According to the latest forecast from our international partner, Savills, European real estate investment volumes are expected to exceed €50 billion in the first quarter of 2025, representing a 28% increase compared to the same period in the previous year. The advisory firm predicts a broad-based recovery and growth across the European real estate market in 2025, with most countries expected to see annual expansion in investment activity. The Czech Republic, Portugal, France, Ireland, and Romania are likely to experience the most significant growth compared to the first quarter of the previous year. As a result, investment volumes are projected to reach €216 billion in 2025, marking a 13% year-on-year increase.

Despite ongoing geopolitical and economic challenges, there is a clear uptick in interest in central business district (CBD) offices, hotels, data centers, and various retail sectors, as well as in the so-called "beds and sheds" segment (residential and logistics properties). Strong, long-term market fundamentals—such as stable tenant demand and favorable market conditions—continue to bolster investor confidence in the European real estate market.

Hungary’s real estate market is also set to benefit from this European growth trend, albeit with its own unique dynamics. Balázs Simonyi, Head of our Office Leasing Division, notes:

‍“In 2024, we successfully continued the upward trend that has been ongoing for four years, with total transaction volumes returning to pre-pandemic levels. We expect this trend to continue in 2025, albeit at a more moderate growth rate of 10-15%, compared to the 30% growth seen in recent years.”

‍

‍

‍

In terms of new office deliveries, only three speculative developments are expected to be completed in 2025 (excluding new office buildings purchased by the Hungarian government): Wagner Palace (2,250 m²), Rhodium (3,300 m²), and Center Point 3 (35,000 m²). This total of just below 41,000 m² represents just over one-third of the average annual supply expansion and is the lowest volume seen in the past decade.

Regarding vacancy rates, no significant improvement is expected in 2025. In fact, the supply situation is likely to tighten further, as the departure of state-funded institutions from the market (approximately 200,000 m²) will have a stronger impact than the extremely low level of new completions.

Rental levels are expected to remain stagnant, as the supply-side market dynamics prevent any upward movement in prices. At the same time, construction cost pressures mean rents are unlikely to decrease further. As a result, excluding specific competitive situations and market participants, rental levels are expected to remain flat, although the prevalence of rent-free periods is likely to increase.

Attila Balogh, Head of our Capital Markets Division, adds:

‍“Since 2021, annual turnover in the investment market has been declining, ending 2024 at just over €430 million. However, activity picked up significantly in the last quarter of 2024, and this momentum is expected to continue into this year. Based on ongoing negotiations and transactions, there is a chance that 2024 turnover could double, which would be a positive sign for the market and its participants. Notably, office deals are also progressing, despite concerns about functional obsolescence. Yields remain stagnant, but with declining financing costs, target returns are becoming more achievable. Beyond offices, there is strong demand for industrial-logistics and retail properties with long-term leases, as well as in the hotel sector, where robust tourism makes it easier to find investors than sellers. The strong outflow of capital from Hungarian investors seen over the past two years is expected to continue, as long as they can acquire properties with yields competitive with domestic levels.”

In summary, the European real estate market is poised for significant growth in 2025, and Hungary is set to participate in this positive trend. While the local market faces its own unique challenges, attractive opportunities remain for investors, particularly in segments supported by strong long-term fundamentals such as stable demand and favorable market conditions. As a partner of Savills, we continuously monitor and analyze market developments to provide our clients with comprehensive and up-to-date services. For more information and the latest market insights, feel free to reach out to us with confidence!

‍