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VOL. 20, NUMBER 18 SEPT 21, 2012 – OCT 04 , 2012
Budapest Business Journal
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PROPORTION OF INCOME SPENT ON FOOD AND OVERHEADS
HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU
SPECIAL REPORT GREEN BUSINESS IN HUNGARY CULTIVATES A SUSTAINABLE FUTURE 〉PAGES 14-26
HUNGRY AND THIRSTY
This year’s droughts in Eastern Europe and the corn belt in the United States have already driven grain prices up. But sooner rather than later, meat and fuel prices will rise as well, along with land fees – and in Hungary, too. PAGES 10-11 MACROSCOPE
SPECIAL REPORT
Q&A
Sustainable currency?
The key to success
Nature can solve it
The high levels of the Hungarian currency seen in August are not supportable in the long run due to uncertainties in the domestic economic environment, such as the outcome of the IMF talks and the 2013 budget. PAGE 03
In recent years, a major change has occurred in the office furniture market towards a more environmentalfriendly way of thinking among custumers and manufacturers alike. And fortunately, both sides can take advantage of the process. PAGE 16
Organica’s exuberant botanic gardens give a home to 100s of plants and little animals – and clean waste water. Co-founder Attila Bognár tells about the global significance of their development and also about their business prospect. PAGES 18-19
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macroscope Forint returns to more sustainable levels Even if the forint could further strengthen amidst favorable global investor sentiments, levels below 280 versus the euro are not sustainable. Recent favorable international developments could positively impact the forint rate in the long-term, Questor analyst Péter Mester told the Budapest Business Journal. In September, further monetary policy easing was implemented by key global central banks. On September 6, European Central Bank president Mario Draghi unveiled a plan for the bank to make unlimited purchases in struggling euro members’ bond markets. Germany’s Constitutional Court gave a green light, on September 12, for the country to ratify the euro zone’s new permanent rescue fund and budget pact. Thus, the ratification of the European Stability Mechanism (ESM) could go ahead with a €190 billion cap on Germany’s liability. In the United States, the Fed said on September 13 that it will expand its holdings of long-term securities
with open-ended purchases of mortgage debt to the value of $40 billion a month in a third round of quantitative easing to support a stronger economic recovery. COUNTRY-SPECIFIC FACTORS For Hungary, the key issue is still the outcome and date of the long-awaited agreement on precautionary financing from the International Monetary Fund and the European Union. If the IMF talks are delayed, the forint could weaken to 290 against the euro, said Mester. If not, there is room for further strengthening. As Hungary’s risk premium has not deteriorated lately with the country’s five-year credit default spread still at around 400 basis points, he thinks that a 283 HUF/EUR rate is sustainable this year. In 2013, he projects an average annual forint rate of 285 versus the euro with rates fluctuating between 271 and 300.
Erste analyst Zoltán Árokszállási believes that even if the forint could further strengthen amidst favorable global investor sentiment, its scope is limited, as levels below 280 versus the euro are not sustainable in the next few months. However, if the government reaches an agreement with the IMF, then these levels become more attainable. Nevertheless, he finds the government’s 266 HUF/EUR rate projection way too optimistic. According to calculations by the National Economy Ministry sent to the Fiscal Council in August, if an agreement were reached with the IMF by the middle of November, the forint would strengthen to 266 against the euro by the end of 2013. The ministry put the average annual HUF/EUR exchange rate at 287.5 for 2012 and 271.44 for 2013. A 5% stronger forint is expected to account for HUF 38 billion of
MONTHLY AVERAGE HUF/EUR EXCHANGE RATE
JANUARY, 2012 FEBRUARY, 2012 MARCH, 2012 APRIL, 2012 MAY, 2012 JUNE, 2012 JULY, 2012 AUGUST, 2012
307.41 290.61 292.18 295.67 293.53 293.71 266.42 278.83
Source: National Bank of Hungary
the savings in 2013, with falling yields generating the rest. A firmer forint is seen as generating most of the savings in 2012. According to the calculations, improved investor confidence in the country would cut interest expenditures on state debt by HUF 7 bln in 2013 and HUF 102 bln in 2013. The ministry projected government securities’ yields would fall 50 basis points immediately after the deal is struck and slip an additional 150 basis points by the end of 2013.
END OF THE STRONG SUMMER RUN Following the rather unexpected rate cut by the National Bank of Hungary (MNB) and the comments of Prime Minister Viktor Orbán on the IMF deal, it was not surprising that the forint started to weaken at the end of August. At its meeting on August 28, the Monetary Council reduced the central bank base rate by 25 basis points from 7% to 6.75%. The rate change was the first since December 2011 and surprised analysts who
had expected the rate to stay on hold until Hungary reached an agreement with the IMF. The forint weakened against the euro from 278.7 to 280.3 immediately after the decision was announced. Orbán said on September 6 that he does not want IMF assistance at the cost of the tough measures leaked by local daily Magyar Nemzet earlier. This immediately led to the weakening of the forint versus the euro from 285.5 to around 289, a new one-month low for the forint. Magyar Nemzet reported – citing unnamed government sources – that the conditions include a reduction in pension payments, an increase in the retirement age, lower family subsidies, a personal income tax increase, privatization, a cut in travel preferences, less bureaucracy, the introduction of a universal value-based property tax, a reduction in local government spending, the elimination of the bank levy and financial support for the banking sector. GL
Budapest bourse to become more transparent by new category A few Hungarian businesses are considering entering the new category of the Budapest Stock Exchange. The Budapest Stock Exchange (BSE) has introduced a new equity market category called “Equities Category T”. The new category became available from September 3, 2012. Although ‘technical listing’ is a Hungarian term, the practice itself is not unheard of in other bourses, where these types of listings are usually also classified also as IPOs. “There are a few companies in the BSE’s pipeline aspiring to stock exchange listing—some of them are already working on their prospectus—which are likely to enter the new category soon,” Attila VargaBalázs, director of the bourse’s listing and
surveillance division, told the Budapest Business Journal. The change will affect some equity issuers already listed on the BSE’s equity market as some category “B” companies may, with time, be moved to category “T”, the BSE said. Companies that went public in the past seven years through a technical listing and are currently included in category “B” but have no history of public transactions will be granted a one-year grace period to carry out a public transaction to stay in category “B”. “The BSE has already contacted 18 of the altogether 37 category “B” companies that could be affected by the change,” said Varga-Balázs. Although it has not carried out a public transaction, real estate company Appeninn Holding, for instance, will be exempt from this process due to its liquidity and free-float, Varga-Balázs said. He added that the company is ranked sixth or seventh on the list of the
most liquid securities of the BSE. Appeninn’s shares were reclassified from category “B” into category “A” of the bourse as of September 14, 2011. Appeninn floated its shares on the Budapest bourse in July 2010. The BSE said that increasing demand by market players for new, better structured and transparent market segmentation at the bourse was a major factor in its decision to introduce the new category. The stock exchange aims to draw investors’ attention to the difference between the risks associated with listings combined with public transactions and the risks of technical listings. “In case of technical listings, when the main shareholders sell very small amounts of shares, little by little, the stock price does not necessarily reflect the true value of the company,” Varga-Balázs explained. In launching the new category, the BSE hopes to promote the option of technical list-
ing, the simplest form of entering a regulated market, to companies considering going public. “From Category ‘T’, it is easier to move up to a higher category later if the company carries out a public transaction,” said Zsolt Katona, CEO of the BSE. “We are convinced that this change will enhance the prestige of categories ‘B’ and ‘A’ and will improve the market assessment of public transactions, as we are certain that sooner or later each and every company will target these higher premium categories,” he added. In 2011, there were no actual IPOs on the BSE, only six technical listings, with the most promising one being that of building materials firm Masterplast. The remaining listings were those of health care firm Biomedical Computer Technologies, asset management firm Plotinus, KEG’s feed unit Visonka, mineral water company FuturAqua and IT firm Optisoft. GL
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bi-weekly
QUOTE OF THE WEEK
There is a stereotype that a low interest rate is good and a high interest rate is bad, which is a very simplified picture of the world. Here and now in Hungary, a rate cut can hardly improve the outlook for growth.
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ANDRÁS SIMOR, GOVERNOR, NATIONAL BANK OF HUNGARY
Gov’t instructs launch of e-toll procurement A government resolution has instructed the Minister for National Development to launch the public procurement procedure for the construction of a distance-proportional electronic road toll system without delay. The system is to cost up to HUF 42 billion, to be paid from 2013 central budget. The tender to purchase the network equipment is expected to be called in the second half of September, the Ministry for National Development said, adding that the procurement process, irrespective of the yet to be selected method, can be completed before the end of this year. The ministry still expects to introduce the system by July 1, 2013 as planned.
ECONOMY VOTE ON 2013 BUDGET POSTPONED? The ruling Fidesz group has backed a government request to postpone a vote to amend next year’s budget. The postponement was asked by the minister in charge of the IMF/EU talks, Mihály Varga, who said the delay will provide space for modifications should the agreement with the IMF and the EU warrant any, if talks with the international lenders continue. They will leave the budget open to amendments if the negotiations continue by the end of September or early October, Fidesz group leader Antal Rogán said. But the Fidesz parliamentary group would rather vote in the budget if talks continue only by year-end. Then they are ready to amend the budget later if the government makes such a proposal, the group leader said. Rogán said that Fidesz group expects the government to execute the workplace-protection plan in full, and wants the government to represent this stand at the talks. He also stressed that Fidesz
MPs “will not be partners” in cutting pensions. Fidesz wants Parliament’s economic committee to investigate the circumstances and consequences of the conclusion of the 2008 IMF/ EU agreement, Rogán said.
ÁKK UPS SALE OF 3-MONTH T-BILLS The Government Debt Management Agency (ÁKK) raised its sale of discount three-month T-bills as demand rose at an auction on September 18. Auction yields fell slightly from a week earlier but were above Monday’s respective benchmark. ÁKK received HUF 102.5 billion bids for the bills expiring on December 27, of which it accepted HUF 55 billion, raising the announced volume by HUF 10 billion. Subscription was up from HUF 64.6 billion at the previous auction a week earlier where ÁKK sold the announced HUF 45 billion of the bills. Average yield was 6.69%, 6bp over the secondary market benchmark, calculated on the same bill series, on Monday, and 2bp under the yield at the previous auction of the bills one week earlier. Yields ranged between 6.65% and 6.72%.
GROSS WAGE GROWTH ACCELERATES IN JULY
CONSTRUCTION SECTOR GROWS 7.6% IN JULY
Gross wage growth in Hungary accelerated to 7.1% year-on-year in July after a slowdown to 4.1% in June, data published by the Central Statistics Office (KSH) shows. The growth of business sector wages picked up, to 9.2% yr/yr from 7.2% in June. Public sector wages were up 0.9% after yr/yr drops in the preceding four months, but rose 8.1% in the 12 months to July if sharply lower wages of those on public work schemes were excluded. Regular gross wages, excluding one-off premiums and bonuses, rose 6.5% in the 12 months to July after a 4.5% increase in June. January-July gross wages were up 4.8%, of which regular wages rose 5.6%. July net wages were up 4.4% year-onyear after climbing 1.6% in June. January-July net wages rose 2% yr/yr. Net wages rose below inflation with consumer prices rising 5.8% yr/yr in July and 5.6% in JanuaryJuly. Hungarians earned on average gross monthly HUF 225,194 in July, of which HUF 211,839 was in regular wages. The net wage, excluding family allowances, averaged HUF 145,187 in July.
Output of Hungary’s construction sector grew 7.6% in July from the same month a year earlier, according to both unadjusted and workday-adjusted data from the Central Statistics Office (KSH). Except for a rise in November 2011, this was the first yr/yr increase since June 2009. Output rose from a low base last year, and was boosted by some road construction, railways renovation and, to a lesser extent, communal investment projects, KSH said. Output of the building segment fell 0.3% yr/ yr in July, while the civil engineering segment grew 15.5%. The base was low in both segments, both contracting a sharp 17.8% yr/yr in July 2011. In a month-on-month comparison, construction sector output rose a seasonally and workday-adjusted 8.6% in July after two months of decline. The sector contracted 7.3% in January-July from the same period a year earlier after a fullyear decline of 7.9% in 2011. Hungary’s construction sector output has fallen every year since 2006. New order stock was down 3.3% in July from 12 months earlier. New orders in the building segment totaled
HUF 42.3 billion in nominal terms, and were down 11.6% yr/yr in volume. They were worth HUF 79.8 bln, climbing 1.8% yr/yr in volume terms in the civil engineering segment. Total order stock rose 0.7% in July from the same month a year earlier. Orders were down 21.4% in the building segment but up 13.2% in the civil engineering segment. Output in the building segment was worth HUF 67.2 bln in July and civil engineering output was worth HUF 79.1 bln. Total order stock held at the end of July totaled HUF 160.8 bln in the segment of buildings and total orders held by the civil engineering reached HUF 410.3 bln.
BUSINESS CHEMISTS CHAIN INAUGURATES LOGISTICS BASE German-owned chemists chain Müller has inaugurated a €10 million, 18,000sqm logistics base serving its Hungarian, Croatian and Slovenian units in Letenye. The project received a HUF 458 million central and European Union grant. Owner and managing director Erwin Müller said base would employ more than
300 workers in two shifts. Before the Christmas season, the base will temporarily operate in three shifts, employing more than 400 workers. The company plans to expand the storage area to 23,000sqm and to triple processing capacity from the current 13,000 items. Headcount will increase by about 50 as some of the activities and staff of the Hungarian headquarters, based in Budapest, will be moved to the new logistics base. Müller has been active on the Hungarian market since 2007 and operates 34 retail units in the country. The Müller group projects 10% revenue growth this year.
HUAWEI TO BRING CHINESE PARTNER TO HUNGARY Chinese telecommunications equipment maker Huawei is expanding production further in Hungary and will also help one of its partner business to set up a manufacturing base here, Huawei Technologies Hungary managing director Gavin Dai told business daily Világgazdaság. Representatives of the partner company will visit Hungary in October. Huawei wants its partner to set up a manufacturing plant and supply spare parts to Huawei plants in Cserkút near Pécs
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and Komárom. Huawei has been active in Hungary since 2004 and has invested about €50 million in the period. The company’s output in Hungary doubled both in 2010 and in 2011 and could expand by a further 40-50% to $1.7-1.8 billion this year, the CEO said. Most of the production goes to export. It also plans to expand the logistic center (ELC) set up at Biatorbágy and Üllő, near Budapest last year, Dai told the daily. Total area of ELC will grow from 25,000sqm to 30,000sqm. Future plans include R&D too, and it has contacted several universities in Hungary.
The center is located at SAP’s Budapest office employing 500 staff, and is the third unit in Budapest working for the international market. The other two are SAP’s Global Support Center Hungary, established in 2001, which primarily works for the German-speaking areas and employs 150 staff, and development center SAP Labs Hungary, set up in 2005, which employs 250 people. SAP Hungary Kft had revenue of HUF 15.2 bln in 2011. More than 1,200 companies in the country use its solutions.
DR. OETKER TO EXPAND PLANT
Chinese-Hungarian joint venture BBCA Szolnok Biokémiai Zrt will receive the government subsidy necessary for building its planned citric acid plant in Szolnok within a month, according to a government resolution published in the latest issue of the official gazette Magyar Közlöny. The document says the government agrees with the idea that the state should obtain a holding in the company in order to have control over the investment and to provide the necessary funding. The government therefore instructs the minister responsible for supervising state-owned assets to take the necessary steps immediately, including conducting talks with the Chinese investor partner through the Hungarian Development Bank (MFB) by September 30 and, after reviewing the value of the investment, to provide the necessary funding of up to HUF 2.5 billion. MFB can supplement the funding from its own funds to a maximum of 49% of it by October 15, if that is justified by the interests of the investment and business considerations. The resolution also calls on the minister responsible for public finance to provide for the necessary
Dr. Oetker Hungary, part of the German Oetker Group, has announced it will double production capacity at its Jánossomorja unit with an investment of more than HUF 1 billion. The development includes building a new, three-story production hall. The company, which makes baking powder and material for preservation, employs 350 people. Dr. Oetker had revenue of HUF 10.8 bln in 2011, including HUF 4.1 bln from exports, data from the Ministry of Public Administration and Justice shows. The company closed 2011 with after-tax profit of HUF 758 million, slightly down from HUF 771 mln a year before. It used profits to pay dividends in both years.
SAP OPENS NEW SERVICE CENTER IN HUNGARY Business management software company SAP has opened a new consulting services center in Hungary. The Budapest center began operating earlier this month with 10 consultants, and headcount is expected to increase further, exceeding 30 by the end of 2013. The new unit provides services to clients in the EMEA region, but its primary role is to support software implementations for Central European clients.
CHINESE-HUNGARIAN JV TO RECEIVE GOV’T SUBSIDY FOR CITRIC ACID PLANT PROJECT
budget funds for the acquisition and the provision of the state funding, also by October 15. It was earlier reported that the BBCA Group plans to build a $90 million citric acid plant in the Szolnok industrial park. The plant is expected to produce 60,000 tons of citric acid a year, employing 350 people directly and a further 500 indirectly.
had been wound up, and their number grew 12% to 18,103 last year. Chairman of the national association of liquidators Ferenc Somogyi said that the acceleration can be explained by the worsening financial situation of businesses and the stricter actions of Hungary’s tax authority. Somogyi said there are about 110 liquidators operating in Hungary.
COURT ANNULS EARLIER RESOLUTIONS REGARDING NEW STATE MOBILE TELCO
TROUBLED MEAT COMPANY FAILS TO RESUME PRODUCTION
A Budapest court has annulled the National Media and Communications Authority’s (NMHH) resolutions allocating frequencies after a frequency auction in January. The court decided that the new state mobile telco MPVI unlawfully won the right to build its network and the three mobile telecom companies already on the market were also unlawfully awarded new frequency blocks. It was not part of the court’s competence to decide whether NMHH is to restore the original state or call a new tender. The existing three mobile phone companies had contested the result of the frequency auction at court. The court said one of the annexes of the government decree effective at the time declares that the frequency that MPVI obtained cannot be allocated to a state-owned company. As regards the issue of roaming, the court said it infringes competition on the telecom market that a network, established at substantial costs, should be assigned to a competitor on a mandatory basis.
NUMBER OF LIQUIDATION PROCEDURES UP 28% YR/YR The number of liquidation procedures against Hungarian companies grew 28% to 23,172 in the 12 months to August, compared to the previous 12 months, company monitoring website feketelista.hu said. In 2010, 16,133 companies
Slaughtering has not been restarted at meat company Kapuvári Hús in spite of promises made by the owner last week, deputy head of the plant’s union Tibor Pászli said. Regional daily Kisalföld said earlier that production at the plant, which employs about 400 people, had come to a standstill. A general meeting of the company’s owners was postponed from the beginning of the week to September 27, the paper said. A demonstration has been held in front of the plant to “protect workplaces”.
AXA BANK TO REPAY FEES The Hungarian Financial Supervisory Authority (PSzÁF) has instructed the Hungarian branch of AXA Bank Europe to repay 380 mortgage borrowers almost HUF 44 million in unlawfully charged early repayment fees and fined the bank HUF 5 mln, PSzÁF said. PSzÁF has also fined the bank a further HUF 1 mln for publishing misleading information on the costs of early repayment. The regulator investigated the bank’s practice regarding early repayments from December 2010 in response to clients’ complaint.
DOMESTIC TARLÓS LAMENTS “MISGUIDED” METRO 4 Budapest Mayor István Tarlós says money for still-unfinished
expansion of city’s underground could have been better spent on other projects. The construction of Budapest’s 4th metro line is a misguided investment, Tarlós said. Money spent on the line could have been used for housing renovation, or for purchasing a full fleet of vehicles for public transport company BKV, he added. The underground project is burdened with a number of problematic legal and financial issues. The deal struck with Siemens – the company that supplies the line with carriages – is expected to result in further debates and negotiations, Tarlós said. He also said that the introduction of a road toll within the city cannot be avoided because the previous Socialist-liberal management agreed to it as a precondition of EU support. However, its introduction may be postponed until 2016, which would give Budapest enough time to build P+R parking facilities, he added.
POLITICS SOCIALIST MEP URGES TOUGH MEASURES AGAINST ASSAULTERS OF ETHNIC HUNGARIANS IN SERBIA In a letter addressed to Serbian Premier Ivica Dacic on September 17, Csaba Tabajdi urged the Serbian authorities to take immediate, resolute and effective measures to pacify antiHungarian sentiments and “force back anti-Hungarian actions”, which have become more frequent over the recent period. Tabajdi’s letter came as a response to an assault on eight Hungarian youths in Subotica, northern Serbia, on the previous week. The victims are supposed to have been attacked because they had talked in Hungarian. “Serbia should guarantee the rights and security of ethnic minorities living on its territory, including the Hungarian community,” he wrote. Some 290,000
ethnic Hungarians inhabit Serbia’s northernmost multiethnic province, Vojvodina, which has a total population of around 1.8 million.
ARMENIANS TO SUE HUNGARIAN GOV’T OVER EXTRADITION OF AZERI MURDERER The national council of Armenians in Hungary plans to file a legal claim against the Hungarian government’s controversial decision to transfer convicted Azeri murderer Ramil Safarov to Azerbaijan, daily newspaper Blikk reported. The publication quoted council head Szevan Sarkisian as saying the charges include abuse of power and bribery. There are an estimated 3,500 to 30,000 Armenians living in Hungary, half of whom speak Armenian as their native language, and there are currently 31 Armenian “selfgovernments” operating in the country. Ramil Safarov, the Azerbaijani army officer who was serving a life sentence in Hungary for murdering Armenian Lt. Gurgen Margaryan with an axe, was extradited to Azerbaijan and pardoned by Azerbaijani President Ilham Aliyev. Officials in Yerevan reacted by suspending diplomatic ties with Hungary. Hungary, however, states that it had sent Safarov back to Azerbaijan after receiving assurances from the Azerbaijani Justice Ministry that Safarov’s sentence, which included the possibility of parole after 25 years, would be enforced. According to some reports, Safarov was extradited to Azerbaijan in exchange for Azeri purchase of Hungarian securities worth €2-3 billion, something Budapest denies. “The Hungarian prime minister is ‘morally bankrupt’ and should resign after admitting that he personally approved the transfer of the Azeri axe murderer while knowing the likely consequences,” the leader of the opposition Socialists, Attila Mesterházy, said earlier. ■
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energy EU ENERGY, CLIMATE CHIEFS CONFIRM AIM TO LIMIT FOOD-BASED BIOFUEL The EU energy and climate commissioners on September 17 confirmed they planned to limit crop-based biofuels to 5% of total energy consumption and said they were not pushing for biofuels that would compete with food. “It is wrong to believe that we are pushing food-based biofuels. In our upcoming proposal for new legislation, we do exactly the contrary: we limit them to the current consumption level, that is 5% up to 2020,” Climate Commissioner Connie Hedegaard and Energy Commissioner Guenther Oettinger said in a joint statement. Reuters reported earlier the European Union would impose a limit on the use of crop-based biofuels.
HUNGARY’S MOL SEEKS TO BUY MORE GAS STATIONS IN CZECH REPUBLIC MOL Nyrt, Hungary’s largest oil refiner, plans to expand its retail business in the Czech Republic by acquiring more gas stations, E15 reported on September 12, citing Anton Molnar, a spokesman for MOL’s Slovnaft unit. MOL bought 124 Czech gas stations from Pap Oil in July, and plans to at least
regional HUNGARY BECOMES TAX HAVEN FOR CZECH AND SLOVAK ENTERPRISES In the last three years, the number of Czech enterprises with head offices in Hungary was up by 41%, Austrian Business & Financial News reported on its website. According to the report, at the moment, 944 Czech companies are based in Hungary, while the number of Slovak companies has increased even more. In July
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double its market share in the coming years, the newspaper said. The Czech competition office has approved the merger of MOL and Czech chemical companies Pap Oil and Bohemia Realty Company, Hungary’s MTI reported on September 5. MOL’s share of the Czech vehicle fuel market will rise to 5% as a result of the transaction, giving the company fifth place on the market, it said.
OMV GIVES UP FRACKING PLANS Austrian energy group OMV has abandoned plans to produce shale gas in Austria because the project was economically unviable, a company official said on September 17. “We have stopped the work. At the moment, the project would not be profitable. There are no further plans regarding shale gas production in Austria for the time being,” OMV’s director of E&P Christopher Veit was quoted by Austrian Business & Financial News as saying. Shale gas is trapped in rocks and requires “fracking” to unlock – a drilling method that involves pumping pressurized water, chemicals and sand underground and is criticized by many environmen-
talists, worried it can pollute water supplies. OMV had said last December it planned to spend up to €130 million plus development costs to search for shale gas in Austria, but only if environmental issues could be resolved.
SLOVAK SYSTEM OPERATOR TAKES STAKE IN CENTRAL EUROPEAN GAS HUB Slovak gas pipeline operator Eustream has taken a 15% stake in the Central European Gas Hub, boosting efforts to increase liquidity in central and southeastern Europe, the trading platform’s majority owner said on September 14. The agreement also opens up new trading opportunities in the region, which is the gateway for Russian supplies to Western Europe, officials said. Austrian OMV owns 65% of the hub and the Vienna Stock Exchange holds a 20% stake. Eustream is a unit of Slovensky Plynarensky Priemysel, which is run by Germany’s E.ON Ruhrgas and France’s GDF Suez. Last year, 40 billion cubic meters of gas – equivalent to around 40% of demand in the UK, which is Europe’s biggest gas consumer – were traded at the hub.
EU SAYS RUSSIA MUST ACCEPT ITS GAS MARKET RULES Russian giant Gazprom must play by EU market rules and stop charging Western and Eastern member states different gas prices, EU energy chief Guenther Oettinger said on September 14. Russia is a most important partner of Europe because of imports of oil and coal, but the European Union needs equality, Oettinger told reporters during a visit to Lithuania. “What we need is fair conditions. In the longterm, we should avoid different prices for gas,” international media quoted Oettinger as saying. The gas price in Berlin or Paris is much lower than in Vilnius, he said. The Russian partners have to accept EU rules, as would all gas exporters, be they from Norway, Algeria or Qatar, Oettinger said. Russian President Vladimir Putin on September 11 banned the country’s strategic companies from disclosing information to foreign regulators after the European Commission started an antitrust investigation into Gazprom’s activities. Besides Lithuania, the countries allegedly affected by Gazprom’s practices
are Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Poland and Slovakia.
KUWAIT PETROLEUM, INA, ZARUBEZNEFT EYES OMV STATIONS IN CROATIA Kuwait Petroleum Corp is interested in acquiring OMV AG’s filling stations in Croatia and Bosnia-Herzegovina through a subsidiary, Croatian daily newspaper Vecernji List reported, without saying how it got the information. OMV, Central Europe’s biggest oil company, has 63 stations in Croatia and 28 in Bosnia. INA, the Croatian subsidiary of Hungarian MOL, confirmed that it has made an offer to OMV, the Croatian business magazine Lider reported on September 5. The sale price may reach up to €150 million, according to media reports. Russia’s Zarubezneft had already announced interest in the petrol station business, Austrian media said. OMV’s market share in Croatia is 13%, while in Bosnia it is 8%.
CROATIAN, POLISH GAS PIPELINE OPERATORS SIGN ACCORD Croatia’s and Poland’s stateowned natural-gas pipeline operators said they signed a coop-
eration accord on September 13 that includes an agreement to connect their liquefied natural gas terminals. Economy Minister Radimir Cacic told reporters in Zagreb that Croatia will build a €1.1 billion ($1.4 bln) project on the island of Krk in the Adriatic Sea, including an LNG terminal, estimated at €600 million, and a €500 mln gas thermal-electric plant. Croatia wants to complete the project by 2017.
NORD STREAM SECOND LEG TO BE LAUNCHED IN OCT The second leg of the Nord Stream pipeline that is meant to deliver Russian natural gas to Europe while bypassing existing transit countries will be launched on October 8, President Vladimir Putin said, RIA Novosti reported on September 12. Russian gas giant Gazprom announced the completion of the welding of the last joint on the pipeline’s second leg on August 29. The first leg of the pipeline, which connects Russia and Germany, was launched in November 2011 and runs along the Baltic Sea bed. It has an annual capacity of 27.5 billion cubic meters of gas. ■
NEWS FOR THIS SECTION IS TAKEN FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, REGIONAL TODAY NEWSLETTER AT WWW.BBJ.HU/STORE/NEWSLETTER-PACKAGE
this year about 10,000 Slovak companies were counted with headquarters in Hungary. The main reason is the flat tax in Hungary, Friedlnews says. The effective tax rate for companies with a total income of up to €1.95 million only comes at 5%. Companies with a higher income are taxed at a rate of 9.5%. What is more, Hungary does not impose a tax on dividends. By contrast, the tax
rate in Czech Republic is 19%. In Slovakia, the flax tax (19%) may be abolished.
EU MOVES TO REINFORCE STATISTICS AGENCY’S POWERS, INDEPENDENCE The European Union reinforced the powers and independence of its statistics office, including strengthening the autonomy of the head of the agency, as part of efforts to prevent a recurrence of the
sovereign-debt crisis. The European Commission cited “the need to strengthen the governance of European statistics, taking into account significant developments in recent years,” the EU’s executive arm said in a statement on September 17. Those developments included Greece’s discovery in late 2009 that its budget deficit was three times larger than estimated, which prompted the EUs to complain of “severe irregularities” in the nation’s economic figures. The measures to bolster Eurostat, the Luxembourgbased statistics agency, are part of the EU’s efforts to strengthen oversight of the budgets and economic policies of the 27 EU governments. “Events related to some national statistics in the recent past created doubts among the public and global investors about the reliability of statistics, with damaging consequences for the European system of statistics as a whole,” the EU said.
GREECE FACES NEW CRISIS, ILLEGAL IMMIGRATION Despite Greece’s massive debt load and sclerotic economy, government leaders
from Brussels to Oslo are fretting about another issue that imperils the integrity of free access across an entire continent: porous Greek borders, the Wall Street Journal wrote. The country has become a steppingstone for a wave of Middle East and South Asia workers fleeing job markets ravaged by years of government turmoil. In 2011, a year of uprisings in North Africa, 140,980 people were detected entering the EU illegally, up 35% from the year before, according to Frontex, the EU’s bordercontrol agency. Of those, 40% came through Greece. Through July this year, 23,000 people were apprehended crossing the border illegally, roughly 30% ahead of last’s year pace. Hoping to come to the rescue, the Europe Commission began pouring €255 million ($331 million) into border protection for Greece over the past two years, but the country’s economic malaise and budget restrictions are hampering many of its efforts to reduce the flow of illegal immigration.
SCHENGEN ENTRY FURTHER DELAYED FOR ROMANIA Romania’s Schengen entry will no longer be decided this fall, as initially planned, because the Justice and Internal Affairs meeting has been delayed until the spring of 2013, Romania Insider wrote. The meeting delay was requested by Cyprus, current presidency holders of the European Union, according to Romania’s European Affairs Minister Leonard Orban, as quoted by Mediafax. Several countries would still have opposed Romania and Bulgaria’s entry to Schengen area, so the meeting was delayed.
POLICYMAKERS NEGLECTING EURO ZONE IMPACT ON EAST EUROPE, EBRD SAYS Global policymakers have not paid enough attention to the adverse effects of the euro zone debt crisis on Southern and Eastern Europe, the president of EBRD has said. “The impact of the euro zone crisis on the region is something I feel has been rather neglected in the global debate. People don’t really talk enough about the impact on Eastern Europe, and Southeastern Europe in particular,” Suma Chakrabarti said. ■
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SAP Hungary shows solid growth SAP’s performance is still largely driven by its traditional customers, multinational companies, but its fastest growing areas are small companies and the upper segment of the SME sector, Balázs Ablonczy, SAP Hungary’s managing director told journalists at the company’s yearly conference organized last week in Tihany, overlooking Lake Balaton. SAP deemed 2011 a “successful” year, while H1 of 2012 has proved to be the best first half yet for the company. SAP Hungary’s turnover grew by 10% to HUF 15.2 billion in 2011, in an industry whose average growth was just a few percent, said managing director Balázs Ablonczy. Even more importantly, he highlighted, the company’s revenue from new software sales grew by 17%. SAP considers new software sales and pertaining maintenance a critical segment, especially in an environment where most ITrelated investments are directed towards upgrading and extending existing installations rather than implementing completely new applications. The two driving forces of the company’s impressive growth are the upper half of the SME sector, where would-be suppliers of new multinational investors are encouraged to upgrade their IT systems to be more compatible with their
potential clients; and small companies, which can access state subsidies to fund their IT development projects. In contrast with the above, government-initiated and state-funded projects dropped in 2011, the MD pointed out. Although many new tenders were put out in this area, most are still in the red tape phase, pending government decisions to actually launch the projects. Others were withdrawn or deliberately put on standby for one reason or another, resulting in a severe situation for the entire sector. While the funds will need to be spent by a specific deadline (especially those coming from the EU), industry experts doubt whether this hesitant approach will result in an optimal cost-benefit ratio in the long run.
As for general trends, Ablonczy said that international tendencies usually appear on the Hungarian market with a few years’ delay. While business intelligence seems to be the “next big thing” (SAP’s solution, HANA, proved to be one of the company’s most successful products shortly after its launch last year), other dominant growth areas include collaborative solutions, mobile applications and cloud-based applications.
SAP Hungary currently employs some 500 people directly, and its partner network has roughly 1,500 people, which consists of consulting firms and IT companies that implement SAP’s products. The company’s core operations include a development center of 250 people, a support center of 130 people, and business experts targeting the Hungarian market. The company’s headcount is due to increase by 10% in 2012, Ablonczy concluded. ZsB
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Drought drives up prices in Hungary and beyond Fidesz’ project accountability: running on empty
10-11 12
New wave of crisis threatens CEE economies The global financial crisis is far from being over – in fact, a new wave is approaching that is likely to put the economic development of Central and East European countries at risk, a fresh report issued by PwC Poland warns. As recessionary triggers, along with waves of the current financial instability, are coming mainly from the eurozone, the CEE region faces two main risks, a report, titled Approaching storm, states. The first danger is that, as with all the emerging economies, CEE countries may easily become victims of a possible global financial panic and the resulting ‘flight to security’ behavior. In a situation of great uncertainty and market instability, global investors typically decide to change their portfolio, reducing the share of assets regarded as ‘risky’ and searching for ‘safe havens’. Typical ‘risky’ assets are the equities and bonds issued by the emerging countries, while typical ‘safe havens’ are bonds issued by the most credible governments of mature economies (e.g. Germany and USA). If developments in the eurozone lead to global market panic, the availability of credit for the emerging markets may fall dramatically, up to the extreme level of a total freeze of international financial markets. Under these circumstances, CEE countries would have to immediately and radically cut their borrowing requirements, under threat of imminent bankruptcy. Such a cut, in turn, could lead to sharp currency depreciation, possible problems in the banking sector, and to a deep recession, the report notes. The scale of the shock depends mainly on the scale of the necessary cuts in the borrowing requirements, as well as on the scale of the internal structural economic problems. The second danger is caused by the very strong links of the region with West European economies. The eurozone economies constitute the main
and crucial export market for CEE countries belonging to or aspiring to the European Union. The economic situation of Russia, on the other hand, is vitally dependent on the Western Europe’s demand for oil and gas. A deep recession in the eurozone represents, therefore, a great and imminent threat for the entire CEE region. LINKED TO THE EURO? The financial stability of the CEE region is also linked to the fate of the euro. Of the 10 current EU members in the region, three belong to the eurozone, and three others have their currency pegged to the euro. The banking sector in the majority of CEE countries is closely connected to West European banking groups. As for Hungary, the report claims that the banking sector remains vulnerable in the country due to the high share of foreign exchange credits and a rising number of non-performing loans. Due to significant pressures in the eurozone, parent foreign institutions controlling twothirds of Hungarian banking assets may be more reluctant to support their subsidiaries. On the other hand, one has to observe that the fiscal tightening works in an opposite direction, albeit at a considerable cost to the real economy. “It is expected that the fiscal situation will improve in the short- and medium-term. Authorities are also trying to support external credibility, renegotiating the joint IMF and EU financial support,” Nick Kós, Country Managing Partner of PwC Hungary comments. “Much effort is necessary to implement structural reforms in the real economy that would increase the country’s longterm growth potential.”
GROWTH PROSPECTS According to current IMF forecasts, the economic slowdown or recession in the eurozone is expected to be relatively short and shallow. Only in the case of a few highly indebted Southern European countries is a considerable GDP fall forecast for 2012, while the majority of Western Europe should record moderate growth of below 2%. By 2013, the GDP growth in the majority of EU countries should start to accelerate once again. But the PwC report says that such a forecast must be assessed as relatively optimistic, and that the actual economic situation in Europe in 2012-13 may appear much more difficult. As eurozone countries are still far from finding a common solution to the debt problem, business sentiment and the financial situation of debtors may deteriorate even more. For Hungary, the report does not forecast optimistic years to come. The Hungarian economy has shown relatively weak growth since the beginning of the global financial crisis. The economy contracted by 6% in 2009 and GDP has not grown faster than 2% per year since then. Sluggish domestic demand is the primary reason behind the slow economic recovery. On the other hand, exports, strongly connected to German demand, have remained the growth engine during tough times. According to the report, the Hungarian economy is expected to remain stagnant in 2012. Afterwards, the expected GDP growth rate may be only slightly higher than 2%. This results, among other things, from structural problems in the Hungarian economy with very low labor force participation, declining productiv-
ity, high indebtedness and low investment rate. The impact of the Western European recession on CEE economies depends also on changes in their competitiveness. A combination of changes in exchange rates and domestic inflation rates leads to the real weakening or strengthening of currencies, making the country, respectively, more or less competitive. Having a weaker currency makes the risk of a painful recession lower for Belarus, Romania, Poland, and Hungary, whilst having a stronger currency in recent years has increased the risk for Czech Republic, Slovakia, the Baltic states, Bulgaria and Russia. The strengthening of a currency does not have to influence exports if a country can increase productivity or reduce wage levels. That type of policy, however, normally leads to higher unemployment and weaker domestic demand, also translating into a deeper recession.
REASONS TO WORRY The PwC report identifies high foreign debt and high dependence on foreign financing as the main sources of worry for CEE economies. In contrast with the Southern European eurozone members, the main financial problem for CEE countries is neither connected with unreasonably high public debt, nor with excessive consumption levels. Nevertheless, relatively low saving rates combined with high investment needs in these countries led to the accumulation of private debt owed to foreigners. Therefore, global financial turmoil that may seriously limit the ability to raise new capital may also increase a risk of default on foreign debt. The level of foreign debt to GDP is quite high in a number of CEE countries, especially Hungary, the Baltic states, Slovenia, Croatia, and Bulgaria. What is more dangerous, however, is the structure of this debt
in several countries. In particular, high risk may be connected with the elevated level of shortterm foreign debt (due in one year’s time). Any problem with paying back or rolling over this type of obligation may lead to a radical increase in interest rates demanded by foreign investors, market panic, and eventually even to insolvency. In the case of Slovakia, Estonia, Belarus, and Ukraine, the share of short-term debt exceeds half of the total. The size of shortterm debt exceeds 50% of GDP in Hungary, Slovakia, Latvia and Estonia. The level of public debt in Hungary is high by CEE standards (80% of GDP in 2011) and access to foreign financing is limited. With a vulnerable financial position, Hungary has no choice but to continue fiscal tightening policies despite the negative consequences it might have on the real sector, part of the report that focuses on Hungary concludes. This article is based on PwC Poland’s report “Approaching storm”
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Smartphones vs. digital cameras When the camera made its appearance on the smartphone, it pretty much paled in comparison to the power of the digital compact camera. The quality was lousy, the images grainy and very small. Anything that moved faster than a rock came out blurry and out of focus. Nowadays, however, the technology on new smartphones has leapt forward enormously with better quality lenses, shooting modes, zoom functions and even image enhancement built right in. Is this the end of the compact camera era? BBJ GERGELY HERPAI/BADSECTOR
Hungary’s mobile phone market is undeniably a gigantic one. According to marketresearch.com, handset sales in the country are expected to grow 6% to a value of $383 million in 2016 as the mobile subscriber penetration rate reaches 120%. Smartphone technology, too, has been a real success in Hungary. The Budapest Business Journal asked Arnoud Vezin, leader of the marketing department of Gameloft, a mobile games company that has an affiliate in Budapest, how many Hungarian users have smartphones and his answer was quite surprising: according to his data, about 2 million. “That’s why our own market of mobile games does pretty well in this country,” he adds. HOW NICE OF YOU! With the advent of smartphones, the practical use of cameras – which have already become an almost obligatory addition to plain mobile phones as well – has also evolved considerably.
One major advantage of having your camera as part of your smartphone is that you can snap a photo and upload it straight away to social media sites like Facebook, Twitter and Flickr, as well as email them to anyone anywhere in the world in an instant. The Hungarian marketing management of Sony acknowledges this. “The purpose is completely different,” Dávid Jécsi, the manager of digital image processing at Sony, told the BBJ. “The smart phone is always with you, and you can use different applications to process your intimate photos, which then can be instantly shared on social networking sites. Pictures taken in smart phones are an integral part of everyday life, but we all see the phone and digital camera photographs with a difference,” Jécsi explained. It’s true that sharing pictures has never been easier than with smartphones. Most now incorporate Bluetooth technology, so it’s very simple to send your images through a wireless connection to another phone, computer, or even a TV set in the same room. Stand-alone cameras need to have their photos transferred to a computer before this can happen, which can take some time if you have snapped hundreds of photos! As for quality, smartphone cameras have evolved technically as well, and there are even phones with semi-professional cameras, like the Nokia 808’s PureView, which can capture photos at up to 41 Megapixels (a measure of resolution), which is an impressive number compared to other mobile cameras of between 8 and 10 MP at best. Still, according to Péter Nagy, a professional photographer, and owner of a Nokia 808 PureView, his phone’s camera cannot match those of his professional cameras for quality. “In all honesty, because of the size of the camera and some other technical issues, those 41 MPs are not as bombastic as Nokia would like you to believe; still, the image quality is very impressive for a mobile phone, if still not reaching
the quality of a good compact camera.” So smartphones ones camera technology has just ut let’s got smarter, but not forget the simple fact that buyingg only eaper one device is cheaper than buying a separate camera, and Hungarians are very price sensitive. CAMERAS: THEY STILL “HAVEE IT” Whilst new smartmartnolophone technologies can make itt very appealing to opt for the pproach “all-in-one” approach to photography, there are ts to note a few good points about the humblee point-anderas. shoot digital cameras. As with most things electronic these days, ays, digital cameras are getting ing smaller, sleeker and sexier ier all the gh it does time. So although o pieces of mean taking two n you next equipment when re nowhere head out, they are near as bulky ass they were just a few years ago. ed for a sinAs it is designed gle purpose – taking pictures – the overall all “photography package” you get is of a higher standard: rd: you will ality image get a better quality with great colorss and sharp focus thanks to its image sensor, which iss generally larger than thosee found in smartphones. They tend to have a wider nd functions array of features and too, including modes des for nighttime, fast-moving ng subjects subjects, sports, nature, and more. TRUE QUALITY The lens is very important in a camera, and the lenses in cameras are generally way better than those found in smartphones. They also have the ability to physically zoom the lens out so you can shoot something at a distance. Smartphones use what’s known as “digital zoom”, which basically means it makes the image larger but the quality gets worse as it does so. Sony’s Jécsi also thinks that cameras still have major advantages over smartphones cameras in some everyday aspect as well. “For capturing holiday moments, hiking, family events, people still prefer to use a digital camera. Thanks to the professional optical
zoom we can get closer to the events without sacrificing image resolution. And thanks to the larger sensor we can capture high quality pictures in low light conditions that aren’t possible with smartphones. Also a number of manual control options are available and the more serious digital machines even have interchangeable lenses.” Jécsi has a point: smartphones still cannot produce decent images while in poor lighting conditions, not a problem for digital cameras at all since they use a proper flash. Regarding the editing of pictures, Instagram on mobile phones is all well and good, but if you really want creative control over your images images, a dedicated camera will let you play around with the aperture, shutter speed and ISO (light sensitivity) settings so you can select what to focus on, blur out parts of the image, freeze fast action shots and more. This helps you learn more about how photography actually works and is a great learning tool if you want to progress in it rather than just take snapshots. Resolution is generally higher in digital cameras, which is a whole article in itself that I will not get into today. In a nutshell, a higher resolution means that you can print out your photos in larger sizes and you have the ability to crop into an image to focus on a particular subject in the shot and still get a great looking photo without it looking all blocky.
“THE PROBLEM IS CHOICE.” (NEO IN MATRIX) So what is the answer to the big question, “What should I buy?” Well, that all depends on you. If you want to take good-quality snapshots of your life and share them with your friends over the Internet, then the smartphone and camera combo is probably for you. If, however, you want a little extra from your images and are more interested in the actual photography side, then a separate digital camera would suit you better. That’s why the market is still quite strong in Hungary: compact cameras have evolved from mid-range quality to a semi- or near-professional level, and offer a good alternative to those who cannot afford an fully profes-
sional camera but still want good quality pictures. Things are changing so rapidly these days that it is probably just a matter of time before the smartphone can match the digital camera in all its features. But until then, the actual camera is still alive and kicking. Jécsi’s final comment perfectly sums up the current difference between smartphones cameras and stand alone compact machines: “While the smartphone is a friend, which is always with you for the unexpected events of everyday, still, if you want to capture and share the most important moments of your life, you may consider having a good quality digital camera as well.” ■
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Drought drives up prices This year’s droughts in Eastern Europe and the United States have driven global food prices up. Beyond food, a poor harvest in grains and other crops affects land fees and fuel prices as well. BBJ ZSÓFIA VÉGH
For Hungarian winemakers, last year was exceptional. Weather conditions, sunshine, and precipitation were just right: anyone tasting a good brand from 2011 can easily confirm that. This year, however, the climate has not spared vintners. Drought conditions across the country has meant less liquid in the grapes, which may be sweeter, but overall smaller and fewer. “The lack of rain dried grapes, which will yield less as a result,” said Mrs. László Mészáros, secretary to the wine community of the Balatonboglár wine region. Tramini, or Gewürztraminer, a grape variety with thin skin and about 80% liquids, had just 70% this year. As a result, from 320 kg of grapes, only 190 liters of must could be made. (On average, 1 kg of grapes makes 0.68 liters of wine.) Based on location, conditions and variety, rates have been even lower. “Sugar levels are fine, but with less water content and, in some places, fewer acids, the harvest is going to be poorer.” Even so, the Balaton region was relatively fortunate with its yield of 0.8-0.9 tons per hectare. In the Great Hungarian Plains region, growers can hardly harvest 0.4 tons a hectare. It provides small comfort that growers from this region are likely to receive some disaster funds that the other wine regions will not. The Agriculture and Rural Development Ministry (FVM) has declared a drought disaster for the country and will make funds available from mid-October to those whose yield drops by at least 30%. By the second half of August, some 8,100 farmers had claimed damages affecting 727,000 hectares, said state secretary György Czerván. Compensation paid early next year will total HUF 8.3 million.
Among crops, grains have been hardest hiz. As opposed to 8 million tons a year ago, only 4.7 million tons of maize will be harvested this year, a more than 40% decline. The harvest should accommodate the country’s needs but will hardly allow for exports.
The average yield of maize in the European Union, on the other hand, is forecast to be 60 million tons, 2% better than the five-year average. The EU is expected to export 10 million tons more than a year ago. Unfortunately, not even a good European harvest will be able
to offset the losses suffered in crops in the United States. A staple food and an essential raw material, corn can hardly be replaced by anything else in the States. According to the United Nation’s Food and Agriculture Organization, global corn prices surged nearly
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in Hungary – and beyond 23% in July, exacerbated by the severe deterioration of U.S. maize crop prospects due to drought. Poor wheat prospects in Russia also contributed to a 17% rise in the global cereal price index (260 points) in August, creeping closer to the all time record of 284 points set in April 2008. Although heavy rains in the United States and the announcement that the Russian Federation would not impose export restrictions helped ease some of the tension, the poor harvest will increase prices globally. Food prices are bound to go up, but not only for goods that contain grains. Other crops, fruits and vegetables will all be more expensive to grow for Hungarian farmers who use land other than theirs. Land rental fees are tied to global grain prices: it is always the wheat commodity market price on August 31 that serves as a baseline for calculations. The higher the price, the higher the rent. Meat products will also be impacted, though tangible effects will not become visible as quickly. “As a rule of thumb, we can say that 70% of the costs of livestock derive from feed,” said Tamás Éder, head of the Hungarian Meat Association. This year’s crop may be enough to feed the Hungarian livestock, unless a lot is exported. Yet this is very
unlikely as farmers sign export contracts well ahead of harvest, expecting better yields. “If feed prices surge, extra costs will be added to the costs of livestock and meat products.” The timeline for this may vary, though. In the poultry sector, where the lifespan of broiler chickens is around six weeks, the effects will emerge sooner as animals have been fed with the more expensive crop. But pork will not be more expensive for some time, pigs having been reared on cheaper feed. Today’s price hikes in pork meat are the result of a feed shortage two years ago, Éder explained. To manage fluctuations in feed prices, the government is planning to create a feed reserve system. Yet the implications of these on the meat sector, according to Éder, can be harmful in the short-term. Were the government to buy feedstock, it could hike prices. Selling these reserves at a subsidized price would be regarded as hidden intervention and would be penalized by international authorities, the expert warned. Using genotypes that have long been available in Hungary and that are resistant to heat and extremes in conditions could help avoid swings in maize crop production. They have been crossbred by researchers in Marton-
vásár, at the Agricultural Institute and Center for Agricultural Research of the Hungarian Academy of Sciences (ATK-MTA). The institute has also experimented with maize genotypes for bioenergy purposes. Biofuel production encouraged by the United States and Europe are factors that have contributed to the increase in corn price. The current U.S. policy towards ethanol mandates that nearly 10% of the nation’s fuel supply come from corn. With today’s price hikes, this is likely to change, some experts suggest. At a recent informal meeting of the European Agricultural Ministers in Nicosia, Cyprus (the country currently holding the EU presidency), questions on a potential shift from fuel back to food have also been raised. Heat resistance may work for corn, but the majority of horticultural products cannot make do without water. “In a dry year like this, the quality of my grapes would have deteriorated so much that, had it not been for irrigation, I would be unable to sell them,” commented György Friedrich, head of Vinitor Kft. Friedrich is one of the very few growers in Hungary who owns irrigated grape fields. He started his career in 1976 and has been dealing with grapes ever since. He installed a
watering system worth HUF 7 million in 2008 (with about 35% state subsidy), a pricey investment the return of which is difficult to calculate. “In 2010, we had much rain, but last year it was useful on dry days,” Friedrich recalled. “When I will recuperate the investment I cannot tell, as the weather makes calculations uncertain in this business.” Friedrich grows Hungarian varieties including Opus, Fanni and Helikon szépe on a 1.3-hectare field near Balatonabadi. Without irrigation, yields would be 40% lower, he claimed. “With eating grapes, the size of the cluster, ripeness and water content of grapes are crucial. Who would buy dried, small, thick-skinned varieties when Italians flood the market with excellent quality grapes?” Friedrich asks. Italy is undoubtedly a strong competitor. In the Dolomites, where annual precipitation is 1,000 mm, they use irrigation as well. Friedrich sells much of his produce at the market hall in Siófok. The priceper-kilogram is close to that of Italian grapes (approximately HUF 450), but Hungarian grapes sell better, he said. “They are so fresh and ripe and taste so good. Of course, there is a lot more work and planning ahead, irrigation alone would not do it.” ■
[ PROMOTIONAL FEATURE ]
Il Pittore – a touch of attractive abstract Theater, cabaret and a contemporary artist’s studio – all incorporated with romantic boxes and an old goods lift. A boutique restaurant in downtown Pest offers this atmosphere, and its spirit very much resembles Puccini’s circle of La Boheme. A young and successful couple – designer-chef Zsuzsanna Antal and Győző Rajcsányi, the general manager – runs Italian-French-Hungarian fusion restaurant Il Pittore. THERE ARE QUITE A NUMBER OF STYLISH RESTAURANTS IN DOWNTOWN BUDAPEST, BUT I GUESS NOT ALL OF THEM HAVE AN ORIGINAL GOODS LIFT INSIDE. HOW DID YOU FIND THIS PLACE, RIGHT IN THE HEART OF THE CITY CENTER? Győző Rajcsányi: Well, it took a while to find this wonderful little street, Képíró utca. It was love for the first sight. It is a multidimensional loca-
Gy. R.: We never really thought about it. We followed our original path as we had in our previous hospitality industry businesses. We believed strongly in our original ideas and in our strength and determination. Without passion and dedication you must not start anything! We could rely on our existing clientele and our reputation as successful business owners. Some asked about the other restaurants in the neighborhood. We would like to have more of them around. That will accelerate business in the district and bring here even more people and more competition. We believe in our team of five or six people and in our capability. It was not easy at the beginning, but spring already created a nice buzz. We had company events, food and wine tastings and press meetings as well.
tion with a traditional European style. A little bit of Paris, Vienna, Rome, but at the same time uniquely Budapest as well. There was a paint shop in this building some 100 years ago. They mixed different colors at the basement right where we are now preparing our meals. The original owners used the goods lift, which is one of our trademarks and which is still in use! We deliver food on it during the day; while at night romantic couples can enjoy it as a special box. So to choose the name, Il Pittore – the painter in Italian – was a natural and logical decision. To our good fortune, in the past few years this place was already well known for a quality restaurant owned by a respected entrepreneur. THERE ARE MANY ITALIAN-STYLE RESTAURANTS IN BUDAPEST. HOW WOULD YOU DEFINE YOUR IDENTITY? Zsuzsanna Antal: Ours is a European boutique restaurant: an intimate place with homestyle attentiveness and an experimental, nontraditional way of creating meals. We think life changes so quickly today that it is a good idea to change with the rhythm of it. We offer a delicate and sometimes bold fusion of Italian, French and Hungarian flavors. This requires constant readiness and knowledge of the latest trends. We try to adjust our capacity to the demands of our guests. We change our menus with the seasons, sticking to our main ambition: to keep our clientele happy and make them come back. We try to maintain our attractive image mainly for local regular clients, however, being in a touristy
location, we are also happy to share authentic Hungarian flavors with tourists. YOU OPENED LAST YEAR. WASN’T THAT A RISK DURING A RECESSION?
HOW DO YOU CREATE THE MENUS? Zs. A.: We do not want to compete with master chefs. I rather avoid the main culinary directions and prefer spending more time traveling and studying different cuisines. My approach is coming from a perspective of my previous professions as photographer, interior designer and waitress. I have a curious mind without frameworks and limitations on dreaming big. My experimental creativity needs a lot of research, and based on the experiences, I like taking risks in combining the components of our meals. Beside the flexible fixed menus, we always try to accommodate special personal requests as well. I often reveal myself to greet customers and check if they are happy with their meals.
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Fidesz’ project accountability: running on empty Fidesz is wrapping up its efforts to uncover instances of verifiable corruption under the previous government. Despite impressive statistics in terms of the number of cases investigated, manhours put in and funds invested, these efforts have failed to result in as much as a single conviction thus far. Even if a couple materialize later, it is not too early to declare Fidesz’ “accountability” mission an unmitigated failure. Still, in defense of the entire project and its leader, Gyula Budai, it must be said that the deck was stacked against them. No government in Hungary has ever had a serious interest in rooting out corruption; not the other party’s, and definitely not its own. BBJ BBJ
Holding the Socialists accountable for their alleged crimes was one of the central Fidesz campaign promises. Such promises were, of course, nothing new in Hungarian politics; in fact, the MSzP itself had campaigned with a similar slogan in 2002, and perceptions of corruption have contributed to the defeat of all three governments to loose elections since 1998. Yet, just as the MSzP’s enforcer László Keller failed in his efforts to facilitate the successful prosecution of alleged Fidesz crimes, two successive Fidesz’ crusaders, Ferenc Papcsák and Gyula Budai – the latter’s name is now largely identified with efforts in this context, which is why we will also refer to him when we discuss “accountability”
efforts – have also come up empty-handed. AN ‘A’ FOR EFFORT? Ostensibly, at least, it was not for lack of trying. There are different statistics out there concerning what the Commissioner for Enforcing Accountability has achieved. In an unusually sincere display of the intertwinement between the governing party and the state, the official governmental website on accountability (http:// elszamoltatas.kormany.hu) also boasts a Fidesz banner, but few useful statistics. Despite the Fidesz webpage’s promise that the process is entirely transparent and all the necessary data would be published on the abovementioned dedicated portal, there is very little actual information on what Budai has done. Drawing on several sources, we have compiled the following statistics. Some 1,440 submissions were made to the commissioner, whose staff compiled reports in 110 cases, with 61 criminal reports submitted. Police and prosecutors are still investigating almost half of these, but thus far only seven cases have resulted in the prosecution bringing criminal charges, involving 39 persons. Among the cases still under investigation are some of the more prominent issues of the past years, such as the Malév privatization and the sale of the Hungarian public television building and the building of the Hungarian commercial representation in Moscow. Though there have been a massive number of investigations and there are still some cases pending, the most damning statistic for Budai’s activities is still the number zero: thus far not a single person has been convicted in Budai’s cases. Even if that number were to creep up slightly, the yield of accountability is likely to be marginal at best. It is highly questionable whether all that was worth maintaining the commissioner’s staff (a team of seven at the time Budai was relieved three months before his appointment was due to expire anyway) for two years. The accountability commissioner certainly does not look like an advertisement for the responsible spending of public funds.
› IF ONE HAS CONTROL
OVER THE LEGAL FRAMEWORK TO SHAPE THE DISTRIBUTION OF PUBLIC FUNDS, THEN IT IS POSSIBLE TO SIPHON OFF MONEY LEGALLY
A REVERSE PAUL One under-appreciated ironic twist in the whole accountability saga is Budai’s appointment to succeed József Ángyán as junior minister in the Ministry of Agriculture. Ángyán had resigned after repeatedly and publicly criticizing the loan of valuable farmland to speculators close to Fidesz rather than to families who wished to make a living from farming. While one aspect of Ángyán’s criticism concerns policy, i.e. the question of whether farmland should be given to farming families or to businesspeople, and is thus a legitimate subject of disagreement, the other, alleging essentially corrupt practices, concerns government ethics and should be beyond dispute. Here Ángyán’s charges are especially serious, for Fidesz has not made an earnest effort to refute them. The appointment of Budai to Ángyán’s position is correspondingly – and herein lies the irony – widely perceived as a move to ensure that the loyal apparatchik quietly facilitates and covers the dubious practices excoriated by Ángyán. PREORDAINED FAILURE The ease with which Budai transitioned from trying to
uncover governmental misdeeds to covering dubious practices partly explains his failure in the former role. The financial transactions under investigation are naturally too intricate and shadowy for anyone to offer an insider’s view of what is going on. Based on recent Hungarian history, however, we know enough to venture reasonable hypotheses as to why his enterprise had to, and was in fact meant to, fail. First, many of the corruption schemes are constructed in such a way that they adhere to legal regulations. If one has control over the legal framework to shape the distribution of public funds, then it is possible to siphon off money legally, too, presuming sufficient brazenness and an apathetic public, inundated by and desensitized towards the ceaseless stream of news about money flowing to circles close to the government. As the fortunes “redistributed” to cronies of the current government attest, Fidesz is all too well aware of this possibility. Furthermore, even when the flow of the money does enter into the realm of illegality, its route is often so convoluted that a team consisting of a
few persons that investigate more than 1,000 cases could hardly be expected to delve deep enough to actually disentangle it. NO ONE IS THIS INCOMPETENT In fact, a frequently heard opinion is that the MSzP’s János Zuschlag was not charged and convicted under the Socialist government because his money grabbing was unusual, but because he got arrogant and, feeling invulnerable, failed to perform the routine schemes to hide it from investigators. Finally, there is the widespread suspicion that many shady deals are in fact apportioned between the major parties, which would imply that a serious investigation would stir a hornet’s nest even in the governing party. To assume that Budai failed on account of his incompetence may therefore well be an undeserved credit to his motivation. In any case, neither the suggestion that there were no as yet-uncovered instances of corruption under the previous government nor the notion that investigators
would not be able to substantiate any despite earnest efforts stands up to reasonable scrutiny. MISSION ACCOMPLISHED The reactions to Budai’s failure were as predictable as the outcome of his mission. Notwithstanding the fact that of the countless persons investigated by Budai not a single one was convicted, Fidesz’ János Lázár unsurprisingly hailed the accountability project as a great success. MSzP probably agreed, as the raw numbers allowed its spokesman, Zsolt Török, to emphasize how its own politicians had emerged vindicated from Budai’s accusations and to argue that under close scrutiny, the cases Budai had reviewed did not qualify as scandals. The MSzP’s boasting is probably a bitter pill for Fidesz to swallow, but preferable to more successful investigations that might upset the delicate scheme pertaining to the use of public funds. Re-emphasizing their outsider status, LMP and Jobbik are less understanding. Both have proclaimed the project a failure and impugned Fidesz’ and Budai’s earnestness. LMP’s András Schiffer had especially tough words for Budai’s efforts, saying that the entire accountability was “mere eyewash from Fidesz. By periodically dangling handcuffs over the Socialists’ heads, they keep the adrenaline levels of their own fanatics elevated”. Real accountability, however, was not in Fidesz’ interest, for then a change of government might result “in Fidesz’ oligarchs being held accountable”. The political elite is a “democratic cartel united by common crimes that render any promise of accountability made by them ridiculous,” Schiffer concluded. Having seen this drama play out again and again, many citizens are probably tempted to agree with Schiffer. Given the solid history of dubious party financing, such a conclusion will hardly faze the major players. ■
www.policysolutions.hu Political Research and Consultancy Institute
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Wasted skills
Spending on the wane
Multichannel sales
Nearly 40% of companies expect to face a shortage of highly educated staff within three years
Level of consumption not likely to rise
Store networks to grow as international retailers embrace multichannel trade
31%
48%
OF HUNGARIAN EMPLOYEES FEEL OVER-QUALIFIED
One-third of Hungarian employees feel that they are over-qualified for their current positions. At the same time, 38% of companies say that they expect a shortage in staff for jobs requiring higher qualifications, a research note made by Randstad shows. The Randstad Workmonitor also reveals that only 4% of the surveyed employees said they were under-qualified for their jobs. That puts Hungary way below the 20% average of the 32 countries in which the survey has been carried out. The Hungarian data is quite similar to other countries in the region – with the exception of Slovakia, where 55% of the respondents characterized themselves as being over-qualified. However, in countries heavily hit by the crisis, a bigger proportion of employees feel that they are over-qualified for their current jobs. In Spain and Greece, this ratio came to 64% and 69%, respectively. According to the Randstad study, 46% of companies reported difficulties when it came to finding the right person for a certain position – typically for positions that require higher qualifications. When searching for employees for lower-qualification positions, 84% of companies did not have a problem finding adequate workers. “Nearly 40% of the companies asked in the survey said that they would face a shortage of highly-qualified workforce within three years,” Sándor Baja, managing director of Randstad Hungary said. “This gives a good opportunity to those who feel they are over-qualified for their current position. Companies, however, are not looking for degrees only, but also for up-to-date knowledge, so job seekers continuously need to improve their professional knowledge.” Randstad’s Workmonitor survey covers 32 countries, and is conducted once every three months. In Hungary, 4,455 employees were queried. PF
I am overqualified for my current job (%)
10%
PROPORTION OF INCOME SPENT ON FOOD AND OVERHEADS
Consumer consumption is expected to fall this year and will stagnate in 2013, according to a recent prognosis by GfK Hungária. There has been a significant change in households’ spending structure over the past decade, during which Hungarians have increasingly spent less on food and clothing. The market of durable goods has also suffered from this shift, in spite of positive tendencies in the region. The market research company forecasts a low level of consumption in both the short- and long-term. Household consumption has been continuously decreasing since 2007, which indicates that the crisis was not the cause but just an accelerator of an already existing tendency. In 2000, households spent 29% of their income on food and 18% on overheads (including energy). Now it is a totally different pattern: the ratio spent on food has fallen to 23%, while overhead expenses have increased to 25% of total income. The amount of money spent on entertainment and telecom appliances has grown significantly, although it should be noted that the price of such services and goods has become relatively lower during these years. But, as data from the Central Statistics Office (KSH) shows, overhead costs have become much higher in the past ten years, and consumers therefore spend more on these in spite of relatively unchanged level of consumptions. As a result of increasing energy prices and higher household costs, consumers seem to have become more moderate in two segments: they spend less on food and luxury goods. The amount spent on clothing has also fallen, although to a smaller extent, the GfK report notes. Another area where consumption has declined is the market in electronic goods. While it saw 6% year-on-year growth at the end of 2011, GfK Hungária projects a roughly 5% setback by the end of this year. Interestingly, online sales are gaining increasing market share: more than 10% of electronic goods are being sold via this sales channel, the report reveals. PF
Consumer price changes (inflation) Corresponding period of previuos year=100
Multichannel will complement, not compete with, “bricks and mortar” retailing over the next two years and will drive increased traffic to stores, say international retailers according to a new study by CBRE. Investment in new and existing stores will also be the number one priority for international retailers over the next two years, with the majority requiring a greater number of stores and increased shop space because of their multichannel strategy. Multichannel retailing allows the consumer to transact via a variety of connected channels such as in-store, online over a computer, and via a mobile site or application. This is revolutionizing the way consumers shop, but has raised concerns among governments, local planners and shopping center owners over the future demand and provision of real estate for retail use. While investment in multichannel is important, investment in new and existing stores remains the number one priority for retailers, the study claims. Today, the majority of retailers (70%) see themselves primarily as “bricks and mortar” retailers; however, in two years’ time a similar majority (63%) will have converted into fully integrated multichannel businesses. On average, retailers said that their online sales today represent 5% of their total; in two years they estimate this will nearly double to 10%. “Our message to the retail and real estate industry is don’t panic. Consumer-driven technology continues to advance and contrary to widely held assumptions, multichannel retailing is actually complementing, not competing with, existing store networks,” Peter Gold, head of cross border retail EMEA, CBRE said. Szabolcs Koroknai, senior advisor at CBRE’s Retail Agency added, “Online trade can have a positive impact on the property market, though, as it can utilize properties of lower quality that are not suitable for traditional retail,” Szabolcs Koroknai, senior advisor at CBRE’s Retail Agency added. PF
Retailers’ most important investment areas (%) Multichannel sales Expanding in new countries
Strongly agree
Existing stores
agree
Opening new stores
do not agree strongly disagree
Source: Randstad Workmonitor
Source: Central Statistics Office
ONLINE SHARE OF TOTAL SALES IN TWO YEARS
Source: Central Statistics Office
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Green offices – the key to success Nature can solve it: botanic garden to clean wastewater Greener transport is now a must
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Government to cut utility bills in public buildings first Energy efficiency efforts in the European Union will include, among others, the mandatory renovation of 3% of public buildings owned by the central government from 2014. BBJ ZSÓFIA VÉGH
Despite the start to the fall parliamentary term being weighed down with member states’ debt burden, it is business as usual in the European Union. In its first plenary session this September, the European Parliament passed an energy directive that probably will make a difference in Europe’s energy scene. Unlike its predecessors, the new package contains binding targets that countries will have to meet. Among them is an annual 1.5% energy cutback to be achieved by end-users, the renovation of 3% of public buildings owned by central administrations, and energy audits for all large firms every year. Politicians and experts alike have questioned how effective these measures will be, as several parts of the draft have been watered down. Yet what they all agree on is that passing such legislation was more than timely in a Europe packed with inefficient energy systems running mostly on imported energy. The new directive is expected to remedy the above problems, with the added benefit of creating jobs and savings on the way. From January 2014, member states will need to renovate 3% of the total floor area of heated and cooled buildings of more than 500 sqm that are owned by their central governments. Originally, the measure was meant to take in all public buildings (e.g. schools and hospitals run or owned by local governments). “Ren-
ovating every public building would cost the country HUF 200 billion annually, an enormous burden under the current economic environment,” Hungarian MEP András Gyürk told the European People’s Party grouping. Having accepted that argument, decision-makers altered the legislation to affect central public buildings only. In Hungary, buildings owned by the central government account for less than 5% of the country’s energy expenditure, said Tamás Pálvölgyi, docent at the Budapest University of Technology and Economic (BME), so their impact is limited (although some other estimates put the amount as high as 10%). But renovating these buildings is a great means of setting an example and shaping the general mindset. “We cannot underestimate the impact on the rest of the industry,” said Diana Ürge-Vorsatz, professor at the Central European University and director of the Center for Climate Change and Sustainable Energy Policies (3CSEP), who cited examples from the United States and Germany. In these places, after undertaking government assignments, construction companies went on and looked for new clients, which resulted in a second wave of renovation in private homes. Though the directive enforces a 3% annual renovation rate, it leaves the details of implementation to national governments. That is, they can decide to what depth and in what order to renovate public buildings. The research group led by Ürge-Vorsatz made a number of studies on what impact different levels of retrofitting would have on savings and employment. The group outlined several scenarios from very basic to deep renovations. After studying renovated buildings, they found that small modifications like changing
windows or installing a new heating system have little long-term effect on savings. These changes translate to a 20-40% renovation, but energy savings often do not materialize, the expert claimed. “People just become more laid-back, leave the door open longer, and set the room temperature slightly higher under the belief the new insulation allows for that. But in doing so they lose that little edge.” Ürge-Vorsatz, and most of her colleagues, therefore recommends a renovation of at least 50% or higher. “At the 70-80% level, investments yield returns. At such levels there is no need to install a new heating system or change pipelines: the building itself saves enough energy.” She goes even further. “In a consciously-planned public building in Hungary, there is no need for heating, not even in winter. Practice shows that, with adequate insulation and a heat exchange system, the heat generated by people and machines is sufficient.” (Unfortunately, new building plans put the emphasis on heating rather than insulation and shade. As outside temperatures continue to rise, this will likely cause problems in the future.)
When it comes to the amount of renovation made every year, however, studies find a rate under 3% is more beneficial to the economy. “The impact on the labor market and prices are more favorable when renovation is made at a slower pace, at around 2% a year,” she said. Ranking raises interesting questions, too. What criteria will governments use to rank buildings in need of restoration? They may begin by picking buildings that require less investment but offer more return, but that is hardly in line with the principles of sustainability. “We are not supposed to leave the brunt of the work to our children or grandchildren,” Pálvölgyi explained, “It would go against the reasoning of sustainable future.” Alternatively, governments could prefer the projects that promise to create the highest number of jobs. No matter which option the Hungarian government favors, it first needs to do an inventory of its building stock. There is currently no exact data on the number, age and condition of the various types of state-owned buildings. Studies are done based on estimates. “Only in possession of that data can we decide responsi-
bly what to do with our housing stock: whether to retrofit or pull down inefficient buildings,” Pálvölgyi said. The new energy directive requires countries to submit such an inventory by January 2015, so in two years’ time, Hungarian experts will probably have a better idea of what they have to work with. What they already know is hardly encouraging. Out of 4.3 million buildings, roughly 2.2 million are family houses built in the 1970s, with square floor plans, thatched roofs and extremely poor energy systems. “The specific energy expenditure of the so-called Kádárkocka (Kádár cube, named after the country’s socialist president during the period) is twice as much as that of panel housing.” That should give a hint to legislators of what to revamp next. The directive requires member states to submit a plan as to how to make all existing housing energy efficient by 2050. The target of saving 110 petajoule a year by 2020 could be met if 100,000-150,000 houses were retrofitted annually, the expert calculated. However, as long as the financing scheme is not clear, goals will remain unfulfilled, Gyürk claimed. “There are
numerous funds at both EU and national level available but paying the required contribution makes it hard to access these.” So the inclusion of an innovative payment option in the energy package – based on a Hungarian initiative – is a great leap forward. This allows member states to sell their excess carbon quotas and use the money obtained to meet their efficiency goals. “With the quotas, a country can substitute contribution. This will help undertake projects that promise substantial savings even during the crisis.” Still, many MEPs claim that savings in energy consumption do not necessarily translate into savings in costs if investments hamper the growth of recovery efforts. Edit Herczog, Hungarian MEP of the Progressive Alliance of Socialists and Democrats grouping in the European Parliament, uses the example of dieting and exercising. “Nothing is as promising as the first 24 hours of a diet. And there is hardly anything as disappointing as when one realizes they also need to exercise to lose weight. So the next challenge for governments is to devise a system that is sustainable and will deliver results without compromising existing ones.” ■
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Budapest Business Journal | Sept 21 – oct 04
Green certificate - to make things obvious Being green already seems to be a basic market requirement for office buildings, and more of them want to prove their sustainability with certification. On what grounds do developers prefer one certification to the other, and what do they gain by going through this expensive process? BBJ BBJ
“Green certifications are not above all,” Adrienn Lovro, head of property development company ABLON pointed out, adding that if a building is built using quality materials and according to Hungarian stan-
dards, a good level of sustainability is still achievable even if not attracting any prestigious green certifications. Still, certificates are of increasing popularity in Hungary, and ABLON itself has several certified buildings itself. “If someone has a clean car, it gives the impression that this man is tidy and takes good care of his property. If someone spares no pain and extra expenditure in creating a greener environment, then it gives the impression that they takes good care of their building in general, so it must be a good working environment,” Dániel Pintér, sales manager of real estate agency Eston, told the Budapest Business Journal. But sustainability has not had a long history in Hungary, meaning that its benefits still need to be explained to tenants quite often; certificates are taken as objective admissions and are easy to interpret and therefore are becoming more important to have. “Actually
having the certificate is very important in Hungary and will probably remain so until sustainability is much better understood by all market participants,” Michael P. Smithing, director of green building certification at real estate agency Colliers International, said. He conducted the certification process of Citibank’s shared service center at Arena Corner, and so played a huge role in gaining the first LEED Platinum certificate in the CEE region. By his estimate, it will take about five to ten years for the participants of the office sector to get more familiar with green issues. With regard to certifications, it is also a fact that, even if there can be no premium put on the rental fee just because a building is eco-friendly, green buildings rent faster, which is a great advantage at times when office vacancy rates are above 20%. THE COST OF GREEN However, nothing comes for
free. Getting a green certification for a new project, regardless of its size, costs around €30,000, while going for an in-use certification for an existing building means that €10,000 has to be paid for the green certification advisor. At least developing in a green way, if done consciously from the very beginning, does not necessarily entail much extra cost. “If green is a determining concept from the very beginning of the design process, then building a sustainable property that is even able to get an internationally acknowledged certification might mean an extra cost of only around 5%,” Tibor Massányi, the head of property development company DVM Group, told the BBJ. DIFFERENT CHOICES Eiffel Palace, a huge office building designed by DVM, has gained a BREEAM certificate, although in the beginning the developer was aiming
to get recognition from LEED. “We realized very quickly that BREEAM fits the local needs much more,” Massányi said explaining why they switched to the British system instead of the American LEED. Although there are some buildings with LEED certifications in Hungary, such as the E building at Inforpark developed by IVG Hungary and Skanska’s Green House, BREEAM is much more popular here, which is mostly explained by its criteria being more tailored to local circumstances. “We prefer the BREEAM certification because we find its credit system more realistic in a European environment,” says Pál Szilvási, project manager of Codic Hungary, which develops V48, an office building BREEAM pre-certified as “very good”. However, be it BREEAM or LEED, as Colliers’ Smithing pointed out, these rating systems (together with the German DGNB, which is not yet really established
in Hungary) “take slightly different approaches to meeting the same end – and all do an excellent job of it”. The differences are really in the details, but a BREEAM Very Good rating is comparable with LEED silver ratings, he said, adding that BREEAM is leading LEED in the certification of existing buildings because BREEAM In-Use is cheaper, faster and easier to achieve than LEED for Existing Buildings. The primary difference here is that BREEAM has three separate In-Use ratings, one for the building, one for the management and one for the tenants. LEED for Existing Buildings is a fusion of all three and requires the active involvement of the tenants as well as a strong management team and a good building. For this reason, LEED for Existing Buildings is harder to achieve, but it also produces a stronger positive impact on the environment. ■
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Green offices - the key to success? In recent years, a major change has occurred in the office furniture market towards more environmental thinking. Using ecofriendly solutions does not just reassure greenminded employees, but also keeps them healthy. BBJ KRISZTIÁN KUMMER
Manufacturers and distributors increasingly put forward green office solutions that support sustainable development and their customers’ growing requirements in this particular area. However, turning towards eco-friendly technologies is not always the result of customers’ requests. “Even if it is not the demand of all cus-
tomers to purchase green and eco-friendly products, commitment to the future of people and of the planet is deeply embedded in Steelcase’s DNA,” said Zoltán Petró, Steelcase’s market manager in Hungary. MORE THAN AN OPTION But choosing eco-friendly production and technologies is increasingly becoming a must for companies, not just a viable option, even if the introduction of environmental-friendly technologies and the transition itself mean additional costs in the beginning. “These changes are quickly becoming universally accepted standards, therefore all those manufacturers who do not want to fall behind in the fierce market competition will quickly apply these methods,” Office Line sales director Péter Bárdics said. “In the process of choosing office equipment and furniture, besides the aesthetic and financial aspects, costumers emphasize their eco-friend-
liness as well. Multinational corporations offer their tenders only to manufacturers who can provide documented proof that each and every step of the manufacturing process meets the most stringent environmental regulations,” he added. The world’s leading companies are engaged in serious competition to attract the most talented employees, Bárdics said, explaining the phenomenon. These people take other priorities into consideration than plain and simple financial recognition – such as the quality of the office environment. A creative, eco-friendly and healthy office can be a significant advantage over the competition. From this point of view, the office environment may affect the quality of the workforce and could eventually have a major impact on the success of the company as a whole. STRICT RULES Under the aegis of environmental-friendly production,
the whole process – raw materials, technologies, packaging, logistics, and recyclability – is reconsidered in order to minimize the environmental impact. From the very first moment of new product development and design, the use of environmentally friendly materials are essential just as it is to ensure that their source is the closest possible to the manufacturing sites. At Steelcase, intelligent product design means incorporating environmental thinking from the very beginning of a process, not as an afterthought. To ensure more environmentfriendly products, the company considers the potential environmental impact throughout the entire product life cycle – from materials extraction to end-of-use strategies – as part of the overall design and development process. This helps avoid the transfer of pollution from one stage to another or from one country to the other. “Our products do not
include any hazardous materials, are designed for an extensive life time, contain replaceable parts, and the packaging weight and material types are optimized. Steelcase offers endof-use strategies for customers and helps them carry out their environment-friendly actions at the end of their furniture’s life,” Petró said. LEED THE WAY A positive trend seems to have taken root in Hungary as more companies and office building managers want to prove their commitment by aiming to meet the strict requirements of the LEED or BREEAM certification systems for green buildings. Recently, K&H Bank stated early in the project design phase its intention that its new headquarters should be Hungary’s first LEED Goldcertified building. And the certification must apply not only to the structure of the building, but also to the entire office furniture as such. “This expec-
tation was a serious challenge for the office furniture manufacturers applying, since the depth of the certification and the project’s terms of volume were both unique in Europe,” Bárdics said. The interior design was commissioned from architectural firm Finta, while Office Line won the supply tender to equip the 2,400-person office with furniture. However, it is not an easy task to fulfill all the requirements of the LEED system. Its certification process uses a point system that makes office buildings comparable. However, offices themselves also have a significant influence on the ultimate score. To acquire the highest possible score, manufacturers have to meet strict requirements. The locations of the raw materials and the manufacturing process have to be physically close to each other, thereby strengthening regional industry and reduc-
[ EXPERT OPINION ]
Every molecule counts when preserving the Earth Steelcase Inc. manufactures office furniture whilst striding towards a positive environmental footprint Like any other globally active company, Steelcase Inc. – the global leader in the office furniture industry – recognizes that pushing the organization to preserve and renew our shared planet is as much a catalyst for innovation in a business as the product portfolio itself. Caring for the environment creates a commitment to get smarter every day and to put your heart into it. The science of sustainability is complex and the art is imperfect, but opportunities to create positive change are limitless. The approach needs to be holistic, research-based and measurable, and any commitment is only useful if it is intended to be long-term. Having started business in 1912, Steelcase has been committed over the decades to continually reducing the environmental impact of its products and activities on a global scale, through constantly seeking more effective ways to conserve resources, prevent pollution and nurture environmental consciousness in the organization. Steelcase CEO Jim Hackett summarizes environmental value creation thus: “We know that the only way to provide the best products in the world is to ensure that they’re the best products for the world! That’s why every step of the way
– through design, manufacture, delivery and product lifecycle – we consider the impact of our work on the environment and uncover opportunities to make things better.” In fact, as far back as 2003, Steelcase became the first company in the industry to carry out Life Cycle Assessments when designing products. By now, 50% of the European product portfolio has been analyzed – in partnership with Quantis consultants and DTU university in Denmark – with this detailed assessment measuring what energy and resources are needed for each item, as well as the impacts on climate change, human health, and ecosystem quality. This, in turn, helps Steelcase customers to make informed product choices based on their own sustainability goals. Every molecule counts when it comes to preserving human and environmental health. This is why the examination starts with the chemical makeup of the product. Steelcase has examined the chemical makeup of over 700 categories of materials in multiple product groups to 100 parts per million, and is actively involved in the elimination of materials
of concern like PVC, hexavalent chromes, and others. For such analysis, Steelcase partnered with McDonough Braungart Design Chemistry (MBDC), and in 2005 a Steelcase chair, named THINK, became the first office furniture product to receive MBDC’s Cradle-toCradle Product Certification. This silverlevel certification recognizes the chair for its implementation of ecologically intelligent materials and Cradle-to-Cradle product design. Today, Steelcase offers more Cradle-to-Cradle Certified products than any other company in the world. Good design and choosing the right materials can ensure a product is desirable and has a long life. It also ensures recyclability at the end of its useful life; furniture that is designed for easy disassembly allows the components
to be separated easily and quickly for replacement or recycling. With options ranging from refurbishing and resale, to charitable considerations or recycling, clients are helped to extend the useful life of thousands of furniture products and millions of tons of raw materials, dramatically reducing the amount of product waste dumped into landfills. Combined with continuous improvement actions within our industrial sites, these activities contribute to minimizing our overall environmental impact, tracking greenhouse gas emissions, water consumption, energy use and waste on a global scale. In its 28 manufacturing sites all over the world, Steelcase maintains a high standard of environmental responsibility thanks to
ISO 14001 certified management systems enabling practices to meet changing regulations and customer expectations. Working together with suppliers to meet a company’s sustainability and lean goals includes partnering on critical environmental initiatives like materials assessment, elimination of chemicals of concern, and technology and process improvements. Major waste and cost reductions result as organizations learn from each other and advance new processes and materials. Working with suppliers is a long-term proposition requiring a great deal of collaboration and cooperation, but one that is critical to results. For many years, Steelcase has relied on its supply chain partners to collect information on materials, recycled content, worker processing, and transportation – in fact this remains a journey of continuous improvement and every day practices are identified that need further improvement.
Love how you work www.steelcase.hu
Steelcase Sustainability Report 2011
2 BusinessSpecialReport 17
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Budapest Business Journal | Sept 21 – oct 04
ing environmental impacts resulting from transportation. Wood-based materials have to have ‘FSC’ approval, as proof of supporting responsible forest management. For all raw materials used for manufacturing purposes, the highest possible share of recycled or rapidly reproducing materials is required, along with the highest possible ratio of recyclability. To protect the quality of air in the offices, manufacturers have to make sure that the toxic pollutant vapors are below very strict threshold values. It is also important that transportation is carried out making use of minimal packaging. Compliance with all the aforementioned requirements has to be proved by presentation of the relevant certificates. “At the realization of such a project, the most important thing is that cooperation between architects and office furniture suppliers should start already in the early planning phase. Only this way can the expected outcome be achieved with the highest efficiency,” said Bárdics. ECO-FRIENDLY MANUFACTURING PROCESS But beyond the final product itself, an entire manufacturing firm can operate in an eco-
friendly way. In 2006, Steelcase pledged to reduce its global environmental footprint by 25% by 2012. That means keeping careful watch on greenhouse gas emissions, water consumption, and energy use and waste output. Since the goal was set in 2006, the company has reduced its greenhouse gas emissions by 40%, its water consumption and VOC (volatile organic compound) emissions by 52% and its waste by 48%. “Sustainability is not just about checking off a box or showing a pie chart you flash through. It is a continuous commitment to learning, sharing and applying new information,” Petró said, citing the words of Deborah Tessier, Global Accounts Manager at Steelcase Group. And sometimes it is the company’s task to demonstrate the positive impacts of the right environment-friendly behavior to customers. An example of that is when one of the largest domestic software companies planned to replace its five-year-old chairs. Instead of selling them new products, Steelcase convinced the client to change only the upholstery of the chairs, which were otherwise in perfect structural condition. ■
18 2 BusinessSpecialReport BBJ
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Budapest Business Journal | Sept 21 – oct 04
Nature can solve it: Hungarian-developed OU SI
An exuberant little forest full of life – it would be hard to say from Organica Water’s botanic gardens that they are actually cleaning wastewater. The technology, developed by two Hungarians, Attila Bodnár and István Kenyeres , uses living organisms, mostly the roots of various plants, but also some snails and fish, to clean communal waste water using much less energy than regular processes. After nine years of operation, the company in 2007 sold its plant manufacturing portfolio and put Organica onto an international path. Co-founder and executive vice president Attila Bodnár tells the Budapest Business Journal about the company’s vision and business prospects. Q: WHY DID YOU DECIDE IN 2007 TO SELL ALL ELEMENTS OF YOUR PORTFOLIO EXCEPT ORGANICA? A: We wanted to go international. Previously, when offering turnkey wastewater treatment plants of several types, we were operating as a regular tech company with contractors here in Hungary, which would have been almost impossible to extend across borders. So we decided to focus only on Organica, as this technology should really be widespread globally. Q: WHY? A: I suppose you haven’t visited too many wastewater treatment plants so far, and this is not a coincidence. Why on earth would any-
one go to an extremely smelly place where wastewater is treated? Our plants are more like friendly botanic gardens without any smell, so they can be very much integrated into any kind of urban environment. Not to mention that it works more efficiently, meaning that it requires a much smaller territory than regular plants, it has a much smaller carbon footprint, and it is also cheaper to operate. Our vision is to see it as the dominant technology in the upcoming 10-15 years. Q: HAVE DECISION-MAKERS REALIZED ORGANICA’S BENEFITS YET? A: Well, it is a fact that infrastructural investments – and especially those dealing with
water – are usually made only as a must when there is no other choice left. However, it has already become clear that the problem of water cannot be handled without reclaiming it properly. Groundwater is gone in many parts of the world and the reservoirs are running dry. It is over: something has to be done. And reclaiming water has so far meant collecting waste water through great infrastructure, bringing it out of the city, which sometimes means up to 80 kilometers, cleaning it there and bringing it back to use it for flushing. The whole process consumes a lot of energy. In contrast, what we offer is to do it locally, use 30% less energy and fit the entire solution in a garden. We had a project, for example, where we installed Organica on the site of an old plant. In a year’s time, the protection zone around it was reduced from 300 meters to 50 meters, and now there are already residential and office buildings and restaurants with a close view of the botanic garden, which otherwise cleans waste water. It is easy to see its significance when considering the value of the land as well. And in countries like China or India, which have a booming economy but also great problems with water supply, our technology might be favored. So we also have offices in India, China and Singapore. Q: CHINA ANNOUNCED A €100 BILLION FIVE-YEAR TENDER FOR WATER TREATMENT LAST YEAR. CAN YOU GET SOMETHING FROM IT?
CURRICULUM VITAE After receiving his master’s in architecture from the Technical University of Budapest, Attila Bodnár, 58, built and ran successful businesses on the northeast coast of the United States. He left the position of managing partner of Denker & Bodnar Architects to relocate into Hungary and establish Organica with his childhood friend, chemical engineer and biotechnologist István Kenyeres. When not working on the reform of wastewater treatment on a global scale, Bodnár enjoys harvesting his fig trees in the garden of his country house near Balaton.
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WWW.BBJ.HU
Budapest Business Journal | Sept 21 – oct 04
botanic garden can clean world’s waste water A: We are to peck at it, we already have five projects on the way, but to be honest, the cultural differences do not make things easier. We have to build so many bridges to understand each other. Q: THE NATIONALITIES OF YOUR WORKERS RANGES FROM INDIAN TO AMERICAN. COMPANIES ENGAGED IN R&D OFTEN SAY THAT THE KNOWLEDGE OF THE HUNGARIAN WORKFORCE IS NOT UP-TODATE EVEN AT THE MOMENT THEY GRADUATE FROM UNIVERSITY, AND SO THEIR TRAINING OFTEN TAKES ONE YEAR AT A COMPANY, TIME THAT PASSES WITHOUT THE NEW EMPLOYEE PRODUCING. DO YOU HAVE SUCH EXPERIENCES? A: Multinationality appears in our management not only because they might represent a different business approach and know the international markets and trends very much but also because our technology has raised their attention. Our head of sales, an Indian who is very much experienced in water, left his home to come here because he saw Organica
as the next big thing in this sector. But our R&D department runs mostly with Hungarian staff. I do not see any problems with their knowledge or their workmanship, moreover, we are actually very happy with them but about the Hungarian education system I can clearly state that it kills kids’ creativity and their ability to solve problems. As for me, I do not put much emphasis on the number of degrees one has, as the main thing is the approach to problems and their ability to work in a team. No doubt this could be improved here. We have many interns from American universities like Yale or Harvard, and those young people really have ‘the faith to kill the lion’. Q: AND HOW DO YOU SEE THE HUNGARIAN R&D SYSTEM? A: We have good experiences since we deal with questions that are obviously considered appealing R&D topics and therefore can still benefit from subsidies.
Q: WHAT ARE THE NEW DIRECTIONS OF ORGANICA’S INNOVATION? AS YOUR HEADQUARTERS IS AT TELKI, CLOSE TO A PRIVATE HOSPITAL, IT WAS RUMORED THAT MEDICAL WASTEWATER TREATMENT MIGHT BE THE NEXT STEP. A: Yes, absolutely. It is one of the development areas we focus on. As we see it, Organica technology allows the taking out of such content more effectively. Even if we do not directly focus on removing, say, 50% of the agent of Algopyrin, we achieve nice results. Q: THAT SOUNDS GOOD WHEN EVEN DRINKING WATER IS SAID TO CONTAIN HORMONES AND OTHER MEDICAL REMAINS. AND WHAT IS THE CLEANNESS DATA OF THE WATER AT THE END OF THE ORGANICA PROCESS? A: Well, the appearance of the topic of the cleanness of drinking water is good in itself, but it should finally be regulated instead of only being discussed. As far as I remember, it was spotted in the early ’80s that fish are dis-
appearing from the Rhine despite the several wastewater treatment plants they installed, which made water spectacularly cleaner. Then they found out that there was too much estrogen in the river. Q: SO THERE IS NO DATA? A: There is: on the one hand, it is a fact that Organica can take out more agents than other technologies at around
the same price. However, the quality of the cleaned water is always as required. There are some extremely sensitive cases, for example, some protected wetland or some rivers where the water you channel in has to be very clean but in some other cases regulations are less strict. But the point is that any degree of cleanness is possible, so the cleanness that Organica provides can be
reached through other technologies as well, but probably at a higher price. Q: IT ALSO MEANS THAT DRINKING WATER SHOULD COME WITHOUT SUCH THINGS. A: Of course: this is a fact. And if you go to a store and buy a good filter machine, you will get drinking water of great quality. But most people probably would not spend HUF 60,000 on this at the moment. ÁV
20 2 BusinessSpecialReport BBJ
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Budapest Business Journal | Sept 21 – oct 04
No other way – office buildings going green While the long-term benefits of an office building being green do not require a lengthy explanation, environmental-friendly solutions might not earn extra forints in the short-term for office building operators under current economic conditions. However, even if the extra costs of development take time to show a ROI, it seems there is no other way than building green. BBJ ÁGNES VINKOVITS
While green offices in London can run 10-20% higher rental fees than those lacking environmentally conscious solutions, a commitment to the
future of the planet does not appear in such a way on the Hungarian market. Although all major market players share the opinion that sustainability has become a decision-making criterion for an increasing number of companies, at a time when office vacancy rates are above 20%, it is difficult to charge an extra premium for a place just for being green. Also, when factors such as location, layout and the age of the building are still those with most impact on price, being green in itself is insufficient to raise the rental fee. However, green buildings still have an advantage, if not in pricing then in the length of the period of being unlet. “The extra costs of building green might not be returned so quickly for the owner, but having more tenants than the regular buildings will make up for the extra price in the long-term,” real estate agency Eston’s sales manager Dániel Pintér told the Budapest Business Journal. Michael P. Smith-
ing, director of green building certification at real estate agency Colliers International, shares this opinion. “Green buildings are renting faster than traditional buildings in comparable locations, even if they are not able to achieve a rent premium in today’s market,” Smithing said, adding that he expects this trend to accelerate in coming years as more buildings are certified. There is no doubt that working in a green office building might not only be a tool for creating a better image; it can also save €0.5 per sqm on overhead expenses. Still, Zsuzsanna Makkai, head of sales at property developer ABLON, disagrees about rental fees. “As I see it, there are no new office building developments anymore that are not green and, as such, comparing the rental fee of a green building to that of a regular office building is practically the same as comparing the rental fees of old and new office buildings,” she told the BBJ.
[ CASE STUDY ]
› GREEN BUILDINGS ARE RENTING FASTER THAN TRADITIONAL BUILDINGS IN COMPARABLE LOCATIONS, EVEN IF THEY ARE NOT ABLE TO ACHIEVE A RENT PREMIUM IN TODAY’S MARKET
The Greenest Building in Budapest
Infopark E with LEED Silver Certification
KAY-UWE BLANDOW MANAGING DIRECTOR, IVG HUNGARY KFT.
Infopark Building E is the first completed building in Hungary to win a LEED certification (2011). Infopark Building E, as well as the concept of Infopark Budapest, is a pioneer project in Budapest. Leadership in Energy & Environmental Design (LEED) is an internationally recognized green building certification system, intended to improve performance in metrics such as Energy savings, Water efficiency, CO2 Emissions reduction, improved Indoor environmental quality, and stewardship of resources and sensitivity to their impacts. LEED is intended to provide building owners and operators a concise framework for identifying and implementing practical and measurable green building design, construction, operations and maintenance solutions. “It makes us proud that IVG Immobilien AG has obtained the internationally coveted awards LEED Silver, Gold, and Platinum of the US Green Building Council for three of our most recently completed project developments in Germany and in addition the first LEED-Certificate
granted for a building in Hungary,” said KayUwe Blandow, Managing Director of IVG Hungary Kft, developer of Infopark. Sustainability and environmental consciousness were at the core of this project from its inception; from the initial dreams and sketches, all through the development of the office park. The most conspicuous evidence of this is the 50% green surface ratio in the office park. The building received energy rating ‘A’, which means a specific energy consumption 30% below the permissible limit required by the Hungarian regulations in effect; thus building E adds about 130 tons less carbon dioxide to the environment at an annual level. The tenants and some investors already prefer qualified office buildings. The development process and the competition among the countries of the region have begun, where Hungary is in an upscale position. IVG have clearly determined the course towards a sustainability strategy in order to enhance the company’s responsibility for the environment and society. Primarily, we provide our tenants with clear economic and ecologic advantages, creating an agreeable working environment for their staff. “There is an increase in the number of tenants who would prefer to move to a qualified office building. We’re expecting an increasing tendency even if it isn’t typical in Hungary nowadays,” said Kay-Uwe Blandow.
NOTE: ALL ARTICLES MARKED EXPERT OPINION ARE PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY
PAPER NEEDED? To keep in step with the trend, it is not only new buildings that are being designed to be sustainable; even those built before environmental requirements emerged so strongly as a factor are now being turned somewhat greener. However, such changes usually leave complex structures such as mechanical engineering untouched and instead involve less costly improvements. Installing energy consumption meters, allowing and encouraging selective waste collection or supporting employees in riding bicycles to work by creating bicycle storage facilities are not huge investments and in themselves are not enough to get an internationally acknowledged green certification such as BREEAM or LEED, but they can still raise the comfort level of employees.
“At many companies, working in a green and environmentally conscious environment appears as an inner need,” Pintér of Eston pointed out, adding that call centers are typical examples of green demand, as these businesses tend to have younger staff who are probably more willing to ride a bike and “probably have more courage to tell their employer about their need for green”. The other major group of green office tenants in Budapest, but with more tangible requirements, are the local subsidiaries of big MNCs that order all their branches to be based in a green building. “Companies mostly from Western countries such as Switzerland, Sweden and the United States often choose only from buildings with certi-
fications. This trend is, unsurprisingly, less strong with Asian companies,” Pintér said. Indeed, as giant multinationals have started to put sustainability into focus and decided to make their working environment greener as well, they have no other choice left than extending their norms to all their businesses, including branches. “There are huge lobbies behind the popularity of certifications,” Tibor Massányi, director of property development company DVM Group told the BBJ. “These companies won whopping state subsidies to go green,” he pointed out. And as more buildings gain green certifications worldwide, including in Hungary, it will likely become more difficult even to lease a building that does not hold such a certification. ■
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WWW.BBJ.HU
Budapest Business Journal | Sept 21 – oct 04
Green office buildings
9,000 3
» »
3
4
5
6
7
www.nepligetcenter.hu
ARENA CORNER www.arena-corner.hu
MILLENIUM GATE www.milleniumtowers.hu
CORVIN TOWERS www.futureal.hu
MILLENIUM TOWER III www.milleniumtowers.hu
»
2010
Ericsson, Coop, AIM, Hessyn, Actavis
–
–
–
–
–
–
RATING VALID UNTIL AUDITOR
OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN
Ground floor +8 900
–
LOCAL SELECTIVE WASTE COLLECTION
26,600
»
–
SELF-REGULATING ILLUMINATION
NÉPLIGET CENTER
2008
GREEN CERTIFICATE
2
NATURAL VENTILATION
12–13 3.90
NATURAL LIGHT
16,000 5
HALLER GARDENS
–
INDEPENDENT ENERGY SUPPLY
7 4,270
1
OWN SEWAGE MANAGEMENT
www.hallergardens.hu
32,500 57,000
2008
Magyar Posta, AON, Samsung, Tesco, Orange, BNP Paribas
PUBLIC TRANSPORTATION
13 3.70
BICYCLE LOCK
MONTHLY RENTAL FEE IN 2012 (EURO/SQM) MONTHLY SERVICE CHARGE IN 2012 (EURO/SQM)
2,870 3-5
GATEWAY OFFICE PARK www.gatewaybc.hu
SOLAR POWER
CURRENT LEASABLE OFFICE SPACE (SQM) MINIMAL LEASE TERM (YEAR)
9 1,500
CURRENT MAIN TENANTS
NO. OF LEVELS AVERAGE LEVEL SIZE (SQM)
35,850 50,340
COMPANY WEBSITE
GREEN SERVICES
YEAR CONSTRUCTED
NET OFFICE SPACE (SQM) TOTAL GROSS BUILDING AREA (SQM)
RANK
Ranked by net office space
ADDRESS PHONE FAX EMAIL
BREEAM In Use
Very Good 2013 ERM International / ERM Hungária Kft.
»
– ABLON Group (100)
1138 Budapest, Dunavirág utca 2. (1) 225-6600 (1) 225-6601 sales@ablon.hu
–
–
– – –
Immofinanz Group, (1) 451-8040
– Immofinanz, Austria (100)
1095 Budapest, Soroksári út 32–34. (1) 451-8040 – g.koo@ immofinanz.com
–
GreenBuilding
– – –
»
– (100)
1097 Budapest, Könyves Kálmán körút 11. (1) 382-9100 (1) 382-9129 property@skanska.hu
»
–
– – –
David Johnston, (1) 484-1319
– –
1088 Budapest, Hungária körút 40–44. (1) 268-1288 (1) 268-1289 info.budapest@ eur.cushwake.com
» » »
–
TriGranit Holding (100) –
1095 Budapest, Lechner Ödön fasor 5. (20) 369-6600 – mlaczko@trigranit.com
»
(100) –
1082 Budapest, Futó utca 35–41. (1) 266-2181 – office@futureal.hu
–
TriGranit Holding (100) –
1095 Budapest, Lechner Ödön fasor 8. (20) 369-6600 – mlaczko@trigranit.com
OTHER
–
24,000 28,000
»
» »
» »
22,500 23,000
9 2,800
23,000 5
13-13.5 3.90
2014
»
–
–
–
–
LEED regsitrated project
22,000 25,000
7 1,500
7,000 5
13.27 3.923.97
2011
Ringier, Garantiqa, Futureal, P&G
–
BREEAM
» » »
2008
Morgan Stanley, Lexmark, Millenum Wellness, Volksbank, Gránit Bank
–
LEED regsitrated project
» » »
20,050 20,500
8
9 2,800
– 5
13 3.90
2007
»
» » » » » » » » »
–
–
–
–
REAL ESTATE AGENT, PHONE
Office with green view In the oversupplied office market, office buildings with a nice garden and some greenery on top can prove more popular, says Balázs Nagy, managing director of MasterClean Kft. BBJ BBJ
Q: WHAT ARE THE MAJOR CRITERIA THAT SPECIFY HOW YOU WORK OUT THE GREEN AREAS IN OFFICE BUILDINGS? A: First of all, we have to meet the official requirements, which might be dif-
ferent in every district as the local municipalities decide on the profile of the future green areas. Luckily, the idea of installing green areas is welcome in most places. Seeing plants is very relaxing and improves the way employees feel. As such, nicely built, aesthetic gardens might be helpful even in building team spirit in the staff or can serve as recreation areas. Still, the beauty of our work is that while we pay respect to the clients’ demands, we put the needs of the plants into focus: they all have their own needs for the amount of light, temperature and for the quality of the soil.
Q: WHAT REQUIREMENTS DO YOU HAVE TO MEET? A: Most importantly, what we always have to keep in mind is that plants that might be harmful for health because they are poisonous or spiky can never be planted. Also, the installment of a proper watering and sewage system is of great importance when creating green areas. If the green area is involved in the planning of the building from the outset, such functions are easy to be implemented, but if the green area is just run-in at an already existing building, installing such systems cost more and is more difficult. Anyway, it is also better to have the green areas planned together
with the whole building. In this case we can be more creative in, for example, deciding where to have trees which later can be planted only with several restrictions such as not to block the view or having enough space to collect the falling leaves, which, according to municipality regulation, has to be transported to a given place in order to compost them. When it comes to factories, the municipality also allocates the minimum percentage of the area and sometimes even decides what kind of trees we can plant in the given area. Also, we have to make sure that the field is free of ragweed otherwise
the maintainer of the garden, practically us, might have to pay fines in the amount of millions of forints. Q: DO THE OWNERS OF THE OFFICE BUILDING GIVE VERY SPECIFIED INSTRUCTION ABOUT WHAT TYPE OF GREEN AREA THEY WANT, OR CAN YOU RELY ON YOUR CREATIVITY? A: It mostly depends on the budget. At some office buildings there are millions of forints allocated for the green areas as well and so they hire professionals to get a good-quality result. But at projects with lower budgets, the developers tend to give more specified instructions in order to keep things simple and cheap.
Q: WHAT NEW TRENDS HAVE YOU EXPERIENCED IN THE PAST YEARS? IS THERE INCREASING DEMAND FOR GREEN AREAS IN OFFICE BUILDINGS? A: Well, as it is known, there is a huge oversupply on the office market but still we see that companies that take care of their image usually prefer office buildings with some nice green areas. They often choose more modern buildings where the good quality of the building comes with a greener environment. Nowadays, the cost of garden maintenance is included in the rental fee as having nice gardens is considered as some kind of extra service that improves the quality of a building.
22 2 BusinessPartnerWatch
250 5
18,000 20,000
7 2,500
1,090 5
9
10
11
CORVIN ONE
13 3.92
2008
Futureal, DAS, epam
www.futureal.hu
2008
K&H Bank, Nestlé, Prologis, JTI, Oracle
MILLENIUM TOWER II www.millenniumcity.hu
17,800 18,400
INFOPARK BUILDING E www.infopark.hu
Lufthansa Systems, Kraft Foods, EITI, IVG, MoveOne
12
13
17,500
»
–
MILLENNIUM TOWER I www.millenniumcity.hu
17,100
Vodafone, Boehringer, Bankkártya Zrt, De Lage Landen
–
»
6,000 5
1313.75 3.90
Ground floor +6 2,0002800
3,700 5
11.9012.90 2.60
2009
8 2,300
2,700 2-5
12.513.5 3.90
2006
9 2,400
NATURAL VENTILATION
–
NATURAL LIGHT
–
INDEPENDENT ENERGY SUPPLY
OWN SEWAGE MANAGEMENT
PUBLIC TRANSPORTATION
–
BICYCLE LOCK
2010
Cetelem Bank, AXN, Medicover, ESAB, Grundfos, Givaudan
SOLAR POWER
20 3.90
www.eiffelter.hu
–
Use of recycled materials
BREEAM
–
BREEAM
RATING VALID UNTIL AUDITOR
REAL ESTATE AGENT, PHONE
OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN
7 3,200
EIFFEL SQUARE OFFICE BUILDING
–
Environmentally conscious construction and operational solutions
GREEN CERTIFICATE
18,500 23,700
2007
DBH Business Center, Lufthansa System, Pannontej
LOCAL SELECTIVE WASTE COLLECTION
12 3
OTHER
SELF-REGULATING ILLUMINATION
6,000 1
GREEN SERVICES
CURRENT MAIN TENANTS
»
7 2,500
18,526
WWW.BBJ.HU
Budapest Business Journal | Sept 21 – oct 04
YEAR CONSTRUCTED
MONTHLY RENTAL FEE IN 2012 (EURO/SQM) MONTHLY SERVICE CHARGE IN 2012 (EURO/SQM)
INFOPARK BUILDING D
CURRENT LEASABLE OFFICE SPACE (SQM) MINIMAL LEASE TERM (YEAR)
8
www.infopark.hu
NO. OF LEVELS AVERAGE LEVEL SIZE (SQM)
COMPANY WEBSITE
NET OFFICE SPACE (SQM) TOTAL GROSS BUILDING AREA (SQM)
RANK
BBJ
ADDRESS PHONE FAX EMAIL
LEED Silver "in-use"
Pre-qualification 2012 Alpha FM
IVG Hungary Kft., www. ivg.hu
– IVG IIF (100)
1117 Budapest, Gábor Dénes utca 2. (1) 382-7560 (1) 382-7570 office@ivg.hu
» » »
ConvergenCE, (1) 225-0912
– Europa Fund II (100)
1062 Budapest, Teréz körút 55–57. (1) 225-0912 (1) 375-0445 office@ convergen-ce.com
» »
»
(100) –
1082 Budapest, Futó utca 47-53. (1) 266-2181 – office@futureal.hu
» » »
CB Richard Ellis (1) 374-3040, Cushman and Wakefield (1) 268-1288
TriGranit Holding (26) Heitman Hepp IV (74)
1095 Budapest, Lechner Ödön fasor 7. (20) 369-6600 – mlaczko@trigranit.com
Jones Lang LaSalle, www. joneslanglasalle.hu
– IVG Immobilien AG (100)
1117 Budapest, Neumann János utca 1.E (1) 382-7560 (1) 382-7570 office@ivg.hu
–
TriGranit Holding (26) Heitman Hepp IV (74)
1095 Budapest, Lechner Ödön fasor 6. (20) 369-6600 – mlaczko@trigranit.com
Good
–
–
–
LEED registrated project
–
LEED
LEED registrated project
Environmentally conscious construction and operational solutions
–
–
–
–
Silver
»
Alpha FM
» » »
FINE OFFICES A+ CATEGORY OFFICES CURRENTLY AVAILABLE FOR RENT IN THE MOST PRESTIGEOUS AREAS OF THE CITY
A SPECIAL SELECTION BY THE
BBJ
Budapest Business Journal
TERRAPARK A, B PALACE ANDRÁSSY ADDRESS 2040 Budaörs, Puskás Tivadar út BUILDING YEAR A: 2000, B: 2002 FREE SPACE A: 1200 sqm, B: 4350 sqm PUBLIC TRANSPORT BUS 240, 40 busz, TERRAPARK shuttle CONTACT Éva Szilágyi
Tel: +3620 / 9848 999 szilagyie@terrapark.hu
The two most successful buildings of Terrapark offer A-category offices in green surroundings, at excellent location in the junction of motorways M1-M7. The buildings have been constructed in a contemporary and representative style. Technical equipments of the buildings meet modern requirements. The buildings have secure underground parking and surface parking spaces.
MARGIT PALACE PALACE ANDRÁSSY ADDRESS 1027 Budapest, Henger utca 2. BUILDING YEAR 2004 FREE SPACE 2416 sqm PUBLIC TRANSPORT Tram 4, 6 Metro 2 HÉV 5 BUS 86, 11 CONTACT Éva Szilágyi
Tel: +3620 / 9848 999 szilagyie@terrapark.hu
The five-storey A-category building offers offices, service units and a two-storey underground parking lot for its future tenants. The building, which formerly housed trams, is under local heritage protection. The state-ofthe-art equipments of the facility meet today’s standards. It is accessible by car and public transportation; Déli railway station and the Danube is only a few-minute walk away.
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BBJ
WWW.BBJ.HU
16,800 17,800
7 2,430
5
OFFICE GARDEN II www.officegarden.hu 16,159 27,000
15
VÁCI GREENS A BUILDING 16 www.vacigreens.hu
K3 - ALLIANZ OFFICE 17 BUILDING www.k3irodahaz.hu
8 2,200
2,347 5
12.0012.50 960 HUF
Ground 15,500 15,500 floor +6 16,441 5 2,429
12.5013.50 2.84
Ground floor +7 2,300
» »
14,350 30,000
» »
2010
2013
18
3,369 5
11.512.5 3.80
14,277 26,000
8 2,040
13,973 27,000
Ground floor +5-6 790– 1162
9,820 3
11.512.5 3.50
13,200 20,300
8 1,600
13,200 3–5
13.5–16 3.8
–
–
–
Geothermal energy utilization
GREEN CERTIFICATE
LOCAL SELECTIVE WASTE COLLECTION
SELF-REGULATING ILLUMINATION
NATURAL VENTILATION
NATURAL LIGHT
INDEPENDENT ENERGY SUPPLY
OWN SEWAGE MANAGEMENT
PUBLIC TRANSPORTATION
BICYCLE LOCK
LEED
19
»
»
» »
1134 Budapest, Kassák Lajos utca 19–25. (1) 382-9100 (1) 382-9129 property@skanska.hu
GVA Robertson, (1) 327-2050, www.gvarobertson.com
– GRT Group (100)
1117 Budapest, Alíz utca 2. (1) 327-2050 (1) 327-2055 office@ gvarobertson.com
Jones Lang LaSalle, 1051 Budapest, Széchenyi tér 7/8. (1) 489-0202, (1) 489-0203, www. joneslanglasalle.hu, Cushman & Wakefield, 1052 Budapest, Deák Ferenc u. 15. (1) 268-1288, (1) 268-1289, www.cushmanwakefield.com
– ATENOR GROUP (100)
1138 Budapest, Váci út 117–129. (1) 785-5208 – bely@atenor.eu
»
– –
1087 Budapest, Könyves Kálmán körút 48–52. – – –
GVA Robertson, (1) 327-2050, www.gvarobertson.com
– Heitman (100)
1117 Budapest, Alíz utca 1. (1) 327-2050 (1) 327-2055 office@ gvarobertson.com
USGBC
–
–
–
–
–
Heat pump, heat protection windowfoil, Building of 0.00 g/year CO2 emission
District heating, low water consumption in restrooms, green roofs, condensation heat recovery during ventilation, optimized building management systems, energy saving bulbs, spare capacity refrigerators, producing hot water from regaining condensed heat from refrigerators, gray water utilization, rainwater collection and storage (eg, for flushing), high-quality insulation and soundproofing
–
– – –
Excellent BREEAM
2010
Allianz
2008
Philips, HewlettPackard, SióEckes, Aloha Informatika, MPG, GRT Group
–
–
–
–
–
Rainwater utilization
–
BREEAM
–
LAURUS OFFICES www.laurusoffices.hu
Platinum precertification
ADDRESS PHONE FAX EMAIL
REAL ESTATE AGENT, PHONE
»
Büro Happold
Very Good
OFFICE GARDEN I www.officegarden1.hu
Syngenta, Shell, Geberit, Bene, Eurest iroda és étterem, Pirelli
SOLAR POWER
2012
ABB, AVIS, Isys-On, Skanska
OTHER
RATING VALID UNTIL AUDITOR
OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN
14
CURRENT MAIN TENANTS
MONTHLY RENTAL FEE IN 2012 (EURO/SQM) MONTHLY SERVICE CHARGE IN 2012 (EURO/SQM)
»
12.95– 13.95 855 HUF
GREEN HOUSE www.skanska.hu
GREEN SERVICES
YEAR CONSTRUCTED
CURRENT LEASABLE OFFICE SPACE (SQM) MINIMAL LEASE TERM (YEAR)
NO. OF LEVELS AVERAGE LEVEL SIZE (SQM)
COMPANY WEBSITE
NET OFFICE SPACE (SQM) TOTAL GROSS BUILDING AREA (SQM)
RANK
Budapest Business Journal | Sept 21 – oct 04
2009– 2011
»
–
–
–
Rainwater storage, "A" energy certification, external shading
BREEAM
»
Buro Happold
– – –
K1A Real Estate Very Good (in Management progress) Szerdahelyi Kft (») – Balázs, IR CEE Project Óbuda-Újlak (20) 926-3068 DevelopZrt ment Holding Gmbh(»)
1103 Budapest, Kőér utca 2/A (1) 392-4075 (1) 392-4081 balazs.szerdahelyi@ immorent.com
NEW AGE CENTER –
– ABLON Group (100)
1138 Budapest, Esztergomi út 44–48. (1) 225-6600 (1) 225-6601 sales@ablon.hu 1096 Budapest, Lechner Ödön fasor fasor 9. (20) 369-6600 – mlaczko@ trigranit.com
www.newagebc.hu 20
K&H IRODAHÁZ - "H" ÉPÜLET
–
»
–
–
–
–
2011
K&H Bank és Biztosító
–
–
–
LEED
» »
»
TriGránit Holding (26) Heitman HEPP IV (74)
»
»
–
–
Stand alone building, landscaped inner garden
BREEAM
Very Good 2016 ERM Hungaria Kft
–
– Codic International SA (100)
1132 Budapest, Váci út 48.e-f (1) 266-6000 (1) 266-6002 p.szilvasi@codic.eu
–
Bike lockers, rain water collection for watering, solar panel (optional), gray water systems
BREEAM
Jones Lang LaSalle
Buda Palota Kft (100) –
1122 Budapest, Krisztina körút 6–8. (1) 451-4280 (1) 451-4289 sales@wing.hu
–
BREEAM
Eston International, GVA Robertson
V17 Kft (100) –
1138 Budapest, Váci út 17. (1) 451-4280 (1) 451-4289 sales@wing.hu
–
tion and management
GVA Robertson, (1) 327-2050
– IVG Funds (100)
1093 Budapest, Közraktár utca 30–32. (1) 382-7560 (1) 382-7570 office@ivg.hu
–
– Kinnarps I. Falköping AB (100)
1133 Budapest, Váci út 92. (1) 237-1251 (1) 237-1250 recepcio@kinnarps.hu
9 1,300
679 5
13 4
22
11,500 13,500
6 2,000
13,500 5
13-14
BUDA PALACE 23
11,330 25,000
Ground 12,063 floor 5 +8 1,900
» »
»
»
–
–
10,600 22,000
Ground 12,350 floor 3 +7 1,800
»
»
»
–
–
2009
Gameloft, Sigma Kudos, Henkel– Schwarzkopf
–
–
–
–
www.millenniumcity.hu
Gold
12,370 23,000
21
– – –
V48 www.v48.hu
www.wing.hu
24
V17 www.v17.hu
»
3.5
Very Good
» »
Very Good / Excellent
» »
RiverPark www.riverpark.hu
KINNARPS HOUSE 26
»
7 400 / 900
»
7,531 9,091
8 1,000
– –
9,865
25
www.jarl-konferenciaterem.hu, www.kinnarpshouse.hu
1
12–14 2.40
» »
2006
Kinnarps Hungary Kft, Rail Cargo Hungaria Zrt
–
–
Environmental conscious construc-
–
solutions
» » »
Intelligent control, conference room, roof garden
–
– – –
24 2 BusinessPartnerWatch
HLB Klient, bnt, Ukrailtrans
2010
Leonad3Do, Agrosystem, Dominium Invest, Talentis Group, Elektronikai klaszter
OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN
2008
» »
–
» »
2220 Vecsés, Fő út 246–248. (1) 382-5100 (1) 382-5101 info@aiglincoln.hu
Environmentally conscious construction and operational solutions
BREEAM In-Use
Building Management 2012 Strabag PFS
IVG, (1) 382-7560
– IVG (100)
1143 Budapest, Stefánia út 101–103. (1) 382-7560 (1) 382-7570 office@ivg.hu
–
– – –
Szénási Zsolt, (30) 202-4451 zsolt.szenasi@ talentis.hu
TBP Zrt (100) –
2053 Herceghalom, Zsámbéki út 16. (30) 202-4451 (23) 532-156 info@tbp.hu
–
– – –
Szénási Zsolt, (30) 202-4451 zsolt.szenasi@ talentis.hu
TBP Zrt (100) –
2053 Herceghalom, Zsámbéki út 18. (30) 202-4451 – zsolt.szenasi@ talentis.hu
–
–
–
–
–
GREEN CERTIFICATE
13 3.20
LOCAL SELECTIVE WASTE COLLECTION
283 1
SELF-REGULATING ILLUMINATION
4 1,200
BREAM
NATURAL VENTILATION
5,353
Landscaped garden
NATURAL LIGHT
2008
INDEPENDENT ENERGY SUPPLY
10–12 3.40
OWN SEWAGE MANAGEMENT
2,850 3
PUBLIC TRANSPORTATION
6 900
OTHER
ADDRESS PHONE FAX EMAIL
BICYCLE LOCK
5,390 5,961
Lufthansa Technik, UniCredit Bank, Nemzeti Közlekedési Hatóság Légügyi Hivatala, Nord Consult, Curver
SOLAR POWER
MONTHLY RENTAL FEE IN 2012 (EURO/SQM) MONTHLY SERVICE CHARGE IN 2012 (EURO/SQM)
GREEN SERVICES
CURRENT MAIN TENANTS
www.thequadrum.hu www.aiglincoln.hu
WWW.BBJ.HU
Budapest Business Journal | Sept 21 – oct 04
YEAR CONSTRUCTED
THE QUADRUM (PHASE 1) 27
CURRENT LEASABLE OFFICE SPACE (SQM) MINIMAL LEASE TERM (YEAR)
COMPANY WEBSITE
NO. OF LEVELS AVERAGE LEVEL SIZE (SQM)
NET OFFICE SPACE (SQM) TOTAL GROSS BUILDING AREA (SQM)
RANK
BBJ
RATING VALID UNTIL AUDITOR
REAL ESTATE AGENT, PHONE
Very Good
StefániaPark www.stefaniapark.com 28
»
TALENTIS INNOVATION 29 CENTER www.tbp.hu
TALENTIS LOFT 30 www.tbp.hu
»= would not disclose, NR = not ranked, NA = not applicable
4,400 5,200
3 1,500
1,750 1
5 3
2,600 2,900
2 1,300
2,500 1
6 25
2012
–
–
–
–
–
–
This list was compiled from responses to questionnaires received by Sept. 19, 2012 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14., or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu
Greenlighting the green is not self-evident The green areas and open-air spaces an office building has to offer are of high importance, but general trends are frequently overwritten by unique, case-by-case deals, reflecting the specific requirements of tenants, industry experts say. Still, the general direction is that office buildings aim to optimize the proportion between maximum office space to let and a livable, more natural environment. “Planning and shaping the green and open air areas of newly-built or refurbished office buildings need to balance three critical areas: core functionality, the demands and legal requirements of the relevant city or district, and serving tenant requirements,” says Zinaida Vojnár, leasing and marketing manager of Orco Property Group, one of the major real estate developers on the Hungarian market. The size and nature of green and open-air areas within an office building can vary on a broad scale depending on various factors, most importantly local conditions (municipalities often prescribe the minimum proportion of green areas for a specific real estate development) and the target group of potential clients. “As a rule of thumb, from a commercial perspective, we
aim for as much green as possible, while of course optimizing the value of the investment by achieving the highest lettable area ratio,” the manager reveals, adding that the balancing can be rather delicate at times, and compromises need to be made. Green areas in general, such as landscaped parks, gardens (internal or external) and terraces, are deemed to be a great feature of office buildings as they improve the work environment, making it more comfortable, more attractive and more inspiring for tenants and their employees. But as with every rule, there are exceptions, and it is virtually impossible to assign real market value to the “greenness” of a specific office building. Some tenants are ready to rent terraces and highly prioritize having one, while other will not be willing to pay extra
for one or do not want their employees to have access to one – this depends on the managers’ preference and the internal company policy, and of course the budget. Common trends, therefore, are frequently overwritten by case-by-case deals or the unique requirements of a certain company. Long story short: the rule is that there is no rule. While common sense suggests that green areas can make an office building better, and thus more expensive, it is absolutely up to the tenants’ needs whether these natural qualities can be built into rental fees. Orco Group’s Szervita Office Building project is an example where this balance will be made. The building, situated on Szervita tér, next to Petőfi Sándor utca in downtown Budapest, will be upgraded and the
landscape redesigned in light of the above. “In the case of the Szervita Office Building, we need to cooperate closely with the District 5 municipality to plan the new landscaping in front of the building, a private property belonging to the group yet potentially to be developed in conjunction with the municipality during a redesign of the entire square,” Vojnár explains. Although these adjacent green areas will be open to the public, they will be built and maintained by the
owner, Orco Group. This structure is not unusual – most of the company’s recent projects have similar, publicly accessible outdoor parks in their immediate vicinities. While it is not unusual for a company to look for office buildings with a terrace or a green patio, there are cases when the requirements are the exact opposite. “I came across one large United States company whose internal policy did not allow employees to use the terrace of the office building,
so after the company rented the office along with some portion of the terrace, it was locked to prevent its use,” Vojnár says, recalling a case from the past. While the priorities might seem surprising at first, the considerations that define these requirements may be quite complex. Safety can be one of them, especially in the case of roof terraces. But at times, it can also be something more straightforward, such as a limitation of smoking areas. A recent regulation has banned smoking in the five-meter proximity of certain buildings, including office buildings that are declared non-smoking. While terraces, patios and other open-air green areas are also subject to this regulation, they are regularly (and implicitly) treated as exceptions. If the policies of the buildings’ operators make it clear that these are non-smoking areas, it is the tenant who is responsible for the behavior of its employees. And more often than not, it is easier to simply lock these areas than to continuously look for cigarette stubs to see whether someone has broken the rules. ZsB
2 BusinessSpecialReport 25
BBJ
WWW.BBJ.HU
Budapest Business Journal | Sept 21 – oct 04
Greener transportation is now a must Today, when fuel prices are soaring without any no end in sight, and urban air pollutants sometimes make a walk in the city impossible, finding greener methods of transport is not just a slogan held high by green parties and bicycle-riding hipsters, but has become a goal that must be achieved. BBJ KRISZTIÁN KUMMER
BIOETHANOL – OVERTAXED Only two years ago, the Hungarian media was full of reports about motorists installing E85-transformers in their fuel systems and of the growing demand of corn-based biofuel at petrol stations all over the country. But as the government, persuaded by the European Commission, tries to fill in gaps in its budget with new taxes and contributions, the excise duty on E85 biofuel has grown in two steps from zero to a gross HUF 89 over a period of just six months. “Demand for bioethanol decreased dramatically among Hungarian motorists, by about 60% due to the excise duty increase,” said Demeter Héjj, president of the Hungarian Bioethanol Association. “However, I am pleased to note that there is a segment
of environmentally conscious consumers who stand by bioethanol although E85 (a fuel mix that consists of 85% bioethanol and 15% gasoline) is no longer cheaper than conventional gasoline,” he added. Those who were looking for some kind of viable replacement for the non-renewable crude oil products were always somewhat on the edge with E85, as even at a price one-third lower than gasoline, the much more modest energy content of E85 equalized the price difference. Hungarian regulations make no difference between conventional gasoline-driven vehicles and flexi-fuel cars. Due to this anomaly, there are no official numbers on Hungarian flexi-fuel cars; however, according to market research and car dealer information, a couple of thousand factory-fabricated flexi-fuel cars are running on Hungarian roads, along with approximately 10,000 retrofitted cars. In the peak period last year, sales of E85 represented 2% of all fuel sales in Hungary, but the figures have fallen since the tax changes. However, thanks to an EU directive, all fuels in Hungary contain at least 4% bioethanol. Domestic production of the fuel has no fallen along with its use, however. Last year, only the Hungrana plant in Szabadegyháza was able to refine biofuel, where approximately 150 metric tonnes were produced. This year, now that a Pannónia Ethanol Zrt plant has opened in Dunaföldvár,
FINE OFFICES A+ CATEGORY OFFICES CURRENTLY AVAILABLE FOR RENT IN THE MOST PRESTIGEOUS AREAS OF THE CITY
production could reach 350 tonnes. According to estimates by the Hungarian Bioethanol Association, the vast majority of bioethanol produced in Hungary is sold on foreign markets. ELECTRIC CARS - THE FUTURE IS HERE? The use of electric vehicles plays an increasingly greater role in Hungary, but this mode of transportation will still need many years before it achieves a significant share in general public acceptance. First of all, environmentally conscious companies have to show a good example in getting one step closer to a carbon-free future. In September 2010, the Elmű-Émász Group opened its first electric charging station in front its headquarters on Váci út in Budapest. By now, eight such units can be found around the country. (Until the end of 2013, Elmű provides electricity free of charge at its power stations.) The company owns five electric cars and the members of the E-Mobility Network, formed in the summer of 2011, operate another five vehicles. The network is composed of car dealers and manufacturers along with companies that purchase electric stations and vehicles. “The common platform aims to play a catalyst role in popularizing electric transport, gathering around itself environmentally conscious companies that are sensitive to issues of environmental protection,” said Zoltán Nagy, managing director of Magyar Áramszolgáltató Kft.
A SPECIAL SELECTION BY THE
BBJ
Budapest Business Journal
OFFICE GARDEN I. PALACE ANDRÁSSY ADDRESS 1117 Budapest, Alíz u. 1. BUILDING YEAR 2008 FREE SPACE 3369 sqm PUBLIC TRANSPORT Bus 33, 103, 114 Tram 18, 41, 47, CONTACT GVA Robertson
Papp Róbert Phone: +36 1 327 2050 Fax: +36 1 327 2055 E-mail: office@gvarobertson.com www.officegarden1.hu Office Garden1 is situated in the 11th district, in one of Budapest’s most dynamically developing area. The office building offers unprecedented flexibility through its architectural solutions, environment-friendly technology and green environment. Office Garden I has its own central energy panel and a fully independent electrical feed. The heat pump heating /cooling system uses renewable energy, resulting in operating costs that are, on the whole significantly less than average.
Members include ABB, BKK, Ernst & Young, GA Hungary, Geometry, the Hungarian Automobile Club, Kábel Team, North Castle Co., the Tonic Advertising Agency, and SAG. The initial electric mobility areas are large cities. According to current estimates, more than 300,000 electric vehicles will eventually run on the roads of Europe. Initially, electric cars will be families’ second vehicle or part of corporate fleets. The rapid evolution of technologies will make electric cars more accessible for everyday use in the foreseeable future. (Already, several seriesproduced models are available, but their price can be many times more than those of standard-powered models.) “Some 5-10 years are still needed for a breakthrough, but the date is highly dependent on the processes of the world economy and the associated evolution of purchasing power,” Nagy said. “The maintenance and operating costs of electric vehicles are
already showing benefits, since each 100 kilometers traveled cost about HUF 800, meaning the consumption of an electric car costs about a third of that of a diesel-driven car,” he added. In addition, the number of moving parts in an electric car is significantly lower, resulting in less wear and tear and a reduced possibility of a technical breakdown. BICYCLES SWARM THE ROADS While the use of bioethanol is falling and the breakthrough in electronic transportation is still pending, cycling has made a clear comeback in urban transport. The traffic jams of the inner city and the continuously worsening state of public transport has convinced many citizens to switch to bicycles. Thanks to the devoted work of civil organizations, led by the Hungarian Bicycle Club, the network of bike trails in Budapest has grown in the last couple of years.
All in all, 187 kilometers of marked trails have been built or designated in the capital: 43 kilometers on low traffic roads, eight kilometers of bike lanes, 64 kilometers of separated bike paths, 49 kilometers of divided walking and cycling paths and 23 kilometers of shared walking and cycling paths. But nothing else has made so many people get on their bikes in the last eight years as the Critical Mass civil demonstrations. The first collective cycling “parade” held in 2004 attracted some 3,000 cyclists, but the number has quickly grown to over 80,000. This year’s event was canceled as the organizers feel that the demonstration has achieved everything it was called to life for. “The number of cyclists has multiplied after the first Critical Masses. In the beginning, nine out of ten new cyclists got on their bikes due to Critical Mass. Now the proportion is the other way around: in 2012, 90% of participants are not biking due to the parade,” said one of the organizers, Gábor Kürti, or Kükü as everyone knows him. “And sometimes it makes me think that this parade is also an excuse to reject the bike. You convince one person, but reinforce the barriers of stereotypes in two others.” However, a last demonstration will be held next year. “2014 will be the first year without Critical Mass. But if you take into account that the number of cyclists grows by 50% every year, in 2014, Deák tér itself will be a demonstration,” Károly Sinka, managing director of Hajtás Pajtás added. ■
3 Socialite
BBJ
East Coast fly 'n' drives Be assertive, not aggressive
28-29 30
Successful in heels Women tend to be quiet overachievers. They are said to work twice as hard as they juggle work with family. Most (Hungarian) women do not want special rewards for that; they just want to be recognized in their own right. The creators of the Women of Excellence Award of the American Chamber of Commerce in Hungary do not necessarily agree: they believe outstanding women deserve recognition. BBJ BBJ
Andrea Jádi Németh, managing partner at Jádi Németh Attorneys at Law, and vice president of the American Chamber of Commerce in Hungary (AmCham), has been the president of the award jury since its inception. As the only female board member at that time, she promoted the Women of Excellence Award with the country manager of Morgan Stanley Hungary. The basic
idea came from a similar MS award in Hong Kong. Yet they wanted to launch a focused award that appreciated balanced achievements at home, at work and in/for the society. Q: IN THE FIRST YEAR, THE AWARD WAS GIVEN TO WOMEN WHO EXCELLED PROFESSIONALLY AND IN THEIR PRIVATE LIFE. HOW COULD YOU MEASURE THAT WITH NO INSIGHT INTO THE LATTER? A: The selection procedure for the jury and me is well tailored yet not easy. Although the system is built to filter worthy candidates, both years showed that there are many excellent women around us, who live exemplary lives and have extraordinary achievements. Nonetheless, each year we create a shortlist from a pool of applications, or rather nominations, which must come from people other than the candidate. Of course, in order to have a strong candidacy, nominations have to be very detailed, taking stock of all the talents, features and experience these women possess. Then, following well-defined criteria, we choose the finalists with whom we meet in person. During the interviews it is always amazing to see how flashes of brilliance come through and truly inspirational, dedicated and charismatic women get revealed. Society needs role models and I am most privileged to be part of finding them.
Q: WHAT IS THIS YEAR’S TOPIC? A: We had work-life balance as a main theme in the first year, outstanding women leaders in the second and this year we are looking for the most promising and proven female talent under 35, young achievers. Every time we try and highlight some different aspect of women’s excellence but balance remains important. With female executives, we did not want to reward a manager but a charismatic, true leader who is visionary in the noblest sense This time we wish to create a platform for harnessing talent, to show case excellence and innovation among young Hungarian women. The Women of Excellence Award will now recognize and celebrate exceptional young women who have made noticeable contributions to society at an early age in the areas of business, leadership and academia. In short, the award aims at inspiring the youth to get involved and pursue their dreams in order to better shape our present and the future. That is the reason why it is so important to reach out with the award to the broadest audience possible. Ildikó Szüts is the communications director of OTP Bank, also last year’s winner of AmCham’s Women of Excel-
lence Award. This year, however, she swaps seats and will help the jury pick the most talented Young Achiever. Q: HOW DO YOU MEASURE SUCCESS? A: Obviously, success is measured based on one’s professional merits and also on achievements in one’s private life, which is strongly related. For me, success is when I am able to manage these two in such a way that I am satisfied with both. Managing a marriage and juggling it with a job is a success: family serves as a background for work. There are always trade-offs, though. I once canceled an international conference as my son came down with avian flu. But I can also recall a Mother’s Day celebration in kindergarten where only my husband was present, as I was abroad. It is impossible to do everything with the same momentum. You need to have every minute scheduled. For me, the working day kicks off at 6am and runs until 11 in the evening. Sometimes you steal a few hours from the one to devote to the other. Without a strict timetable, I could not cope. Q: YOU RECEIVED THE WOMEN OF EXCELLENCE AWARD PARTLY IN RECOGNITION OF THIS. HOW DID YOU ASSESS IT? A: People working in the field of economy have hard times just the same as others. There
are always tough spells to move away from. Awards in general help you recharge and give you the strength to move on. They offer reassurance that it is worth continuing your work, and they also help motivate the group you oversee. What was different with this award is that, unlike most awards that appraise professional merits, this one also honored the segments of life that are not work-related. How much one stands up for or is involved in a community, what things they give their names to, etc. This was also the first time when I knew the other nominees, and I felt truly privileged to be part of such an illustrious group. Q: THIS YEAR YOU WILL BE THE MEMBER OF THE JURY. HOW WILL YOU DECIDE WHOM TO SELECT? A: There are always women who have to be within the circle of nominees. Their work, their colleagues’ feedback and their achievements predestine them to be there. Choosing the very best from the best is the hardest part. However, I have three criteria I will be particularly careful about. First, can she set an example with what she has achieved? Showing best practices to younger women is important so that they dare step up. If they can
see that others are capable of doing it, they will believe they can, too. I once held a lecture for female leaders and asked them why they thought there were so few women executives. The answer was because most did not think they could make it. I will also be watchful of how much effort candidates have made to get where they are. Finally, beyond virtues in work, it is important to see what other ways they contribute to the world. Kind of like CSR, but not limited to that. I think that giving lectures at a university or mentoring young people are just as valuable. At the bsank, I also welcome interns and like to introduce them to the workings of the place. Q: YOU SAY WOMEN ARE STILL RELUCTANT TO ACHIEVE HIGH GOALS. WHAT DO YOU THINK ACCOUNTS FOR THAT? A: It is a question of culture. Many women claim they should be recognized based on their aptitude, not because they are women. It could work if the older generation passed down their experience to the young ones. I am not saying that legal measures [such as introducing quotas - ed.] are not useful: they would probably help women quickly catch up in number terms. But changing the mindset takes far more time. ■
28 3 Socialite BBJ
WWW.BBJ.HU
Budapest Business Journal | Sept 21 – oct 04
East Coast fly 'n' drives Vast distances, high buildings, breathtaking skylines, and fathomless culture. No one can claim himself a travelled rav avel e le led man without hands-on experience of the United States. Make your entry to the land of dreams at one of the great cities of the East Coast: you will find whole new scales and an intimidating mass of opportunities for a lifetime experience. Boston - Tea Party; Washington D.C. – Capitol Hill; New York – Woody Allen? It’s time to refresh your East Coast tags. If you are ready to take a flight overseas, you may chose either of two quite doable combo’s of East Coast fly ’n’ drive. If you are flying to New York, spend some days in the Big Apple, then rent a car and hit Interstate Highway 95 southwards: a four-hour drive will take you to Washington D.C. (the reverse applies when you fly to Washington D.C. from Europe). If you touch down on U.S. soil in Boston, enjoy the city for at least two-three days, and then drive all the way down to NY City. You don’t need return to your landing airport: you can take off back to Europe from each of the three biggest cities of the East Coast. NEW YORK CITY New York will shake up your sense of scale, depth and density. But make sure that you taste the life of average New Yorkers after you have seen the main landmarks. Mix high society events and everyday
LUFTHANSA HIGHLIGHT: UP AND ONLINE On a Lufthansa flight to Boston, you stay connected: to business, to your family back home, or (if you like) to YouTube. When the ‘no-gadget!’ lamp above you is out, flip open your laptop, iPad or Kindle, connect to FlyNet, Lufthansa’s on-board internet service and surf online! But every now and then, look up from your screen to enjoy the sight beyond the windows.
pleasures for a greater New York effect. For example, take a walk on the new High Line Park, a new green stretch built on a disused, elevated freight line on Manhattan’s West Side (between West 30th str. and Gansevoort str.). Modern green design, stunning city vistas and a great event-mix will are waiting for you (and free guided tours every Tuesday). Once in Chelsea, you can explore the sheaf of modern art galleries (check nygallerytours.com for a guided tour). Close by you will find the Hell’s Kitchen district with its famous flea market. Towards lower Manhattan, check out Greenwich Village (once a place of rebels and artists) with the Washington Arch in its center. Southwest to GW you will get to SoHo with its famous cast-iron staircases and overbooked restaurants. If you do not get a table here, try one of the places in the neighboring TriBeCa district (the Odeon, The Harrison, or the Curch Lounge). Your Manhattan-day should include a good shopping on 5th Avenue, a visit to Ground Zero (though the memorial is still in the works), and a walk on Wall Street. After nightfall, brave the Broadway buzz and buy theater tickets at discount rates at a TKTS Discount Booth. The Empire State building is open until 2 AM but if you want to see the New York scenery and the Empire State Building, head for the top of the Rockefeller Center (The Top of the Rock) at night. New York abounds with music, but if you are looking for the cream of it, check shows at Carnegie Hall, the Metropolitan Opera, the Jazz at Lincoln Center, and the Apollo Theater of East Harlem (or attend free shows of emerging artists at the Manhattan School of Music). Do not miss Brooklyn, the home of Paul Auster, Spike Lee, Norman Mailer, and Bazooka bubble gum! Descending from Brooklyn Bridge, amble along Brook-
lyn Heights Promenade, or try the historic Cyclone (built in 1927!) at the fun park on Coney Island. Try also the long ride on Train 7, a historic subway line that cuts through Long Island City, Sunnyside, Woodside, and Jackson Heights all the way to Flushing: from the elevated tracks you will see New York just like the characters of your favorite movies and experience dozens of cultures along the way. Eager for a deeper insight into New York City culture? Check Big Onion for award-winning guided tours (http://www. bigonion.com/tours/), or take on a free tour with volunteering New Yorkers (www.bigapplegreeter.org). Staten Island Ferry is also free (http://www. siferry.com/) – but mind waiting for an older vessel because they have open decks! When planning your visit, check www.nyco.com, the official tourist site of the metropolis. WASHINGTON D.C. Do you want to enter the White House? Contact your country’s embassy in D.C. now, or at least 30 days before your planned visit. You may see only eight of the 132 rooms, but it is worth the time. Do all the must–see sights (Capitol Hill, the White House, and the U.S. Supreme Court Building) but beware that if you visit all U.S. National Memorials (from Lincoln’s to Roosevelt’s and the different war memorials) you will spend whole days among Grecian columns. Visiting one of the Smithsonian Museums is also a must, but mind your time limit when choosing from the vast variety of its collections. The National Air & Space Museum is a choice as good as the Smithsonian Natural History Museum where the repertoire ranges from immense dino-skeletons to giant diamonds. At the International Spy Museum you can observe the spying techniques and goodies of the past 50 years and get involved in exercises of analysis and dis-
guise at the museum’s interactive stations. After you have seen history, dip into the real life of the Capitol Hill community! On Sunday noon, visit the Eastern Flea Market (voted second best in the world) in the heart of D.C. Relish tasty food, buy local crafts, clothing, and artwork, chat with locals and enjoy live performances in a festive setting (http:// www.easternmarket.net/). Before or after, make a jaunt in Georgetown, the old city center that has nicely conserved raw houses, cobblestone roads, upscale shops and Georgetown University. This is also the starting point of the Chesapeake and Ohio Canal, a relaxing national park that stretches along the Potomac River. Here you can bike, kayak, or ramble. To see Washington art at its best, book tickets for ballet or classical music shows at the Kennedy Center (www. kennedy-center.org). If looking for the loose end of culture, sample the bars of H Street (Red Palace, The Rock&Roll Hotel, or Little Miss Whiskey’s Golden Dollar). You can bid a stylish farewell to Washington from the tower of Washington National Cathedral with the whole city laid out below you. BOSTON This great city has great traditions but it also beckons with a nice waterfront and great cuisine. Start with the traditions: walk the Freedom Trail, a tour of the most important sites of the War for Independence. Courtesy of the Freedom Trail Foundation, you can take a free guided tour every day. You will see sites like the Boston Common (the city’s oldest park) and the Bos-
LUFTHANSA HIGHLIGHT: A LEGEND, REBORN Be among the first travellers to fly on the new Boeing 747-8, the new edition of the longest double-deck passenger aircraft in the world. Lufthansa is the first airline to fly the new Boeing model, and their choice of Washington D.C. as the first destination to serve with the Boing 747-8 is a symbolic gesture. Read more on the ‘Queen of the skies’ in our next article on the transatlantic Lufthansa experience! ton Latin School that nurtured some of the founding fathers of the United States (Franklin, Adams, Hancock, and Paine). The Trail tour features the Old South Meeting House where a heated debate triggered the event we now call the Boston Tea Party. Among others, you will visit the Old State House, one of the oldest and most beautifully conserved public buildings of colonial America (a central site of events that lead to the Revolution), and Faneuil Hall where the principle of no taxation without representation is said to have been born in 1764. After the Trail tour, visit North End. One of Boston’s oldest neighborhoods, this quarter bears the traces of its Italian community. Boston is also a good place to experience an important part of the American soul: baseball. Fenway Park is one of the oldest baseball parks in the States and the home of the Red Sox. Book tickets 36 hours before the game! If you don’t want to take the trip to Harvard University campus (also close by) on a sunny day,
choose the Sowa Open Market. Every Sunday (until October 28) this lively marketplace awaits with food from farmers, garments and furniture from local designers, and BBQ food from food trucks. If you are looking for fancy stuff and a swanky place, visit Faneuil Hall, a beautiful shopping center crammed with restaurants. Just a block away from Faneuil Hall, you will find Long Wharf where you can embark on a memorable harbor cruise. Choose a historic cruise in the harbor with narration, or take a tour around the oldest lighthouses of the United States. How about boarding a catamaran for a three-hour whale watch? Once in the wharf, remember that Boston is a seafood-eaters’ Mecca. For the best treats of lobster rolls and Ipswich clams go to Neptune Oyster (63 Salem Str.), or try Island Creek Oyster Bar’s fresh staples! If the view over the table also matters, try Legal Harborside (270 Northern Ave), which has good basic seafood and great waterfront vista. ■
LUFTHANSA HIGHLIGHT: THE SILENT EUROPEAN To the Big Apple in Big Comfort: enjoy the more than 6,000 km long flight to New York aboard Lufthansa’s new Airbus A380 which is 50% more silent than its predecessor. You will hear but a gentle, muffled humming as the plane cuts through the skies.
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BEST CLASS
Lufthansa Airbus A380-800 The biggest commercial aircraft ever, the Airbus A380-800 sets new standards in engineering, sustainability, and flight experience. In its new flagship aircraft, Lufthansa couples best-rate services with technological breakthroughs. IN NUMBERS LENGTH: 73 m HEIGHT: 24 m TAKE-OFF WEIGHT: 560 tons WINGSPAN: 79.8 m ENGINES: 4x Rolls-Royce Trent 900s (the most silent aircraft engines in the world) NUMBER OF DECKS: 2 FLIGHT CLASSES: First, Business, and Economy NUMBER OF PASSENGERS: 526 FLY IT TO: Beijing, Houston, Johannesburg, Miami, New York JFK*, San Francisco*, Singapore and Tokyo *not operating in winter.
WHAT’S INSIDE?
New First Class: The Big 8
TOP NYC SIGHTS
1. The Empire State Building 2. The Brooklyn Bridge 3. Times Square 4. Central Park 5. Grand Central Terminal 6. Lincoln Center for the Performing Arts 7. The Metropolitan Museum of Art 8. Ellis Island and the Statue of Liberty 9. Ground Zero 10. The American Museum of National History
The new First Class offers new a kind of pleasure as it weds old-style craftsmanship in quality and modern approach in design and technology. Automatic humidifiers assure optimal climate for relaxed traveling, and the seats can be personally adjusted. Sleep, work or lounge as you never dreamed aboard an aircraft! First Class has two huge bathrooms with elegant, clever design. The multimedia set teems with films, games and music, and displays live-images of the camera mounted on the rear of the plane.
Business Class: Like a family The 98-seat new Business Class shares the entire upper deck with First Class. At the push of a button, the new seats can be adjusted in different positions, and along with an adjustable headrest they allow a relaxed sleep in a stretched-out position. Reading lamp, cocktail table, storage compartments and the multimedia system assure a very pleasant longhaul flight.
Economy Class: Classy? Indeed, it is. Situated on the main deck, Economy Class has room for 420 passengers but it still feels like an airy, spacious cabin due to barely slanting walls. The storage space has also grown. The multimedia system serves quality entertainment and a specially trained cabin crew sees to the best flight experience.
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Be assertive, not aggressive Do you find it hard to say no? Do you lack the courage to stand up for yourself? Could it be that you do not speak out on topics because you are afraid of creating aconflict with your peers? If this happens often, it could be the sign of a lack of assertiveness. Do you ever wonder why some people always seem to get what they want, whether it is a promotion or a higher salary or more cooperation from colleagues and friends? The secret here is assertiveness. If being assertive is not easy for you, you are not alone. Many of us were raised to believe that it is not nice to put our own needs first. Others hesitate to speak up because we hate conflict or criticism, or dread the possibility of being embarrassed. Often we just go along with the crowd because we want to be liked. Assertiveness is a style of communication that empowers its users to speak out and stand up for themselves in a clear and respectful manner. Being assertive means expressing your wants while being mindful of the opinions, needs and feelings of others. You are respectful towards others yet you say what is on your mind, what you think and feel. You show self-confidence, but you are never pushy or over-controlling. It is saying honestly to yourself, and to others, “This is who I am. This is how I want to be treated,” while respecting other people’s rights and opinions. Assertiveness is not about being liked all the time nor about making sure everyone is happy. It is about standing up for your right to be treated fairly. There are many advantages to being assertive: - It empowers you to become a stronger communicator; - It gives you confidence and enhances your self-esteem; - It helps you gain the respect of others while improving your decision-making skills; - It creates win-win situations; - It helps you to healthier and more honest relationships; - It definitely reduces the bitterness you may feel when
your needs are not met and wards off anger, stress and high blood pressure. The more assertive you become, the better you are able to face problems and conflicts with poise and confidence. It encourages you to make decisions without second-guessing yourself. You will have more self -respect and in return will earn the respect of others. Assertiveness is often confused with aggression. Although it is a common mistake, the two are very different. The difference can be summarized with a simple word: respect. Assertive people respect others’ opinions, feelings, needs and wants. They find ways to avoid infringing upon other people’s rights while asserting their own rights and seeking compromise. It is possible to communicate your feelings without making someone else feel that they must give in to you. Aggressive people on the other hand lack respect for others. They are quick to shout or threaten people and invade their personal space. They are ready to make a scene to be heard. Aggressiveness is characterized by a complete disregard for others’ needs, wants, feelings or even personal safety. Conflicts with aggressive people turn into shouting matches that can even lead into physical violence. Over-aggressiveness and self-promotion seem abundant in the media and society today. People communicate aggressively every day, fights occur frequently on reality TV, and aggression often gets too much airtime overall. Being aggressive is not likely to win you many friends and ultimately
may not even get you what you want. However, being assertive gives you a quiet dignity, as it is not pushy like aggressive communication. It allows you to honestly express how you want to be treated. PASSIVENESS Like aggression, passivity is not likely to win you many friends either. Passive communication assumes that others will understand what you want or need even if you do not specify those needs. Silence and assumption are the characteristics of this style. The key difference here is again respect. Aggressiveness was defined by a lack of respect for others, while
passiveness can be defined by a lack of respect for one’s self. Passive people disregard their own opinions, feelings, needs and wants. Passiveness takes away the power of a person who stays quiet or just allows others to decide what needs to happen. BACK TO THE IDEAL BEHAVIOR: ASSERTIVENESS WHEN TO USE IT Being assertive is useful when you act as a consumer, when you want to be a better partner, parent or even caretaker to someone who matters to you, or when you want to handle workplace challenges. In order to become assertive, you need to change
your mindset. You need to practice assertive skills as often as possible. You can use them first on friends and family to get used to saying, “I want” or “I need”. Then you can begin using assertive communication in public and at work. The more you try this new language, the more you will begin to see yourself as assertive. Making the transition is not easy. Old habits are difficult to change, even if those habits result in pain and frustration. How well the transition goes varies from person to person, but it depends on you alone. The route to your new assertive self is more like a corkscrew, where you move forward several steps, move
back a few, move forward then back a little again. That means that sometimes you will be able to assert yourself and other times you will not. There is a lot of backward and sideways movement on the path to assertiveness. As things click and as you receive the response and respect you desire, it will give you more motivation to continue. The more you practice and the more you stay with it, the more assertive you will become. I would like to close with a George Orwell quote: “If liberty means anything at all, it means the right to tell people what they do not want to hear.” Live assertively and create the life you want! ■
Judit Ábri von Bartheld ACC, International Coach Federation accredited executive coach, organiser “Coaching Without Borders” www.coachinghataroknelkul.hu, and “Leadership Excellence Forum” abri.judit@executivecoach.co.hu www.executivecoach.co.hu
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Stratis Consulting has acquired data management company MasterData Kft. The transaction resulted in Stratis establishing two new business units. Sipos, founder of MasterData Kft, will head the data governance unit. In the past 17 years he has led major data warehouse and BI solution development programs (clients including CIB, MKB and T-Mobile). He started his career as a researcher at the Hungarian Academy of Sciences’ Computer and Automation Research Institute, after graduating from the Budapest Technical University in 1976.
Mezei will lead the other business unit established at Stratis. Between 2004 and 2012, he was salesperson, business development director and application services business unit director at HP. He started his career at the Budapest Technical University, working in cooperation with the Braunschweig University of Technology on the development of a computer-aided design system. In 1993-2004 he was CTO and later CEO of Infoland Kft. Mezei is a graduate in mechanical engineering and holds an MBA .
Name Ferenc Sipos Current company/position Stratis Consulting Kft/ head of data governance business unit
Name Gábor Kohári Current company/position Deloitte/deputy CEO at financial advisory services
Before joining Deloitte, Kohári ran his own facility management and real estate assessment company. Previously, he worked with another of Hungary’s Big4 companies for more than ten years. He graduated from the Budapest Technical University and obtained his second degree from the University of Economics and Public Administration. He is a member of RICS (Royal Institute of Chartered Surveyors).
Name Ferenc Mezei Current company/position Stratis Consulting Kft/ head of application governance business unit
Name István Falcsik Current company/position Szarvas, Falcsik és Társai Law Office/lawyer
Falcsik recently joined the law office, which cooperates with Deloitte. He worked at the Custom and Finance Authority for nearly 15 years, and later established his own law firm. He obtained his degrees from the legal faculty of Eötvös Loránd University and from the College of State Administration. He is married with two children.
Name Szabolcs Koroknai Current company/position CBRE/senior advisor
Koroknai joined CBRE’s Budapest office in September. He has been working in the commercial real estate market for 12 years, having spent three years on the development side (Mammut, Strabag) and nine years as retail consultant at Colliers International. Koroknai was involved with leasing shopping centers and retail parks, and represented such clients as Mosaic Property, Mammut, WING, Europa Fund and Portico Invest, C&A, H&M, Orsay, Raiffeisen Bank, McDonald’s and Alexandra Books.
Piller has been appointed CEO and member of the board of telco and broadcasting company Antenna Hungária as of September 10. Interim CEO Yves Coulomb, appointed on June 1, will continue his work as CFO and member of the board. Name András Piller Current company/position Antenna Hungária/CEO