of office space in Budapest last year.

One-fourth of the space was located on or near Váci út, one of the capital's main thoroughfares. Monthly rents for A-category office space in Budapest are €12-14 per square meter. Monthly rents for premium office space are €20-21. Vacancy on the market stands at 12.8%. Investors added 121,000 square meter of new industrial space in Budapest last year, bringing the total market for modern factory space to 934,000 square meter. Contracts were signed for 159,000 square metres of this in 2006. Vacancy on the market was just 8%. Monthly rents for modern factory space in the capital are €3.5-5.5 per square meter. Yields for new industrial space are about 7.5%. (Mti-Eco, Bloomberg)