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Why the Váci út

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corridor is so busy

Call a pro! Asset

for amateurs management not

 24

Excitement building

real estate investment

in Hungary Investor interest economic is increasing, as and fundamentals improve Budapest has yields stay high. pipeline now, few projects in the soon. but that may change

Business Journal Vol. 23. number 20

Budapest

HUF 1,250 | €5 | $6 | £3.5

Building success

oct 30, 2015 – noV 12, 2015

Hungary’s practical business bi-weekly since 1992 | www.bbj.Hu

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mnB could keep money loose to 2019 Analysts were surprised to hear central bankers talk about their plans as far as four years into the future – especially when most had anticipated the base rate would start to creep up by 2017. 3

special report

Planning growth as masses pass through Management of Budapest Airport involves hitting a moving target: Even as it serves roughly one million passengers a month, the facility is constantly undergoing development. 26

News

since 1994, District Xiii Mayor József tóth has worked to attract developers, turning Váci út into the capital’s main office address. He reveals his winning strategies in an exclusive interview. 20

tv2: War for media control continues The latest drama over ownership of Hungary’s second-largest TV station is just one episode in a long-running effort by the ruling Fidesz party to control the message carried by commercial news outlets. 8

socialite

spending a day among the dead Our photographer explores the history and serene beauty of Budapest’s main cemetery, Kerepesi, which is going to get spruced up for All Saints Day but is always worthy of a visit. 34

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2015.10.28. 22:09

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budapest business journal | Oct 30 – nov 12, 2015

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Why the Váci út

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management not

for amateurs 

Excitement building

real estate investment

in Hungary Investor interest economic is increasing, as and fundamentals improve Budapest has yields stay high. pipeline now, few projects in the soon. but that may change

Business Journal Budapest

Vol. 23. number 20

oct 30, 2015 – noV 12, 2015

Hungary’s practical business bi-weekly since 1992 | www.bbj.Hu

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Building success

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By spending billions of forints on fences and border patrols, the government has successfully sealed Hungary from refugee traffic, making this the only country in the corridor from Turkey to Germany that refugees have to go around, instead of passing through. The neighboring countries are angry at this isolationist approach, and the refugees face greater dangers as colder weather approaches, but officials imply that these foreigners pose a threat. The idea that the government must protect us from external threats is a favorite theme of our leaders. It is a transparent effort at populist fear mongering, designed to get us to forget the real problems that this country has, and to ignore how little our leadership is doing about those problems. It seems to be working for now, as recent polls have indeed shown an uptick in the popularity of the ruling Fidesz party in the face of assumed threats from abroad. Seriously though, do we really need this fence? Estimates are hard to come by, but a Fidesz official has suggested the cost of fencing along the border could come to at least HUF 20 billion. Meanwhile, the refugees that this expensive effort is blocking are not interested in staying here, and it was entirely possible to let them keep making the half-day trip through our country on their way toward Austria and Germany.

The government has given a host of reasons for never letting refugees set foot on Hungarian soil. They warn us that migrants carry diseases, that Muslims will have more children than we do and destroy our Christian way of life, and that migrants will take our jobs. But if we are really so worried about diseases, should we not be more concerned that roughly 1,000 doctors leave our country every year? The state pay for doctors is about onetenth what it is in other European countries, which is why health care workers are leaving in droves, and those who are staying are overwhelmed. If we are really concerned about our children, should we not think more about better schooling? Thanks to cuts in spending – and unnecessary government interference in curriculums and faculties – the quality of Hungarian academic programs is dropping, encouraging our best and brightest students to study, work and move abroad. As for concerns about migrants taking our jobs, demographers tell us that, like doctors and students, other types of workers are leaving Hungary to find better wages in the West. While stirring fear of foreigners is easier than dealing with our problems, in the long run blaming others will not improve health care, education and employment prospects in this country. As long as the government neglects these, and other vital issues, the majority of the traffic at our borders will continue to consist of people heading for the exit.

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above, terminal 2 of Budapest’s Ferihegy airport in 1985. at left, the newest skyCourt connecting terminal 2a and 2B of Budapest liszt Ferenc international airport, as it was renamed in march 2011. Budapest liszt Ferenc international airport saw passenger numbers exceeding 1,017,000 in september – a 16.2% year-on-year rise. in October, operator Budapest airport received the ‘airport of the Year’ accolade, in the 4-20 million passenger category, from the CaPa Center for aviation.

2015.10.28. 22:09

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mnB: We may keep rates low until 2019 the Hungarian National bank surprised analysts by predicting loose monetary policy four years into the future. analysts had previously expected an increase by 2017. zsófia czifra

to no one’s surprise, the Monetary council (Mc) of the national bank of Hungary (Mnb) has left the 1.35% key rate unchanged at its latest ratesetting meeting on October 20. but the accompanying statement released afterwards by the Mc did grab analysts’ attention. the last sentence says: “if the assumptions underlying the bank’s projections hold, the current level of the base rate and maintaining loose monetary conditions for an extended period, over the entire forecast horizon, are consistent

with the medium-term achievement of the inflation target and a corresponding degree of support to the economy.” the forecast horizon currently runs to the second half of 2017. given that no previous Mc statement has ever been so explicit about the future rate path, comments a few days later, referring to a timeline even farther out at 2019, were equally surprising. in a reaction to the Monetary council statement, nomuraʼs senior emerging markets economist and strategist peter attard Montalto said that Mnb is making step-by-step moves towards cutting rates, which could happen in early 2016 and mark the start of a move down to 1%. the research note by nomura highlights the difference between the september guidance, which stated that the current base rate would be kept longer than expected by markets, and the current one that extends forward guidance for rates unchanged for the entire forecast horizon (which is two years). “we think the changes at the start of this paragraph are also significant, showing the weight put on the projections. we believe they are doing this deliberately, given the

“While the inflation target is achievable, negative real interest rates must be maintained to close the output gap.” downside risks to the forecast,” the nomura analyst added. in the meantime, Mnb deputy governor Márton nagy said at a conference organized by portfolio on October 27 that the central bank may keep its base rate at the current record-low level until 2018 or even 2019, beyond its horizon for monetary policy. the bank expects to meet its policy objective – 3% inflation plus or minus a percentage point – by the end of 2017, but that will not necessarily lead the bank to raise rates, nagy said. “the base rate can remain low for a sustained period, even in 2018, but i cannot rule out that even in 2019, beyond the policy horizon,” nagy told reporters, as cited by reuters. analysts in a reuters

poll conducted earlier this month had forecast the base rate would remain unchanged this year and next, rising to 2% by the end of 2017. not raising rates as inflation accelerates would mean giving Hungary negative real interest rates, which nagy said was necessary as long as a negative output gap persists. “negative real interest rates are not just an opportunity but a must,” reuters quoted nagy as saying. “inflation targeting is the most important, but inflation targeting also allows real interest rates to turn negative, even on a sustained basis. the output gap remains negative, and while the inflation target is achievable, negative real interest rates must be maintained to close the output gap,” nagy said. just before the deputy governor revealed the details on the rate path, analysts thought the base rate could be raised within two years. takarékbank analyst gergely suppan had said that the key rate is expected to be kept at 1.35% until the end of next year, and can be increased as high as 2.5-2.75% by the end of 2017, with increasing downward risks.

Bill would require retailers to hire more

A Tesco Expressz shop on Kazinczy utca in Budapest.

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the Hungarian government is drafting proposed legislation that would require large retailers to hire a minimum number of workers, according to reports published October 28. under the proposal, retailers with units larger than 400 sqms, would be required to employ one worker per 70 sqms, so that there would always be someone available to provide help to customers. “lack of workforce is becoming more and more critical in the retail sector,” said an article about the law in Magyar idők, the new publication that the government has taken to using as its official gazette. according to the paper, as a result of the bill, which is expected to come into effect in 2016, retailers would need to double their workforce. Magyar idők predicted that hypermarkets, such as tesco and auchan, will object to the measure, citing lack of resources. However, the daily said, “as a result of gradually increasing retail sales, retailers saw approximately HuF 15-18 billion more profit than planned.” indeed, retail sales have been slowly growing this year, even though large retailers were hit by a law that required them to close their stores on sundays as of March. Members of the retail industry have complained that the small growth in sales would have been much larger if not for the sunday closings law.

2015.10.28. 22:09

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budapest business journal | Oct 30 – nov 12, 2015

NEWS Decree reveals Rogán’s responsibilities antal rogán, who was recently appointed political cabinet chief of a specially created ministry, will be responsible for managing, monitoring and coordinating the government’s policies, according to a decree published in the official gazette Magyar Közlöny, Hungarian news agency MTI reported on October 27. under the decree, which was signed by Deputy prime Minister Zsolt semjén, the political cabinet chief will also be responsible for coordinating government communication, a field which is currently under the aegis of the prime Minister’s Office, led by cabinet chief jános lázár. rogánʼs position will involve summarizing and evaluating government proposals, on the basis of which he is to submit a final proposal to Hungary’s prime Minister Viktor Orbán, Mti adds. rogán will also be in charge of briefing ministers and government organizations on the prime minister’s decisions, while he will have the authority to ask officials to report on the implementation of the government’s various policies, which can then be passed on or presented to the prime minister, Mti reported. rogán will also be responsible for coordinating protocol tasks pertaining to the prime minister and the government, tasks concerning the prime minister’s official visits abroad and organizing state events, the news agency added.

Opposition says farmland auctions favor oligarchs parliament held a heated debate on October 26 about government plans to privatize farmland starting next month. the opposition claims the land will be sold to government friendly oligarchs, while the government insists the sale is aDVertiseMent

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meant to favor Hungarian farmers over foreign investors. addressing lawmakers before the debate, Farm Minister sándor Fazekas said plans were to put 20% of state land into the hands of farmers, something the government claims would strengthen family farms, help make farmers more competitive, strengthen the position of small farms against big companies and protect Hungarian land from foreign buyers. critics say the land will be handed to friends of the ruling party. For example, origo.hu reports that, through the auctions, Felcsút’s forint billionaire mayor lőrinc Mészáros, a close associate of prime Minister Viktor Orbán, will have a chance to buy HuF 1 billion worth of farmland. Opposition parties criticized the government’s move as an attempt to “play land into the hands of friends and oligarchs”. lMp’s benedek r. sallai said at a press conference on October 26 that all Hungarian elites in the past have been “stealing whatever they could put their hands on” and now they are stealing what is left: the country’s most important natural resource. He said the move would not serve the interests of small farmers at all. együtt (together) party said “Fidesz’s land reform” went against Hungarian laws, and vowed that all “stolen land” would be returned after a change in government when Fidesz’s “friends” would be held to account. the far right jobbik party said it would be “standing guard” by each and every land auction in the country. the socialists argued that the government’s plan to auction off farmland would not prevent foreigners from obtaining estates in Hungary, calling the program the “greatest swindle of the past 25 years”. the Democratic coalition (Dk) said the land to be auctioned would not go to local farmers but to new owners who “never touched a hoe”.

Photo: MTI/Szilárd Koszticsák

in brieF

1956 remembered People gather at Plot 301 in rákoskeresztúr cemetery where soviet forces secretly buried the Hungarian leadership of the 1956 Uprising on October 23, the anniversary of the beginning of that uprising. memorial services were held around the country on that day.

Government asks for EC ban of genetically modified crops

Government drafts changes to public procurement law

Hungary has submitted a petition to the european commission (ec) asking for a ban in Hungary on all genetically modified corn varieties that have production licenses or are about to receive such licenses in the european union, the farm ministry told Hungarian news agency MTI on October 27. the government sent its petition on september 21, asking for the ban of eight products. since none of the companies producing these types of corn had submitted an appeal by the October 22 deadline, the ec will have to modify existing and future distribution licenses to exclude Hungary, the ministry said. Hungary will also ask for exemptions from the ec in the future if other gMO producers request european distribution rights, the ministry said, noting that Hungary’s constitution stipulates that the country remain gMO-free.

the Hungarian government published a five-point draft on its official website kormany.hu on October 26 regarding modifications to Hungary’s public procurement law, for which comments from opposition parties would only be heard in parliament on the same day, Hungarian daily Népszabadság reported. as part of the modifications for public procurement, the price-value ratio rather than the lowest price offered would be the key factor in evaluating a tender, Hungarian online daily origo.hu reported. critics of the modifications say that this point is aimed specifically at lajos simicska’s közgép. since simicska and prime Minister Viktor Orbán had a public falling out, his flagship company közgép stopped winning public procurement tenders, despite offering the lowest price. the Hungarian public procurement board banned közgép from public procurement tenders in july for submitting what it called “false data”. the firlm appealed that decision in september.

Franklin Templeton continues to sell Hungarian bonds Franklin templeton, one of Hungary’s largest creditors, will continue to sell its Hungarian bonds, despite bonds held by the investor falling to HuF 6.1 billion in Q3 from HuF 7.5 bln, Hungarian online daily hvg.hu reported on October 26, citing data from portfolio. hu. according to a report from online daily hvg.hu, the gradual selling of Hungarian government bonds by Franklin templeton is a sign the investor is planning to exit Hungary. the number of bonds owned by Franklin templeton has declined since the beginning of the year. Hungarian government securities held by Franklin templeton dropped 2.2% in Q4 last year, as compared to the preceding quarter, and fell by a year-on-year 4.1% due to the forint weakening to the dollar. by May, the emerging Market specialist had reduced its Hungarian debt exposure by HuF 432 bln. analysts said in May that time would tell whether Franklin templeton, which holds most of Hungary’s government securities, was selling because of concerns about the situation in ukraine rather than because of something happening on the Hungarian market.

Eurostat: Two-thirds of Hungarian jobseekers remain unemployed in the second quarter

some 66.7% of Hungarians who were unemployed in the first quarter remained unemployed for the second quarter, while 23.1% found employment for Q2 and 10.2% moved into inactivity, according to eurostat statistics published for the first time on October 26 on quarterly labor market flows. the eu average of those who found employment from the first to the second quarter reached 18.6%, while 64.6% remained unemployed and 16.8% moved into inactivity, data by eurostat reveals. eurostat said all persons who worked at least one hour for pay or profit during the reference week or were temporarily absent from such work, were counted as employed persons. unemployed persons, according to eurostat, are all persons not employed in the reference week who had actively sought work during the past four weeks and were ready to begin work in, at most, two weeks. eurostat classified

2015.10.28. 22:09

News 05

www.bbj.hu

budapest business journal | Oct 30 – nov 12, 2015

GKI-Erste: Business confidence worse, consumer sentiment improves

gki-ersteʼs combined gauge of consumer and business confidence stood at -0.8 points in October, up from -1.8 in september, Hungarian news agency Mti reported on October 26. the business confidence index fell to 5.8 points in October from 7.5 in the previous month. the consumer confidence index rose to -19.6 points from -28.3. businesses in all but the commercial sector were more pessimistic. industrial companies’ assessment of output in the previous period and of the order stock including export orders improved, while that of inventories and their production outlook deteriorated. the construction sector index fell after rising in the previous two months as companies’ assessment of orders worsened. confidence in the commercial sector has reached its peak so far this year as the assessment of sales positions and the expectations for orders were markedly better. companies in commerce said inventories were slightly higher. companies in the service sector said business was worse and the outlook has deteriorated.

Hungary to expand programs for fostered workers the Hungarian government is planning to launch new programs to expand employment in the country, péter cseresnyés, state secretary of the national economy Ministry, told Hungarian daily Magyar Idők October 26. the state secretary said that the government is drafting a decree that would allow the advance payout of subsidies for fostered workers who find market-based employment before their public work program contracts expire. Fostered workers are employed by the government and paid less than minimum wage to work at jobs such as street sweepers or metro ticket collectors. in addition to revising the system of vocational training to suit the needs of the labor market, cseresnyés said that the most important aspect is to provide

support for job placement at businesses and create incentives for job creation. as a result, the Hungarian government is launching new training programs. these programs, which will focus on putting fostered workers in market jobs and reducing unemployment among youth, according to the state secretary, are being co-funded by the european union and the Hungarian state. the state secretary said that the vocational education system must be restructured and become operational by the next academic year as a first step. cseresnyés said that greater emphasis will be placed on adult education, in particular making training for a second profession free of charge.

Photo: MTI/Attila Kovács

inactive people as those who could neither be regarded as employed or unemployed, and this included in particular students, pensioners and housewives or men, provided they were not working at all and were not available or looking for work.

Forint could join CLS currency settlement system the Hungarian forint could be the first currency in the region to join the cls settlement system in the next few weeks, the company told international news service Reuters on October 22. according to reuters, the national bank of Hungary is planning by november 16 to join the system, which “covers 17 currencies and almost all of global wholesale foreign exchange trading”. citing “sources with knowledge on the project”, reuters reported that the introduction could happen “in weeks”. “cls has moved into the implementation phase of onboarding the Hungarian forint,” the company said in a statement. “the go-live is targeted for fourth-quarter 2015, subject to the satisfaction of clsʼ eligibility criteria and internal governance requirements and securing the necessary regulatory approvals.” specialist u.s. financial institution cls provides settlement services to its members in the foreign exchange (FX) market. “cls is the largest multi-currency cash settlement system, eliminating settlement risk for over half of the world’s FX payment instructions,” the company says on its website. “cls enhances financial stability by providing risk mitigation and operational services for the global FX market,” the website adds.

MKB Bank plans to enter bourse Hungary’s state-owned Mkb bank is planning to list its shares in the budapest stock exchange (bse), given that the bank’s value can best be demonstrated by its participation in an open, regulated

Opposition to park plan lászló Baán, ministerial commissioner for the liget Budapest project, holds a pile of signatures handed to him by lászló várnai (center), chairman of Civilzugló egyesület, a civic group that opposes the liget Budapest plan to redevelop the városliget (City Park) on October 26. Just before receiving the signatures, Baán presented his HUF 200 billion plan for redeveloping the park in Parliament. the liget Budapest projectʼs original plan involved setting up five museums for Hungarian music, fine arts, architecture, ethnography and photography within City Park. Under the plan finalized at a cabinet session last week, the ethnography museum would be built at a different site than originally planned and the architecture and photography museums are no longer part of the liget project and will be built elsewhere in Budapest, Baán told the committee. the plan calls for increasing the amount of green spaces in the park.

securities market, chairman-ceO Ádám balog told Hungarian daily Magyar Idők on October 22. balog, the former deputy governor of the national bank of Hungary (Mnb), said that several potential investors have already been notified and negotiations are underway. He added that the central bank, which exercises the ownership rights, is looking to sell at least 50% of its shares plus one vote. the ceO said that a stake exceeding this minimum target may also be

sold. balog said that the new owners will be satisfied with the result of the restructuring and the bank’s new aim, Hungarian news agency MTI reported. balog said he – like the Mnb – also believes that only five large banks will remain in Hungary in five years’ time because this number best suits the size of the Hungarian market, Mti added. the Hungarian state bought Mkb from bayernlb last year, and reports suggest that it plans to sell the bank by early 2016.

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Pm seeks to exit refugee crisis as tensions rise with Hungary’s borders sealed off, the flow of refugees is bypassing this country, but neighboring states insist they need help with the problem. bbJ staff

after closing off the croatian border, and essentially changing the route for migrants passing through europe so that it bypasses Hungary, officials here seem to be taking the attitude that refugees are no longer this country’s problem. the neighboring countries do not seem happy about this attitude, and the weight of the crisis seems to be straining relations in the region in general. at an October 25 emergency meeting in brussels to discuss the refugee crisis, Hungarian prime Minister Viktor Orbán declared that his country had become a mere “observer” in the process because his country had solved its refugee problem by doing the right thing. “the number one source of the crisis is that members of the european union, and especially those who are members of the schengen treaty, are not able, or are not ready, to keep their word,” Orbán said. He maintained that every schengen country should be taking the same steps as Hungary to seal its border against refugees. Others did not share his viewpoint at the meeting, and since then, Hungary has come in for more criticism from foreign officials. while not referring specifically to Hungary, julia klöckner, vice president of germany’s conservative cDu party, and Dutch Finance Minister and head of the eurogroup jeroen Dijsselbloem, both said in late October that countries that do not agree to take in refugees should lose their eu funding, and this funding should go to help refugees.

Asylum seekers wait to register at a reception center in Šentilj, Slovenia, before crossing the border to enter Spielfeld, Austria, on October 26. (Photos: MTI/György Varga)

“The number one source of the crisis is that members of the European Union, and especially those who are members of the Schengen treaty, are not able, or are not ready, to keep their word.” Record numbers

slovenia, which became part of the main migration route with the closing of the croatian border crossing, had called for the emergency session in brussels to deal with the crush of refugees passing through that country on the way to austria. slovenia’s prime Minister Miro cerar told the gathering: “if we are unable to make concrete steps in the coming days and weeks, then europe and the european union will start falling apart.”

Most of the leaders at the meeting, which included the eu countries on the refugee route, as well as several non-eu balkan countries, seemed more amenable to helping than Orbán. all those present agreed to a 17-point action plan to continue addressing the problem. Despite pledges to work together, the european countries along the refugee route, which stretches from greece to germany, are buckling under the strains of the crisis. apparently eager to travel before the coming winter, and before

europe more thoroughly shuts its borders, thousands of refugees are still passing through each country on the route every day. Many balkan countries said the refugee flow was hitting record numbers in late October. On October 28, shortly after slovenia called for the emergency meeting, austria suggested it might have to build a fence just to contain the roughly 8,000 people crossing the border every day. austria said the point of the construction would be to create order at the border, not to prevent people from coming in. “it is not about generally closing off the border, but we are trying to control the situation and ensure security with large numbers of people. we want to avoid escalation,” karl-Heinz grundböck, a spokesman for the austrian interior Ministry, was quoted as saying by the new york times.

Epson hElpEd with its nEw printErs

domestic hazards affecting children is a major concern in today’s homes. Poszeidón special ambulance and epson Hungary cooperated to raise awareness about the issue and to give tips to prevent such accidents. We asked miklós fábián, national sales manager at epson Hungary, about the cooperation. How did the idea of cooperation came up? Poszeidón Special Ambulance had the original idea to create a brochure that helps parents prevent domestic accidents involving children. They turned to Epson for help to prepare and print

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these brochures. We’re always on the lookout for opportunities to support local initiatives since our mission is to prosper with communities and help create a better world. Therefore, we offered Epson’s knowledge and the services of Ink Tank System (ITS) technology to provide fast and cost-effective printing solutions for Poszeidón ambulance so that a higher number of brochures can be printed to reach more parents and families. Why were the new printers suitable for the project? Epson’s ITS printers feature refillable ultra-high capacity ink tanks that enable

the new L-series printers to print for a more affordable price compared to conventional inkjet and laser printers. ITS printers deliver ultra-low-cost printing without the need for ink cartridges including models that come with enough ink to print up to 12,000 pages in black and 6,500 pages in colour. As a result, the cost per page can be up to 90% lower than other printers on the market, making Epson’s technology ideal for consumers and small businesses who want to print brochures or leaflets in a higher volume. This technology enabled us to help Poszeidón Special Ambulance’s initiative.

Where will the brochures be available? The brochures will be available in GP waiting rooms, children’s hospitals and through district nurses in Pest County in October and November. We plan to print more of them in the future and continue our cooperation with Poszeidón Special Ambulance. www.epson.hu/inktanksystem

2015.10.28. 22:10

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www.bbj.hu

budapest business journal | Oct 30 – nov 12, 2015

Analyst: While raising ire abroad, Orbán gains locally a former foreign minister criticizes the current government’s diplomacy but acknowledges it is improving their popularity at home.

“I cannot remember any time since the system change 25 years ago when Hungary had such a bad reputation and such bad relations with the neighbors.”

cHristiaN KesztHelyi

Hungary has been cutting itself off with its go-it-alone approach to the refugee problem and its literal fence building, and is damaging its reputation abroad, according to a former foreign minister. in a discussion with foreign press on October 21, péter balázs, who was Minister of Foreign affairs for the socialist government from 20092010, right before the current Fidesz government took over, was critical of the government’s foreign policy on the refugee crisis. He did, however, acknowledge that the government’s stance seems to be playing well at home.

Hungarian Prime Minister Viktor Orbán speaks to the press at an October 25 summit on the refugee crisis in Brussels. (Photo: MTI/Balázs Szecsődi) “i cannot remember any time since the system change 25 years ago when Hungary had such a bad reputation and such bad relations with the neighbors,” balázs said. “Domestic opinion polls reveal that the popularity of [prime Minister Viktor] Orbán has increased, because of building fences and

eliminating refugees. in europe, i can see the opposite trends.” with the exception of slovakia, balázs maintaned, Hungary’s “situation is tense” with all its neighbors. “within the eu it is clear that Orbán is isolated,” he said. “nobody even wants to be in a picture with him.” as for Hungarian Foreign Minister péter szijjártó, balázs said that he is “a good spokesperson for Fidesz, repeating his master’s voice”. but balázs maintained that the kind of criticism szijjártó has leveled at others is unprofessional and considered too harsh for the diplomatic sphere. in contrast, another speaker at the discussion, Ákos gergely balogh, editor-in-chief of the online news portal Mandiner, suggested that Orbán’s

government was simply doing what it had to do. “there are some well-known intellectuals, who are very critical of the Orbán government, and yet in this question they admit that Orbán may be right – that it is a big problem and accepting everyone is not a good idea,” he said. balogh added that it is impossible for europe to give refugees temporary shelter for a few years, as they would not want to leave. “i am not sure europe is strong enough to send back hundreds of thousands of people,” he said. regardless of how the issue may be playing among foreign leaders and the foreign press, it would appear that the government’s hard line on refugees has helped Fidesz’s popularity at home. according to independent pollster ipsos, support for Fidesz grew to 24% in september, up from 20% in june. in fact, in june, Fidesz’s popularity had been declining while its closest competitor, the far-right jobbik party was growing. that situation seems to have turned around: in september, jobbik’s support fell to 14% from 15% in june. in sheer numbers, Fidesz had 1.9 million supporters in september, while jobbik had 1.1 million, according to ipsos.

eXpert opiNioN

powErful changEs in powEr gEnEration Pál Gerse business Development expert Met pOwer Hungary Even if renewable energy sources are spreading, gas-fueled power plants remain unavoidable actors of power generation. However, new initiatives are needed to guarantee their survival. The power market has profoundly changed in Hungary and all over Europe. The economic crisis, the political interventions and the support of renewable energy production have altered the market conditions of traditional power generation. The new era has started with the EU energy policy’s triple 20% targets, followed by policy actions. One of the action plans, the Roadmap 2050 visualizes a nearly 100% decarbonisation as the main target in power generation until the middle of the century. The basic rule, the mandatory purchase of energy coming from renewable energy sources (RES) divided the electricity market

into regulated and free segments. The Fukushima accident has also boosted the increase of renewable sources. As a forerunner, Germany decided to close nuclear plants and accept Energiewende to fully replace these plants with RES generation. New EU policies are influenced by green movements, interested industry segments and political turbulences on primary energy markets (Ukraine, Middle East). renewable energy depends on weather Nevertheless, renewable energy sources could not yet adapt to open market conditions because of their dependency on weather conditions (wind, sunshine) and high development costs. To overcome these obstacles, renewable sources need economic and political support, i.e. foreseen price levels and sales opportunities, so governments decided to grant these price levels for their generation. In addition, system operators in EU member states are obliged to purchase the totality of renewable generation. Consequently, conventional power generation is in trouble and the competition for decreasing sales possibilities has dramatically increased.

The natural-gas-fueled power plants are particularly suffering, even the highly efficient ones. Their generation costs consist of low fix cost elements and high variable costs (contrary to nuclear or coal power plants), so their market share is shrinking and these units do not even get enough income to cover their operational expenses. The situation is even worse in Hungary, as gas power plants have another strong competitor: import supplies coming from foreign – nuclear or coal-fired – units and from the surplus of renewable power generation in Germany. Without enough revenue these plants are making losses, so the owners have to decide about their future. Taking into account future market possibilities, they may be ready to finance losses for a few years, but not in the long run. While wholesale prices are constantly decreasing, nobody talks about the costs of energy policies. The subsidy of RES generation has appeared in consumer prices, increasing in most European markets. Capacity markets may help The current state of fossil-fueled generation portfolio will change in the near

future. Many of the units, especially the efficient ones, may be for sale and could be relocated in places where demand is growing faster and market prices promise return on investment. Decision makers should analyze the situation and the related risks, taking into account that energy supply security is a fundamental requirement and a national responsibility. They should propose correcting actions which help maintain the necessary capacity level. One of the actions may be the introduction of capacity markets, already in place or under realization in many EU countries. The main goal is to maintain strategically important capacities (power plants) inside the power generation system, thus guaranteeing supply security. Capacity markets make energy supply more stable, balancing the weather-dependent – therefore unpredictable – RES generation and the constantly changing power consumption. During peak time (during the day), power consumption drastically increases, so one needs flexible power plants capable of instantly providing large quantities of electricity. That is exactly what gas-fuelled power plants are able to do.

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT fOR whICh ThE BuDAPEST BuSINESS JOuRNAL DOES NOT TAKE RESPONSIBILITy

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08 News

budapest business journal | Oct 30 – nov 12, 2015

tv2: latest battle in media war the ruling fidesz party’s campaign to control the press hit a snag when two media oligarchs, who have apparently dropped their allegiance to the government, claimed ownership of the country’s second-largest television station. bbJ aNalysis

the drama is worthy of a soap opera: a one-time government-friendly media mogul gone rogue has apparently snatched tV2 away from a one-time Hollywood mogul gone local and his would-be ceO, a formerly antigovernment media executive who may have gone to the other side. while the public tussle for the ownership of the country’s secondmost watched tV station makes for sensational news, it is also part of a very serious campaign by the ruling Fidesz party to control the message of the media. this campaign has included completely rewriting the country’s media laws in 2010-2011, as well as market-oriented steps that critics say interfere with the workings of a free and democratic press. “since their election in 2010, Fidesz has used a mix of regulatory and economic means to attempt to control the media – with some measure of success. the current fight over control of tV2 is part of the government’s aim to secure footing in the commercial tV market and to counter rtl klub, tV2’s main competitor,” said amy brouillette, a local media expert with the center for Media and Data studies at central european university. everything seemed to be working according to Fidesz’s plans on October 15, when tV2’s party-friendly owners, yvonne Dederick and Zsolt simon, announced they would sell the station to another individual who is presumably Fidesz-friendly, the governmentappointed film commissioner andrew g. Vajna. but later that day, károly Fonyó claimed that he and his longtime business partner lajos simicska had actually bought the station two days earlier, by exercising a purchase option that they obtained when they lent money to Dederick and simon to buy the station. Dederick and simon refute Fonyó’s claim and the dispute over who owns the station will likely be determined in court. according to Fonyó, he and simicska had been involved in tV2 since 2013, back when Dederick and simon bought the station, along with a few smaller tV channels, from pro7sat1, a germanbased company that was ready to leave the market. when the December 2013 sale went through, simon was tV2’s general

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Ready for a redesign? The logo of TV2. manager and Dederick was its financial director. even as an employee, simon had overseen increasingly Fideszfriendly news coverage and his station received a lot of government advertising. neither simon nor Dederick were believed to have enough money to buy a tV station. in fact pro7sat1 loaned them the purchase price and held a lien on the property. after the sale, simon reportedly told the staff that he and Dederick would not be the longterm owners, but that the station would remain in Hungarian hands. “the general manager and the financial director have ended up buying the company, and it is abundantly clear that there are other actors behind the acquisition,” Hungarian media expert Ágnes urbán wrote shortly after the sale. at the time, the Fidesz leadership would probably have wanted its then ally simicska to help fund tV2, for instance by buying the lien from pro7sat1.

Dederick and simon would be the public face of tV2’s ownership, while simicska would once again assume the position of the moneyed, predominantly silent, partner for a government-friendly media outlet. the purchase of tV2 by a Fideszfriendly team two years ago was a major victory in the party’s effort to control the commercial, private media.

Seeking influence beyond public media the government had already effectively captured the public media in 2011 by completely rewriting the country’s media laws and shuffling personnel to ensure full managerial and editorial control over the state-funded tV stations, MtV1, MtV2 and Duna tV. while the state media authority is not forthcoming with exact viewership figures, it is estimated that these stations together have traditionally garnered about 10% of the Hungarian television audience.

a larger share of the audience is claimed by two privately owned commercial stations, rtl klub, the most popular Hungarian television station which has enjoyed an estimated viewership of around 20% of the audience, and tV2, which has run a close second. though satellite, cable and digital broadcasting have been diluting their strength, these two private stations are still seen as the largest in the market. eager to control the message of these and other private media outlets, Fidesz has offered the carrot of revenue from state advertisers, while wielding a stick in the form of an advertising tax. Fidesz apparently also sought to control the private media through purchases made by its favored media oligarchs – including simicska, Zsolt nyerges, Fonyó and gábor liszkay. these oligarchs often partner with one another, and simicska had perhaps the broadest interests, although his

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budapest business journal | Oct 30 – nov 12, 2015

The cast of characters in the TV2 ownership saga

Zsolt Simon (left) and Yvonne Dederick Before they purchased tv2 from Pro7sat1 in 2013, simon was the general manager of the tv channel and Dederick was the financial director. they attempted to sell the channel to Hungarian film commissioner andrew G. vajna, but Károly Fonyó claims he and his partner lajos simicska actually own the station. Simon oversaw Fidesz-friendly coverage while he was the head of the station. Dederick is an American who has been living here since 1991, and “speaks perfect Hungarian”, according to Magyar Narancs.

Andrew G. Vajna

Dirk Gerkens

Károly Fonyó

Lajos Simicska

the man the government apparently would like to see in charge of tv2, vajna must wait to find out what happens with a legal challenge to his supposed purchase of the channel. After a successful career producing nearly 50 Hollywood films, including the first two ‘Rambo’ movies and a couple in the ‘Terminator’ series, Vajna returned to Hungary, where he was born in 1944, to be the government’s pick as film commissioner, which means he decides which Hungarian films are funded by the state. His focus on commercial films has been labeled shallow by some and practical by others. Good government contacts apparently helped Vajna and his partner Gábor Szima win the concessions for every casino in Hungary.

the man andrew G. vajna wants to hire as the CeO of tv2. the choice of Gerkens was a surprise, because he had run rtl Klub, a station known to be critical of the government and the ruling Fidesz party. Under Gerkens’ leadership in 2001-2015, RTL Klub became Hungary’s leading TV channel, in both viewership and revenue. RTL Klub’s news was relatively independent, and became increasingly critical of the government toward the end of Gerkens’ tenure, when officials sought to punish RTL Klub with a very high advertising tax rate. Gerkens was reportedly transferred out of Hungary, to another position in RTL Group, in March, around the time that the government agreed to lower the advertising tax.

a media oligarch and associate of lajos simicska, Fonyó says he and his partner helped bankroll the owners of tv2, and in exchange they received an option to purchase the station. Fonyó said he exercised that option on October 13. Fonyó’s other media properties include Metropol, the free newspaper that is given away in Metro stations and elsewhere and is listed as having the largest circulation of any print publication in the country. Fonyó and Simicska are partners in Mahír Cityposter Kft., the outdoor advertising company that was said to be the only company to receive an increase in government advertising spending, especially from the state lottery company, during the past recession. (Photo: hajraveszprem.hu)

Károly Fonyó’s partner, who supposedly helped bankroll tv2 and is now a part owner of the station, according to Fonyó. Simicska, a long-time friend of Viktor Orbán, supposedly lentsupport to Fidesz in the party’s early days. He headed the tax authority under the first Orbán government in the 1990s, and owns pieces of various media outlets. Simicska and Orbán had a public split in February, and since then, Simicka’s news outlets have been more critical of the government. Simicska is also an owner of the construction firm Közgép, which used to receive more money in Hungarian government tenders than any other company. Since Simicka’s break with Orbán, Közgép has been denied the right to bid in government tenders, but it is fighting the ban on tendering in court.

ownership is often obscured through holding companies or straw men, as was apparently the case with tV2. these oligarchs have reportedly been enriched as their media outlets enjoyed state advertising contracts. “according to presently known company data, their media empire generated more than HuF 20 billion in profits during 2010, 2011, 2012 and 2013 for lajos simicska, Zsolt nyerges, károly Fonyó and gábor liszkay,” said an investigative piece by kreativ published in april. a long-time friend of prime Minister Viktor Orbán. simicska briefly headed the tax authority under the first Orbán government in the late 1990s. His association with the prime minister goes back to the days when the Fidesz party was first forming. the assumed government arrangement with simicska reportedly went sour in February, when he had a public falling out with Orbán. the trigger for their argument was said to be the advertising tax, which dug into the profits of simicska’s media holdings. simicska was also apparently upset by Orbán’s announcement at the beginning of this year that the government would be spending most of its advertising budget with state-owned broadcasters – meaning simicska’s broadcast, print and online media outlets would lose that source of revenue. around the same time, the government announced that public station MtV1 would become an all-news station, a change that

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would make simicska’s pioneering government-friendly all-news station Hír tV redundant. previously a media-shy behind-thescenes figure, simicska reacted to these slights by giving a raft of interviews, in which he repeatedly used the same obscenity to describe the prime minister. He also began to use his media outlets to be more critical of the government. For its part, Fidesz wooed away much of simicka’s pro-government editorial staff and began arrangements to anoint new media oligarchs. Árpád Habony, another party ally who has been something of a background figure himself, suddenly began developing a media empire that is said to include two new governmentfriendly outlets, the print/online daily Magyar idők, which often carries direct statements from government officials, and the funkier, more youth oriented online news portal 888.hu.

Vajna? Why not! as its new tV oligarch, Fidesz apparently chose Vajna. a successful producer of nearly 50 Hollywood films, including several in the “rambo” and “terminator” series, Vajna, 71, recently returned to the country of his birth to take up a new career as the Hungarian official in charge of deciding what films receive state funding. aside from having big media experience, Vajna might also be considered a good candidate for tV2 ownership because he was

“I am not pro-government and I won’t be. I would like to build an interesting and exciting television station that will be successful.” recently awarded the exclusive rights to run casinos in Hungary – a deal that guarantees Vajna a big paycheck and presumably guarantees the government that he is in their corner. still, Vajna insisted in an October 22 interview with index.hu that he was not planning bland, pro-Fidesz programming. “i am not pro-government and i won’t be. i would like to build an interesting and exciting television station that will be successful,” he was quoted as saying. Vajna’s claim would appear to be backed up by his announcement that tV2’s new ceO would be Dirk gerkens. During 14 years of running market leader rtl klub, gerkens oversaw news coverage that was often critical of the government, and especially so toward the end of his tenure. gerkens left rtl klub in March, and it was speculated that the station’s multinational parent company, rtl group, agreed to replace gerkens and tame criticism of the government if officials would in turn lower a bracketed advertising tax that was taking 50% of the channel’s revenue. the government later proposed a new, lower tax, and rtl

group also announced that gerkens would be assigned to a position outside of Hungary, but both the government and the tV station denied that any deal had been made. the October 15 naming of gerkens to run a station that many expected to feature government-friendly news coverage was a surprise move by Vajna. but Fonyó outdid Vajna’s surprise later that day, with his own announcement that he, in fact, was the owner of tV2. it seems there will be a fight for control of the station, and that the government will help to oppose Fonyó and simicka’s takeover bid. cold water is already being thrown on their hopes by the competition authority (gVH), a government body that has been able to exercise broad, often apparently discretionary, power to fine improper behavior by companies and to approve mergers. Vajna’s purchase was approved by the gVH, but, as an official from the authority eagerly told public news station MtV1, Fonyó has no such approval. even if Fonyó and simicska can prove they have insiders’ rights to buy tV2, gVH could use its authority to say their ownership violates competition rules. it seems likely that this soap opera will continue for a few more episodes, providing the news audience with some entertainment for a while. but it is still far from clear whether the tV channel at the center of the drama will eventually offer that audience something approaching independent news.

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2Business BBJ

COMPANY NEWS

Sony Pictures expands Hungarian portfolio Hungary’s Competition Office (GVH) cleared the acquisition of Viasat Hungária Zrt., the operator of commercial channel Viasat 3, by Sony Pictures Television Network (SPT), Hungarian online daily origo.hu reported on October 26. SPT is buying 100% of Modern Times Group’s shares in Viasat Hungária, making SPT the sole owner of commercial channels Viasat 3, Viasat 6 and Viasat Play, the daily reported. SPT is expanding its Hungarian portfolio, which currently comprises AXN, AXN Black, AXN White, AXN NOW and AXN Player, origo.hu added. “This is a serious milestone,” John Rossiter, SPT’s CEO responsible for the region said.

UPC Hungary to launch landline internet, telephone service

Luxembourg-based UPC DTH said that it is planning to launch landline internet and telephone service across Hungary from November 2, Hungarian news agency MTI reported on October 28. Satellite television service provider UPC Direct is involving partner service providers for the launch of the new services, using a dedicated network, MTI said. The new services will be available in a package, which includes satellite TV, broadband internet access, Wi-Fi access and landline telephone service, with a 12-month loyalty contract, the service provider told MTI. UPC Direct, counts 285,000 subscribers in Hungary.

Richter fires commercial director

Hungarian drugmaker Gedeon Richter announced on October 20 it had terminated the employment status of its commercial director, Endre Pokomandi, effective October 19, 2015, Hungarian news agency MTI reported. CEO Erik Bogsch will supervise the company’s commercial activities until the appointment of a new director, Richter said.

Morgan Stanley organizes coding workshop for girls The Hungarian office of Morgan Stanley, together with non-profit organization Skool, held a coding workshop on October 17 for secondary school-age girls to inspire young women to get involved in IT. Professional organizations say that the ratio of women in the ICT sector is well below 20%, and although some 60% of graduates at European universities are women, the ratio of engineering and IT students is only around 20%, the announcement detailing the event stresses. Citing experts, the announcement reports

that in ten year’s time there will be 700,000 more jobs in the labor market than there are fresh university graduates to fill them. Despite the abilities of the sector to offer women an increasingly secure career, few choose IT as their future profession. “IT is often mistaken as a profession for men, but diversity in the tech industry is of utmost importance and our aim is to provide attractive, secure and innovative career opportunities for both men and women,” said Norbert Fogarasi, general manager of Morgan Stanley’s Budapest office. “Morgan Stanley is committed to diversity and partnering with organizations like Skool,” he added. With the help of volunteers from Morgan Stanley and Skool, young women aged 15-18 were able to deepen their skills in processing programming language by coding a game, which they could take home and show their parents or even further develop. Organizers hope that the experience will help these young women find their future profession, and that in a few years at least as many young women might choose IT as they do the administrative or legal fields.

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2 Business

Budapest Business Journal | Oct 30 – Nov 12, 2015

Metrans builds €35-50 mln logistics base in Hungary Metrans Konténer, the Hungarian subsidiary of Germany’s HHLA AG, has laid the cornerstone of a logistics base it is building in Csepel, south of Budapest, through an investment of €35-50 million, Hungarian daily Magyar Hírlap reported on October 22. The construction of the new 165,000 sqm rail container terminal, including a repair facility and storage for refrigerator containers, is due to be wound up by 2017, Hungary’s Foreign Minister Péter Szijjártó reportedly announced at the event. The investment is expected to create 200 new jobs in Hungary. KlausDieter Peters, HHLA AG’s CEO, said that after the completion of the base, Metrans will be able to handle 250 trains monthly, while the annual volume of containers shipped by the company is likely to rise to 250,000 from the current 170,000.

Robert Bosch completes HUF 2.9 bln capacity expansion German-owned automotive industry supplier Robert Bosch Elektronika completed a HUF 2.9 billion capacity expansion project at its plant in Hatvan, eastern Hungary, on October 21, Hungarian news agency MTI reported. The investment, which was supported with a HUF 870 million European Union grant, is expected to raise headcount at the plant by approximately 50. The Bosch Group has given a clear sign that it is taking a long-term interest in Hungary, state secretary Balázs Rákossy said at the inauguration event in Hatvan, as reported by MTI. Bosch has nine bases in Hungary, employing more than 11,000 employees, MTI said. The Hungarian units had combined revenue of HUF 825 bln in 2014, up 15% from a year earlier, including sales between the group’s partly- and whollyowned units. Sales on the Hungarian market grew 14% to HUF 183 bln in 2014, MTI added.

Lego to invest €25-50 mln in Hungary Danish toy manufacturer Lego is planning to invest approximately €25-50 million at its unit in Nyíregyháza, eastern Hungary, by building automatic high-bay warehouses and a decoration and assembly area, plant manager Jesper Hassellund Mikkelsen and mayor Ferenc Kovács announced at a

joint press conference on October 21. The refurbishments, which are expected to take 12-18 months for the assembly plant and two years for the warehouses, will expand production capacity and increase headcount by 200 at the plant, which currently employs 2,400, Mikkelsen said. The plant manager added that a recent decision will result in the installation of injection molding equipment at a leased plant at a site formerly used by Lego, where 150 new employees will launch production early next year. Mikkelsen added that the firm is also considering doubling injection molding and packaging capacity at the Hungarian plant by 2020, as part of its long-term development plans. “If this decision is made, headcount could increase by a further 1,300,” he said. Publicly available figures show that Lego Manufacturing Kft. had a pre-tax profit of HUF 860.5 mln and a net profit of HUF 788.7 mln on revenue of HUF 28.2 billion last year, according to Hungarian news agency MTI.

MOL acquires Eni’s downstream business in Hungary Hungarian oil and gas company MOL said on October 21 that it had signed an agreement with Eni International B.V. to acquire 100% of Eni Hungaria, a company managing 183 Agip branded service stations in Hungary as well as wholesale activities in the country. The deal does not include Eniʼs wholesale lubricants business. The investment is in line with the MOL Group’s strategy to expand its presence and increase its retail market share within the supply radius of its core refineries. The acquisition is a unique opportunity for the MOL Group as it includes key retail positions and strengthens the company’s position in and around Budapest. The transaction is still subject to competition clearance.

Dentons advises GDF SUEZ’s sale to Főgáz Zrt. The sale of GDF SUEZ’s 99.9% stake in its universal service gas trading company in Hungary (GDF SUEZ Energia Magyarország Zrt.) to state-owned gas distributor Főgáz Zrt. was facilitated by the Hungarian office of Dentons, according to an announcement issued on October 21. Partner Anita Horváth, supported by counsel Balázs Fazekas and associates Balázs Varszeghi, Tünde Gönczöl, Márton

Kertész, and Eszter Fodor, led the advisory team in Budapest. “We are very proud to have had the opportunity to support GDF SUEZ in this transaction,” commented Anita Horváth, lead partner on the deal. “This deal is a great example of Dentons’ ability to liaise at the highest level with major multinationals, while capitalizing on local ties and a deep understanding of the domestic regulatory and business landscape,” she added.

László Metzing, AmCham COO, dies at 58

Magyar Telekom welcomes new marketing director Mohamed ElSayad has been appointed Residential Marketing Director at Magyar Telekom, the Hungarian subsidiary of German telco giant Deutsche Telekom, taking effect from November 30, Hungarian online daily kreativ.hu reported on October 26. ElSayad is replacing Zsuzsanna Poós, who is leaving the company, the online daily said. ElSayad has more than 15 years experience in the field of digital marketing, brand and product introduction and development, distribution expansion and raising efficiency. He worked at the Dubai-based Emirates Integrated Telecommunications Company from 2011 as a Digital Marketing Director from 2013. Before that he worked at MSN Arabia, MSN Maghreb and MSN Pakistan.

Nespresso Hungary has new director Györgyi Gyovai has been appointed the new director of Nespresso Hungary, to take effect this month, according to an announcement issued on October 20. She is replacing Gábor Flesch who has been promoted to Regional Sales Executive and will carry out his duties from the Swiss branch of the firm. After working for Mars in Hungary and Poland and spending several years at Danone, Gyovai joined Nestlé Hungária Kft. in July 2013. Beyond managing procurement and supplies, she participated in strategic planning and its realization, and in innovation and product development. The professional has experience in the business management of multinational companies. In her new position she will be responsible for expansion in the Hungarian premium coffee market, building the Nespresso brand, and working on the development of Nespresso’s consumer and business.

László Metzing, the chief operating officer of the American Chamber of Commerce in Hungary, died on Friday, October 23 after a short illness. He was 58. The AmCham office staff issued a short statement on Monday, October 26, in which they described the COO as a “dear colleague”. “He was a genuinely good man, a caring friend, a dedicated and loving husband, father and grandfather,” the statement read. Metzing had been at the organization for 17 years, as head of administration and then COO. He also served as acting CEO, from October 2013 until June 2014, while the chamber looked for a permanent replacement to take on the chief executive’s role. Metzing qualified from Budapest University of Technology and Economics (BME) in 1981, having studied economics and foreign trade. The AmCham statement noted that many knew Metzing as “the Rock” and described him as “the foundation of what AmCham is today ... he helped build it into a great organization, with a strong and supportive staff and a vibrant membership community. We will never forget him: His professionalism, his personality, his anecdotes, his smile. He will be missed dearly. He already is.”

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for more information: Eva Benyo, Mobil: +36309341865, E-mail:benyovica@gmail.com, www.homelist.hu

2015.10.28. 22:02

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2 Business

Budapest Business Journal | Oct 30 – Nov 12, 2015

Business meets gov’t in AmCham first Industry groups seek to pull in government for more intensive partnership. ROBIN MARSHALL

In what is planned as an annual event, the American Chamber of Commerce, the Hungarian Investment Promotion Agency and the National Council for Telecommunications and Information Technology co-hosted the first “Business meets government” summit in Budapest on October 27. In light of progress on the ninecountry Trans-Pacific Partnership, growing cooperation between China and the United States, an emerging Russialed Eurasian trading block and the rise of Latin America and Africa as investment destinations, keynote speaker Péter Szijjártó, Hungary’s Minister of Foreign Affairs and Trade, said Europe risked being left behind in the global competition. “We Europeans debate the necessity of T-TIP, which is going nowhere,” he warned, talking about the much hyped Transatlantic Trade and Investment Partnership. He called for “pragmatic

Kálmán Kalotay of the UN’s Conference on Trade and Development addresses the group.

Foreign Minister Péter Szijjártó addresses the AmCham conference in Budapest on October 27. (Photo: MTI/János Marjai)

cooperation” with Russia and warned that Europe should not “limit ourselves regarding trade with China”. Szijjártó said the EU should learn from the Hungarian experience in coping with the mass movement of people across the Continent. “We [Hungary] have proved that without gaining back control of the external borders of the EU, it is impossible to find any kind of answer to the migrant crisis.” Noting that it was no longer enough to compete just in the immediate neighborhood, the minister identified two key areas: A skilled labor force that can meet the demands of current and future investors; and the need to

widen the Hungarian supplier base for multinationals based here. He acknowledged a longstanding complaint about predictability and “decisions made too quickly” which unnerved the boards back in the corporate headquarters. “We do not want to give you ‘hard days’ any more in this respect. We would like to give just very limited surprises to the business community in Hungary in the future.” He also admitted there was a problem in connecting the lack of labor in the west of the country with the lack of jobs in the east, although he did mention Hankook as an example of best practice

in this area. “We would especially welcome your feedback in how to mobilize the Hungarian workforce, and how to incentivize and subsidize more vocational training. If we can address these two challenges, we will be able to have progress” in moving up the world competitiveness rankings, he said. Second keynote speaker Kálmán Kalotay, from the UN’s Conference on Trade and Development, said for all the Visegrád Four countries it is “very important to nurture foreign investment because FDI is an essential source of economic development for the group”. Suggesting that Hungary needs to improve access to finance and its capacity for innovation (“by far the lowest in the Visegrád Group”) by leveraging its scientific tradition, where it is a clear leader, he was hopeful the 1990s front runner in attracting FDI could regain lost ground (it now ranks behind Poland and Czech Republic). “Hungary and the Visegrád countries have the potential to attract more FDI, that is clear,” he concluded. In his closing remarks, Farkas Bársony, AmCham board member and head of its investment policy task force, said a summary of the summit and its four breakout roundtable discussions, featuring both business leaders and government representatives, would be submitted to the prime minister as soon as possible so as “to make sure not to lose momentum”.

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2 Business

Budapest Business Journal | Oct 30 – Nov 12, 2015

this special report is sponsored by

A NEW FORCE IN GLOBAL REAL ESTATE www.cushmanwakefield.com +36 1 268 1288

Hungary on the institutional investment map Strong investment activity is seeing property yields continue to fall in many European markets, Budapest is back on track and definitely on the institutional investor’s target map. In the past months significant investment transactions were closed in Hungary. This summer saw Morgan Stanley complete their purchase of the AEW portfolio in Budapest, Hungary and the formal announcement of TPG’s purchase of Trigránit - whilst extensively a company deal, it is still one that has obvious positive implications for the Hungarian property market.

Budapest office among the fairly priced markets European office Markets Fair ValueTM office classifications

Cushman & Wakefield, as Morgan Stanley’s advisor in the AEW deal, see the fundamentals as being the key. The low-rent hangover from the recession and subsequent lack of development supply set against increasing levels of demand –record levels in the office market –bode well for future rental growth prospects. Unlike Hungary’s traditional competition –Poland and the Czech Republic –vacancy levels are on the way down. There has been lots of talk of the “wave of capital” coming east, but experience shows that investors need to see that they are not the only players in town. The positive news from the Morgan Stanley deal is a wakeup call to other funds as to the value and strong real estate fundamentals that Hungary has to offer.

ReAl estAte NEWS

Eiffel Palace wins World Green Building Council design award

Eiffel Palace, located in central Budapest and in possession of the LEED Gold and BREEAM Very Good certificate, was awarded the Leadership in Building Design and Performance title by the World Green Building Council (WorldGBC) in Verona on October 15 at Greenbuild Euromed, according to an announcement published on October 19. “The WorldGBC Leadership Award is the most prestigious recognition of our ongoing commitment to develop sustainable buildings that excel both with their future-proof design and long-term energy performance. Eiffel Palace – with its 120 years of history, innovative technical solutions and dual environmental certificate – is a unique gem among European office buildings,” Attila Kovács, MRICS, Managing Partner at Horizon Development said on behalf of the project. “We are very proud of the achievement of this project and the role that our

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member company DVM group played in it. This building is a great example of how we can make a historical building sustainable,” Mónika Tornóczky, Secretary General of Hungary Green Building Council, said. “Eiffel Palace is an outstanding example of contemporary architectural design that embeds novel energy and water saving solutions into a historic building on a heritage site. The Eiffel Palace building renovation preserves the future, while reflecting on the past,” the Architects Council of Europe remarked as one of the expert partner organizations on the awards jury. “A knowledge-based society must be based on the intelligent use of resources to allow the prospect of producing more while consuming less,” awards partner the European Council of Engineers Chambers said. The biannual awards were established by WorldGBC’s Europe Regional Network

to promote leadership in sustainability and inspire best practice in building projects, business practice and public policy, the announcement says. Eiffel Palace is a Central Business District development of unique significance in historic preservation, urban planning, sustainability and general construction, the announcement said. It officially opened its doors in Budapest in 2013. After 120 years, the former Pesti Hírlap and Zrínyi Nyomda building has been restored to its original splendor and has contributed to the rebirth of the Hungarian capital, the announcement added. The building’s dual environmental certificate (LEED Gold, BREEAM Very Good) is unique in Central and Eastern Europe, the statement said. Apart from the focus on environmental value creation, it also puts great emphasis on restoring historic values, the statement added.

Eiffel Palace in District V.

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Excitement building

Investor interest in Hungary is increasing, as economic fundamentals improve and yields stay high. Budapest has few projects in the pipeline now, but that may change soon.

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Investor interest finally r With high yields, and impressive economic numbers, Hungary is becoming a favored CEE destination for the bankrolls of institutional and value-add investors. gary J. MorrEll

A combination of increasing demand from international investors, improving economic indicators, and more favorable investment sentiment towards Hungary has resulted in improved liquidity in the investment market. Last year saw the re-emergence of investment activity in the country for the first time following the economic downturn of 2008. Most of this came from domestic funds, while the major European funds were still reluctant to conclude acquisitions. However, this summer has seen the return of institutional funds looking to make acquisitions following a Morgan Stanley Real Estate-led deal. While Hungary still lags behind Poland and Czech Republic in terms of investment volume, a significant yield gap is attracting the interest of so-called value-add and institutional investors. In a survey of participants at the recent CEE Property Forum 2015 in Vienna, organized by Portfolio and RICS, 59% of attendees chose Hungary in response to the question “Which of Romania, Bulgaria, Serbia, and Hungary offers the best value for investors?” “There is more investment coming to CEE from more sources and in more directions,” commented Troy Javaher, director of CEE capital markets at JLL. “The geographical target is expanding as we are seeing a significant increase in interest in Hungary and Romania. Part of this is because of solid macro-economic figures that are coming out of these countries, and part of this is due to the lack of ability to buy product in Poland and Czech Republic. Also, bank debt is becoming more available and more affordable,” Javaher added. JLL predicts that CEE investment activity is on track for a record high volume for 2015. The summer months have seen a preliminary transaction volume of well above €2.8 billion recorded in the third quarter. This quarterly figure is only marginally short of the record-breaking 2007. “With the final quarter of the year often representing one of the busiest periods for our investment teams, and looking at the pipeline of deals that are in advanced stages, we predict that the CEE regional volume could reach the €8 bln mark by yearend. Should this happen, it would put 2015 at the highest level since the economic downturn, and the third highest in the past 12 years,” said JLL’s Kevin Turpin, head of research CEE.

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Big job in the pipeline: An illustration of the V17 office, which is due for delivery in 2016.

“The geographical target is expanding as we are seeing a significant increase in interest in Hungary and Romania. Part of this is because of solid macro-economic figures that are coming out of these countries, and part of this is due to the lack of ability to buy product in Poland and Czech Republic.”

Czech Republic leads CEE in terms of investment volumes at 43%, followed by Poland with 28%, and the recovering Romanian and Hungarian investment markets at 11% and 10% respectively. Hungary is predicting a total investment volume of €700-750 million for the year, while volumes of more than €3 bln are predicted for Czech Republic.

Big deal led by Morgan Stanley Árpád Török, CEO of TriGranit also acknowledged the groundswell in the region. “In general, there is an obvious positive trend across the whole CEE real estate market since last year, and yes, Budapest will probably move the fastest among these countries in the near future,” he said. “Nevertheless, Bucharest is a similarly strong player, which in

2-3 years could be the top investment focus in the region beside Poland and Hungary. As for Hungary, the country’s present strong economic performance is expected to continue, which together with other factors like better financing terms, decreasing yields or office vacancy rates encourages investors to bring money to the country and to invest.”

In one of the most significant transactions in recent years, a group of investors led by Morgan Stanley Real Estate, in partnership with the Hungarian developer and investor WING and the Austrian retail manager and investor CC Real, purchased a Budapest portfolio consisting of the 31,500 sqm MOM Park shopping center and the adjacent 19,000 sqm office

2015.10.28. 21:58

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y returning

1500

2500

Investment in CEE markets in € millions

(Percentages below each country show y-o-y change)

1000

Q1-Q3 2014

2000

Q1-Q3 2015

2500

500

2000 1500 1500

1000 Bulgaria

Croatia

1000

Czech Rep.

Baltic States

Hungary

Poland

Romania

Russia

Slovakia

500

0 Bulgaria Croatia Bulgaria Croatia -29% -60% Bulgaria

Source: CBRE

Czech Rep. Baltics Hungary Poland Czech Rep. Baltic States Hungary Poland +130% +43% +11% -15%

Croatia

Czech Rep.

Baltic States

This is a perception issue from abroad with regard to political and economic risk, and Hungary has to sell itself better as a place to invest,” he said. Yields for Hungary are put at 7-7.25% for prime, centrally located offices, 7% for shopping centers and high street retail, and 8.75% for prime industrial and logistics. This provides a significant premium on Poland and Czech Republic, as yields for Prague stand at 5.75% for office, 5.25% for retail, and sub-7% for industrial. Growing demand for scarce product in Hungary is expected to cause further yield compression.

Scarce investment-grade product

building in Buda from a fund managed by AEW Europe. The deal also includes the 28,800 sqm West End Business Center and the 13,700 sqm EMKE office center on the Pest side of Budapest. “The Morgan Stanley/AEW deal will open minds to Hungary once again,” said Mike Edwards, head of CEE investment and valuation at Cushman & Wakefield. “Whilst the occupational fundamentals have been there for a while, investors have struggled to answer the question of whom to exit to. The challenge for development of the investment market is sourcing the large lot sizes that are required by leading international investors.” The purchased assets in the deal are essentially earlier generation stock, although West End Business Center is seen as a very well located quality center. The last acquisition of a newly delivered

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top-of-the-market office building was the purchase by the Hungarian Erste Openend Real Estate Investment Fund of Vision Towers from Futureal last year. Tim O’Sullivan, head of Hungary & SEE capital markets at CBRE sees rising investor interest in Hungary. “A number of institutional investors are considering Hungary, however they have not spent money yet as there is a wait and see approach. Once the first two or three big deals are concluded this will confirm that Hungary is a stable market and provide evidence of where pricing stands. Previously, there was a lack of available product, as vendors did not want to sell during the economic crisis. However, pricing is now far more attractive from the perspective of vendors, and we are now seeing bigger and better assets being made available to the investment market. More major deals are due to be concluded.

Budapest office vacancy could fall to 13-14% by the end of 2016. This would put it below levels in Warsaw and Prague. With the very low pipeline and the number of pre-let office projects close to 100% pre-leased before delivery. One concern regarding the development of the market is the scarcity of investment grade office product. With regard to pipeline, Wing has topped-out the 12,000 sqm V17 office project, and delivery is scheduled for mid-2016, while Skanska is due to deliver the first 6,600 sqm phase of the two-part Nordic Light development in May 2016, with the 26,000 sqm project due to deliver in August of that year. In addition, the Belgium Atenor Group is due to complete the third phase of Váci Greens next year, the 24,500 sqm Building B. Industrial development in Hungary is still limited to built-to-suit projects, and this has helped in the re-balancing of the market and the fall in the vacancy rate to close to 13%. A number of big logistics operators are looking at Hungary as the high vacancy rate is falling. In a recent industrial transaction, Prologis (through the Prologis Targeted Europe Logistics Fund) has purchased the 69,000 sqm M1 Business Park Hungary from CA Immo and Union Investment. However liquidity could be a problem as once a logistics center operator makes an acquisition, it tends to keep a logistics facility in its

Romania Russia Romania Russia -63% -13%

Hungary

Poland

Slovakia Slovakia -83% Romania

Russia

portfolio. With regard to retail there is no major stock currently available after the AEW deal. But, retail consumption is rising and preliminary data shows Sunday closing regulations have not hurt the sector to the extent that was feared. With a limited stock of available investment grade product, investors are considering the value-add strata. In a recent value-add transaction the Hungarian Diófa Asset Management fund purchased the 17,000 sqm Infopark E in the Infopark high tech business park from regional developer Bluehouse Capital. Bluehouse took a value-add approach to the project by striving to reposition the building by improving its tenant mix. Also in the value-add category, the U.K.based investment management fund Europa Capital has acquired a 30,000 sqm portfolio consisting of the Kálvin Center, Duna Office Center and Baross 52 office building. ConvergenCE is acting as asset manager on the portfolio. Hungary has yet to see an investment market in its regional cities. Poland is seeing transactions concluded in several large provincial centers in all market sectors. Skanska Commercial Development Europe sold a portfolio of four office buildings in Krakow and Katowice; almost 60% of transactions in Poland in the first half of 2015 were outside of the capital. In Czech Republic, money has moved to the regions in search of industrial and retail product. “Hungarian assets now have an excellent yield-risk profile: Occupational markets are improving and yields are still high enough to attract capital into the sector,” concluded Gábor Borbély, head of research at CBRE Budapest. “We expect that, besides the ongoing high activity of local funds, cross-border investors will increase their exposure to Hungary in coming quarters, driving investment volume to €700-800 million this year.” Skanska is currently working on five office projects in the Polish cities of Warsaw, Poznan, Katowice, Krakow and Lodz, and is also active in the capitals of Hungary, Czech Republic and Romania.

2015.10.28. 21:58

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location, transportation key for developers The Váci út corridor, Budapest’s main artery for office development, is attractive because of its good public transport, eager local government and initially low land prices. gary J. MorrEll

Anyone following the office business in Budapest is familiar with the Váci út corridor, the most popular district for class “A” office space in the city. The capital’s next three major pipeline projects – Nordic Light by Skanska, the third phase of Váci Greens by the Atenor Group, and V17 by Wing – are all located here. Another thing these properties have in common is that they are all within close proximity to metro stations, and offer direct access by car and bike. While the success of the corridor can be attributed to many factors, including an active district mayor whose local government seeks to attract good development, transportation and a good location are essential parts of the equation, say the experts. The Váci út corridor also leads the Budapest office market in terms green development, as it has the most accredited sustainable buildings. “Public transport plays a significant role,” according to József Tóth, mayor of the 13th District, a man who has made a career out of attracting office development. (See interview, page 20.) “The Metro 3 line is essential to the competitiveness of the area, and this is evident because, outside the area of the metro, similar development cannot be observed.” Tóth recently attended the toppingout ceremony of the V17 office building, which developer Wing defines as representing “environmentally friendly architecture”. Wing also boasts of the ease of transport and the amenities in the area. “V17 is easy to approach both by car and by public transport, and there are numerous convenience services

Sunny side of the street: The popular Váci út corridor, as seen from the Danube.

“It is very important that office development in an urban city context is close to public transport, and such locations are essentially brownfield sites.” in the immediate neighborhood.” According to Pál Baross, President of the Hungarian Green Building council, the factors that helped turn Váci út into a major business district are good public transport, large plots and initially cheap land prices, the allowance of high density development and the “open door” policy of the district’s political leadership – including the engagement of successive chief architects with developers. With all these pluses, the one criticism that Váci út receives is that, due to lack of attention to the quality of public space, it remains an arterial street and not a boulevard. The most recent office delivery in the corridor was the 17,000 sqm Building C at Váci Greens by the Belgium Atenor Group. Arguably the biggest office project in Budapest, the development has a BREEAM Excellent sustainability rating, due in part to the good access by public transport. As is the case with other recent

projects on Váci út, the complex leads directly onto a metro station and provides parking facilities for bikes in addition to shower and changing facilities.

Brownfields make sense “It is very important that office development in an urban city context is close to public transport, and such locations are essentially brownfield sites,” said Baross. “This is an important principle as around ten years ago there was a danger that the office market would ‘suburbanize’, but as the Tó Park development showed, this view was premature and not what was needed at the time. The labor market wants offices to be in Budapest.” But it’s not only Váci út that has good transportation connections. Another recent major delivery was the 12,000 sqm Eiffel Palace office development by the Hungarian developer Horizon Development in the central Fifth District. This is a new building that has been constructed onto the original 1890s facades. Horizon subsequently sold the building to the Hungarian National Bank (MNB) for a reported €45 million. The center achieved both LEED and BREEAM accreditation. Although the Eiffel Palace is in an excellent location with regard to public transport links, the project team had to overcome issues not faced by Váci

út developers because the building is a classical Central European structure in a protected area. Therefore in any redevelopment for business purposes the original facades and interior atrium had to be preserved. With regard to the infrastructure of Budapest in general, Baross argues that the city is able to offer significant advantages in the all-important areas of sustainability because of its excellent public transport. “Budapest has a good network, although the quality of service level is still a big challenge and coming up with a formula of sustainable financing [for transport] remains elusive. The recent addition of a bike rental network is a positive step, especially servicing the downtown area,” he said. Central European cities still lag in terms of sustainable development, Baross said, and Budapest is no exception. He explained that administrators do not do enough to ensure the kind of green development that can attract business. “In fact many urban governments are still more concerned about inflexible zoning prescriptions rather than possible trade-offs between sustainability issues, such as bonuses for higher density, mixed use, and open space provision within the footprint area of the building,” Baross said. “Unfortunately, the planning establishment of Budapest does not understand either the concept of business or quality of life. So there is really no trade-off.

Pódium

Buda Center Address 1065 Budapest, Nagymező utca 44. Year built 1993 free spAce 5,465 sqm Public transPort Metro line M3, M1,

trolley No. 70, 72, 73, 78, bus No 9, 105 contAct Barbara Baráth +36 20 984 4977 Zoltán Fábián: + 36 20 497 2181

Podium office building stands in the downtown theatre district in Budapest, with its 5,700 sqm of highly efficient premium office space. Right in the middle of the city centre, the panoramic view over the Budapest skyline will take your breath away. The central location of the building offers endless opportunities for eating, drinking, shopping and entertainment. The office building features high technical standards, turnkey offices fitted out according to the tenants’ needs and a fully redesigned attractive, modern reception lobby and refurbished common areas.

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Address 1016 Budapest, 7-13 Hegyalja út building yeAr 1991 free spAce 3,550 sqm Public transPort tram No. 61, bus No 8, 27,

40, 110, 112, 139, 140, 140A, 178, 212, 239 contAct Barbara Baráth +36 20 984 4977 Zoltán Fábián: + 36 20 497 2181

Buda Center is situated along the road connecting Elisabeth bridge and BAH junction one of the most significant hubs of Budapest. You can find hotels, restaurants, cafés, fitness and wellness centres in the vicinity. MOM Park shopping mall and the well-known Gellért Hill with the Citadella are just around the corner for a nice walk. The premises were designed to provide efficient spaces with plentiful natural light. The windows are openable and equipped with external and internal shading system. You can chill out and enjoy the breathtaking view of the city on the redesigned and landscaped roof terrace.

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The man behind the lucky 13th as the Mayor of District XIII since 1994, József Tóth has had a lot to do with turning the Váci út corridor into Budapestʼs premier office district. We asked him to share his secrets for success.

“Following an analysis by professionals, the local government developed longterm tasks in the middle of the ‘90s. Beyond residential and recreational development, the construction opportunities of commercial and service units were marked as an engine for growth.”

gary J. MorrEll

The 13th District has established itself as the “business center of Budapest”, attracting office development from international concerns like Atenor, Skanska, HB Reavis and CPI, as well as Hungarian developers such as Wing and Futureal. They have attracted tenants like GE and E-On, who have established international offices in the so-called Váci út business corrider. In addition to offices, residential retail and leisure complexes have been developed in the former industrial zone, ensuring that the area is also a “living environment”. Part of the success of the district is due to its good transport infrastructure and its previous abundance of large,

József Tóth delivers a speech at the recent ʼtopping outʼ ceremony for the V17 office building on Váci út. relatively cheap brownfield plots. But a lot of the reason for the development in District XIII is the active, proinvestment local government, which has been led by district mayor József Tóth, since 1994. His continued re-election, and the continued dominance of his district in office development, indicates

that he is doing something well. We asked Tóth to talk about the success of District XIII and what makes it possible.

Could you outline the amount of office, retail and residential development

that has been undertaken in the 13th District in recent years? a: In recent years, District XIII has maintained its attractiveness and its economic potential. The local government has supported investment for the improvement of the image of the district and also the improvement of the districtʼs environment, with carefully planned urban development. As the result of large-scale urban development that started with the change of regime, District XIII has seen the construction of 18,000 apartments, more than any other district. This includes luxury apartments on the banks

EXpErT opInIon

DVM group celebrates 20 years of excellence and launches premium CBD developments DVM group – the company offering the most comprehensive range of integrated building services in Hungary – looked back on the first 20 years of its professional history this month. The festive birthday party was held on 15 October with the participation of 350 esteemed clients and invited guests (from the real estate, banking and government sectors) in Váci 1, an iconic heritage building in the heart of Budapest’s central business district. The event was the ideal occasion for the company to uncover its ideas about the revival of the building, and to announce its plans to move its headquarters there in Q1 2016.

15 October also brought a tremendous success for the company, as it was the day when the World Green Building Council announced the winner of the European Leadership Awards in Verona, Italy, with Eiffel Palace office building bearing the palm in the Building Design and Performance category. The commemorative exhibition and the special jubilee publication disseminated at the event

When it comes to sharing details about the recently announced new projects, Massányi concluded: “We believe that 20 years of professional experience have well prepared us for the upcoming three developments we are planning to complete by 2018.

Managing Partner Tibor Massányi talks about past and future ambitions paid tribute to two decades of excellence in the building industry, with an illustrated company history, snapshots of DVM group’s major milestones, a colorful visual overview of important reference projects, a remarkable list of international awards, and a general insight into the DVM group service portfolio. As managing partner Tibor Massányi pointed out “the complex DVM portfolio was created over the course of the company’s first decade, organically developing from the original expertise of the design and project management fields, to be later complemented by the general construction, project management, sustainability consultancy and development management divisions. The size

of the DVM team also increased exponentially, together with internal competencies getting stronger with each team member who joined. We started with a small business that employed four colleagues twenty years ago and matured into a medium sized enterprise of over 70 employees, with an ever growing number of projects, increasing revenues and satisfied clients from all over the world. Our references cover all areas of the real estate industry from office building development projects in their entire complexity to the design, construction, project management and certification of hotels, restaurants, retail units, sports facilities, heritage restorations, public buildings and healthcare units, and of course the fit-out of office interiors.”

In Q2 2016 Váci 1 - with its major international retail anchor tenant opening a flagship store in May - will become the vivid retail and office complex it was always meant to serve as at its ideal location by Vörösmarty tér. We also chose it as the new home of DVM group for the next 10 years. Our other project in the pipeline, located only a couple of minutes from Váci 1 at Szervita tér, will also offer exceptional quality leasable office and retail space for premium tenants as of 2018. Promenade Gardens – a new Váci út office corridor favorite – may open its doors to office and retail tenants a year earlier (in 2017), with the primary target audience being shared service centers of international corporations.” www.dvmgroup.com

nOte: aLL artiCLeS marKed eXPert OPiniOnS are Paid PrOmOtiOnaL COntent fOr whiCh the BudaPeSt BuSineSS JOurnaL dOeS nOt taKe reSPOnSiBiLity

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of the Danube. The local government also built 600 rental apartments from its own resources. This exceeds the number of apartments built by all the other local governments put together. We are especially proud of our pioneer investment in a passive house (using ultra-low energy technology) of 100 apartments for rent. This is unique in Budapest – and in the whole CEE region. The district’s office construction serves as a flagship in the capital, as one-third of the office investment is made here. In the 2010-2014 period, some 200,000 sqm of retail and hospitality units were built. Váci út, with its modern buildings, is still the fastest changing main road in the capital. The category “A” offices here have all been designed by the most renowned Hungarian architects. Some specific developments: • Capital Square, 32,650 sqm, (2009) on the corner of Váci út and Dráva út; • Gateway Office building near Árpád híd, 36,300 sqm; • Greenhouse in Kassák Lajos utca, 17,800 sqm (2012, December); • HB Reavis Váci út, Turbina utca corner, 18,480 sqm; • Atenor Office Builidngs at Váci út, Fiastyúk utca corner (first phase 17,420 sqm, 2013; second phase 20,145 sqm, summer 2015; third phase the end of the year, 24,923 sqm); • Vision Towers at Váci út, Dózsa György út corner, March 2015, 23,500 sqm; • Skanska’s newest office building is being built at Váci út, on the Süllő utca corner; • Last week there was a ceremony for the V17 office building at Váci út, on the Bulcsú utca corner; • As for residential buildings, there is the aforementioned 100-flat passive house, built solely from local government money, at the corner of Jász utca and Zsinór utca; • A notable private investment is the Nanette Harmony on Rozsnyai utca.

How do you promote the Váci út area to foreign and Hungarian developers and investors? a: Before joining the European Union, we had the option to give tax rebates to investors. Even after the tax rebates ended, investors valued the reliability, predictability and investor-friendly attitude of the local government. The good reputation of past investments made the area interesting for new investors.

Where did the original idea come from to develop the area into a business district? a: The local government carried out a thorough investigation of investment possibilities. Following an analysis by professionals, the local government developed long-term tasks in the middle of the ‘90s. Beyond residential and recreational development, the construction opportunities of commercial and service units were marked as an engine for growth. The district government set out its long-term goals, in a document that is valid for 25 years. In 2013, following thorough and detailed

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consultations with professionals and citizens, the district put together a development concept to last until 2033. The concept’s medium-term plans are carried out in four-year cycles.

How do you cooperate with developers in the design and planning process? a: The Office of the Chief Architect is in touch with the developers, discussing development concepts and midterm programs. The most significant investments are discussed by the District’s Planning Committee, which makes offers to investors. The committee is made up of top professionals.

Would you define Váci út as the major office business district of Budapest? a: Váci út and its environment, is the major investment area in Budapest. The area has been a flagship for 20 years, preserving its competitiveness. An international conference on architecture and real estate development dealing with Váci út found that the area is not only competitive in Budapest but also on international levels.

How important is public transport infrastructure to the success of Váci út? a: Public transport plays a significant role, as transport is a key part of the infrastructure. Metro line 3 is essential to the competitiveness of the area, and this is evident because, outside the area of the metro, similar development cannot be observed. Therefore, transport has a significant but not singular role in the development of a certain area.

How much more office and residential development do you anticipate in the near future? a: We are not expecting the investment boom we saw before 2008 to happen again. In the past 6-7 years, the development in the capital has been concentrated in this district, with almost 50% of the new office buildings being built here. We can see a growing demand for development by investors. Hopefully, District XIII will stay in the center position of such activities. Beyond the investment mentioned earlier, we also expect significant development by HB Reavis at the southern area of the Árpád bridge, and there are some other investments being prepared. Also in District XIII, around the Dagály bath, a swimming complex for the 2017 Aquatics World Championships is being built as a government investment of elevated significance. The construction of Klapka Szolgáltatóház is going to be a significant investment for the local government and will change the area’s overall image, with the renewal of the area and the development of public spaces. Local government investment in flat construction is being continued, through two blocks of flats of 21 and 48 units each. The investment uses the district’s own resources, without any loans. Preparations have already started.

Is the development of the Váci út area a model for other areas in Budapest or cities in Hungary? a: Definitely, yes.

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Green conversions are good for business Miklós Szebenyi Co-head of property management JLL

The Budapest Business Journal spoke with Miklós Szebenyi, co-head of property management at JLL, about the challenges of going green in the office and retail sector. To what extent is JLL involved in the refurbishment of properties looking for BREEAM and LEED certification? We manage properties as if they were aiming for certification. BREEAM and other certifications provide guidelines in the management of shopping centers and ‘A’ category office buildings even if a landlord has no intention of certifying that property. But if there is a request to do so through a third party contractor, our buildings are always ready to be certified. How do you assess what is required in the refurbishment process? When we take over a building, we audit all the components including electrical, heating and cooling, and water systems and see where upgrades are possible and based on that we first try to optimize consumption through management tools and use the service charge whenever funds are needed to carry out the lesser upgrades. We also put forward proposals to the landlord regarding capital investments of bigger value items that need to be replaced. It is a continuous process contingent on technological developments and regulations also change. What are some of the challenges you face in managing and promoting green properties in Hungary? If you can come up with a business plan with a very short return on investment, the landlords are always very supportive, especially if you can do it from the service charge to replace outdated equipment with more effective machinery. When it comes to capital investments, however, the support tends to be lower and these investments need to be justified. On the other hand there is also pressure from the tenant’s side. Even if there are no direct savings, the landlord will invest because a tenant has stipulated that they will not move into a building that is not certified or does not meet such standards. This can even be a deal breaker.

How receptive is the Hungarian market to these developments? I think it’s spreading mainly because of the pressure from the tenant’s side. If you want to remain competitive you have to meet certain criteria imposed by tenants. You also have to consider how much of the service charge goes towards utility consumption, so making your property run efficiently is usually a good investment. Additionally, if your service charge – which is a big part of overall costs – is too high, you won’t find tenants to occupy the property. What are some of the obstacles you face in converting an existing building? There is very little you can do to change the structure of a building, but what you can do is make the interior components more efficient. Most office buildings built in the late ’90s can easily be converted into green office spaces. Those structures that were built in the ’60s and ’70s are much more difficult to convert and in some cases it is easier to start from scratch. What is JLL’s role in the refurbishment process? Our task as operators is to convince asset managers about the importance of this kind of investment and its operation. We are not decision makers but we have a big influence on the decision makers. We train personnel on how to look out for significant issues within an office building. We also present business plans and case studies to our clients that outline the benefits of carrying out refurbishments to create an environmentally efficient office space. Fifty percent is knowing the technology and the legislation and the other 50% is just common sense. You have to hire the people with the right mindset who are committed to environmental sustainability. What green office project is JLL most proud of? We managed Dorottya Udvar, which is a 100-year-old building that was recently refurbished. It’s a good example of a wellmanaged older building and it is the only building in Hungary in the ‘In Use’ category with BREEAM Excellent certification. It shows that if you care about your property, you can achieve almost anything.

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Local property experts believe i

Csaba Széll of CE LAND Holding.

a group of local executives in the Hungarian real estate market tell the Budapest Business Journal that they are feeling the pull of demand in the market and they expect growth.

Árpád Török of TriGranit.

IMMOFINANZ in Hungary seemed a little less enthusiastic about the pipeline for now. “Although we see a clear trend with regard to declining vacancy, I would not call it very low. For sure there are developers that have already started their projects. But quality office space does not necessarily equal new development. It can also be achieved by keeping the recent properties in good, up-to-date condition through investment,” Nagy said. He added that IMMOFINANZ had just completed such a refurbishment at Árpád Center in Budapest. BBJ STaFF Eventually, though, Nagy said he expected development to kick in. “We definitely see a positive trend in our The market is improving, and vacancy results, both in terms of income and is dropping, but it may be a while decreasing vacancy within our portfolio before this translates into a demand in all sectors. As the demand also shows for development, according to a range signs of increase and there is only a of experts queried by the Budapest limited availability on the market of good, quality products, it is obviously a Business Journal. Further improvement in the market time to invest both in existing portfolio here would require a more stable legal and new developments,” he said. and investment environment and an Katalin Sermer, country manager of improved international reputation, the S IMMO APM Hungary Kft., similarly experts agreed. Still, most said they suggested her company is feeling would counsel outsiders to enter the demand, but not yet enough to encourage Hungarian real estate market. investment in new development. “I expect significant transactions in “There is a distinct recovery of the Hungary in the coming 12-24 months, market to be felt, slowly but steadily and the 2016 office pipeline forecast could making its impact, however, we do not reach the highest volume since 2010, with see major changes coming in the next nearly 90,000 sqm in new office space,” one or two years,” she said. “We have said Árpád Török, CEO of TriGranit. “The invested largely in the technical and Hungarian real-estate industry, which aesthetic upgrade of our buildings. We almost totally burnt out and showed only refurbished the entrance lobbies of minimal activity during the financial City Center, Buda Center, River Estates, crisis, is showing more and more signs Pódium and Blue Cube, the facade of of recovery. Economic indicators have River and Buda, lift lobbies in several been both stable and positive for several buildings and so on. We are keeping pace months already, investor confidence is with technical standards to attract new growing, and more enterprises (foremost tenants and to keep our longstanding among these, service providers from partners in our buildings.” every segment) choose Hungary for their Tim O’Sullivan, head of capital markets service centers again.” at CBRE Hungary, was equally cautious, Viktor Nagy, country manager, asset though he acknowledged growth. “We management office and logistics, for have seen a significant increase in

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Viktor Nagy of IMMOFINANZ.

Katalin Sermer of S IMMO APM Hungary Kft.

business activity, as have many of the real estate agents, developers, investors and real estate funds. Investment volumes are coming off a very low base, so it’s all relative, but in 2016 it’s not unrealistic to expect investment volumes to reach €1 billion – keep in mind that is still only half of the record levels recorded in 2007,” O’Sullivan said. “We don’t expect that investors will come in and fund new developments, rather they will acquire existing assets which will benefit from rental growth in the shortto medium-term. Investors still prefer to acquire standing investments with income compared to funding speculative office development.” Csaba Széll, managing director of asset management for CE LAND Holding, said he anticipated development soon. “The current vacancy in the Class “A” segment is within the so called ‘healthy’ range (i.e. bellow 15%). It is on a sevenyear low point. That is a positive sign for all of us who work in that market. The reason that we see limited new projects, though, is the relatively low rents, the difficult financing and the low number of decently prepared projects. Having said that, I believe that new funds will continue coming in actively to Budapest in the near future to boost new development,” Széll said. “Indeed, our company CE LAND Holding has been continuously improving its business results and market position in the past four years. We have been completing half a dozen major real estate project disposals on behalf of our clients. In my view, our team will be involved in more investments in the coming years.” For Noah Steniberg of Wing, which just had a “topping out” ceremony at its new V17 office, due to be delivered next year, it is a fine time to build. “Wing has experienced a marked improvement in both the real estate development and investment markets,” he said. “Quality tenants with larger contiguous space requirements have very limited choices,

and are therefore prepared to commit to pre-leases in advance. This allows for the launch of new projects since funding is available to strong developers on the basis of pre-leasing agreements that is not available for speculative developments. As Hungary’s leading office developer, Wing has recently launched several projects on this basis.” White Star Real Estate Kft. managing director János Gárdai said he also expects new developments soon. “Trends are encouraging and we definitely expect investments to come in. Our own investors have started to look at Hungary again and we will soon re-enter the country with new investments and our own developments,” Gárdai said. “Our business has been greatly improving and we are very optimistic about the forthcoming years. With the recent changes in our ownership structure, we are looking again to invest and to develop,” he said. “Even as we speak we are underwriting a few deals.”

Advice for investors Asked what they would advise as an investment approach concerning Hungarian real estate, the experts ranged from cautious to enthusiastic, but all seemed to encourage entry. Sermer said she would give “basically the same advice as in every other city: Take a good look at the premises, make sure the quality is high, pay attention to the location (public transport etc.) and make sure you treat your tenants well.” Steinberg of Wing agreed that knowledge of the market is important. “New investors need to understand the specific dynamics of the local market, but this is true for all cross-border transactions. A strong, stable, reliable local partner can be an invaluable advantage,” he said. “The commercial property market is strongly focused on Budapest, although there are excellent

2015.10.28. 21:59

Budapest Business Journal | Oct 30 – Nov 12, 2015

e it’s time to invest

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The BuDapesT real esTaTe MarkeT is aliVe Dr. Sándor Habóczky Partner SCHOENHERR HETéNYI ATTORNEYS AT LAW

Lawyers also hope the positive mood goes beyond “Airbnb enthusiasm” and will be steady in the Budapest real estate market.

Tim O’Sullivan of CBRE.

Noah Steniberg of Wing.

opportunities in tourism and hotels, manufacturing related industrial properties, and retail throughout the country. It is an opportune time to consider an investment in Hungary.” Török stressed the importance of well-focused investment. “During the financial crisis, TriGranit consolidated and cleared up its portfolio, and since then, we have focused on activities that we are the best at – office and retail. And that is what helped us survive,” he noted. “Though the present period is a prosperous one, with many opportunities, undertaking only what one can do best, and only as much as one can affordw, is a long-term and beneficial way of thinking.” Török also said that he believed investment in Hungary had to focus on the capital. “Based on research, the city represented 35% of the national GDP in 2007 and its share will reach 40% by 2020. The secondary cities are by far not as high in potential as the smaller cities in Poland.” While White Star’s Gárdai cautioned, János Gárdai of White Star Real Estate. “the advice would necessarily depend on the type of investor”, he added: “My general advice would be: Now is time CE LAND’s Széll also suggested that to invest. The office market in Budapest high-end is best. “I would encourage is starting to look attractive again. foreign investors to select distinguished Vacancies are low and Hungary still has quality, sustainably well-managed a yield advantage compared to other projects, in case they are planning to CEE markets. The logistics market can hold those assets at least for mid-term also offer good opportunities, especially or longer,” he said. “I would also support now that retail sales growth can support investors in selecting investment schemes opportunistically speculating new developments in this sector.” CBRE’s O’Sullivan suggested the on short-term outstanding returns as importance of premium properties. “Buy well. For that kind of fast return, I would the best in class assets affordable to advise them to turn to experienced local an investor, assets that will be stable experts like us.” and grow in the short-term, but assets Nagy of IMMINOFINANZ said the that can weather the next storm and high-end approach has always been continue to be defensive assets against the preferred route for his firm. “Every future market shocks,” he suggested. company has its own strategy, but “The economic indicators for Hungary we believe that wide range of quality and especially Budapest are solid and services can be one of the drivers for continue to remain stable – investors success, and providing premium quality should look at the data and focus on the on a permanent basis pays off in the long fundamentals of the market.” run,” he explained.

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As a lawyer working in a CEE network, the past couple of years I often saw a bit enviously some high-profile transaction work of my Polish colleagues on the popular Warsaw real estate scene. The reputation gap of Budapest was quite obvious, both in terms of our countries’ comparable macro-economic indicators, investors’ interest and the scale of real estate projects planned and actually realized. These days, things have started to really change. While economic figures and market reputation are rising and, at the same time, overall demand for new developments is growing, Budapest is still offering affordable investment opportunities. The Hungarian real estate market may be worth investing in before favorable opportunities narrow and the environment gets more difficult and the competition gets tougher. A price per value based comparison with other CEE capitals, particularly Warsaw and Prague, suggests there is a room and longer term opportunities for real estate investments and developments. Although the investors’ trust in the country is recovering slowly and it is still very fragile, finally it seems “Hungary is performing better” compared to its CEE market competitors in certain segments. Due to the solid economic growth, the improving labor market and the recent FX housing loan consolidation, a greater number of households enjoy a growth of real wages and thus represent a greater consumption force. In addition to the increase of household disposables, a slight improvement of financing and lower bank interest rates on savings all direct attention of private individuals towards real estate investments. This particularly goes to Budapest, which currently enjoys the benefits of a tourist industry boom. Among such conditions, Budapest central district rents increased very fast, attracting private residential spending and buy-to-let type of property investments, mainly by locals. The simultaneous Airbnb thrill has not just further elevated the excitement and expectations, but it had an overall impact on property rent and sale prices, especially in the smaller apartments’ range. Nevertheless, average Budapest flat prices are still below the pricing level of CEE capitals, while the

housing demand is increasing well beyond the low level of developments. Therefore, we see a good reason for the era of this type of transaction and legal work to come again. Such refreshing grade of optimism is not necessarily typical for foreign professional investors and developers looking for yields in the commercial sector. They are rather cautious and careful because of the unpredictability of the regulatory environment, as experienced over the past years. As a consequence, the Hungarian retail sector does not seem to have the same leading role in investment volume as in the other CEE countries. While growing household consumption supports the rising retail sales figures and new brands feel encouraged to enter the Hungarian market, the regulatory restrictions on this segment (e.g. plaza stop, Sunday shopping ban) keep the retail property developments at a low level. More typically, existing shopping-centers aim to upgrade their tenant mix, their layout and quality of services. From the legal perspective, amendment of rent payment and calculation terms in existing lease arrangements with regard to the restricted opening hours have been an issue this year. Although relevant civil law provisions suggest tenants may be proportionately released from rent payment for the term they are unable to utilize leased premises for their business activity, the landlords’ financial position in the popular shopping centers did not weaken at all. As opposed to the retail segment, professionals and market surveys both suggest the Budapest office sector provides greater opportunities for property developers. The low level of completions and limited supply of new developments during the crisis automatically resulted in a greater demand for office space, and today’s market is characterized by declining vacancy rates and an intense take-up. Compared to Prague, and particularly Warsaw, Budapest still has a fair potential in growth and developments, especially in the higher quality asset class. Some speculative investments can be seen again and the good projects run with a very high grade of pre-let. In accordance with these trends, we observed in our daily practice already last year the strengthening negotiation position of office landlords and the decrease of tenant incentives. Beside re-negotiation of office lease terms, we expect to see an increasing number of opportunities to support new developments, too.

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Asset management professionals n as the work of maintaining a sustainable office that provides a good working environment becomes more complex, specialized skills are in greater demand. gary J. MorrEll

Successful commercial office centers require increasingly specialized professional asset and property management techniques, which is usually the responsibility of the in-house department of a developer or investor, or out-sourced to the property management department of a consultancy or dedicated property management provider. Sustainability issues are now a central element of asset and property management processes, and this is now widely regarded as a precondition for a developer in sourcing debt finance, letting a project and providing an exit strategy in a sale to investors.

Industry standard: The BREEAM website at www.breeam.com. This is also a basic requirement from the perspective of tenants and for an investor when making a decision to purchase a recently delivered building or in seeking to upgrade an acquisition. “The evidence is that certified sustainability is a must for new buildings in the market place. For developers it is a must to source financing, to attract tenants and to get an exit,” said Pál Baross, President of the Hungarian Green Building Council (HuGBC). “Yet I do see a difference in attitude between those who drive their business by excelling on the sustainability score, and those who do it solely as a marketing requirement. Ultimately the first group builds its sustainability business model as a track record, the second as a means to exit.”

With limited development financing available and low development pipeline, owners of older office developments are using Property Management (PM) and Facility Management (FM) techniques to upgrade their portfolios to meet the perceived needs of tenants for class “A” product. With regard to the definition of the different roles, Katalin Sermer, country manager at the Austrian-owned investor S IMMO Hungary, which is upgrading its Budapest office portfolio, comments that the overall performance of a portfolio and financial and operational strategies are overseen by the asset manager, whereas property and facility managers deal directly with tenants. “The role of the PM is managing the daily business of an office center and

maintaining relations with tenants. FM is the hands-on part of the business, and now usually involves companies that specialize in this work. This can involve intelligent building management systems that, for example, regulate the temperature, or software that is used to record activities and materials used and the life span of equipment,” she said. According to Cushman & Wakefield, who are acting as property managers for Union Investment at the Krisztina Palace office center, the priorities of the company are: Finding sound and longterm tenants, keeping existing tenants, maintaining the quality of an “A” grade building, sustainability, and keeping or increasing the BREEAM certification level. The 15,000 sqm center was completed in 2010 and subsequently purchased by Union Investment, and has attained BREEAM In-use certification. In its latest project, Skanska has commenced construction of the first 6,600 sqm of the two-phased 26,200 sqm Nordic Light office development in Váci út, which has been pre-certified with Gold BREEAM certification. According to Skanska, sustainable design features will contribute to Skanska fully leasing the project and creating the option of an exit strategy, while at the same time reducing the environmental impact of the building.

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s now essential Work environment has cash value

Analysts agree that developers need to offer good working conditions, as tenant profitability is closely linked to the provision of amenities and a flexible and comfortable environment. The next significant Budapest office delivery is set to be the 12,700 sqm V17 Office Building in Váci út, for which the Hungarian developer WING Zrt. recently held the topping-out ceremony. Wing has signed a long-term 8,500 sqm lease with E.ON at the complex. Around 600 employees will move into the building in the second half of 2016. The building includes an 18-meter high atrium and circular reception area, café and restaurant, and a 900 sqm green internal courtyard. The design for the €34 million center was drawn up by Aspectus Architect and the general contractor is Market építő. As is currently the norm, sustainability elements have been incorporated in the development process from the design phase. “Asset management is done in-house and we regard this as part of our core competencies. We develop buildings that we expect to hold on to for long periods of time, and this means that we property manage them ourselves. If later they get sold, they get sold, but we always have the perspective when we approach a project that we need to work on a longterm basis,” commented Noah Steinberg, CEO of Wing. “So we try to make sure that our buildings are sustainable, not only from an environmental point of view, but also from a business point of view. An environmentally conscious building also makes sense because operating costs are lower, and this also creates a better working environment for tenants; these are the two key elements that we look to. In addition, buildings should be run as efficiently as possible and the biggest cost is energy, so the less energy use there is, the better the buildings are.” According to Wing, V17 is being constructed to the standards necessary to achieve a BREEAM Very Good environmental rating. This includes recyclable materials with a minimal environmental footprint – tropical wood products, for example, are not being used. Hot water is provided using solar collectors, and the building’s mechanical systems will be individually regulated. The building will be naturally ventilated through the induction of fresh air, with energy recovered by a heat exchanger. Natural sunlight will be maximized by large glazed surfaces that can be shaded as necessary. A bicycle storage facility will provide space for 90 bicycles in the underground garage, with the provision of showers and changing rooms. András Schmidt, property and green business manager at Skanska Property Hungary, comments that a central issue is that a pleasant working environment for tenants is created. “A good working environment includes a reasonable internal temperature, efficient external shading and flexible and efficient work spaces. Natural daylight is regarded as another important human factor. According to certification regulations, it is import to place a work station close

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“A good working environment includes a reasonable internal temperature, efficient external shading and flexible and efficient work spaces. Natural daylight is regarded as another important human factor.” to the source of natural light: 5-6 meters of space from the facade constitutes the ‘daylight zone’. A good indoor environment includes thermal comfort with an avoidance of drafts, with efficient lighting, a high ratio of natural daylight, automatic sun shading, flexible design, good restaurant facilities and internal and external gardens that can be used as a meeting point,” he said.

Accreditation is important Baross, a qualified BREEAM assessor in addition to being president of HuGBC, comments that with international investors there is a formal basic requirement that the property have a transparent and credible accreditation score when making a purchase. Not necessarily the “higher the better”, rather the “more robust and more long lasting”. “In some ways sustainability is in a sense future full proofing. By my own score, tested on a number of investors, the check list of sustainability is location, energy efficiency, indoor quality and green space.” The most commonly used certification organizations in Hungary are the U.S.-based Leadership in Energy & Environmental Design (LEED) and the European-based Building Research Establishment Environmental Assessment Methodology (BREEAM). “Technically LEED relies on more American standards; BREEAM is better adapted for the European context outside of the U.K. There is some measure of investors’ preference, shaped by the geographic weight of their portfolio. I anticipate that in the future there will be a formal convergence between the two systems. Additionally, as well that other ‘national systems’ will emerge responding to local building morphologies and environmental factors,” commented Baross. The LEED Gold and BREEAM Very Good accredited Eiffel Palace has won the World Green Building Council Europe Leadership in Green Building Awards 2015. The Architects Council of Europe, as a part of the jury, remarked: “Eiffel Palace is an outstanding example of contemporary architectural design that embeds novel energy and water saving solutions into a historic building on a heritage site. The Eiffel Palace building renovation preserves the future, while reflecting on the past.” The complex was developed by the Hungarian developer Horizon Development and was purchased last year by the Hungarian National Bank for a reported €45 million.

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Foreign clients treated with special care at top real estate agency Otthon Centrum Otthon Centrum (OC), one of Hungary’s largest real estate agencies has been capitalizing on the recent boost on the market. Franchisee Partner Tibor Tóth and Head of Office Katalin Ceglédi from the company’s branch offices in Budapest downtown explain how their premium service is used by foreign and domestic clients alike with utmost satisfaction. How has OC managed to harness the recent immense growth on the real estate market? We have witnessed extremely dynamic expansion in the past month, in particular in the capital districts 5, 6 and 7 with a price increase of 20 to 25%. Our firm has kept the pace with this development by opening 40 new offices only in 2015. In fact, our nationwide network is our key asset that guarantees a thorough overview of our sophisticated database at all times which is highly appreciated by our clients. What is the situation like in the Budapest downtown area of which you personally have the best insight? Our core locations on Vörösmarty square, Liszt Ferenc square, Ó street, Papnövelde street and Mérleg street have experienced a very active period. Factors such as low interest rates, the broker scandals or the hype to buy flats for lease in the AirBnb scheme all played a role in revving up turnover. Our downtown offices have the advantage of being at places frequented by many, including a lot of tourists who often visit the city first, then return as buyers. What share does foreign clientele have in your operation? Customers from abroad are treated with special care not least because around 10-15% of all transactions are attributed to them. We are at their disposal with extensive foreign language services: our inner city representations all employ colleagues with strong language skills. We strive for striking a balance of distribution of spoken languages, so that different nationalities always find a consultant knowing their tongue. Chinese and Russian buyers seem to appreciate this to a large extent as you can build trust with them this way more easily. What kind of properties are particularly looked for now and how can supply match overall demand? One thing is certain: the concept of ‘small apartment’ is gone. There are simply none out there in the very heart of the city. With no new developments under way, flats of HUF 20M are considered now small and if they are of decent quality they are sold in no time. The market is very much driven

by demand from abroad as Budapest is still an affordable place. In total, however, 90% of all purchases in the area are motivated by investment. You must have a strategy as to how to attract those investors to buy with your assistance. We take utmost care that in our database only properties with background checks are registered. No murky business is tolerated; land registry records are permanently monitored and verified. In addition, we provide evaluation services, arrange the issuance of energetics certificates or offer credit consultancy. This would not be possible without our highly qualified personnel that undergo continuous training. This range of quality services has been added an innovative product as of October 1 which should be attractive to even more would-be customers. The product known as ‘Split’, or ‘Felező’ in Hungarian, is not new in Western Europe. According to this, agency commission is split between buyer and seller which is a justified practice on today’s market. It’s not a secret that this way we are targeting foreigners who are already familiar with the structure and who have special needs to be fulfilled. Although the concept may be received with some suspicion by the local community, we are confident that in the case of hot properties it will be a very competitive solution. What about real estate lease? Is there a similar trend to look out for as in the case of sales? It’s a typical phenomenon that if a foreign client buys a property via us and they do so with investment purposes, which is the case almost every time, they tend to entrust us with matters related to leasing as well. Accordingly, we find the right tenant and get the lease framework done. Since in the current environment a 6-9% annual yield is realistic, it’s a popular solution. Of course, if property management services are further needed we are happy to connect our clients with our renowned corporate partners. This way any of our customers’ needs in relation to their property can be fulfilled in a one-stop-shop fashion at the highest professional level.

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BP Airport: Caring for millions, p Serving one million passengers a month, the capital’s international airport is a constantly moving and changing asset, and a challenge to manage. gary J. MorrEll

Managing an office building with thousands of workers and visitors every month is a challenge, but imagine catering to one million people in a month. Budapest Ferenc Liszt International Airport recently celebrated the milestone of doing just that as the airport exceeded the threshold for the first time in its history, according to operator Budapest Airport Zrt. “Last year we celebrated our nine millionth passenger in a year and now in July we have handled more than a million passengers in the space of a single month,” said Jost Lammers, CEO of Budapest Airport. “We are doing everything we can

to maintain Budapest Airport as the most dynamically growing travel destination in the CEE region, and to ensure that business and leisure travelers, foreign investors and business partners will look upon Budapest and Hungary as an attractive location.” The 100% privately owned Budapest Airport Zrt. is tasked with managing, operating and developing the international airport, reporting to the four companies that act as shareholders. In addition to running the airport itself, this includes property and asset managing real estate projects at and surrounding the airport, including cargo and logistics facilities, business park integrator buildings and eventually a proposed airport hotel. This is essentially the infrastructure that surrounds a modern European airport occupied by companies that rely on it to maintain their business role. In addition, the company also acts, to all intents and purposes, as a developer by providing specialist logistics and office space in addition to upgrading the airport buildings in order to improve efficiency. If all that isn’t enough, the company has the added responsibility for the air transport infrastructure and the promotion of Hungary as a flight destination. Budapest Airport Zrt. owns the two terminals and surrounding land that totals almost 1,500 hectares. “We have been

The design for the DHL logistics center. running the airport since 2007. This is not only property development, but the main activity is obviously operating the airport and providing the infrastructure for our passengers,” said René Droese, property director. “At the moment there are no plans to re-open Terminal 1 for passenger traffic and there is therefore no outlay for maintenance and security. It is used as an event location with companies renting the terminal, but this is not sustainable for the long-term future as it is not revenue generating, so we are thinking about what we can do with the building and how we can best utilize the terminal. It would not be economic to re-open the terminal

to passengers as Terminal 2 has enough capacity and this would also double costs for security. Terminal 1 is not really suited to be a passenger terminal as it is a heritage building, and therefore it is a long and difficult procedure to make modifications that requires consultations with architects and the authorities. So in terms of operational procedures, Terminal 1 is not state-of-the-art,” he added. There is an option to construct a cargo facility next to Terminal 1 with direct access to the airport road infrastructure. However, cargo represents an uncertain market sector and is difficult to forecast, as long-term trends cannot be predicted in the same way as passenger numbers.

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Zen in the City

Investor Developer ConvergenCE recently bought one of the first modern buildings on Váci út, the Duna Office Center, which was built in 1994. We talk to the CEO of ConvergenCE, Alan Vincent, about their plans for the building.

What was the rationale of your purchase of the Duna Office Center? We are following a strategy we formulated with our investors 18 months ago. We have seen how office buildings which are well located but suffering from age and a lack of capital expenditure and active management have resulted in high vacancy levels. At the same time, banks are quite correctly not yet financing any speculative office development. The opportunity, therefore, is to meet increasing demand for modern offices by purchasing such distressed office buildings in good locations and investing the necessary time and capex to bring them back up to a high level of finish, amenity and service, which will make them leasable again. But is there really demand for such space now in Budapest after the high levels of vacancy we have seen in Budapest? In reality, there has been a shortage of the right type of property in the best locations in Budapest for the last two years. Whilst the overall vacancy level exceeded 20% in the

past, the majority of this space was poorly located and specified. Overall vacancy has dropped dramatically during the last 12 months and is at 13.5% according to the Budapest Research Forum, a historic low, whilst (as we have experienced at our Eiffel Square building), the best located offices often have tenants lining up to take any available space now. In particular there is a shortage of large contiguous office spaces of over 3,000m2 at the moment.

So tell us what your plans are for the Duna Office Center? CityZen, the property formerly know as Duna Office Centre, occupies a prime position on the popular ‘Váci Corridor’, very close to its intersection with Dózsa György út, 50m from the entrance to the Metro station. However, whilst the location is the best on Váci út, the age of the 12,600m2 building means that it suffers mainly in terms of the provision of its mechanical and electrical services and lifts. We received a permit during the summer to give the building an external face-lift, significantly improve the size and appearance of the reception area and to install two entirely new lifts. In addition, we will entirely replace the mechanical and ventilation systems and uprate the electrical capacity of the building to meet the more dense occupancy requirements of modern office buildings. The building has always had a good parking

months, half the time of a new office building and with considerably less risk. We expect to have a formal launch of the renewed 12,600m2 building in the first quarter of 2016.

provision with 150 spaces so that does not need improving! What is the significance of the name CityZen? Well, although everyone knows the Duna Office Center, due to its age, the connotations are not exactly modern or embracing the current office occupancy reality. Naturally, rebranding a building is part of such a relaunch. Our creative team came up with a name which they considered better describes the type of environment which occupiers are looking for today; a space where they feel comfortable and can react to the challenges of todays business world in the city; with insight and balance, aiming to reach a state of calm perfection. How long will this project take to realize and when will it be completed? We have commenced the demolition of the internal vacant areas and the construction of the additional lifts and reception area. The works will be completed within 9

We understand that environmental certification is a requirement for new office buildings? Yes, that is the case and we have commenced a BREEAM certification process, which is an essential requirement of many occupiers and tenants in modern office buildings. How can you manage such a complex process? The background of ConvergenCE is in development, whilst we have also provided asset management, property management and project management services since our establishment 11 years ago. All of these abilities are necessary to understand the potential of old buildings to be improved and to manage the process through to successful leasing of the finished product. Our multidisciplinary senior management team of 4 has over 80 years of hands on real estate experience between them.

www.convergen-ce.com

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Budapest Business Journal | Oct 30 – Nov 12, 2015

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planning further growth The design for the airport hotel.

Extending Terminal 2 Budapest Airport is definitely planning to extend Terminal 2, however, with a “pier”, a structure providing additional boarding bridges to aircraft; the project is currently at the design and permitting stage. With tendering and construction contracts being concluded, the operator plans to open the pier in 2018. It will provide more capacity for the bigger passenger aircraft (configured with three rows of seating) that arrive from, for example, China and the Emirates, and long haul flights from Canada. In the Airport Business Park between Terminal 1 and Terminal 2 there is 500,000 sqm available for greenfield development

The design for the ‘integrator facilityʼ. with access to both terminals and the main access road to the airport. This provides the potential for 100,000-150,000 sqm of logistics space. The first project has been completed with a development for DHL Global Forwarding. “We have concluded a 15- year lease in which it decided to bring two units under one roof. In the project we were in competition with more traditional logistics developers,” said Droese. With regard to logistics development, Budapest Airport will design and construct tailor-made “integrator buildings” for TNT (8,000 sqm) and DHL Express (9,000 sqm) in a facility next to Terminal 1. Both facilities are due to be delivered in the summer of

2017. The operator has also recently handedover a 2,000 sqm hangar facility to Wizz Air. “We have created long-term facilities based on long-term leases for companies working at the airport,” commented Droese. Budapest Airport Zrt. is developing a hotel at Terminal 2 and a contract with an international operator has been signed. The development strategy of Budapest Airport is to sign up with a third party that has the expertise to operate a hotel and fill a vacuum, as currently there are no bedroom facilities at the international airport. The target opening is summer 2017. With regard to the transport infrastructure there has been talk of an

extension of the metro line or a railway connection directly to Terminal 2, but thus far there has been no feasibility study and therefore the idea is at the preparation stage only. Such a project is not regarded as easy to execute, as there are many stakeholders that need to be coordinated and a need for funds. Given the additional risks with regard to infrastructure, yields for buildings in the airport area tend to be higher than, for example, an office building in the city center. An airport facility is seen as a lot more complicated, and it is difficult to lease airport offices, as tenants tend to be reluctant to commute there.

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A call for better foreign representation after attending the early-october Expo real conference in Munich, one delegate said he saw a lot of interest in Hungarian property – but not enough official representation for the country. BBJ STaFF

István Kerekes, leasing director at Horizon Development.

The conventional wisdom among property professionals is that Hungary needs to better promote itself at major international property and investment fairs such as Expo Real in Munich and MIPIM and MAPIC in Cannes in order to capitalize on its growing perception as an investment destination. Most delegates from Hungary at the October 4-6 Expo Real reported a resurgent interest in Hungary from even the more conservative institutional investors. However, as with other major international events, neither Hungary nor

Budapest had an official stand (in contrast to its Polish and Czech neighbors) to promote the destination to the 38,000 delegates from 74 countries. “We experienced very promising investment interest during the latest Expo Real in Munich. Not only the opportunistic investment funds, but the usually very conservative German funds are also looking for investment possibilities, and Budapest is definitely not off of their radar,” said István Kerekes (leasing director at Horizon Development), who attended the event.

“However, that does not mean that project financing has become much more available. The financing institutions are only looking for projects with the best fundamentals, but those will be sought after by the investors as well, so we expect a healthy yield compression, especially in the case of the very few CBD [central business district] office developments.” With regard to the need for Hungary to have a higher profile presence at major international property fairs, Kerekes commented: “I think Hungary and Budapest should have a higher

presence at the upcoming real estate fairs such as MIPIM and especially Expo Real, as 2015 was the third year in a row when Budapest did not have any kind of exposure at Expo Real. The city and the state have to understand that their involvement is needed to be able to refute the discomfort people feel about Hungary due to the news seen on television – even though Hungary and Budapest is providing one of the best investment possibilities in the CEE region.” Asked what advice he would give to an investor considering moving into the Hungarian market, Kerekes said that they should take foreign media messages about Hungary with a grain of salt. “Try to listen to the international players who are currently investing in the Budapest real estate market, as well as the Hungarian market makers. We have seen a record year on the investment market so far, and we still have two months left in 2015. Those transactions would not have happened if the foreign investors had been afraid to exploit the opportunities,” he said. “We definitely believe in the market, especially in the CBD where we have recently purchased two projects for developing new prime office and retail schemes in the city center.”

EXpErT opInIon

HANDHELD FM SERVICES Based on a decade of experience in facility and property management STRABAG PFS developed its own software encompassing its complete real estate service spectrum, the STRABAG Managing Buildings System (SMBS), which is also optimized for mobile technology. The primary objective of the software is to provide our customers with a transparent and easy-to-use technology meeting the requirements of the 21st century and accessible from any part of the world, in order to ensure transparency in our property and facility management services. By using this technology our customers can comfortably report the detected faults, they can submit remarks, and while obtaining accurate and up-to-date information they can monitor the entire maintenance and repair process with the opportunity of immediate intervention.

Ede Gulyás Managing Director CA IMMO HUNGARY KFT

CA IMMO is a leading real estate company in Hungary. Ede Gulyás, Managing Director of CA Immo Hungary Kft, answers questions about the firm’s activities. Can you say something about CA Immo’s portfolio in offices? How many properties are you managing in Budapest? In the region? As an office specialist, CA Immo owns eight office buildings in Budapest besides and one logistics park. CAI also has a retail center in Győr. All of our office buildings are located in key and central areas of Budapest and each is of class “A” technical standards and is also managed at a high level, which is proven by the LEED Gold certifications already possessed by seven of the eight office buildings. Certification for the eighth building is on the way.

ST SM M RA BS Bu ana BA Sy ildi gin G st ng g em s

www.strabag-pfs.hu

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a hefty portfolio of quality properties

What about your logistics portfolio? Can you say something about that? Our single logistic property is located at the airport, and includes an office scheme within

the industrial park, which makes it a unique complex. Our tenants enjoy the synergies of having business activities present in the park as well as the closeness of the airport. Our tenants’ appreciation of the property and our management is shown by their long-term commitment throughout the past several years. What do see as the main challenges to asset management in Hungary and CEE? As there has been no considerable development in the commercial real-estate market in Budapest in the past few years, and in spite of this fact the occupancy ratio has increased very slowly, the main tasks and challenges have been to keep the existing tenants in the portfolio. Tough pricing battles, tight layout planning and fierce competition have accompanied every leasing transaction. What are your projections for the property market here in Hungary? And in the region? Even though the investment sentiment towards Hungary is changing, and we experience willingness from both the buyer and the seller side, we are still missing the final commitments from the wide investor society. Only a few, mainly local players are active in this respect so far, however, we are confident that this will change. The availability of financing, a more stable political and economical climate, economic growth, and the charm of Budapest will all play a role in further investments. Developments are not yet happening on a large scale; we foresee this in the mid-term at earliest.

nOte: aLL artiCLeS marKed eXPert OPiniOnS are Paid PrOmOtiOnaL COntent fOr whiCh the BudaPeSt BuSineSS JOurnaL dOeS nOt taKe reSPOnSiBiLity

2015.10.28. 22:00

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www.bbj.hu

Budapest Business Journal | Oct 30 – Nov 12, 2015

Asset management companies

main pRopeRties managed in H1, 2015

40,821

Office buildings: Blue Cube, Buda Center, City Center, Maros utca Business Center, Pódium, River Estates, Twin Office Center and Budapest Marriott Hotel

Balance Building, Gateway Office Park, Arena Corner, Váci188, Airport City Logistic Park, Budaörs Office Park, BC30, BC91,BC209

–

Wingholding Zrt. (99.90), other (0.10) –

noah m. steinberg – –

1095 Budapest, Máriássy utca 7. (1) 451-4760 (1) 451-4289 info@wing.hu

Hubert mühringer Péter Radó Bereniké Sólyom

1075 Budapest, Wesselényi utca 16. (1) 479-6020 (1) 479-6029 office@addvalgroup.com

oWned by Clients

1052 Budapest, Deák Ferenc utca 15. (1) 268-1288 (1) 268-1289 info.budapest@ eur.cushwake.com

oWn pRopeRty

gergely pados Zsuzsanna Kiss Orsolya Németh

ConstRuCtion site

– Cushman & Wakefield Inc. (100)

Hotel

1132 Budapest, Váci út 30. (1) 225-6600 (1) 225-6601 hungary@cpipg.com

oFFiCe

mátyás gereben Kristóf Skwarek Bea Déri

industRial

–

– CPI Property Group (100)

Retail

1051 Budapest, Bajcsy-Zsilinszky út 12. (1) 429-5050 (1) 429-5055 office@simmoag.hu

otHeR

katalin sermer Tímea Földi –

aCCounting seRviCes, ContRolling

– CEE PropertyInvestment Immobilien GmbH (100)

pRojeCt management

7,817 7,728

addRess pHone Fax email

ReCeivables management

top loCal exeCutive CFo maRketing diReCtoR

tenant management

www.simmoag.hu

oWneRsHip (%) HungaRian nonHungaRian

poRtFolio, pRopeRty and Real estate management

s immo apm HungaRy kFt.

poRtFolio diveRsiFiCaiton aCCoRding to type oF pRopeRty managed (%)

seRviCes oFFeRed in pRopeRty management

poRtFolio diveRsiFiCation aCCoRding to oWneRsHip stRuCtuRe (%)

total value oF pRopeRty managed in HungaRy (HuF mln)

net Revenue FRom asset management

Company Website

total net Revenue in 2014 (HuF mln)

Rank

Ranked by total net revenue

–

Rental, operation

–

100

–

Cpi HungaRy kFt. www.cpigroup.hu

2,411

(1)

CusHman & WakeField nemzetközi ingatlan tanáCsadó kFt.

1,685

2,411

www.cushmanwakefield.hu.com

Wing zRt.

addval kFt.

www.wing.hu

www.addvalgroup.com

Ce land Holding asset management kFt.



  

–

100

196

Central Udvar, Ausztria Ház, Eximház, Tulipan Park, Green Corner



  



–

100

AddVal Group Kft. (100) –

193

Duna Tower



–

Owners' representation, utilization, sale, value maximization, re-positioning

–

100

–

100

(100) –

Csaba széll Anita Molnár-Széll Zoltán Balla

1138 Budapest, Népfürdő utca 22. B/11 (1) 785-4985 (1) 799-8879 info@celand.hu

Rental, business and financial management, due dilligence

100

Individuals (100) –

attila madler, tibor gasser – –

1117 Budapest, Infopark sétány 1. Infopark I (1) 382-7560 (1) 382-7570 office@ gamma-am.hu

árpád török Gyula Ágházi Dániel Pazsitzky

1062 Budapest, Váci út 3. (1) 374-6500 (1) 374-6541 info@trigranit.com

521



tRigRanit Fejlesztési kFt. www.trigranit.com

–

V17 (office building), Corvinus University and Studium office building, Máriássy Ház, Millenáris 180,000 office buildings, East Gate Business Park, Dél-Pesti Üzleti Park, Hegyvidék shopping center, Agria Park (shopping center)

  

–



www.celand.hu

gamma pRopeRties kFt.

–

100

Millennium City Center, Budapest, Bonarka City Center, Krakow, B4B Offices, Krakow, Lakeside Park, Bratislava

  

–

76.3 21.2 2.5

100

–

Ÿ Ÿ

Ÿ Ÿ Ÿ

Sándor Demján, Sándor Csányi (Ÿ) Peter Munk, Immofinanz Group (Ÿ)

Ÿ Ÿ Ÿ Ÿ

–

Ÿ Ÿ

Ÿ Ÿ Ÿ

– CA Immobilien Anlagen AG (100)

ede gulyás – –

1074 Budapest, Rákóczi út 70–72. (1) 501-2800 (1) 501-2801 office@caimmo.hu

Ÿ Ÿ Ÿ Ÿ

Business planning and execution, value enhancement management, leasing concept connected to real estate rental, real estate check and supervision, contact keeping with tenants, budget and controlling

100

– Alan A. Vincent (100)

alan a. vincent – –

1062 Budapest, Teréz körút 55–57. (1) 225-0912 (1) 375-0445 csaba.zeley@ convergen-ce.com

–



–

Ca immo HungaRy kFt. www.caimmo.com 9

ConveRgenCe NR

www.convergen-ce.com

immoFinanz seRviCes HungaRy NR kFt. www.immofinanz.com

60,000

Eiffel Square, Margit Palace, Terrapark Next A&B, Kálvin Square, CityZen Offices, Baross 52

Árpád Center, Átrium Park, Central Business Center, Globe3, Globe13, Greenpoint7, Haller Gardens, Office Campus, Optima A, Szépvölgyi Business Park, Xenter13



  



–

Ÿ Ÿ

100

–

Ÿ Ÿ Ÿ

–

100

–

– viktor nagy IMMOFINANZ AG Krisztina Kökény (100) Gergely Koó

1133 Budapest, Árboc utca 6. (1) 236-0435 (1) 236-0436 offices_hu@ immofinanz.com

notes: (1) Management company.

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Real estate developers

eCe pRojektmanagement budapest kFt.

5,100

–



–



–



–



–



asset management

Real estate bRokeRage

Condominium opeRation

built-to-suit development

Real estate utilization

Real estate investment

ConstRuCtion

pRojekt management

poRtFolio management

aCtivities and seRviCes

FaCility management

publiC building

industRial

inFRastRuCtuRal

Residential

CommeRCial

oFFiCe

Company Website

total net Revenue in 2014 (HuF mln)

Rank

types oF investment

ongoing pRojeCts in HungaRy (invested value in HuF, expeCted yeaR oF Completion)

Ranked by total net revenue

–

www.ece.com

Cpi HungaRy kFt.

2,411

budapesti ingatlan Hasznosítási és Fejlesztési nyRt.

1,826

 

–

  

 

–

Balance Building 2015

–

K27 Kerepesi Business Center

  

–

  

 

–

www.raiffeisenevolution.com

806

  

–



–



–



–

top loCal exeCutive CFo maRketing diReCtoR

addRess pHone Fax email

– ECE Projektmanagement GmbH & Co. KG (100)

Christoph augustin, nóra kismarci, gergely lászló, Hanna szilvásy Hanna Szilvásy –

1106 Budapest, Örs vezér tere 25/A (1) 434-8200 (1) 434-8207 info@ece.hu

Samsung, Vodafone, Citibank, General Motors, Magyar Posta, Trilak, Panalpina, Cognizant, BASF, EOS

– CPI Property Group (100)

mátyás gereben Kristóf Skwarek Bea Déri

1132 Budapest, Váci út 30. (1) 225-6600 (1) 225-6601 hungary@cpipg.com

gábor angel Zoltán Farkas –

1033 Budapest, Polgár utca 8–10. (1) 457-3860 (1) 367-2800 bif@bif.hu

Árkád 1. Budapest, Örs vezér tere, 2002, Árkád Pécs, 2004, Árkád Győr, Interspar, Media 2006, Debrecen Fórum, Markt, Gap, 2009, Árkád Szeged, Zara, H&M, C&A 2011, Árkád 2. Budapest, Örs vezér tere, 2012

 

–

Castrum House, Flórián Yard, Ü48, Harsánylejtő Kertváros

(100) –

–

Amfi Apartment House, Budapest - 2003, Rumbach Center office building, Budapest - 2008, Uniqa HQ, Budapest - 2009, Residence 1&2 office building, Budapest - 2010

Eli-HU Kft, W.UP Kft.

– Raiffeisen evolution project development GmbH (100)

Rudolf Riedl Sabine Wegscheider –

1027 Budapest, Ganz utca 16. (1) 346-6400 (1) 346-6448 krisztina.major@ raiffeisenevolution.com

– Skanska Commercial Development Europe AB (97.50), Skanska Komersiell Utveckling Norden AB (2.50)

zoltán linczmayer – –

1134 Budapest, Kassák Lajos utca 19-25. (1) 382-9100 (1) 382-9129 property@skanska.hu

noah m. steinberg – –

1095 Budapest, Máriássy utca 7. (1) 451-4760 (1) 451-4289 info@wing.hu



www.bifirodak.hu

Re pRojeCt development kFt.

oWneRsHip (%) HungaRian nonHungaRian

majoR Clients in 2014

Quadrio (Prague, 2014), Europeum Shopping Center (2011), Courtyard by Marriott Budapest (2010), Gateway Office Park (2008), Airport City Logistics Park (2008), Business Center 30 (2007)

www.cpigroup.hu

(1)

pReviously Completed ReFeRenCe pRojeCts, yeaR oF Completion



skanska pRopeRty HungaRy kFt. www.skanska.hu

567

Wing zRt.

atenoR gRoup HungaRy kFt.

pRologis HungaRy management kFt.

www.wing.hu

www.vacigreens.hu

www.prologiscee.com

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521

137

 



–

 

–

 

V17 office building, HUF 9.5 billion, 2016, Telekom HQ, 2018

–

VÁCI GREENS building "B", 2015 Q4

–



–



–



 

–



–



–



  

–



–



–



–



–



East Gate Business Park F csarnok, 2014, Hegyvidék shopping center, 2012, Dél-Pesti Üzleti Park F csarnok, 2012, Allianz HQ, 2010, Millenáris office buildings, 2009, Átrium Park, 2008, Agria Park, 2008, Corvinus University, 2007

Wingholding Zrt. (99.90), other (0.10) –

–

VÁCI GREENS building "A", 2013, VÁCI GREENS building "C", 2015

GE Infrastructure, GE Hungary, SYKES, Enterprise Communications

– Atenor Group S.A. (100)

zoltán borbély – –

1138 Budapest, Váci út 117–119. (1) 785-5208 – info@atenor.hu

– ProLogis B.V. (100)

lászló kemenes Sylwester Flaga Marta Tesiorowska

1095 Budapest, Lechner Ödön fasor 7. (1) 577-7700 (1) 577-7701 info-hu@prologis.com

–

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www.bbj.hu

goodman HungaRy kFt. www.goodman.com/hu

–



–



–



–

Real estate bRokeRage

oWneRsHip (%) HungaRian nonHungaRian

top loCal exeCutive CFo maRketing diReCtoR

addRess pHone Fax email

– Goodman Europe (Lux) S.A. (96.67), Goodman Belgium N.V (3.33)

dominique prince – –

1024 Budapest, Lövőház utca 39. (1) 336-2270 (1) 336-2289 info-hu@goodman.com

Millenium Tower I. II. III. Budapest (2008), Bonarka City Center (2009) Kraków, Poland, Bonarka for Business (B4B) Office Buildings (2011-) Kraków, Poland

Heitman, IPR Group, PKP, ING, Aareal Bank

Sándor Demján, Sándor Csányi (Ÿ) Peter Munk, Immofinanz Group (Ÿ)

árpád török Gyula Ágházi Dániel Pazsitzky

1062 Budapest, Váci út 3. (1) 374-6500 (1) 374-6541 info@trigranit.com

– Indotek UK. LLC (Ÿ), BRITEX International LLC (Ÿ)

dániel jellinek – –

1148 Budapest, Kerepesi út 52. (1) 688-1700 (1) 688-1701 indotek@indotek.hu

Biggeorges Vagyonkezelő Kft. (50), NV Vagyonkezelő Kft. (50) –

istván Hajnal – –

1023 Budapest, Lajos utca 28–32. (1) 225-2525 (1) 225-2521 admin@ biggeorges-nv.hu

Eiffel Square (2010), City Point 9 City Logistics Center (2010), Park One, Bratislava (2007)

– Alan A. Vincent (100)

alan a. vincent – –

1062 Budapest, Teréz körút 55–57. (1) 225-0912 (1) 375-0445 csaba.zeley@ convergen-ce.com

Corvin ONE, Corvin Towers, Corvin Corner, Vision Towers

KPMG, TEVA, PROVIDENT, Nokia, EPAM

Péter Futó (50), Gábor Futó (50) –

gábor Futó, péter Futó Pál Darida Péter Karai, Áron Görög

1082 Budapest, Futó utca 47–53. (1) 266-2181 (1) 688-5499 office@futureal.hu

Individuals (100) –

attila kovács – Ildikó Rézműves

1054 Budapest, Szemere utca 17. (1) 473-1209 (1) 473-1210 info@ horizondevelopment.hu

–

Budapest, VIII. Mátyás tér 10-11. (2013), Budapest, XIII. Rozsnyay u.33. (2014), Budapest IX. Nádasdy u. 10-12. (2015)

– Wildetio Ltd. (100)

yuval kishon – –

1095 Budapest, Mester utca 83/C (1) 919-3333 (1) 919-3333 info@metrodom.hu

 

IP West office building (2009), The Quadrum office building phase no. 1 (2008), Haller Kert office building (2008), Market Central Ferihegy Retail Park (2007), M1 Business Park (2006), Airport Business Park (2004), Alkotás Point office building (2002), Infopark (1999)

Heitman, GLL Real Estate Partners, Union Investment, Immofinanz AG, CA Immo, Deka Immobilien

– (100)

jános gárdai Krisztián Barabás Edina Magó

1117 Budapest, Budafoki út 91–93. (1) 382-5100 (1) 382-5101 info@ whitestar-realestate.hu



asset management

Condominium opeRation

built-to-suit development

Real estate utilization

Real estate investment

ConstRuCtion

pRojekt management

poRtFolio management

 

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indotek zRt. 11

www.indotek.hu

biggeoRge's-nv Real estate developeR NR zRt.

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pReviously Completed ReFeRenCe pRojeCts, yeaR oF Completion

majoR Clients in 2014

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tRigRanit Fejlesztési kFt. www.trigranit.com

 

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www.biggeorges-nv.hu

ConveRgenCe NR

www.convergen-ce.com

FutuReal NR

www.futureal.hu

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Corvin Sétány phase no. 4 and 5, Budapest ONE

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Váci 1, 2016, Promenade Gardens, 2017, Szervita Square, 2018

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HoRizon development kFt.

www.horizondevelopment.hu NR

metRodom kFt. NR

www.metrodom.hu

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WHite staR Real estate kFt.

www.whitestar-realestate.hu NR

Ÿ= would not disclose, NR = not ranked, NA = not applicable

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The Quadrum office building, phase no. 2 (2017)

aCtivities and seRviCes

FaCility management

publiC building

industRial

inFRastRuCtuRal

Residential

oFFiCe

Company Website

CommeRCial

total net Revenue in 2014 (HuF mln)

Rank

types oF investment

ongoing pRojeCts in HungaRy (invested value in HuF, expeCted yeaR oF Completion)

Budapest Business Journal | Oct 30 – Nov 12, 2015

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Eiffel Square office building (2010), Eiffel Palace office building (2014)

This list was compiled from responses to questionnaires received by Oct. 28, 2015 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.

NOTES: (1) Management company.

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6TH DISTRICT

134Sqm- LISzT FeRenC SquaRe Unique offer! 134 sqm, 2 bedroom-apartment with balcony is for sale on the 2nd floor (lift access) of the most beautiful classical building of the vibrant Liszt Ferenc square. +36 (70) 716 9086

98 000 000 HUF

7TH DISTRICT

68Sqm, 3 RoomS, kIRáLY STReeT Great investment opportunity! Brilliant location near Deák Square. Fully renovated. The price also includes the furniture and a parking place on the -2 floor. +36 (70) 469 3331

55 000 000 HUF

5TH DISTRICT

92 Sqm - 2 + 1/2 RoomS, FeJÉR gYÖRgY STReeT Interior designed, newly refurbished flat in the heart of the city. Air conditioning, high quality materials. Quiet street, excellent building.

+36 (70) 388 6234

95.000.000 HUF

6TH DISTRICT

5TH DISTRICT

VáCI STReeT

BeLgRáD RakPaRT

FoR InVeSToRS!

A very special and unique apartment in the heart of the city, in Váci street: 3rd floor, 3 rooms, 3 balconies facing Váci street and part of the Danube. 121 sqm.

1 room, studio apartment in district V.on Belgrád rakpart. It’s on the second floor. From the balcony is a wonderful panorma to the Danue, Gellért Hill and Buda Castle.

Rented till 31.12.2017, 5,6% interest. Furnished 131 sqm flat with living room, open kitchen, 3 bedrooms, 3 bathrooms and a toilet. Váci utca near to Vámház tér.

+36 (70) 716 9241 180 000 000 HUF

+36 (70) 716 9196

7TH DISTRICT

45 000 000 HUF

5TH DISTRICT

+36 (70) 716 9201

99 500 000 HUF

5TH DISTRICT

SPeCIaLITY aT VÖRÖSmaRTY SquaRe WITH maRVeLLouS PanoRama

2nd DISTRICT

67Sqm

We offer for sale a 2nd floor corner apartment of 119 sqm at one of the most compelling part of the 5th district.

We offer an apartment in district 2, near the banks of Danube. It is situated in a good condition, “Bauhaus” building, the apartment is furnished and completely renovated.

+36 (70) 469 3606 170 000 000 HUF

+36 (70) 716 9831

5TH DISTRICT

29 900 000 HUF

7TH DISTRICT

30Sqm, 4Sqm gaLLeRY, BaRCSaY STReeT

neaR THe BaSILICa

gReaT LoCaTIon!

2 SePaRaTe BeDRoomS

48 Sqm LuxuRY aPaRmenT

Unique opportunity in the VII. district. We offer a real treasure chest located in Barcsay street

A 124 sqm apartmant is for sale near to the Basilica with living room, 3 bedrooms, 2 bathrooms. The luxury flat is on the 3. floor, has a balcony, will be ready in November.

Nice appartment, renovated building, 2 elevators, at 4 floor. 61 sqm, 2 rooms, bathed in natural light, facing Balaton street, very close to Parliament and Margaret Island.

We offer a 76 sqm apartment with 2 separate bedrooms with a a balcony in the heart of Budapest (5th district) for sale. Come and have a look at it.

This is a bright first floor apartment in a new building in the VIIth district. This is a trendy two story 48 sqm luxury apartment with a living room, one bedroom and equipped with economic geothermic heating and cooling system.

14 900 000 HUF

+36 (70) 461 9306 160 000 000 HUF

+36 (70) 716 9956

+36 (70) 469 3331

5TH DISTRICT

6TH DISTRICT

34 900 000 HUF

5TH DISTRICT

+36 (70) 388 5806

25 900 000 HUF

5TH DISTRICT

+36 (70) 716 9611

47 150 000 HUF

5TH DISTRICT

78 Sqm - 3 RoomS, SzenT ISTVán kÖRÚT

61 Sqm -2 RoomS, nÉmeTH LáSzLÓ STReeT

66 Sqm - 2 RoomS, FaLk mIkSa STReeT

165 Sqm - 5 RoomS, moLnáR STReeT

78 Sqm - 3 RoomS, SÖRHáz STReeT

LUXURIOUS apartment, refurbished to the highest standard with no cost spared. Great building, brilliant location, near the Danube and close to all amenities.

We offer an apartment in district 6, near Andrássy street. BEAUTIFULLY RENOVATED, bright and quiet in central location. READY TO MOVE IN! Great investment opportunity!

Great location, close to the Danube! Excellent layout, in need of total refurbishment. Facing the street, balcony, quiet, bright flat.

This completely renovated duplex apartment has separate rooms, 3 bathrooms and it is located close to the Danube and the heart of Budapest. Ideal for investment.

Completely renovated, kitchen fully equipped. Small, quiet street, close to the Danube and Váci Street. Brilliant investment opportunity!

47.900.000 HUF

+36 (70) 388 5379 133.500.000 HUF

+36(70) 388 5379

+36 (70) 388 6234

67.000.000 HUF

6TH DISTRICT

+36 (70) 388 5549

36.000.000 HUF

6TH DISTRICT

+36 (70) 388 5549

6TH DISTRICT

5TH DISTRICT

175.000 EUR

5TH DISTRICT

240 Sqm - 5 RoomS, DÓzSa gYÖRgY RoaD Wonderful view over Heroes’ Square, this exclusive apartment has 5 rooms, 3 bathrooms and a roof terrace. Varosliget with the world famous Szechenyi spa is just a 5 minute walk.

89 Sqm - 3 RoomS, HunYaDI SquaRe

101 Sqm - 4 RoomS, eÖTVÖS STReeT

77 Sqm - 2 RoomS, Ó STReeT

118 Sqm - 3 RoomS, STeInDL ImRe STReeT

101 Sqm - 2 RoomS, BeLgRáD RakPaRT

Nicely renovated apartment facing a lovely green square. Living room plus 2 bedrooms. Building in excellent condition.

We offer an 101 sqm unrenovated apartment in a nice building built on the turn of the century, first floor, lounge, 3 bedrooms, 2 bathrooms. Bright, facing the street.

Luxurious apartment block attached to a 4 star hotel. 24-hour porterage, access to wellness facilities and swimming pool.

Next to the Parliament, on the top floor of an eclectic building, built on the turn of the century. In need of total refurbishment.

In the heart of downtown, benefitting from stunning river view, we offer a beautiful, totally renovated apartment for sale.

+36 (70) 716 9144 118.900.000 HUF

+36 (70) 716 9144

38.000.000 HUF

+36 (70) 716 8654

37.500.000 HUF

+36 (70) 716 8654

70.000.000 HUF

+36 (70) 388 5499

62.900.000 HUF

+36 (70) 388 5499

320.000 USD

1051 Bp. Harmincad st. 4. x 1051 Bp. Hercegprímás st. 2. x 1066 Bp. Ó st. 24-26. 1056 Bp. Papnövelde st. 3. x 1061 Bp. Liszt Ferenc sq. 10. x www.oc.hu

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4 Socialite BBJ

Greeting the dead

Candlelit cemeteries provide atmospheric scenery on November 1, but any time is a good time to visit Kerepesi, Budapestâ€™s biggest graveyard.

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Budapest Business Journal | Oct 30 – Nov 12, 2015

Scenic rest for the famous at Kerepesi Every year on November 1, it is traditional for Hungarians to visit the graves of loved ones, to tidy up and leave behind flowers and candles. Officially called Mindenszentek Napja (All Saints’ Day), the annual event essentially started with the Roman Catholic holiday of All Saints’ Day, the traditional day for remembering saints. But in the case of Hungary it has gone secular and has been celebrated as a national holiday since 1989. By evening on November 1, cemeteries are mystical, candlelit places hosting quiet, but not overly somber visitors. Even if you are not visiting family, it can be a moving celebration to observe. Any other time it can also be interesting to visit Budapest’s beautiful old cemeteries, which often feature spectacular monuments. Kerepesi Cemetery is the capital’s bestknown final resting ground, and walking through it is like strolling through history. Find some outstanding memorials using the map below, or just wander about discovering remarkable markers for the famous, the infamous and the unknown. Kerpesi is located at Fiumei út 16 in District VIII, and is open most days during daylight hours. –PHOTOS: LaMography/Moni Lazar Salgót

arjáni

út

t 8 9

6 3 4

iú

Fiu

Entrance 1 2

History set in stone Kerepesi Cemetery (mapped MAP LEGEND: out above) contains monuments to freedom ﬁghter Lajos 1. Defenders of communism in 1956 (top) Kosssuth (left) and the Workers’ Movement

aped

ves et The y l is died

d I, 3) ich, d at kai. on

2. Soviet soldiers

in 2006. Graves around the memoa bed with an old musician and young 3. Arcades with mausoleums cherubs grieving – and moody-looking rial mostly belong to participants in 4. Artists’ parcel for painters, writers and at the back of poet Endre Ady. Beyond this is the art- the 1956 Uprising, 5. Ferenc this parcel, 12 marble slabs contain ists’ parcel (4), where writersDeák such as the names, ages and professions of Attila József rest near paintersAntall such as 6. József people who were killed in 1956 and Mihály Munkácsy. 7. Memorial to anti-Soviet fighters inin1956 buried, or dumped, this cemetery. Sandor Deák (5), who compro8. Pantheon of the Workers Movement This memorial sits physically, and mised with the Austrians to win some freedoms for Hungary, givesKádár his name politically, opposite one of the larg9. János to Budapest’s most central square and est monuments in the cemetery, the 10. Mihály Károlyi Pantheon of the Workers’ Movement rests in the very centre of Kerepesi. 11. Lajos Kossuth (8), with tall metal Socialist Realist Adjacent is the eerie-looking gravestone for Antall József (6), the first 12. Jewish cemeterystatues of weary workers propping prime minister after communism, who each other up. They face six freedied in 1993. His burial site is protected standing walls with engravings of struggles against oppression on one by horsemen in pagan outfits and people bearing crucifixes, all half-covered side and names of dead on the other. Nearby is the relatively simple red by a big blanket. marble grave of a member of the workAnother recent memorial, for ers’ movement, János Kádár (9), the those who died opposing Soviet communist who became prime minisoccupation in 1956 (7), was erected

10/21/10 9:51:22 PM

Clockwise from top: The tombstone of Lujza Blaha, the actress who gives her name to a major Budapest square and Metro stop; a bird statue perches atop the tombstone of 1848 revolutionary leader Sándor Petőfi; a memorial for poet Attila József; the grave of Endre Ady’s muse, simply known as Léda; a treelined walkway; Novelist Mór Jókai’s grand, circular memorial.

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www.bbj.hu

Budapest Business Journal | Oct 30 – Nov 12, 2015

4 Socialite

Clockwise from below: A monument to those killed fighting for communism in 1956; the mystical tomb of József Antall, Hungary’s first democratically elected prime minister; the grave of Ferenc Mádl, Hungary’s president from 2000-2005; communist-era dictator János Kádár’s grave; a monument to those who gave their lives for communism. Immediately at left are memorials for those killed fighting the Soviets in 1956.

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Budapest Business Journal | Oct 30 – Nov 12, 2015

“The Look of Silence” screens at the Verzió International Human Rights Documentary Film Festival. ADVERTISEMENT

WHAT’S

ON drMáriás exhibition through to november 22, ericsson Galéria

This exhibition from Serbian born, Hungarian painter drMáriás (aka Béla Máriás) presents his most recent works. Known for depicting significant figures in the Hungarian political sphere, drMáriás’s paintings borrow from surrealism in an attempt to present a critical view of the systems in which we live, while showing the many faces of his subjects, some of them a little unsavory. ericsson.com

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Fun things to d o in Budapest for the nex t t wo weeks.

period, while also employing Latin or North African motifs. Corea continues to deliver virtuosic performances that are filled with innovative power. mupa.hu JaCk’o’lantern FestiVal october 31, heroes’ square For this charity event guests are invited to bring their beautifully carved pumpkins to Heroe’s square along with non-perishable items, which will be donated to the non-profit organization, Gyermekétkeztetési Alapítvány (Child Nutrition Foundation).

ChiCk Corea & the ViGil october 30, Palace of arts

Mike stern band november 2, budapest Jazz Club

Renowned jazz musician Chick Corea is a favorite among Hungarian audiences and often plays in the capital with his smaller ensembles. This performance will feature a touring sextet, The Vigil, that will perform material from their album of the same name released in 2013. Corea has recruited an international cast of gifted players that recall the jazz-rock sounds typical of the “Return to Forever”

American jazz guitarist Mike Stern honed his skills while playing with jazz-rock band Blood Sweat & Tears and reached a wider audience through his collaboration with Miles Davis in the early to mid1980s. Touted as one of the greatest jazz guitarists of all time, Stern is a sixtime Grammy nominee and winner of numerous international awards. bjc.hu

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Budapest Business Journal | Oct 30 – Nov 12, 2015

st. GerMain november 3, budapest Congress Center St. Germain is the stage name of French musician Ludovic Navarre, known for his blend of house music and acid jazz that was best demonstrated on his 1995 album “Boulevard”. The album went on to sell over 300,000 copies worldwide. His follow up and United States debut, “Tourist”, was released in 2000 and sold over four million copies. Ludovicʼs most notable influences were Bob Marley, Miles Davis, and Toots and the Maytals. He has also released EPs under several aliases including Deepside, LNʼs, Modus Vivendi, Hexagone, Nuages and Soofle. bcc.hu Whisky shoW november 7, Corinthia hotel The fifth annual Whisky show features all of the finest spirits from Scotland, Ireland, the United States, Canada and Japan as well as more exotic breeds. Local producers will also be represented as will top baristas in a competition to prepare the best Irish coffee. Plenty of opportunities to sample the goods on offer. whisky-show.hu korean FilM FestiVal november 10-14, various venues The eighth annual Korean Film Festival will take place in four cities across Hungary over the course of four days with screenings in all genres of Korean film from action to comedy and animation. The majority of films were selected based on audience requests from previous years. The opening ceremony in Budapest will be held at the Uránia National Film Theater and

features traditional dance performances. koreaifilm.hu Verzió november 10-15, various venues The Verzió International Human Rights Documentary Film Festival will take over the art house cinemas of Budapest to present over 50 films from around the world that address human rights issues. Screenings touch on a wide selection of themes from Belarusian alternative theater, to Iranian mullahs, Rwandan football players, American homeless people, Ukrainian revolutionaries, Eritrean refugees, Czechoslovakian terrorists and Hungarian migrants. Discussions on human rights and filmmaking workshops are also included in the program. verzio.org steVe Gadd band november 13, Palace of arts In honor of his 70th birthday, popular jazz musician Steve Gadd has set off on a world tour in the company of his esteemed musical friends. The band will introduce material from “70 Strong”, the second album released by the band Gadd formed in 2013. Gaddʼs unmistakably sensitive and pulsating playing style has appeared on recordings by Eric Clapton, Paul Simon, James Taylor, Kate Bush, the Brecker Brothers, Chick Corea and Steely Dan. Gadd’s latest release features a wide variety of musical styles tied together with bursts of improvisation. mupa.hu

“Tarsoly, Kulcsár, Princz and Friends in Munch’s Studio”, by drMáriás.

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Budapest Business Journal | Oct 30 – Nov 12, 2015

Wine: A celebration of Olaszrizling in October a sampling of hungary’s most widely planted grape produced some ordinary vintages and some real winners. rob sMyth

The animated and youthful crowd at the Grand Olaszrizling Tasting, the centerpiece event of Olaszrizling Október, at Sofitel on October 10 certainly served to show that this panCentral European grape is continuing to shed its one-time lowly reputation. Indeed, the prospect of a day of serious tasting devoted to the Olaszrizling grape would have seemed preposterous just a few years ago, but the fact that this has become a hotly anticipated event shows things can change once vintners take a grape seriously. While plenty of offerings were clean and correct but ultimately no great shakes, there were some that showed that Hungary’s most widely planted white wine grape is capable of making excellent wine. Some of the prime hot spots for Olaszrizling in Hungary fall on the slopes around the northern shores of Lake Balaton, where the soils range from volcanic basalt around Badacsony, with limestone entering the mix in the Káli Basin part of the Balatonfelvidék region. Red Permian sandstone, rendzina, Triassic period limestone, dolomite and marl come into play at BalatonfüredCsopak. All of these soils appear to favor the grape, enabling it to retain the kind of acidity required to make the wine lively and interesting as the grapes ripen sufficiently to gain enough concentration. The problem with the Olaszrizling grape can be that the structure-building acidity drops off when it picks up enough sugar to be able to ferment it into a big wine. However, this appears to be less of a problem in northern Balaton, where the moderating effect provided by the lake itself could also be beneficial. However,

A source of fine Olaszrizling: Badacsony, right and the surrounding hills. (Photo: kirandulo) even around Balaton some winemakers admit to adding a bit of acidity to perk up the wine in a hot vintage, although that’s a poor substitute for the electricity brought by the real thing. 2014 was no such vintage, which has led to a number of wines having a real natural zest about them. The 2014 offering is the third vintage that Gyula Szabó, of the káli kövek cellar in Köveskál, opted to make his Rezeda wine purely from Olaszrizling. Rezeda is the Hungarian name for the Reseda (mignonette) plant and the scent of its fragrant flowers is said to be reminiscent of local whites, especially Olaszrizling. To find the ideal balance in 2014, Szabó blended his Olaszrizling from Szent György Hill, where the acidity had dropped off but the flavor was intense, with the more marked acidity of Fekete Hill. The result is a wine of firm body and an enticing combination of stony, nutty, fruity (pear and green apple) and floral notes, with vibrant tension throughout. Incidentally, Olaszrizling often has a touch of almond about it, which some consider a winemaking fault, but a tiny amount can add complexity to the wine.

Related by name only Incidentally, Olaszrizling is no relation to the noble Riesling grape that’s associated with Germany and especially Alsace. Nevertheless, it is notable that

the cool vintage of 2014 has somehow made wines to rival the great Riesling grape. Not only is the aforementioned wine on par with Káli Kövek’s own fullbodied and varietally pure Szentantalfa Riesling 2014 from the Sósi vineyard, the same also occurred with Frigyes bott’s takes on Olaszrizling and Riesling from 2014. These wines are made by Bott, an ethnic Hungarian, just over the Slovakian border in the region of Muzsla, and the Riesling is usually a notch or two above the less sophisticated Olaszrizling. Bott himself has even said that he doesn’t consider Olaszrizling worthy of making the cut to go into his top blend of Super Granum, which comprises only local varieties of Furmint, Hárslevelű and Juhfark. Bott’s 2014 Olaszrizling, which was soon drained dry by an adoring public at the Olaszrizling Grand Tasting, had a complex and pure nose and palate with peach and apricot merging nicely with nutty notes, along with ideal structure, weight and length. At present it is in even better nick than the similarly impressive Riesling whose acidity is just a touch on the pointy and mouth-watering side, although it should soften with a bit of bottle ageing. To make matters more confusing, Rizling is an oft-used moniker for the Olaszrizling grape and the two are sometimes blended around Balaton and, indeed, complement each other nicely. Over the border in Austria, Olaszrizling

becomes Welschriesling, which typically makes cheap and cheerful bottom shelf dry whites, but comes into its own in being a key ingredient of the world-class sweet wines from around the shores of the Lake Neusiedl (Neusiedler See in German and Fertő tó in Hungarian). Back at the Balaton and Grand tasting, while Figula’s excellent Olaszrizling from Balatonfüred had been guzzled before I got there, the exciting szent donát from neighboring Csopak impressed with five different Olaszrizling bottlings from the 2013 vintage; one estate blend and four single vineyard offerings from four different kinds of soils. While they had much in common, there were subtle differences to be found between the wines on close inspection, and the quality is indeed high. It was no marketing trick to show these vineyards separately but rather the vintage that allowed it: One of perfect ripeness yet with really vibrant and zesty acidity. However, due to the vagaries of the 2014 vintage, Szent Donát are probably likely to come out with a single estate blend only, which was in good shape at the tasting. A similar approach was taken to good effect by the upcoming Petrányi Pince, which is also from Csopak. While not much Olaszrizling sticks around long enough to age, it was nice to get a chance to sample wines going progressively back to the 2006 vintage from Somló’s kreinbacher; really impressive specimens that were still very much alive and kicking. Somló has similar volcanic basalt soils to Badacsony and retaining acidity (an important component in enabling a wine to survive the passage of time and subsequently pick up complexity) is seldom a problem. Somló is also one of the few places where you can truly compare Olaszrizling with Hungary’s most prestigious and hyped white wine grape: Furmint. The latter is quickly catching up with Olaszrizling in terms of its share of area under vine in Hungary as wineries rush to plant it up and down the land. However, experience does show that Olaszrizling often has the audacity to outperform Furmint on Somló Hill.

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BOOK REVIEW

An armchair trip to Hungary’s wine regions the information contained in the guide demystifies the increasingly complex world of hungarian wines, and the writing is enjoyable enough to make this book an excellent drinking companion. bbJ staFF

It is obvious that Rob Smyth has had a lot of wine. You can tell by the detailed, often affectionate, way he explains the aromas, flavors and textures he has savored in his explorations of roughly 200 local vintners, all of whom are catalogued in his new book, “Hungarian Wine, A Tasting Trip to the New Old World”. These descriptions are proof that Smyth, the Budapest Business Journal’s own wine columnist, was a professional writer long before he became a certified expert in his favorite hobby, consuming wine. Now a holder of the Wine & Spirit Education Trust Diploma, one of the top certificates in wine education, the author has done his homework on Hungarian grapes and winemaking techniques, and he has also done his fieldwork, visiting hundreds of wineries around the country. That knowledge is useful, but it is Smyth’s skill as a writer that makes this book such a pleasant drinking companion. As he describes winemakers, wine regions, and of course the wine, the author brings you out to the countryside to meet the idiosyncratic vintners and to taste their uncommon products. “It was one of those visits you don’t forget in a hurry. With preacher-like intensity in his church-shaped cellar, Péter Vida described a wine as being

similar to a human being: Going through awkward early teenage years before entering its prime,” Smyth writes at the beginning of a profile that later describes how the vintner himself reached his prime. “While Vida’s wines were always well crafted, there was often a hint of barnyard brett about them, but thankfully that is long gone,” the section continues. “He has now come to extol the virtues of temperature-controlled fermentation – which he had previously dismissed – in preserving aromas.” The easy writing style means this a lovely book to browse with your favorite tipple, but the practical organization, reader-friendly design and broad reach of the book mean it is also a superb reference volume, with encyclopedic information on Hungarian wine that is simple to navigate. Like a fine vintage, the Hungarian wine sector has matured wonderfully, and in the last few years an impressive range of good wines has become available. This guide comes just in time to explain the increasingly complex and interesting world of Hungarian wine. True to the subtitle, the book is in the form of a wine-tasting trip. Following a knowledgeable section on the characteristics of the grapes found in Hungary, the meat of the book is a guide divided by region, and then by individual winemakers, with detailed descriptions of the flavors they can offer. As Smyth notes, Hungarian wine, especially good Hungarian wine, is produced in small amounts, and there is not much point in documenting the various bottles on offer, because that will change from season to season. Instead, it is more important to know the grapes, regions and the vintners. Using this information as a guide, it is easier to consistently locate the types of wine you are looking for, and to have an idea of what the bottle you are holding in the shop will taste like when opened. While doing its main job of helping you choose your wine, the book may also instill a bit of wanderlust, inspiring you to visit wine regions, like the “Hungarian Tuscany” of Badacsony. You would want to sample the local grape in terroir, perhaps

trying Szeremley’s “unctuous, nutty and oily Kéknyelű”, and meet the quirky, creative types behind the wine, like József Vestergombi: “He’s a very direct man, indeed a bit of a loose cannon, but he makes subtle wines.” The information sections about each region, the maps, and suggested restaurants and hotels will help you get started on your journey. But even if you never leave your chair, reading “Hungarian Wine” is like taking a trip to the vineyards. Grab a glass and enjoy.

hunGarian Wine, a tastinG triP to the neW old World by robert smyth Published by Blue Guides (www.blueguides.com) ISBN 978-1-905131-68-6 Available in Budapest from Bestseller’s bookstore and branches of the Wine Society.

HOW MEMORABLE YOUR FESTIVE SEASON IS DEPENDS ON HOW YOU SPEND IT Let us be a part of your festive season. All you have to do is be with your loved ones, and we will do the rest. Do not trouble yourself with cooking, order our ready-made dishes or visit us during the festive season. THANKSGIVING DINNER | 26th November TURKEY & GOOSE DELIVERY | 25th November - 31st December HUNGARIAN X’MAS DINNER TAKEAWAY | 1st December - 31st December FESTIVE BRUNCHES | 29th November, 6th 14th, 21st and 25th and 26th December X’MAS DINNER | 24th December NEW YEAR’S EVE | 31st December For further information call us on 06 1 327 6932 or visit our website http://budapest.intercontinental.com/en/festive-season

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GRUPPO T.F.M. KFT. 1068 Budapest, Király u. 102.

1ST DISTRICT

2ND DISTRICT

10TH DISTRICT

5TH DISTRICT

12TH DISTRICT

15TH DISTRICT

94 SQM – 4 ROOMS, PAULER STREET

107 SQM – 3 ROOMS, ALVINCI STREET

122 SQM – 4 ROOMS, STOLLÁR BÉLA STREET

143 SQM – 4 ROOMS, MARTINOVICS SQUARE

107 SQM – 4 ROOMS, EDVI ILLÉS STREET

180 SQM – 6 ROOMS, PESTÚJHELY

In a new building with elevator, this very spacious, high standard apartment has separate rooms, 2 balconies, 2 bathrooms, air conditioning system and parking space.

Beautiful panorama over the Buda Hills from the 27 sqm of terrace, this very spacious apartment has separate rooms, 2 parking spaces and it is situated in a new building.

This renovated, 3rd ﬂoor apartment is located in an elegant building close to Margaret Island, right next to the Danube, and also has a view of the river.

This very well divided, spacious apartment that needs renovation has private gas heating and a ﬁreplace in the living room. It is situated in a small period building.

This duplex apartment has two separate entrances, view over the forest from the terrace, private garden and garage. There is a two storey, renovated, 40 sqm of chalet on the lot as well.

This two storey family house built on 540 sqm of lot, beneﬁts of two bathrooms, terrace, two car garage and a well kept front garden, it is located in a quiet side street.

87.500.000 HUF

160.000.000 HUF

77.900.000 HUF

32.000.000 HUF

55.000.000 HUF

39.500.000 HUF

+36.1.201.0403

2ND DISTRICT

+36.1.336.1706

3RD DISTRICT

+36.70.3156.116

5TH DISTRICT

+36.70.268.5017

10TH DISTRICT

+36.1.789.2846

13TH DISTRICT

+36.70.398.8754

NAGYKOVÁCSI

80 SQM – 3 ROOMS, KELETI KÁROLY STREET

130 SQM – 3 ROOMS, MENEDÉKHÁZ STREET

232 SQM – 5 ROOMS, FALK MIKSA STREET

200 SQM – 4 ROOMS, KŐÉR LANE

53 SQM – 2 ROOMS, CSANÁDY STREET

207 SQM – 5 ROOMS, PUSKÁS TIVADAR STREET

This very spacious and sunny, garden facing apartment has 12 sqm of terrace and private gas heating. It is located close to the Mammut shopping mall.

This two storey family house built on 709 sqm of lot, has beautiful panorama from the big terrace and parking space in the garden. It is located in a landscape protection area.

This beautiful, two storey, top ﬂoor apartment near the Parliament has a panoramic view of the Danube, 150 sqm of terrace and many extraordinary facilities.

This three storey terraced house in good condition built on 320 sqm of lot, has 2 bathrooms and garage. The house is “A” energy rating.

Very close to the beautiful St. István Park, in a completely renovated period building, this quiet apartment in good condition has private gas heating.

This completely renovated, two storey family house has 2 bathrooms, 4 terraces, well kept private garden and it is located in a very quiet village, in Pest county.

29.900.000 HUF

32.900.000 HUF

220.000.000 HUF

44.900.000 HUF

17.990.000 HUF

58.900.000 HUF

+36.1.336.1706

2ND DISTRICT

+36.1.430.1403

3RD DISTRICT

+36.70.3156.116

7TH DISTRICT

+36.70.268.5017

11TH DISTRICT

+36.70.701.2348

13TH DISTRICT

+36.1.376.6080

FOR RENT

93 SQM – 3 ROOMS + HALL, TÁROGATÓ STREET

200 SQM – 5 ROOMS, RÓMAIFÜRDŐ

74 SQM – 3 ROOMS, WESSELÉNYI STREET

61 SQM – 3 ROOMS, IRINYI JÓZSEF STREET

104 SQM – 2 ROOMS + HALL, KATONA JÓZSEF STR.

50 SQM – 3 ROOMS, VÁROSLIGETI ALLEY

This well divided, spacious apartment that needs renovation has private garden, parking space in the courtyard and it is situated in a nice Bauhaus style building.

This completely renovated, two storey family house has two bathrooms, two terraces, two balconies, two car garage, beautiful garden and it is located close to the Danube.

Next to the Synagogue, in the historical Jewish area, sunny apartment in need of renovation in a renovated period building.

This street facing, high ﬂoor apartment beneﬁts of separate rooms, balcony and it is situated in a building with elevator. Close to the Budapest University of Technology and Economics.

This very sunny and spacious, top ﬂoor apartment is situated in a period building with elevator, a few steps from the St. István Circuit.

7th district: In a renovated historical villa with beautiful, well kept garden, this duplex apartment has 2 separate bedrooms and living room with open kitchen.

39.900.000 HUF

87.000.000 HUF

30.900.000 HUF

25.000.000 HUF

38.900.000 HUF

115.000 HUF/month

+36.1.376.6080

2ND DISTRICT

+36.1.430.1403

3RD DISTRICT

+36.70.3156.087

7TH DISTRICT

+36.1.720.2433

11TH DISTRICT

+36.70.701.2348

15TH DISTRICT

+36.70.322.3697

FOR RENT

80 SQM – 3 ROOMS, GANZ LANE

114 + 148 SQM – 6 ROOMS, BÉKÁSMEGYER

117 SQM – 4 ROOMS, DOHÁNY STREET

78 SQM – 3 ROOMS, ERCSI STREET

150 SQM – 5 ROOMS, PESTÚJHELY

80 SQM – 3 ROOMS, BAJCSY-ZSILINSZKY STR.

This completely renovated, very sunny, well divided, high ﬂoor apartment has air conditioning system, open kitchen and it is situated in a well maintained building with elevator.

2 new built, two storey family houses built on the same 606 sqm of lot. The houses have private gas heating, well kept garden and garage. Quiet and green location.

In the historical Jewish area, within a nice period building. It is a perfect solution for anybody seeking a renovation project.

Next to the Bottomless Lake, this completely renovated, street facing apartment has private gas heating and it is situated in a nice building, in a quiet street.

In the garden suburb area, this two storey family house in good condition built in 1999 has 432 sqm of lot, 2 bathrooms, terrace and front garden.

5th district: Beautiful panorama over the St. Stephen’s Basilica, this furnished apartment has 2 separate bedrooms, living room and it is situated in a nice building, close to Deák Square.

40.900.000 HUF

114.900.000 HUF

36.000.000 HUF

26.990.000 HUF

39.000.000 HUF

600 EUR/month

+36.1.201.0403

2ND DISTRICT

+36.1.430.1403

4TH DISTRICT

+36.70.3156.087

7TH DISTRICT

+36.1.720.2433

11TH DISTRICT

108 SQM – 5 ROOMS, ÜRÖMI STREET

90 SQM – 3 ROOMS, MEGYER GARDEN SUBURB

100 SQM – 3 ROOMS + HALL, DEMBINSZKY STR.

130 SQM – 4 ROOMS, TORMA STREET

This two storey family house has 70 sqm of beautiful garden, very sunny living room with open kitchen and two separate bedrooms. Good connection to public transport.

This two storey, very bright part of a house has 240 sqm of lot, private gas heating and air conditioning system on the upstairs. Parking space in the courtyard.

In a beautiful style, renovated period building, this spacious, street facing apartment that needs renovation beneﬁts of separate rooms and it is located close to the City Park.

This family house with mansard, that needs renovation has 650 sqm of lot, 2 bathrooms, nice veranda and parking space in the courtyard.

52.900.000 HUF

26.900.000 HUF

37.500.000 HUF

30.500.000 HUF

+36.1.336.1706

2ND DISTRICT

+36.1.782.7275

4TH DISTRICT

+36.1.351.0446

8TH DISTRICT

12TH DISTRICT

220 SQM – 4 ROOMS, MEGYER GARDEN SUBURB

95 SQM – 3 ROOMS + HALL, PUSKIN STREET

84 SQM – 4 ROOMS, HOLLÓSY SIMON STREET

This lot has beautiful panorama and 15% coverage possibility, gas and water on it, electricity in the street. It is located in a very quiet, green area, close to shopping malls.

This two storey family house built on 355 sqm of lot, has 2 kitchens, 2 bathrooms, terrace, garage and outdoor swimming pool in the garden.

Beautiful panorama over the National Museum’s garden, this very bright apartment has separate rooms, and it is situated in a nice style period building, close to the Astoria Square.

In a renovated building, this very sunny and quiet, garden facing apartment that needs renovation has two balconies and private gas heating.

105.000.000 HUF

54.000.000 HUF

63.500.000 HUF

41.900.000 HUF

+36.1.782.7275

+36.1.351.0446

+36.70.322.3697

The Moment when you think of a happy home

+36.1.720.2433

4730 SQM, LOT – TÁRKONY STREET

+36.1.376.6080

+36.70.398.8754

+36.1.789.2846

Are you looking for apartment?

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EACH AGENCY INDEPENDENTLY OWNED AND OPERATED. • THESE OFFERS ARE VALID, TILL THE APARTMENTS ARE SOLD. • THESE INFORMATION DO NOT CONSTITUTE A CONTRACTUAL ELEMENT.

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2015.10.28. 22:01