Market Report 2020 H2

What will investors, tenants and owners face in 2021?

Budapest Office Market

Tamás Pál MRICS – Head of Office Agency, Tenant Representation

Last year, in 2020, in line with international trends, Hungary’s total office rental transactions decreased. By the end of the year, however, it became apparent that along the positive change affecting the market, the reorganization could start in 2021, albeit in a much more nuanced way than predicted by many market participants in the first half of the year. After the initial difficulty, tenants appear to be settling their office operations, and with the advent of hybrid office use, they will settle into this form of operation in the longer run, too. However, it is essential to note where more emphasis is placed on communal areas and meeting rooms, the proportions of office space will not decrease because a denser seating plan will be considered. We are facing a year of change, as taking into account our employees’ needs will largely depend on how flexible the company allowed working from home during the past year. We see that after the epidemic, a more extended test period will begin, where employers will decide for decades whether flexible working is an excellent alternative to keep the employer’s interest and sustain working efficiency.

Industrial and Logistics Market

Ernő Kiss – Associate Director, Head of Investment and Industrial

The recent period’s uncertainty has not been able to shake up the industrial and logistics real estate market, but on the contrary, more intense competition has begun, where e-commerce actors have experienced explosive growth. Record low vacancy and high stabilizing rents characterize the entire sector. We expect the expansion of demand and tight supply caused by changing consumer habits to keep this segment in focus for developers and investors in the coming years. We can already see those already launched investments, which are larger than ever before, will not necessarily satisfy all the needs, so no stagnation or decrease in rents is expected.

Investment Capital Market

Attila Balogh – Investment, Asset Management

With the persistence of travel restrictions, a market favorable to domestic investors with strong purchasing power may emerge. Hungarian players’ success with a market share of almost 50% so far may depend on the price sensitivity of the sellers, which is not a negligible aspect in the light of the current and expected economic outlook. Simultaneously, the border closure did not act as a barrier to international acquisitions: for domestic players to have a more diversified and saturated portfolio, the business for them continued at a breathtaking pace in Poland, Romania, Bulgaria, Greece, Spain, and Malta. In listed countries, they can realize higher returns, so spectators and players will likely witness exciting events in the next period.

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