Hungarian Office Market Continues to Look Good

Occupier focus

The total market size has increased to 3.3 million square meters, with two speculative projects having been delivered in the first half of the year: Váci Greens B in the Váci Road Office Corridor, and Váci 1 in the central business district (CBD), the report from the real estate services firm notes. The vacancy rate stands at 10.3% over the total office stock in Budapest, now at one of the lowest levels in 19 years, since records first began. Rents in most submarkets were unchanged, but Central Buda improved marginally. The upward pressure on rents seems to have intensified however, and looking ahead, the trend may filter down to the increasingly popular Grade B segment. Prime rents remained stable in the first half, with the increased possibility of positive rental growth along the Váci Corridor and in the North Buda area.

Several real estate developers have started to commit to speculative schemes, according to C&W, while overall construction activity grew to 400,000 sqm for delivery in 2016-2018 by the end of September.

Net absorption was 65,800 sqm in the first half, which is 18% less than the exceptional first half year figure last year. Net absorption is expected to remain positive this year due to limited speculative developments, C&W forecasts.

Investment focus

The second quarter of 2016 saw €191 million invested into the office sector, which predominantly took place in Budapest. This, after last year’s performance whereby in excess of €368 million was transacted, shows improved investment activity. The largest deal was KGAL’s market entrance with the purchase of Eiffel Square. Furthermore, as both investor appetite for prime assets and the pipeline of deals remain healthy, prospects are for an increasingly active H2. Prime yields currently stand at 6.75%.

(Forrás: http://www.cushmanwakefield.com/~/media/marketbeat/2016/08/hungary_off_2...)