Budapest Business Journal 2619

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BUSINESS JOURNAL BUDAPEST

VOL. 26. NUMBER 19

OCTOBER 19 – NOVEMBER 4, 2018

SPECIAL REPORT

Real Estate Development

SPECIAL REPORT

Hotel Developers Attracted

by Strong Guest Demand Tourist visits to Hungary are continuing to rise with 5.5 million people visiting in H1, indicating a growth of more than 7% on the previous year. Developers, investors and hotel operators all see the potential for hotel development.  21 NEWS

September Inflation Surprises Analysts The 3.6% rise in Hungary’s yearly inflation has surprised analysts.

The data, however, did not affect the latest rate-setting decision of the Monetary Council, which left the key rate at 0.9%.  3 SOCIALITE

Learning From a Conspiracy Theorist David Holzer tries to work out the appeal of English writer and public speaker David Icke, who is bringing his “Everything You Need To Know” tour to Budapest. 36

Building Bridges

BUS

I NES

S

Czech investor Michal Mička tells the BBJ in an exclusive interview why he is considering expanding into Hungary, and where he sees opportunities.  7

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Budapest Business Journal | October 19 – November 4, 2018

THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL STAFF: Zsófia Czifra, Kester Eddy, Bence Gaál,

David Holzer, Christian Keszthelyi, Gary J. Morrell, Robert Smyth, Bálint Szőnyi, Zsófia Végh, Ágnes Vinkovits.

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CONSTRUCTING AN ECONOMIC BELLWETHER The construction industry has become something of a bellwether for Hungary’s economy. When the financial crisis really began to bite, real estate was hit hard. There is a grim sort of irony here, given that what ended as a near-global meltdown originally started in the sub-prime mortgage market in the United States, but in next to no time developers found the banks had either stopped lending entirely, or only under the most stringent of terms. Projects were suspended or abandoned. Cranes, now almost omnipresent, all but disappeared from the cityscape.

How those tables have turned. This week the Central Statistical Office produced its latest data on the output of the construction sector, which showed a climb of 24.4% year-on-year in August.

Based on seasonally and working day adjusted indices, construction output increased by 1.9% in August compared to July. For the January-August period, output was up 22.6% y.o.y. In absolute terms, that output could be measured at HUF 327.9 billion in August and HUF 1.8 trillion for January-August. This is now a seriously healthy business sector, and one enjoying considerable growth.

But it has also become a bellwether in another field: exposure to the national labor shortage. The point is made several times in our Special Report inside this issue that costs are rising and completion dates slipping as it becomes ever harder to find experienced carpenters or bricklayers or plasterers. And that is having its own knock on effects.

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Back in mid-August, napi.hu reported that a shortage of firewood and consequently higher prices are expected this winter.

That’s not down to a sudden shortage of trees in the Hungary, but rather the people needed to turn those trees into firewood; woodcutters have been leaving the countryside I record numbers to come to Budapest and work in the construction sector. According to the publication, firewood sellers say they have never experienced such a shortage: prices have risen 13.5% y.o.y., napi.hu says.

Wood has always been one of Hungary’s more numerous natural resources, even after the loss of Transylvania’s forests postTrianon. According to 2010 data from U.N.’s Food and Agriculture Organization, 22.6% or about 2,029,000 hectares of Hungary was forested. Little has changed since then: the CIA World Factbook entry for Hungary, last updated this month, puts the current percentage of forested land at 22.5%.

When I first came here in the late 1990s, one of the first things that struck me was that it was more common to see wooden scaffolding than metal. Even modern houses in the countryside and designer flats in the cities will frequently feature a log burning stove, often covered in ceramic tiles, in a corner of the lounge. But a shortage of firewood doesn’t just mean the Christmas fire for the well-to-do becomes a little more expensive; it also has serious social implications in a country where, for many of the poorest, wood remains a primary source of heat in winter.

The construction industry is not only important in its own right, once again a significant contributor to Hungary’s GDP. As it battles to overcome the challenges of the labor crisis (made more urgent for it by the need to complete projects before the VAT rate for new homes returns from 5% to 27% on January 1, 2020), it is also impacting other sectors. Any way you look at it, the real estate revival matters.

Robin Marshall Editor-in-chief

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News///macroscope

September Inflation Surprises Analysts

The 3.6% rise in Hungary’s yearly inflation has surprised analysts.

The data, however, did not affect the latest rate-setting decision of the Monetary Council, which left the key rate at 0.9%.

Hungary’s consumer price index was way above the central bank’s mid-term target in September,

reaching

3.6%,

which represents a five-year high in the data. The inflation increased from 3.4% in August, and it has now remained within the target band since June 2017, except for February 2018 when it slipped slightly below the target.

On a month-on-month comparison, consumer prices rose 0.3% over the previous month in September, up from August’s 0.1% month-on-month increase.

September’s increase was largely driven by higher prices for food; alcoholic beverages and tobacco; and clothing and footwear, owing to seasonal factors. Core consumer prices, which exclude volatile items such as fresh food and fuel, grew 0.2% from the previous month in September, up from August’s flat reading.

The National Bank of Hungary (MNB) commented on the data saying that its measures of underlying inflation developments remained broadly static, compared with August. The indicator for core inflation, excluding the effects of indirect taxes, stood at 2.4% in September, edging up from 2.3% in the previous month.

The central bank attributed the pickup in headline inflation to the “rise in volatile unprocessed food prices”, and said core inflation rose as a result of the increase in excise tax on tobacco products.

Households’ inflation expectations “remained at moderate levels” in September, the MNB added.

Index Surprise

The index surprised analysts, as most of them had expected a slightly lower year-on-year increase in consumer prices in September.

The Central Statistical Office will publish earnings data for the January-August period on October 19. The second estimate of retail trade figures will be published on October 24, and employment and unemployment statistics for the July-September period will come out at the end of the month.

Development of the National Bank of Hungary base rate

percentage

May 24, 2004-March 23, 2016

Source:

Business news site FocusEconomics panelists see inflation averaging 2.4% in 2018, which is down 0.1 percentage points from last month’s projection.

For

ZSÓFIA CZIFRA

Numbers to Watch in the Coming Weeks

2019,

the panel expects inflation to rise to 2.7%, which is unchanged from last month’s projection.

TD Securities’ research team expected the index at 3.5%, FXStreet.com noted.

“As expected, food inflation was the main driver of the move higher, up to 4.65% y.o.y. from 4.1%,” the site quotes the research team. “That the inflation rate is continuing to move above the 3% target rate will be of some concern to the MNB, although it can take some comfort from the fact that core inflation has been somewhat better behaved moving up to 2.4% y.o.y. from 2.3%.”

The research team think that the latest data will bring forward the time at which the central bank will have to start unwinding its current loose monetary policy. “The MNB has started flagging that this policy will eventually end and we expect maybe the language to be ramped up a bit in this respect… while leaving current loose monetary conditions unchanged,” they noted.

According to Orsolya Nyeste, senior macro economist analyst at Erste Bank, inflation will remain at this higher level in October but will slow down to near 3% in November and December, due to base effects. As for the whole year, she thinks it is unlikely that the index will drop below 3%.

Slow Increase

“In the coming months, we expect a slow increase in the core inflation index, due to the weaker forint, rising salaries and growing domestic demand. As this year’s average yearly inflation is likely to be higher than previously thought – mainly because of higher oil prices –, we cannot expect a significant acceleration in the CPI; the base rate can rather have a supporting effect. Yearly average inflation

can be 3.3% in 2019, following a 2.9% index this year,” Nyeste concluded.

Takarékbank analyst Gergely Suppan thinks that the MNB will not engage in a tightening cycle until mid-2019, and when it does switch to a more hawkish mode, it will fist withdraw its nonconventional tools. Following this, a slow, graduate rise in the CPI can be expected, Suppan said.

Maintaining the loose monetary conditions in Hungary is not supported by the global sentiment, as the Fed is likely to continue to raise its base rate gradually.

Also, the European Central Bank is likely to go on with its bond-buying program; however, an actual rate hike is not expected until the second half of 2019, Suppan noted.

As analysts expected, the latest inflation data did not cause a change in the MNB’s monetary policy for now: at its latest rate setting meeting on October 16, the Monetary Council left the base rate unchanged at 0.9%.

The rationale, released by the MNB following the decision, contains no surprises. “In order to maintain the loose ADVERTISEMENT

monetary conditions, the Monetary Council held the base rate, the overnight collateralized lending rate and the oneweek collateralized lending rate at 0.9% and the overnight deposit rate at -0.15%.

In addition, in September the council left the average amount of liquidity to be crowded-out for the fourth quarter of 2018 unchanged, at least at HUF 400 billion-600 billion. On the next occasion, in December 2018, the council will decide on the amount of liquidity to be crowded out and will take this into account in setting the stock of central bank swap instruments,” the note reads.

In the meantime, the MNB has increased Hungary’s gold reserves.

According to its rationale: “Taking into account the country’s long-term national and economic policy strategy objectives, the National Bank of Hungary’s Monetary Council increased Hungary’s official gold reserves significantly, in line with its previous decision. Accordingly, the amount of gold reserves expanded from the earlier 3.1 tons to 31.5 tons in October 2018. The MNB purchased gold for the first time since 1986.”

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Do you know someone on the move? /// Send information to news@bbj.hu

Directors Named at PwC Hungary PwC Hungary has announced the appointment of new directors in its tax, audit and advisory service lines, also welcoming a fresh arrival Roland Földvári as director in advisory in September.

Gábor Farkas (34) joined PwC Hungary’s tax advisory team in 2008.

Specializing in value-added tax, he assisted local municipalities, as well as Hungarian and multinational companies, in managing their tax matters. After a secondment to Munich, Farkas focused on developing automated tax solutions.

Roland Földvári (39) joined PwC Hungary’s deals practice in early September as director. Prior to this, he worked for three years at another professional services firm, where he managed due diligence projects, and provided IFRS advice on M&A transactions. Before that, he spent eight and a half years with the MOL Group in

Roland Földvári various roles, including head of group financial reporting, and was in charge of long-term planning at MOL’s strategy development unit.

Csaba Gyimesi (38) joined PwC Hungary nine years ago, and is currently leader of cyber and IT security and risk assurance. His areas of expertise include IT security audits, data protection, GDPR compliance and certification, and performing assurance engagements on IT strategy and maturity. He is also involved in training senior executives and staff, and provides support for various simulations and tests. Prior to PwC, Gyimesi worked for five years at a consulting firm, where he took part in system implementation and integration projects, mainly in CRM, data analytics, and ERP. Gábor Halmosi (35) joined PwC Hungary’s capital markets and accounting advisory services and PwC’s academy team in 2011. His main area of expertise is assisting companies and groups with preparing their financial statements according to International Financial Reporting Standards. He has played a significant role in preparing the adoption of IFRS in Hungary. Prior

to joining PwC, he worked for four years at another professional services firm, where he was primarily engaged in auditing the Hungarian subsidiaries of multinational enterprises.

Péter Honyek (41) joined PwC Hungary’s tax advisory team in 2014.

His main field of expertise is tax consulting related to personal income tax and social security. Prior to joining PwC, he served as head of department at the former Ministry for National Economy (now Ministry of Finance), where he was responsible for preparing personal income tax legislation. He previously worked as spokesman for tax matters at the National Tax and Customs Administration. In addition to international enterprises, his clients include family businesses and private individuals, and he also provides advice to non-profit organizations.

Dániel Kiss (40) joined PwC Hungary’s technology consulting team in 2016. His areas of expertise include CIO advisory, IT strategy design, IT operations development, systems integration, and systems implementation. He also contributes to enhancing PwC’s presence on the enterprise IT market through design and implementation of transformation programs. Over the past 18 years, Kiss has held leadership positions in technology consulting, software manufacturing, and telecommunications service provider companies in Hungary and several other European countries.

András Korompay (48) joined PwC Hungary’s risk assurance services team in 2018, where he leads the SAP consulting business line and has been working on setting up PwC’s SAP Center of Excellence. His main areas of expertise include strategy development, operations assessment, efficiency improvement, and leading and providing quality assurance for very large information technology projects.

Dr. Krisztina Kőmíves (40) left the National Tax and Customs Administration to join PwC Hungary’s tax advisory practice in 2006. Her primary role is leading the team that handles bookkeeping and payroll functions outsourced to PwC by domestic and foreign clients. She has also advised clients extensively on matters concerning value-added tax and tax administration proceedings.

Dr. Tibor Szabó (46) joined the predecessor of Réti, Várszegi & Partners Law Firm PwC Legal in 2003, and currently leads the firm’s finance law practice. In addition to finance law, he has gained substantial experience in acquisitions, tax law, and trust law. He provides full-scope legal services to his main clients, which include major companies from the banking and capital markets sector and high net-worth individuals.

Dr. László Szűcs (48) joined the predecessor of Réti, Várszegi & Partners Law Firm PwC Legal. From the start, he was instrumental in setting up and then leading the law firm’s labor law practice, and has also gained considerable experience in real estate law, construction law, and

data protection law. Szűcs provides full-scope legal services to his main clients, which include major companies from the FMCG, pharmaceutical, and automotive sectors.

Real Estate Expert Joins EY Law Office Szabolcs Posta has joined the VámosiNagy Ernst & Young Law Office as the leader of its real estate legal team,

Szabolcs Posta bringing more than two decades of legal experience to the post, the company says.

Prior to joining EY, Posta led the real estate law group of White & Case LLP’s Budapest office, and later acted as law and compliance director at road haulage firm Waberer’s International, taking part in preparing and executing its entry to the stock market.

He has been involved in numerous real estate law transactions, commercial real estate developments, joint venture, project financing and restructuring projects in the past two decades. Former clients include several private capital and real estate funds, as well as multinational corporations.

“The real estate market will be one of the most active areas in the upcoming years, where larger transactions require complex tax optimization, and restructuring,” said Posta. “One of EY’s advantages is that, with the cooperation of different fields and the maximum utilization of synergies, it can provide effective services alongside the rationalization of transaction costs.”

Partner Iván Sefer, head of the EY Hungary law office, said: “With the arrival of Szabolcs, we can build a deeper, more specialized relationship with our clients, and we can help their operations in more aspects. We can definitely feel the market demand for this. We’re very glad that we can broaden our team with such a great expert. With our renowned financial and company law groups, we hope that we can provide outstanding real estate law services with Szabolcs,” he added Posta also has plenty of international experience, having attended postgraduate courses in England and the U.S. after receiving his degree at Eötvös Loránd University in Budapest. Over the course of

his career, he has worked in both London and New York, taking part in corporate and transaction projects.

Deloitte Appoints Director of Risk Management

Deloitte has announced the appointment of Tamás Szauer as its new director of the risk management business line, with Szauer working as an external advisor for Deloitte before the appointment, according to a press release sent to the Budapest Business Journal.

Szauer, an expert with 15 years of experience, will be in charge of controlling Deloitte’s risk management projects involving financial institutions.

“Joining the Deloitte team is an exciting challenge for me. With growing regulatory and supervisory expectations and a need for increasingly complex knowledge, the financial market has plenty of opportunities for us,” says Szauer. “Modern quantitative methodologies and machine learning, which have practically appeared in all sectors and are continuously spreading, play an important role. I think that with my professional experience, I can contribute to further success on a regional level.”

The newly appointed director began his risk management career at leading regional banking groups K&H and OTP, afterwards working on the implementation of the Basel II regulation in Hungary and Central Europe. Later, he joined Raiffeisen International, and was responsible for the introduction of the regulation in Bulgaria, Albania, Kosovo, and Poland, as well as the validation of the retail model.

Tamás Szauer Over the course of his career, he also worked at the FHB Group in the portfolio and risk management field. Szauer participated in due diligence, portfolio valuation and transformation projects, as well as in the development of collection processes.

He joined Magyar Posta as deputy CEO responsible for financial services and the network in 2012. He was involved in multiple large volume projects in the renewal of financial services, the launch of new payment channels, and network optimization.

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Nokia ‘Future X Days’ Reveals Most Important Hungarian R&D In celebration of its 20th anniversary in the country, Nokia Hungary opened its doors for three days to showcase the 25 most important developments of its Hungarian R&D center.

A member of the public tries out a Nokia innovation.

ZSÓFIA VÉGH

The world is not short of crazy ideas.

Innovations abound that offer solutions to problems in ways we never thought could be possible. Only a few decades ago, generating energy from water and sun or running a family car on electricity was inconceivable. Today, these inventions are increasingly part of our lives.

A great deal of today’s technological innovation takes place thanks to mobile network development and that, too, has come a long way. In 2008,

4G was

just being introduced; in 2018 we are already talking about what the 5G-network can handle.

Nokia in Hungary Nokia has been present in Hungary since 1998. Its headquarters in Budapest, Nokia Skypark, is home to one of the biggest IT and telecommunication R&D centers

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Finnish telecommunication giant Nokia’s R&D activity in Hungary encompasses everything from artificial intelligence solutions and 5G networks to more traditional mobile switching centers.

To celebrate, the company opened its doors to its local and international partners, industrial professionals and university students and also organized a conference under the title “Future Nokia X Days”. The idea was to showcase the 25 most important Nokia innovations developed in Hungary.

Emergency Network

One is a backpack that can be turned into a cell tower designed for emergency situations where power and telecommunications

in the country. The company now employs 2,200 people and its local research center, Nokia Bell Labs performs fundamental research in the field of artificial intelligence and cognitive science, among other areas.

networks are down. The small-sized, robust and easily transportable

25 kg

mobile network can be set up and operated by anyone who has undertaken the short training course by Nokia. It allows multiple people to chat and make video-calls simultaneously; the conversation can be managed by an operator as well.

The product is commercially available as of this year. The obvious target group is first responders and rescue organizations, but it can also be used anyone who wishes to create a connection in places where there is no network coverage.

Another breakthrough innovation is a system that analyzes driver behavior using artificial intelligence. Despite the expansion of self-driving technology, human drivers and interaction will still be required in the future. Drivers remain a key influencing factor on road safety. Many aspects of driver behavior can be understood via the analysis of the vehicles’ motion, using sensors such as the accelerometer or gyroscope.

Nokia’s system tracks and records everything from acceleration, braking,

“Hungarian professionals at Nokia Bell Labs and Nokia Technology Center perform world-leading research and development activity in several fields of mobile technology. Future X Days provided an excellent opportunity to showcase the 25 most important technological innovations developed in Hungary.” lane change to road surface anomalies like potholes and bumps and how smoothly or aggressively the driver takes these. Based on the gathered data, analysts can tell if, for example, someone takes a turn aggressively because it is poorly designed or because this is simply how that person drive. The system can be used for optimizing maps or transportation solutions and can also have an impact on vehicle insurance.

“Hungarian professionals at Nokia Bell Labs and Nokia Technology Center perform world-leading research and development activity in several fields of mobile technology,” said Gergely Mihálka, a member of Nokia’s global executive management on October 9. “Future X Days provided an excellent opportunity to showcase the 25 most important technological innovations developed in Hungary.”

Gergely Mihálka, member of Nokia’s global executive management.

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Budapest Business Journal | October 19 – November 4, 2018

Business

hub. You can find here Europe’s largest university hospital, Charité. The startup accelerator of Bayer Pharmacy, G4A, and the international accelerator network the StartupBootcamp are also based here.

Contrary to what its name might suggest, Startup Campus Berlin does not focus on early stage startups.

“We help technology-based enterprises in the stage of growth enter the German market and secure investment for global scaling up,” Galla explains.

In the first three months of their yearlong program, which any enterprise can join, their team monitors the market, assesses competition and advises the company if its service/product stands a chance or not. If it does, they actively seek cooperation with different organizations, set up meetings with potential business partners and organize pitch presentations to prospective VC investors.

Startup Campus Berlin fully represents the company, thus making the constant presence of the Hungarian startups unnecessary.

Helping Hungarian Firms Find Their way to German Markets The second best thing in the life of a business venture, after securing investment, is foreign expansion.

It is also the second most challenging to achieve. It’s even harder when you come from a market as small as Hungary and can’t boast a country brand like France or the United Kingdom.

ZSÓFIA VÉGH

Getting to these markets is not impossible but even in Germany, the closest target of many, competition is tough. Hungarian enterprises have to compete with the 40-million strong market of Poland in addition to the 80-million German market.

“Add to that the Czech and the Austrian markets, and you’ll find yourself competing against a 140-million market,” says József Török, director of business development and startups at Széchenyi Tőkealap-kezelő Zrt. Germany is almost inaccessible unless you

100% Focus

have partners or contacts here, he adds over a cup of coffee in a specialty café in Berlin.

Török arrived in the German capital, together with Borbála Farkas-Főzy, senior investment manager of Hungarian stateowned venture capital investment fund Hiventures, at the invitation of Startup Campus Berlin, an organization that helps enterprises of the CEE-region to build business and get the next round – usually series-A – investment on the German market. The occasion for the visit was the annual meeting of the German Private Equity and Venture Capital Association (BVK), a forum and a gala dinner, where the density of VCs and potential future partners is higher than average.

Though both came with the overall aim of networking and furthering their businesses, their focus is different.

Hiventures invests in earlier-stage, higher-risk enterprises – previously a niche in the Hungarian market – and

therefore is looking at companies that have foreign market potential. Despite being a fairly new entity, operational from

early

2017,

Hiventures already has an impressive number of investments, which is a good entrée in foreign markets, Farkas-Főzy says.

“Our aim is to put Hiventures as a Central-Eastern European VC entity on the map so potential partners know about our presence”, she says. “I am also here to get a better understanding of what local VCs might be interested in. And, of course, I am aware of which of our portfolio partners have an interest in Germany.”

Unlike Hiventures, SZTA is not mainly after global success stories. Only a quarter of the companies it has invested in are startups or from typical startup fields such as biosciences, fashion, IT, etc. The majority of SZTA’s portfolio consists of more mature firms – small enterprises in manufacturing and the service industry with a track record in Hungary or in the export markets. The average investment was HUF 146 million, increasing up to EUR 1 mln.

Wider Networks

“I am here to widen our international network”, Török says. “When we sit down with a German (M&A) investment firm, we talk about two types of cooperation: they would either help us with their sales relations and knowledge of industry suppliers or with series-A or B-capital.”

Both Hiventures and SZTA came with a portfolio that fits the main categories Startup Campus Berlin is focusing on: digital health.

The Hungarian team hoping to “This industry is quite strong in Berlin,” build networks in Germany. says Zoltán Galla, head of the Berlin

“Of course, enterprises need to come to Germany once a month, for business meetings or events we find could be important for them. We prepare everything in advance, which allows them to focus 100% on the business development,” Galla explains.

SZTA and Hiventures will repeat their visits because continuous face time is crucial in this segment, he adds. “Swapping business cards is the first step, but the goal of the first meeting is always to arrange the next one. We will keep monitoring what would suit collaboration best and going to develop the project in line with the initiatives the parties have identified.”

“We help technology-based enterprises in the stage of growth enter the German market and secure investment for global scaling up.”

Though almost all companies want to expand abroad, most are not willing to pay the price and dedicate the time for it, Galla reckons.

“Many firms would spend

only

5%

of the investment they receive on foreign expansion. To achieve their goals, they should set aside at least 10 or 20%.”

It is not necessarily the enterprises that are reluctant to devote more to foreign markets, but investors, Török notes, as many have financed failed attempts abroad.

They just want to make sure the money is well spent and that any trip abroad is really necessary and well-focused, he adds. This is where Startup Campus Berlin could help.

What Hungarian enterprises could benefit from, and Hiventures is also aiming to achieve, is international follow-on investment. Western European VC firms are well-embedded in the ecosystem and they also provide ancillary services such as legal representation, Farkas-Főzy notes.

“My primary goal was to build ties with VCs, which was successful as I met some that are active in the region.”

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Budapest Business Journal | October 19 – November 4, 2018

From Prague to Budapest: Seeing Opportunities in Bridge Brands Czech investor Michal Mička, CEO of C2H Equity a.s., has been looking into opportunities in the Hungarian market.

The Budapest Business Journal spoke to him about what he found here, and why he has started looking over the borders

BBJ: You recently made a trip to Budapest to look at investment possibilities. Was it a success?

Michal Mička: Yes, the trip was a success; I found that the Hungarian market has a lot of potential, especially within the bridge brand sector. Above all, we wanted to understand the Hungarian market. For example, their shopping centers are much smaller than in Czech Republic, and the same goes for the competition. In C2H, we will be reviewing the market in more detail to ensure that once we enter it, we have the right strategy in place to deliver results like we are delivering on the Czech market.

BBJ: Are you open to any opportunity that presents itself, or did you have specific target markets in mind?

MM: When it comes to fashion, the Czech market has progressed in the last few years; I feel that progress was quicker than in Hungary. I feel that the competition has strengthened in the Czech Republic, especially in Prague and we in C2H have been able to keep up with the trends. When visiting Budapest, I personally feel that the time has come to bring the changes we have adapted in Prague to the market very soon.

Michal Mička

MM: In C2H, we are interested in opportunities within the Hungarian market and we are looking for grade-A locations to support and strengthen our retail umbrella.

We feel that the [fashion] bridge brand sector is missing within the market, and this would be a great opportunity to take up. Specifically, we set ourselves a goal to localize suitable free business units in shopping centers to expand into. Not just for [fashion brands] Pietro Filipi and Kara, but also for other big brands, of which we have become the main franchise holder in the region of Central and Eastern Europe.

BBJ: Why make the trip now?

MM: As part of C2H strategy we are reviewing our five-year strategic plan and we feel that Hungary has a lot to offer, as it becomes a part of our development plan. What is more, the Hungarian market is growing faster than

the Czech or Slovak markets, and it is not far away. The expansion is therefore a logical outcome of our long-term plan.

BBJ: How reliant are you on market analysis, and how important is it to get a personal feel through a visit?

MM: The analysis really helps me understand the market, but you can’t understand a market properly until you see it with your own eyes. Watching people shop, observing the traffic flow, seeing how shopping malls are laid out… Even such detail of people’s eating habits gives you a totally different view of a market. As a business we conduct a careful research on each market to understand how to enter the market correctly and successfully.

BBJ: You started out in your native Czech market. How does do you think it compares with Hungary?

Prague-based investor Michal Mička (31) is the majority owner of Czech fashion companies Pietro Filipi and Kara. He is also behind several startups, for example Liftago (ride hailing service), Favorit (bespoke bicycles), Flatio (accommodationfinding service for CEE, including Budapest) and Shopsys (B2B and B2C e-Shop development).

Mička is also a founder and owner of investment company C2H Equity a.s., established as a jointstock company on August 18, 2017, and which covers activities within private equity, venture capital and real estate. His main idea is to invest into companies which offer interesting opportunities and potential to multiply invested capital. According to Mička, the quality of people is a key for every successful investment.

Having already invested what he says is tens of millions of euros in Czech Republic, he now aims to broaden his portfolio in CEE region, including Hungary.

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BBJ: Beyond following up on your business trip, what is in the immediate and mid-term future?

MM: As I mentioned earlier, C2H is reviewing its five-year strategic plan and in a short period of time we will start exploring new markets to expand into in the midand long-term. The goal is to create a retail umbrella for C2H and to make it strong player within CEE over the next few years.

Michal Mička

BBJ STAFF

Business

F R A NC HI S E PA R T NE R WA N T E D

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Budapest Business Journal | October 19 – November 4, 2018

The Glove That Allows the Blind to Read Hungarian startup GlovEye has developed an innovative project offering a solution to help blind people around the world read a variety of texts. The startup developed a tactile feedback glove for smart devices which lets blind and partially sighted people read printed text as Braille. The glove achieves this by utilizing a special Braille cell under the user’s index finger which projects any read character to the user’s fingertip.

BENCE GAÁL

Back With a Bang

The glove is connected to GlovEye’s reader app which uses a camera to track both the text and the user’s finger. The startup’s solution incorporates Microsoft’s AI technology, which uses optical character recognition in order to create text from the image of printed text, software engineer and founding member Ádám Fülöp tells the Budapest Business Journal.

Originally, the team consisted of three Hungarian university students. “The basic idea came from Krisztián, who was a friend of mine

and also a founder in the beginning,” Fülöp says, recalling the early days. “We started the project with three people in February 2017 for Microsoft Imagine Cup, then in June Dániel, our very good friend, also joined us.” The team went on to win the Hungarian edition of the Microsoft-backed student developer contest, and to reach the top 32 in the worldwide edition of the competition.

However, the project almost hit a wall after the cup. “This team had reached a lot in a few months but, for different reasons,

Innovation Fuels Wizz Air’s Future Flight Path Hungarian low-cost airline Wizz Air says that innovation plays a critical role in the company. The so-called ultra-low cost carrier model continues to be a disruptive approach that is changing the way traditional airlines think and act, Joel Goldberg, chief digital officer, tells the Budapest Business Journal.

CHRISTIAN KESZTHELYI

Fourteen years ago, when Wizz Air allowed only online payment, many said the company and its business model were brave. However, due to the steady progress of innovation, time has proved Wizz Air right and it has continued to innovate new products and services ever since.

“These customer-facing innovations are perhaps the most visible areas of innovation within our company. By testing out new ideas in the marketplace, we are able to see how we can get better at servicing our customers’ needs,” Goldberg tells the BBJ. “Besides our customer-facing innovation, we are also ambitiously pursuing innovation within our core operations.

The goal here is to not only provide our colleagues with added value services, but to also make their overall experience as frictionless as possible. Everything from

everyone except me left the project after the summer. After many attempts the team has been rebuilt successfully; it now consists of three people and is currently actively looking for funds,” he adds.

Future driven innovation

sponsored by

were always sold exclusively online – we were among the very first in the industry to do so – and we kept on adding further services and innovative solutions to our architecture,” Goldberg notes.

“The Wizz Air app has been a major step towards better customer experience and now almost 30% of our sales are already made on a mobile device,” Goldberg says. In fact, Wizz Air’s app can be used to book flights and keep all the most important data related to the passenger’s journey. Furthermore, the application can even be used as a boarding card.

Sleek and Responsive

Joel Goldberg self-service HR systems to the roster management app for our crew,” he adds.

Wizz Air says innovation has always been at the core of its strategy. “Our tickets

After the successful rebuilding, the startup came back with a bang this year. GlovEye participated in The Chivas Venture World Final and is part of Design Terminal’s mentoring program. In September, it won the Budapest edition of the Pitch@Palace competition, pitching their idea to Prince Andrew, the Duke of York in person. The competition was founded by the duke in 2014, with the aim to “amplify and accelerate” the work of young, innovative technology enterprises. (For more on this, see our earlier story “12 Hungarian Startups Proud to Pitch to a Prince”).

In achieving top spot in the Hungarian round of Pitch@Palace, the startup has qualified for the competition’s global round in London in December. The team will present in St. James Palace. Keen on achieving even more, GlovEye is already preparing for the competition. “We are organizing meetings with London-based institutions and organizations to get the most out of the opportunity,” Fülöp says.

According to him, the biggest challenge during the development of the device was figuring out questions related to user experience. This includes understanding how blind people can use the device, and how exactly it should work “to be as easy to use as possible”. While the product is not yet available commercially, the startup hopes to launch sometime in 2019 Q2.

“In 2016 we fully redesigned our website to give it a sleek, easy and straightforward functionality, a responsive layout and an uninterrupted flow,” Goldberg adds.

With the eighth most visited airline website in the world, Goldberg says Wizz Air is always thinking about how to enhance the overall travel experience of its customers.

“As we focus more on our consumer experience, we shift our business to becoming more of an ‘experience’ company, where personalization, data and digital experience play an even stronger role than they do today,” the CDO explains.

“While change and development are often considered in a linear way, we at Wizz believe

innovation is happening at an exponential speed. So we are thinking a lot about how to increase our velocity and looking for potential new ideas across our organization. For this reason, I am sure that Wizz Air will be a driver of innovation in the airline industry in the future,” Goldberg underlines.

“This will allow us to broaden the way we think about our brand and the services we offer beyond just being an airline,” he adds.

“New ways of working are often overlooked, but this is what actually provides the backbone for excelling at innovation. We are early on the journey but are aware that true innovation happens best when you empower your people and create cross-functional teams that can work towards achieving business outcomes,” Goldberg says.

“Being a growth company with big ambitions for the future, I view innovation as a way for us to unlock our employees’ potential. First, by automating manual, repetitive work, we free up our employee to focus on more value adding activities. Second, new innovations allow new ways of thinking about our customers, creating a virtuous cycle of test, learn and adapt,” Goldberg concludes.

This regular column, run in association with Audi, looks at how some of Hungary’s biggest companies involve innovation in their daily practice.

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Budapest Business Journal | October 19 – November 4, 2018

Special Report Real Estate Development

Falling vacancy rates, relatively easy access to finance and a market hungry for space make this is a good time to be a developer.

Strong Market Fundamentals Attracting Investors

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Boom Time in the Office Market

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Industrial Supply Needed to Meet Growing Demand

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Retail Development Finally Taking-off

18

Strong Guest Demand Attracting Hotel Developers

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Budapest Business Journal | October 19 – November 4, 2018

Strong Market Fundamentals Attracting Investors Established developers on the Hungarian market are going ahead with built-to-suit (BTS), speculative and long-term phased projects as vacancy is low in all markets sectors and market players have the necessary development finance or access to debt finance.

GARY J. MORRELL

course but I would not say it is deterring internationals. They are ready to acquire and are happy that liquidity is strong in the market. Certainly the investment volume is determined by the availability of investment grade product versus capital to invest. The latter is highly available currently, both in terms of domestic and international funds,” he says.

Significant Development

A number of assets of more than EUR 100 million are in due diligence or under marketing with closing expected this year, which completes the development and exit cycles.

Despite the positive fundamentals on the demand side in all market sectors, a limited supply of suitable product is continuing to act as a brake on greater investment activity.

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INSIDE VIEW

Key Factors of Employee Retention in the Real Estate Sector Balázs Boskó

Recruitment Consultant HAYS HUNGARY

The recruitment and retention of wellqualified employees is a growing concern for experts in the real estate sector. The tables have certainly turned: candidates of high professional value tend to have three or four on-going applications, and they are not afraid of salary negotiations anymore.

What may be even more surprising is that, in several cases, it is not the salary package that plays the most important role in their final decision. This article aims to unfold some keys factors, that significantly contribute to employee recruitment and retention in the real estate sector. There is more to this than first meets the eye.

One of my candidates was an expatriate who wanted to relocate to Hungary after several years in Germany.

I introduced him to a couple of clients and I remember calling him after an interview: “I have seen better container offices on the construction site than their office building. There is no way I am going to work for them,” he said. Interestingly enough, the salary conditions would have been far better, than his original expectations: competitive base salary,

bonus, company car for private use, fringe benefits – the whole package. Eventually, I placed him at a renowned real estate developer – for a smaller salary, but with a freshly refurbished office building with green technology.

A site manager candidate of mine stated the following: “I would gladly exchange my wide range of fringe benefits for a company car.” Site managers have to shift between construction sites and they often face overtime, especially during the handover period. Even a pool car system results in serious time-loss that could be spent with the family.

A project manager once said to me: “Your client is well-known for strict EHS standards and a wide range of benefits.

I would gladly be part of that team.” A junior project engineer highlighted that professional development on big projects would be the number one priority for her.

So what are the morals of these stories? That a good salary package alone is not enough to attract high-qualified candidates. The working conditions send a serious message to potential applicants about how the employer might treat its employees. HR managers and CEOs have to carefully analyze the potential needs of each position when putting together a salary package.

www.hays.hu

“We are witnessing significant office development today and when a fully leased new product comes to the market it is highly likely to find a buyer. There has been very limited development in retail, so indeed, there is a shortage of new products in this sub-market. In terms of established products though, major centers like MOM Park and Mammut have transacted this Promenade Gardens by Horizon year,” Limp commented.

Development in Budapest.

Hungary’s Erste Asset Management has completed the acquisition, agreed last year, of the 25,000 sqm Promenade Total commercial real estate investment Gardens from Horizon Development. This volume in Hungary for 2018 is forecast at transaction reflects the significant role of EUR 1.6 billion-1.7 billion according to Hungarian capital at the high end of the consultancy CBRE. Budapest investment market, providing more security for the markets.

Skanska Property has also sold its “The shortage of investment 36,000 sqm Mill Park to the same buyer.

This is the second investment deal between grade product is not the two parties following the Nordic Light transaction deterring international

investors from visiting Hungary; over the last year we have toured the market with numerous existing and new equity sources.

However, it has made it more difficult for those already present to increase their exposure, whilst those who are yet to enter have struggled to react in time when a suitable product does become available due to fierce competition from local investors.”

“The shortage of investment grade product is not deterring international investors from visiting Hungary; over the last year we have toured the market with numerous existing and new equity sources. However, it has made it more difficult for those already present to increase their exposure, whilst those who are yet to enter have struggled to react in time when a suitable product does become available due to fierce competition from local investors,” said Ben Barclay, senior investment consultant at CBRE Hungary.

Adrián Limp, head of valuation & advisory at Cushman & Wakefield Hungary agrees that institutional investors are now present and potential new entrants are increasingly looking to invest.

“We are in discussions with a number of new players and others that have been less active over the past ten years.

Shortage of product is a challenge of

in

2016.

Skanska has now started construction of Nordic Light Trio, the 14,000 sqm third phase of the Nordic Light office complex.

The latest EUR 29 million project is already 80% prelet.

“Class ‘A’ office developments receive around five bids and the very best product can attract as many as ten bids,” said Skanska Hungary CEO Marcin Łapiński.

Class “A” offices and shopping centers have and will continue to attract a lot of attention, both from a local and international perspective, as Hungary continues to offer attractive returns in comparison to Poland and Czech Republic according to consultants the Budapest Business Journal spoke to.

“CBRE has run open market sale processes over the past 18 months for both types of products and have received in excess of five or six offers. We do not expect more forward purchasers. We have only seen one forward purchase in this current cycle, which was Erste Asset Management’s purchase of Promenade Gardens from Horizon Development, and CBRE does not see that trend changing.

Skanska are the other active developer who generally divests as soon as the building is functional (and usually fully leased); most other developers are not regular traders,” adds Barclay.

Continuing Boom

The current office development boom looks set to continue as Hungarian and regional developers such as Horizon Development, Wing, Futureal, Atenor, HB Reavis, GTC and Skanska all able to source finance and conclude the necessary preleases.

In this landlord dominated market, more players are opting for speculative development, with HB Reavis and Atenor undertaking large, phased, long-term

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Budapest Business Journal | October 19 – November 4, 2018

Special Report | 11

projects. Colliers International estimates that more than 20 office projects are due to be delivered in 2018-2019. The market is expected to remain landlord driven until at least 2020 unless there is a major change in the Hungarian economy, Colliers says.

In contrast, Wing has acquired a niche role developing tailored research and development buildings for high-tech companies. It was responsible for the largest delivery of the year, the 57,000 sqm, built-to-suit, Magyar Telekom headquarters. The Hungarian developer is also working on a new 22,000 sqm Budapest headquarters for evosoft Hungary, 100% owned by Siemens, in order to consolidate its activities into one location.

“Just as across Europe, the demand for secondary shopping centers is dwindling. Prime high street retail is arguably the most liquid asset class, as this attracts both high net worth individuals and institutional investors, however this type of asset rarely trades on the open market. Good quality industrial product also tends to trade relatively easily, but is also quite rarely available due to the highly consolidated ownership amongst a few long-term hold players.”

The circa HUF 50 bln Telekom headquarters was financed by Wing’s own equity and a consortium of banks consisting of UniCredit Bank Hungary and K&H Bank. Despite the current low vacancy and strong demand, Wing has been pursuing a conservative office development strategy, only going ahead with office developments once a built-to-suit agreement or a significant prelease has been agreed.

According to Barclay at CBRE, certain office developers are also to undertake ADVERTISEMENT

Etele Plaza by Futureal. developments speculatively, such as Skanska and Futureal, although it is more common to see relatively small preleases of

around

20%

of GLA triggering development.

“However, such is the strength of the office leasing market, nearly all developments that have entered the market over the past 18 months have been at least 75% leased upon completion. The general trend in the market is that developers have far more success in securing tenants once the project nears completion and the tenant understands the concept of the building.

The Promenade Gardens and HillSide Offices projects showcased these dynamics, for example,” he commented.

Serious Bidders

For a newly delivered fully leased office there would be at least a dozen serious bidders, in the view of Cushman & Wakefield’s Limp. “As for retail, a lot depends on quality and lot size, but there is certainly competition for products. We

60min more time for myself since the concierge

has been running my errands.

have not seen much forward purchase agreements recently. Equity and debt finance are available to most developers so we do not expect this form of profit sharing to become more common in the market,” he explains.

Futureal have concluded

a EUR

150 mln

(about HUF 48 billion) loan agreement with UniCredit Bank and Erste Group for the Etele Plaza retail project. The fact that the long-term pipeline retail projects are now going ahead also reflects the confidence of developers, retailers and financers in the Budapest retail market.

In the Etele Plaza financing package, the money will be available for ten years for the development and long-term operation of the shopping center.

“Our goal is to satisfy our clients’ financing needs with competitive project and syndicated loans tailored to their individual needs,” said Gábor Vörös, head of financing at UniCredit Bank Hungary.

With falling vacancy rates, there is a low supply of continuous logistics/light industrial space to meet demand. As elsewhere in CEE, industrial developers prefer the more cautious built-to-suit (BTS) development option. Further, industrial companies tend to hold on to product following an acquisition.

“For Grade ‘A’ offices, the local openended funds provide a high level of liquidity in addition to the German closed ended funds, and there is still a healthy demand from international equity for best-in-class shopping centers. Just as across Europe, the demand for secondary shopping centers is dwindling. Prime high street retail is arguably the most liquid asset class, as this attracts both high net worth individuals and institutional investors, however this type of asset rarely trades on the open market. Good quality industrial product also tends to trade relatively easily, but is also quite rarely available due to the highly consolidated ownership amongst a few long-term hold players,” concludes Barclay.

My to - do list s are getting shor ter: sandwiches for meetings?

The concierge takes care of that.

New IT connections? The owner sor t s that out. Lunch with the head of marketing from the company nex t door? The community manager organizes it for me – at a nearby restaurant.

myhive- offices.com Vienna Warsaw Budapest Prague Bucharest A brand of IMMOFINANZ .

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Budapest Business Journal | October 19 – November 4, 2018

Boom Time in New Law On Remodeling the Office Market INSIDE VIEW

Commercial Buildings Dr. Szilvia Andriska Attorney (H)

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Noerr and Partners Law Firm

Due to new legislative amendments, the number of cases in which a special permit is required for work on commercial buildings continues to increase. The new permit proceedings apply to work for which no actual building permit is required, but an assessment must be obtained from the pertinent authorities. Environmental, infrastructural and urban planning impacts of the commercial building are taken into consideration in this assessment.

Although the regulations of the “Plaza Stop” bill have changed in 2015, special requirements for construction work on commercial buildings (shops, shopping malls) are still in force. Since 2015, the law has mandated, as a part of the procedure for obtaining a building permit, an assessment by the head of the Government Office of Hajdú-Bihar County for the construction as well as the extension of any commercial building with gross floor space exceeding 400 square meters.

As of August 10, 2018, a new permit, i.e. a “function conversion permit” must be obtained when a building with 400 square meters or more gross floor space is changed into a commercial building, or when a commercial building is remodeled. An assessment by the head of the Government Office of Hajdú-Bihar County must likewise be obtained as a part of these new function conversion permit proceedings.

The remodeling of a commercial building as defined in the new law includes not only modifications for which no building permit is necessary and which result in an increase in the size of the commercial building to more than 400 square meters, but also any alteration of a commercial building already larger than this size.

Because modifications to commercial buildings entail the obligation to procure the new permit, the scope of construction work subject to this special permit has become considerably broad. Practically speaking, even changing the location of walls within commercial premises may require a function conversion permit if the premises are larger than 400 square meters.

When such modifications are made, the assessment by the head of the Government Office of HajdúBihar County focuses on whether the advantages expected from the establishment of the commercial unit are greater than the disadvantages it causes. These are the same considerations that have been taken into account based on the legal requirements that have been in force since 2015.

If the disadvantages outweigh the foreseeable positive effects of the commercial edifice, the result of the assessment may be a refusal. In some cases evaluated between 2015 and 2017, the assessment resulted in rejection of the application because the commercial premises would have had a negative impact on the value of the buildings in question, which were under a historical preservation order, or because the high volume of traffic the commercial establishment would have generated would have decreased air quality or increased noise volume.* The assessment also takes into account the projected impact of the commercial building on the surrounding area, as well as the feasibility of the measures planned by the applicant with the aim of eliminating or diminishing the related adverse effects.

In order to reliably determine exactly what construction work requires this new conversion permit, it will be necessary to observe the authority’s actual practice in the future. This is of critical importance since, if the building is modified or used without the authority’s permission, the authority can prohibit the commercial activity in the building and impose a fine.

The information contained in the article is for informational purposes only and should not be considered legal advice, legal statement or interpretation.

Established developers on the Hungarian market are going ahead with built-to-suit (BTS), speculative and long-term phased projects as vacancy is low with a limited supply of 5-10,000 sqm class “A” space. In reaction to more sophisticated tenant demands, both Hungarian and regional players are delivering ever more imaginative developments, both from the specification and interior and exterior design perspectives.

GARY J. MORRELL

In the largest recent completion, Wing has delivered the 58,000 sqm Magyar Telekom Group headquarters, located in District IX. Wing has also commenced construction of a further 20,000 sqm BTS headquarters for evosoft Hungary.

“With BTS projects we are able to agree a long-term lease with a major tenant and this puts us in a position to tailor the building to the specific needs of the tenant. At the same time the tenant needs to commit to a long-term lease of more than ten years. This is in contrast to those buildings which are designed to a more flexible specification to meet the needs of multi-tenants,” commented Noah Steinberg, chairman & CEO of Wing, on the development strategy of the company.

According to CBRE, a number of developments that were undertaken in 2016 are now set for completion. A total of

around

460,000 sqm

is under construction, of which 175,000 sqm is expected to be completed this year.

However, more than 70% of this space is already committed through preleases. In H1, five new office schemes were delivered on a speculative basis with an average 42% occupancy, according to Judit Varga, head of office advisory at CBRE. In another completion, Skanska has delivered its eighth Budapest office project, the speculative 35,000 sqm Mill Park in District IX. The LEED “Gold” accredited complex is more than 90% let and has already been sold to Erste Real Estate.

*Source: https://www.penzcentrum.hu/upload/ Szakhatosagi_allasfoglalasok.pdf, request for public data.

Central Vehicle www.noerr.com

In the current market environment, class “A” office developers are able to conclude the necessary preleases and

sell a property to investors and exit if necessary, and go on to further projects, as is the development policy of Skanska.

Marcin Łapiński, managing director of Skanska Property Hungary, sees office accommodation as a central vehicle for companies in hiring and retaining staff in the current labor market where there is a shortage of skilled labor.

A number of developments that were undertaken in 2016 are now set for completion. A total of around 460,000 sqm is under construction, of which 175,000 sqm is expected to be completed this year.

Skanska has acquired a further development plot in District IX and will undertake development of the first 20,000 sqm stage of the three-phase Skandanavian Gardens once a prelease has been agreed.

Another long-term Budapest developer, GTC Hungary, has officially opened its new Budapest office development, the 21,500 sqm GTC White House on Váci út.

The company is continuing to develop the Twist and Pillar office projects.

Also on Váci út, Horizon Development has completed the speculative 25,000 sqm Promenade Gardens; the center has been forward purchased by the Hungarian Erste Open-ended Real Estate Fund. Elsewhere, in the historical center of Budapest, Horizon is currently developing the mixed-use Szervita Square, consisting of 15,000 sqm of office, residential and retail space; the LEED “Platinum” accredited project is due to complete in 2019.

Total modern office stock in Budapest currently stands at a little over 3.5 million

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Budapest Business Journal | October 19 – November 4, 2018

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Special Report | 13

In the current market environment, class “A” office developers are able to conclude the necessary preleases and sell a property to investors and exit if necessary, and go on to further projects. sqm, around 2.8 million sqm of which is “A” and “B” speculative office space. The current vacancy rate stands

at

7.5%.

Development activity is accelerating: Cushman & Wakefield has traced around 250,000 sqm of space under construction.

As much as 60% of space due to be delivered this year is already preleased, although more developers are developing speculatively.

The Váci Corridor is the most favored area for office development with around 30% of total construction, followed by South Buda with about 22%, according to CBRE. In a sign of the continuing positive mood in the Budapest office market, CPI is developing the 16,000 sqm Balance Hall. This third phase of Balance Office Park on Váci út is scheduled to deliver at the end of 2019, bringing the total space at the complex

Telekom HQ to 35,000 sqm and there remains the possibility for a fourth phase of the development.

The Hungarian Futureal Group has been awarded WELL building precertification for its three current

Budapest office projects. The complexes will provide more than 100,000 sqm of WELL, LEED and BREEAM accredited office space. The company has undertaken development of the first 25,000 sqm phase of the 65,000

sqm Budapest One Business Park and completed phase one of the Corvin Technology & Science Park, and the first phase of Advance Tower.

Continued on page 14 ▶ ▶ ▶

Horizon Development Announces Bentley Home Partnership at EXPO REAL valuation – will need to cater to the new trends and tenant needs.

With Szervita Square Building featuring a mixed-use function (office, retail and luxury residential), placemaking in the service and residential sectors also came to the forefront of discussions. Attila Kovács – an architect by trade – shared a recent development regarding his ongoing project: “We are absolutely thrilled to have concluded an exclusive partnership with Bentley Home. As

Last week’s EXPO REAL featured a truly engaging Budapest-stand with numerous projects presented by developers active in the capital and regional cities of Hungary. Co-exhibitors also participated in thought-provoking panels moderated by the Financial Times and CBRE. Attila Kovács MRICS (managing partner, Horizon Development) elaborated on his views about the impact of the sharing economy on the real estate sector and made a newsworthy announcement about his

company’s recently closed partnership with the Bentley Home brand.

When tackling the issues related to our new mindset about the use of office space, Attila Kovács used Szervita Square Building as his benchmark example. He argued that with co-working, collaboration and community gaining a new momentum in the office sector, all trades related to the building industry – including building design, interior design, property development, construction and even property

the first and only project in Europe, our Szervita Luxury Residences will exclusively carry the name ‘Furnished

by Bentley Home’. We found EXPO REAL the perfect international platform to make this announcement, and to start branding and marketing our topquality premium residences. Bentley Home is the most exquisite brand to introduce a new definition of luxury interior to downtown Budapest.

With its aesthetic heritage rooted in the British automobile brand, it adds a contemporary, cosmopolitan flair, sophisticated finishes and fine materials to our project.”

www.horizondevelopment.hu

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INSIDE VIEW

REITs as Real Estate Developers: New Rules to Promote Investors’ Confidence Kinga Hetényi

Adrián Menczelesz

Managing Partner

Associate

SCHOENHERR HETÉNYI ATTORNEYS AT LAW

SCHOENHERR HETÉNYI ATTORNEYS AT LAW

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The Hungarian Parliament has adopted new rules on the real estate investment trust (“REIT”), supporting the establishment of more such entities. Between 2011 and 2017, the concept of REITs did not live up to expectations in Hungary, so the legislators have decided to ease some rules that seemed too onerous for investors in the Hungarian market.

In 2017, the legislator set forth more favorable taxation terms and conditions, and also simpler rules of foundation and operation (for example, the reduction of the minimum registered capital requirement from HUF 10 billion to HUF 5 billion). This change process has now continued with (i) the clarification of the activities of a REIT, (ii) the extension of the scope of the issuable classes of shares, and (iii) the alignment of the rules of the REIT Act on the dividend pay-out with the Hungarian Civil Code.

Based on the REIT Act, REITs in Hungary may be set up as a special form of corporation listed on the stock exchange (i.e. public companies limited by shares). REITS have to meet various special requirements and they need to be registered with the relevant registry of the Hungarian Tax and Custom Administration (“HTCA”). As part of the special requirements, the companies may only be engaged in activities that qualify as authorized activities (e.g. activities of holding companies, purchase and sale of own real estate, property management).

The legislator has now clarified that REITs and their SPVs or subsidiaries may engage in real estate development activities, however, they may not pursue actual construction activities (i.e. a REIT is eligible to enter into a construction agreement with a contractor, but not as a contractor). This change enables REITs to participate in the organization of real estate development projects.

Before the recent amendment, REITs were authorized to issue only ordinary shares and employee shares. From now on, REITs may also issue preference shares, except for dividend preference shares and voting preference shares with veto right. Dividend preference shares may not be issued by REITs

anymore, and the earlier possibility to issue such employee shares is also no longer available. However, the amendment provides an opportunity to issue voting preference shares (without veto right), ensuring the main investors’ control over the company and increasing the free float of the shares.

The former provisions set a strict obligation for REITs: a REIT had to pay out a dividend, equivalent to at least the expected dividend (as defined by the REIT Act) within 15 trading days following the approval of the financial statements. If the funds available for dividend distribution were lower than the expected amount of the dividend, at least 90% of the disposable funds must have been paid out to the investors. This rule limited the shareholders’ freedom of choice and also restrained investors from the establishment of a REIT. The amendment takes into consideration the shareholders’ freedom of choice set out in the Hungarian Civil Code. The new rules still provide that the management must make a proposal about the expected dividend but the shareholders’ meeting may decide not to pay a dividend, or to pay a different amount of dividend.

Besides that, the amendment aligns the REIT Act with the Hungarian Civil Code in relation to the dividend pay-out, as it also provides an opportunity to REITs to form a reserve for new projects or transactions. In accordance with market practice, the deadline for the dividend pay-out changed to 30 days from the approval of the annual financial report by the shareholders’ meeting.

The concept of the REIT has not become widespread to date because of the burdensome requirements.

After the amendment in 2017, a number of real estate companies have announced their intention to be transformed into a REIT. The HTCA has already registered Graphisoft Park as a REIT, and also Budapesti Ingatlan Hasznosítási és Fejlesztési Nyrt. and Appeninn Vagyonkezelő Holding Nyrt. as a regulated real estate investment preliminary company. The establishment of more new REITs is expected to follow the progressive changes of the REIT Act.

Mill Park in Budapest by Skanska Continued from page 13 ▶ ▶ ▶

Interior Importance

Developers are increasingly paying more attention to their office interiors and the wellbeing of staff in office centers as they are seeking WELL certification in addition to BREEAM and LEED sustainability accreditation. Skanska is developing the third 14,000 sqm phase of the Nordic Light office complex to meet the WELL Building Standard.

“Employee wellbeing was at the forefront when designing Nordic Light and this will be our first office project in Hungary to receive WELL certification,” says Łapiński.

The complex is already 80% prelet.

In 2019, nine buildings with a combined GLA of 144,000 sqm and 62,000 sqm of refurbished space are scheduled to be delivered, according to CBRE. The South Buda area and Váci Corridor will receive twothirds of this.

As confidence in the market grows, developers are undertaking more ambitious projects. In a major phased development in the Váci Corridor, the European developer HB Reavis is constructing the 136,000 sqm Agora Budapest. This long-term, phased development project is planned to be completed in 2023. The first speculative phase (which is targeting BREEAM “Outstanding” and WELL “Gold” accreditation), Agora Hub and Agora Tower, will deliver 65,000 sqm of office, retail and service space by 2020. Jan Hübner, country CEO at HB Reavis Hungary, commented that construction of a further 60-70,000 sqm phase is planned to go ahead

in

2020.

www.schoenherr.eu

The Belgium developer Atenor has officially handed over the 14,000 sqm speculative Váci Greens D, the fourth component of its phased office project that

will consist of 130,000 sqm of space across six buildings upon completion. In parallel with development of the final phases, the developer has undertaken work on the speculative phased 85,000 sqm Arena Business Campus in District VIII in Budapest. The announcement of such a further large-scale project reflects the current confidence in the Budapest office market.

Location, Location, Location As developers are looking to go ahead with office developments to meet strong demand, there is increasing competition for suitably-sized sites that provide visibility and meet the requirements of tenants and staff regarding access to amenities and public and road transport links. Despite its green environment close to the Danube and the Budapest Technical University, the south Buda area is lacking in development sites with direct metro access, which has been one of the major reasons for the success of the Váci Corridor.

Third party sustainability accreditation organizations such as BREEAM, LEED and WELL have requirements with regard to exterior architectural design and, for example, the use of materials in construction, interior design and property and facility management, and locational and urban development issues. The norm today is for developers to source sites with direct access to metro, train, bus and tram stations, which is now a basic requirement of tenants and staff working in office centers. Further, new developments now invariably include bicycle parking and changing facilities and electric car charging possibilities.

For their part, local authorities are proactively promoting suburban districts to developers as part of urban redevelopment schemes. The concept is of a reciprocal benefit to both the developer, the companies that locate to the project and the surrounding population.

In 2019, nine buildings with a combined

GLA of

144,000 sqm

and 62,000 sqm of refurbished space are scheduled to be delivered, according to CBRE. The South Buda area and Váci Corridor will receive two-thirds of this.

3

www.bbj.hu

Budapest Business Journal | October 19 – November 4, 2018

Special Report | 15

Industrial Supply Needed to Meet Growing Demand Development in the industrial and logistics market has been low in recent years with a limited availability of contiguous industrial space and rising demand resulting in record low vacancy rates. More developers are expected to develop on a built-tosuit (BTS) basis with a smaller amount of speculative development. A functioning developer-led industrial market has still not developed outside the capital, however, as has occurred elsewhere in Central Europe.

GARY J. MORRELL

“Market trends are a positive sign for market players, therefore many developers have started thinking of planning new buildings for their existing plots, as well as investigating the opportunities for acquiring additional development sites,” comments Csaba Dobos, senior industrial associate at Colliers Hungary.

ADVERTISEMENT

“However, there is still a limited number of well-prepared speculative projects and new developments are definitely expected. Due to the market absorption during 2018, the vacancy rate dropped to 3.5% by mid-year, which is a record low in the Hungarian industrial market. Many developers are working actively on the planning/permitting/constructing of new speculative buildings,” he adds.

Development activity is continuing unabated across Central Europe with demand outstripping supply. The average vacancy for the CEE five (Czech Republic, Hungary, Poland, Romania and Slovakia) stood at 4.4% as of H1, with the lowest vacancy in Hungary. The Central European industrial and logistics market is continuing to record high demand, reflecting the indicators in the wider European industrial markets. Total stock in the Budapest area stands

at 2.8 million sqm.

Poland and Czech Republic continue to be the dominant Central European markets, with an estimated industrial stock of around 14 million sqm and seven million sqm respectively, according to Cushman & Wakefield.

With high demand and limited supply, the differential between speculative and BTS development has become more difficult to define as with the current strong demand, most speculative space is let before completion.

“The difference between BTS and speculative is a bit misleading nowadays, as most of the delivery is taken by tenants at the planning stage or during the construction phase. So there is not as much typical speculative construction as there was in the past. We only expect more speculative development if demand slows

down, as developers are now under pressure to match demand size,” commented Ferdinand Hlobil, head of Central European industrial at Cushman & Wakefield.

Encourage Development

However Gábor Halász-Csatári, head of industrial at Cushman & Wakefield Hungary, considers that markets conditions will encourage more speculative development activity in Hungary.

“The modest speculative development activity has recently been a limiting factor in market activity, and at first created a window of opportunity for existing Class ‘B’ products.

Now there is definitely much need for Class ‘A’, modern speculative stock (with existing stock practically being absorbed by the market) and we see rental levels have started to improve to levels which makes speculative development feasible. This will most probably trigger the speculative development activity which we expect to actually break ground in the short-term,” he says From the BTS perspective, Goodman is developing

the

87,000 sqm

Auchan Retail Hungary logistics facility at its Üllő Airport Logistics Center; the warehouse is being described as the largest yet logistics complex in Hungary.

Continued on page 16 ▶ ▶ ▶

Special Report

16 | 3

Continued from page 15 ▶ ▶ ▶ In further developments, CTP is due to deliver a 21,000 sqm facility at CTPark Budapest South (Dunaharaszti) in the second half of 2019 and one 30,000 sqm and one 11,000 sqm building at CTPark Biatorbágy. A further 30,000 sqm is set to be delivered at BILK and a 11,000 sqm speculative facility at Airport City Logistics Park by CPI. Developer P3 is known to be considering development sites in Hungary.

With regard to tenant specifications there have been no significant changes in requirements, as companies are more concerned with securing space in the view of Colliers’ Dobos.

www.bbj.hu

Budapest Business Journal | October 19 – November 4, 2018

“Due to the limited supply, the most important factor is the availability of an existing building within the shortest time, i.e. an immediately available unit that is suitable for the planned activity, instead of a potential new development with a 1-1.5 year planning and construction time, as well as a longer-term lease agreement,” he says. “The lease term – preferred by tenants – is usually three-five years in the case of logistics and ten years for automotive production, while, owing to the higher pricing nowadays, landlords prefer as long a commitment as possible.”

Green Certification

Prologis has commenced construction of a 10,600 sqm speculative facility at Prologis

(2018 Q4 – 2019 Q4)

35000

Pre-let space

30000

Leasable space

25000 20000 15000

80%

10000 50%

5000 0

2018 Q4

2019 Q1

Source: Colliers International

2019 Q2

2019 Q3

to

EUR 4.5.

Hungarian Industrial Speculative Pipeline sqm

Harbor Park, due to deliver next March after a six month construction period. It will be submitted for BREEAM “Very Good” accreditation; certification from a third party green organization is increasingly trend among regional industrial developers and industrial park operators. As of the end of June, the Prologis Budapest portfolio stood at 656,000 sqm; that compares to 1.3 million sqm in Czech Republic and a total CEE stock of 4.5 million sqm of space with 120,000 sqm under construction.

Concerns are continuing to be voiced about the shortage of skilled labor and rising construction costs. Rents have risen to EUR 4 per sqm per month, while for new developments this could rise

2019 Q4

Expected Handovers

“The shortage of available labor force on the market is strongly affecting both supply and demand in the industrial sector,” comments Gergely Baka, head of advisory for industrial and logistics at CBRE Hungary. “Coupled with a shortage of construction materials, the resulting cost inflation is breaking the markets in many development plans, causing developers to abandon projects; hence the meagre volume of speculative construction. The projects that do materialize are in turn priced near record high levels to offset the costs, resulting in rents that most tenants are not willing or able to meet,” Baka adds.

Take-up figures for Hungary are low in comparison with its Central European

“There is still a limited number of well-prepared speculative projects and new developments are definitely expected. Due to the market absorption during 2018, the vacancy rate dropped to 3.5% by mid-year, which is a record low in the Hungarian industrial market. Many developers are working actively on the planning/ permitting/constructing of new speculative buildings.” neighbors. This is partly due to the fact that, in contrast to Poland, Czech Republic and Slovakia, a functioning commercial industrial market has not developed outside the capital.

Therefore, companies establishing light industrial facilities have tended to develop their own.

CBRE estimates total modern industrial stock at 8.84 million sqm, although only around 3.2 million sqm of this is developer-led. On-going construction in Hungary’s regions is estimated at

ADVERTISEMENT

Property for Sale and Rent We offer for sale a total 151,006 sqm site in Budapest near the Campona Shopping and Entertainment Center in the heart of District XXII, close to the bank of the Danube, on the Buda side of the city. The property is just 18 kilometers from the city center.

This part of the district is traditionally an industrial and manufacturing area, and the land use in the surrounding area reflects this. All opportunities are open for development except polluting production activities (e.g.: recreation, residential, warehousing, logistics, retailwholesale, etc. are possible).

The site includes office buildings and factory space. This is a revenue producing property, the site of which is free and clean of all debt obligation, and also of all contamination issues.

The property provides excellent road access from a logistics perspective, and also benefits from convenient access to the M0 orbital motorway, which in turn provides access to all other motorways in Hungary. Public transport is available in the neighborhood.

Owner-financing is available. All offers received will be reviewed and responded to.

Presently we also looking to rent out parts of the area. Currently we can offer a 2,900 sqm warehouse with 420 sqm of office availability; on the ground floor there is 2,300 sqm of warehousing possibility and upstairs there is 1,200 sqm of free space. There is also the possibility to rent a three-story building, which has to be renovated but is suitable for office or hostel accommodation.

The location of property

A green area of 20,000-30,000 sqm is also available for rent that is suitable for the storage of cars, the stock of other goods, including heavy equipment, miscellaneous materials etc.

The site is guarded and fully serviced with gas, water, electricity, and an internal road network. We can offer very competitive rental rates with mixed opportunities in the renting period. We are prepared to make modifications where necessary.

If you are interested, please contact: Judit Debreceni E-mail: ginacakft@gmail.com Phone: +36/70-679-7989 or +36/1-424-6200.

Ginaca Ingatlankezelő and Hasznosító Kft. 1222 Budapest, Háros utca 7.

2nd district

Goodman Üllő Airport Logistics Center.

200,000 sqm with a further 180,000 sqm planned or under construction, the largest current project being the 60,000 sqm Bosch plant under construction in Hatvan (57 km northeast of Budapest).

Record Low Vacancy

In another huge project, the BMW group plans to establish a production plant in Debrecen (220 km east of the capital) by 2021. However, there is barely any forlease development expected for the rest of the year to alleviate the record low vacancy rate of around 2% across the total stock outside the Budapest agglomeration, in the view of CBRE. With regard to the geographic position, Dobos argues that Hungary is a small country with a radial highway structure and its borders are reachable within

approximately

200 km

in virtually any direction. However, compared to neighboring countries with more multipolar market structures, Hungary is still highly Budapest focused.

Halász-Csatári, of Cushman & Wakefield, sees strong potential in Hungary’s countryside. “There is a steady flow of demand from new market entrants from the manufacturing/production sector predominantly looking for countryside locations,” he explains.

“This is driven by the better availability and pricing of land and workforce and potential state incentives. Large automotive hubs (such as Győr and Kecskemét) are already very popular and have grown at a steady pace each year in terms of new buildings delivered.

“The shortage of available labor force on the market is strongly affecting both supply and demand in the industrial sector.

Coupled with a shortage of construction materials, the resulting cost inflation is breaking the markets in many development plans, causing developers to abandon projects; hence the meagre volume of speculative construction.

The projects that do materialize are in turn priced near record high levels to offset the costs, resulting in rents that most tenants are not willing or able to meet.”

Investors have started looking at the very few institutional products currently available there, and developers also show an increasing interest in developing in well-established countryside cities,” Halász-Csatári adds.

Special Report | 17

3

www.bbj.hu

Budapest Business Journal | October 19 – November 4, 2018

2nd district

2nd district

67 sqm – 3 rooms, Herman ottó street

92 sqm – 3 rooms, BUday LászLó street

76 sqm – 3 rooms, riadó street

In a nice villa house, this very sunny, well divided apartment has living room with open kitchen, 2 separate bedrooms, air conditioning system and 2 parking spaces in the courtyard.

This very well divided, bright and spacious apartment in good condition benefits of two bathrooms and it is situated within a well maintained condominium, in a quiet side street.

In a nice, Bauhaus style building, this bright, well divided, garden facing apartment has 2 separate bedrooms, living room, covered balcony and private gas heating.

54.900.000 HUF

56.900.000 HUF

72.000.000 HUF

+36.1.336.1706

2nd district

+36.1.336.1706

2nd district

+36.70.376.4138

2nd district

76 sqm – 2 rooms, BUdakeszi street

134 sqm – 3 rooms, FrankeL Leó street

200 sqm – 6 rooms, endrődi sándor str.

In a new built subdivision with wellness area and swimming pool, this very sunny apartment has 20 sqm of terrace, private garden and parking space.

In a nice villa house, this very spacious and sunny, garden facing duplex apartment has two bathrooms, balcony, terrace and parking space in the courtyard.

Beautiful panorama from the 2 balconies, this very spacious and bright, luxury triplex apartment has 40 sqm of living room, 5 bedrooms, 3 bathrooms, sauna and parking space.

74.900.000 HUF

97.000.000 HUF

+36.70.376.4138

3rd district

+36.1.336.1706

3rd district

175.000.000 HUF

+36.70.376.4138

3rd district

36 sqm – 1 room, Bogdáni street

56 sqm – 2 rooms, óBUda oLd town

112 sqm – 3 rooms, Fésűs street

In a quiet and green area, this park facing apartment, that needs renovation, benefits of a private gas heating and it is situated within a well maintained condominium.

Close to the Amphitheatre, within a period building, this partially renovated, well divided apartment has private gas heating. Good connection to public transport.

In a new building, this very sunny and spacious, garden facing apartment benefits of a living room with fully fitted open kitchen, 2 separate bedrooms, 2 balconies and private gas heating.

24.900.000 HUF

30.990.000 HUF

39.900.000 HUF

+36.1.430.1403

3rd district

+36.1.430.1403

3rd district

+36.70.669.5350

3rd district

130 sqm – 4 rooms, szentendrei street

80 sqm – 4 rooms, testVérHegy

210 sqm – 5 rooms, temesVári street

This very well divided, spacious, duplex apartment has separate rooms, 2 bathrooms, terrace, private garden and garage. It is situated within a nice villa house.

In a new built subdivision with common garden, this very bright apartment benefits of a living room with open kitchen, 3 separate bedrooms, 2 balconies and parking space.

Close to the Danube, in a beautiful, green street, this very spacious, two storey detached house built on 640 sqm of lot, has two bathrooms, terrace, nice garden and garage.

44.900.000 HUF

89.900.000 HUF

169.900.000 HUF

+36.70.669.5350

7th district

+36.1.430.1403

7th district

+36.70.669.5350

7th district

92 sqm – 3 rooms, istVán street

89 sqm – 3 rooms, damjanicH street

74 sqm – 2 rooms + HaLL, doHány str.

Close to the City Park, in a renovated building with elevator, this well divided, bright, street facing apartment has 2 separate bedrooms, living room and two balconies.

This sunny, garden facing apartment benefits of two separate entrances, two separate bedrooms and a living room. It is situated within a well maintained building with elevator.

Next to the Synagogue, this completely renovated, street facing apartment has two separate rooms, private gas heating and it is situated within a renovated building with elevator.

44.900.000 HUF

49.900.000 HUF

64.900.000 HUF

+36.1.351.0446

13th district

+36.1.351.0446

13th district

+36.70.337.2405

13th district

23 sqm – 1 room, Visegrádi street

70 sqm – 3 rooms, radnóti mikLós str.

85 sqm – 3 rooms, Visegrádi street

In a renovated building with elevator, this completely renovated, very bright apartment has sleeping gallery and it is located close to the St. István Circuit.

This well divided, park facing apartment, that needs renovation, has 2 separate bedrooms, living room and balcony. It is situated within a building with elevator and common garden.

25.500.000 HUF

39.900.000 HUF

This completely renovated, top floor, luxury apartment benefits of two bathrooms and private gas heating. Within a building with elevator. All of the furniture is included in the price.

+36.70.414.7759

+36.70.414.7759

91.900.000 HUF

+36.70.414.7759

grUppo t.F.m. kFt. 1068 BUdapest, kiráLy U. 102.

Prologis Park Budapest-Harbor.

each agency independently owned and operated. • these offers are valid, till the apartments are sold. • these information do not constitute a contractual element.

2018_10_tecnocasa_bbj.indd 1

2018. 10. 16. 13:35

18 | 3

Special Report

www.bbj.hu

Budapest Business Journal | October 19 – November 4, 2018

Retail Development Finally Taking-off Although consumer demand in Hungary is continuing to rise, with 7% year-on-year growth in retail sales for the first half year, the shopping center stock in Budapest and across Hungary remains very low. Development is now starting to take-off, although the next significant delivery is not scheduled until late 2020.

GARY J. MORRELL

“After years of limited pipeline volumes, we see increasing development activity on the retail market throughout the country. The overall active monitored pipeline currently ADVERTISEMENT

Allee shopping center in Budapest. adds up to circa 140,000 sqm, excluding the planned extensions of several landmark shopping centers in Budapest, such as Arena Mall and Campona,” said CBRE. The Hungarian unit of the Californiabased commercial real estate services and investment firm puts the average vacancy rate in Budapest shopping centers

at

1.5%.

The city has not seen any shopping center deliveries in recent years, with projects

put on hold due to concerns over economic issues and consequently consumer demand.

However, market conditions are now regarded as appropriate by most analysts for the delivery of new Budapest malls that would freshen the market. There is also significant development activity in prime high street retail in central Budapest.

“Demand by retailers is surely present on the market, due to multiple reasons,” comments Viktória Szabó, head of retail at Cushman & Wakefield Hungary. “A strong economic environment, expanding local and international brands and the need for

fresh new schemes and retail concepts are all encouraging further market improvement.”

CBRE has registered the entry of eight new international retail brands into Hungary in the first half of 2018. However, the number of new entrants is low in CEE terms, and Hungary is not the target country for brands penetrating the region for the first time; new entrants are mostly registered in Czech Republic and Poland according to Éva Sréter, head of retail at JLL Hungary.

The next planned delivery will be the 53,000 sqm Etele Plaza by Futureal, due for completion in 2020. Etele Plaza is

“Etele Plaza, which is the only shopping center currently under construction, was fully pre-let before the start of the development works on the plot, which shows that there is a healthy demand for new shopping center projects.” located at a transport hub at the Kelenföld railway station, the Metro 4 underground line, and the approach section of the M1 and M7 motorways. The hub is used by 165,000 people daily according to Futureal and the 55,000 sqm project will consist of around 180 retail outlets. The development project also includes the 65,000 sqm

3

www.bbj.hu

Budapest Business Journal | October 19 – November 4, 2018

Special Report | 19

INSIDE VIEW

Creating Value by Making the Most of Smart and Green Managing Director Skanska Hungary

Skanska, one of the world’s leading project development and construction groups is driven by a strong commitment to have a positive social and environmental impact.

The Swedish multinational company’s purpose is to build for a better society.

Marcin Łapiński, Managing Director of Skanska Property Hungary discussed how the built environment can generate value both for business and society.

Etele Plaza by Futureal.

Budapest ONE office park. This is the second brownfield development project

by Futureal after the Corvin Promenade urban regeneration project that has delivered a 44,000 sqm shopping center and 10,000 sqm of street retail.

“Etele Plaza, which is the only shopping center currently under construction, was fully pre-let before the start of the development works n the plot, which shows that there is a healthy demand for new shopping center projects,” says Sréter.

Long Awaited

Another long awaited pipeline mall is the 53,000 sqm Bogdáni shopping center by the German ECE, located in the Óbuda area of Budapest, again at a transport hub.

ECE is waiting for new permits on the development. In contrast to Etele Plaza the location has no obvious competitors, according to Stréter. ECE has developed five shopping centers across Hungary in Budapest, Győr, Pécs, Debrecen and Szeged. In Budapest,

ECE’s

68,000 sqm

Árkád center is currently the largest shopping center in the country. Completed in 2002 and extended and renovated in 2013, it was the last major shopping center delivery in Budapest.

The Central Park project by the Hungarian developer Granit Polus, located in Districts VI and XIII, has a retail, office and residential elements. Negotiations with the national and local governments are ongoing for this long-awaited development.

Another long-planned pipeline Budapest development project is owned by the Polish developer Echo Investment. That plot has the required planning approvals needed.

“The newly planned schemes have the opportunity to tailor-make their developments to the changed needs of retailers – be it a larger food court area, a new leisure element, etc. Meanwhile existing older schemes are working on renewing their projects, in order to keep up with the new

trends, and changed market environment,” says Szabó of Cushman & Wakefield.

“Differentiation is a must, not only due to the increased number of large shopping center projects in the city, but also due to new global trends within the sector.

Among the need for newly expanding retailers (completely new on the market) landlords of new schemes will most likely pay special attention to both ensuring a substantially larger food element within their centers (food court, food halls and traditional restaurants), as well as working

“Hand-in-hand with the strong demand figures, investment activity remained strong during H1 and the overall volume invested in retail assets is likely to improve significantly with major schemes already under offer or currently being actively marketed.” towards securing attractive leisure elements, in order to ensure an extended dwelling time by customers,” she adds.

JLL puts the total modern shopping center stock in Budapest at below 800,000 sqm, which is low by European standards. The leading centers are generally considered to be the already mentioned Árkád center and Arena Mall (formerly Arena Plaza, 66,000 sqm), Allee (47,000 sqm), WestEnd City Center (45,000 sqm), Mammut (44,000 sqm) and MOM center (30,000 sqm). These all have waiting lists for tenants and are therefore able to command the highest rents.

Continued on page 20 ▶ ▶ ▶

Skanska is always at the forefront of doing business through value creation in a responsible way and contribution to the society. Is Profit with Purpose a strategic way for your company?

Our Business Plan 2016-2020, Profit with Purpose, outlines the strategic direction that will take Skanska to the next level.

Our aim is to increase shareholder value while working toward a more sustainable future for employees, customers and communities. Profit is needed to deliver our purpose; and a strong purpose will contribute to our profit. It is not about doing one or the other; it is about doing both at the same time. This is how Skanska creates Profit with Purpose. Drawing on our Scandinavian heritage, we’re green and innovative. We look at business decisions through sustainability lens and create futureproof solutions in order to contribute to the community in which we operate in a meaningful way, leaving a long lasting legacy. Our buildings will serve their users and communities for many more years, and we do have to use the natural resources wisely and in a sustainable way to ensure the best possible outcome. Developing green and sustainable buildings is the only way forward for property developers.

What do you think makes Skanska a trendsetter of sustainability solutions?

Constructing “green” buildings is a major step to decrease carbon footprint, to help preserve our environmental heritage and to reduce tenants’ maintenance costs on a longer term. A huge emphasize is during the design phase. But these days it is not just about more efficient light bulbs, solar panels and green roofs. It is about making greener the whole construction process: usage of local and energy-friendly materials and pre-fabricated elements, decrease carbon emission during transportation, introduction of time-efficient formwork systems and implementation of waste management solutions.

Furthermore, Skanska takes a longterm view towards futureproof buildings so that they are sustainable for many decades to come. Our new innovative solution - currently under testing - is the

usage of semi-transparent perovskite solar cells to cover our office buildings on a commercial scale, in collaboration with the technology provider Saule Technologies. The usage of perovskite cells is an important step towards energy self-sufficient buildings.

Skanska also integrates water-efficient solutions within its projects. Mill Park, our latest office development uses around 75% less water than a conventional office building in Hungary and includes a rain and soil water harvesting system for toilet flushing and irrigation.

Could you give more details on that project?

Mill Park, located in Budapest’s 9th district, is really the combination of great location, access to transportation with high-quality office space providing sustainable solutions. We believe that people are the heart of our business. It’s why we place such a strong emphasis on creating the right working environment and care about the neighbouring community, for example a new crosswalk on Soroksári road was developed to provide safe crossing for pedestrians, as well as easy access to the Danube promenade. A public bicycle network station will be placed near the building to offer bike service to the office workers and the neighbours. All these features reflect Skanska’s commitment to creating high-quality buildings that make positive contributions to local communities.

Mill Park opened recently. What’s next for Skanska?

We have just started the third phase of Nordic Light office complex on the Váci út office corridor. The new building, Nordic Light Trio aims for WELL certification, to be the first Skanska development in Hungary achieving it. A warm and welcoming lobby with a feel of a cosy living room will offer space to work, meet or have a coffee in a relaxed environment.

Top notch and smart solutions are the key to delivering a high-quality experience for our customers. Connected by Skanska is the most integrated operating system for the office buildings and we developed it aiming to connect smart technologies of the building, but more importantly to integrate people in the workplace. At Nordic Light Trio, it will support people working in the building users with activity based parking system, as well as with a virtual reception and mobile access. The all-in-one app will offer unique networking and social opportunities as well.

A spirit of true and honest partnership with surrounding communities, building strong and effective relationships with them is an integral part of each our project. For example Nordic Light Trio project’s 2,400 sqm multifunctional garden was designed to provide green, relaxing area open not only to tenants but to the neighbours, too.

NOTE: ALL ARTICLES MARKED INSIDE VIEW ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

Marcin Łapiński

Special Report

20 | 3

Continued from page 19 ▶ ▶ ▶ In the Budapest high street market the Párisi Udvar project by the hotel developer, Mellow Mood is scheduled to deliver 2,500 sqm of retail space on Ferenciek tere adjacent to the same developer’s hotel development. Close by, Horizon Development is developing another retail component at its Szervita Square mixeduse complex.

Refurbishment

Sréter actually argues that the market has reached a relatively high density level when it comes to supply, and refurbishment instead of pure development is becoming

www.bbj.hu

Budapest Business Journal | October 19 – November 4, 2018

more relevant. She cites the on-going refurbishment of Shopmark by Diófa and the extensive redevelopment of Campona

by CPI and the acquisition of Eurocenter by WING, which will undertake a value add strategy for the center.

“Hand-in-hand with the strong demand figures, investment activity remained strong during H1 and the overall volume invested in retail assets is likely to improve significantly with major schemes already under offer or currently being actively marketed,” CBRE says of the retail investment market.

In its first entry into the Hungarian market, the South African NEPI Rockcastle, a prolific investor/developer elsewhere in

Arena Plaza

45,000

66,000

Árkád

sqm

sqm

68,000 sqm

Allee

47,000 Mammut

sqm

44,000

MOM Park

30,000

sqm

sqm

BBJ infographic

the region, has acquired the 66,000 sqm Arena Mall and also purchased a

22-hectare development

Budapest’s Leading Shopping Centers WestEnd City Center

Arena Mall (formerly the Arena Plaza).

plot adjacent to it. The company has a policy of redeveloping and extending its acquisitions as a long-term investor and building owner.

Diófa, meanwhile, is scheduled to reopen the rebranded Shopmark shopping center later in the year after redevelopment of the earlier generation shopping center.

Outside of the capital, retail development is limited, although there are some small pipeline projects of less than 10,000 sqm, typically retail parks and strip malls. This is in contrast to other central European countries, which have thriving retail development markets with large retail projects being undertaken by established developers in regional cities.

“We are experiencing a more moderate retail expansion in most European

“A strong economic environment, expanding local and international brands and the need for fresh new schemes and retail concepts are all encouraging further market improvement.” markets in general. This is rather a result of the global changes experienced within the industry. Strengthening of e-commerce has resulted in an increased need for new, alternative concepts in shopping centers, targeting the renewal of the overall shopping experience,” concludes Szabó.

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Special Report | 21

Strong Guest Demand Attracting Hotel Developers Tourist visits to Hungary are continuing to rise with 5.5 million people visiting in the first half year, indicating a growth of more than 7% on the previous year.

Developers, investors and hotel operators therefore all see the potential for hotel development.

GARY J. MORRELL

Intercity Hotel

CBRE has traced a pipeline of around 18 three-, four- and five-star hotels under construction in Hungary, the clear majority of these in Budapest. However, due to the complex development process and a national labor shortage, scheduled delivery dates are slipping further into the future.

“Although we see a significant shift in planned completion dates throughout the country, construction activity has remained strong both in the capital and larger regional cities, with an expected delivery of circa 1,200 hotel rooms in ten individual schemes until the yearend,” CBRE says of the immediate hotel pipeline.

“Budapest is still the most preferred destination when looking at new development opportunities and eight out of ten new schemes under construction are indeed situated in the central areas of the

“The occupancy levels in many Central European markets are reaching peak levels and room rates are approaching those seen in Western Europe.” capital, comprising circa 980 modern hotel rooms,” the consultancy added.

With regard to the uncertainty over completion dates, CBRE has monitored around 2,700 rooms in nine hotels that are under construction, while the overall pipeline comprises around 4,000 rooms, of which 3,400 are in Budapest. The difficulty

of sourcing well-located development sites or properties suitable for redevelopment would seem to protect the market against saturation, with demand is still outpacing supply.

Central European capitals in Austria, Czech Republic, Hungary, Poland, and Slovakia have some of the highest hotel occupancy levels in Europe, according to Cushman & Wakefield.

Prague is ranked fifth among global hotel markets with the highest hotel occupancy in Europe for 2017. Budapest ranked tenth with an occupancy rate

of

77.5%

compared to Prague with 80% and Vienna with 75.3%.

“The occupancy levels in many Central European markets are reaching peak levels

and room rates are approaching those seen in Western Europe,” commented David Nath, head of CEE hospitality at Cushman & Wakefield on the figures.

Occupancy Down, RevPAR up However, after a long period of sustained growth in its occupancy rate, Budapest has registered a year-on-year decline to 74% for the first half of 2018.

That said, revenue per available room (RevPAR) continued to rise in the first half year by an average 5.4% year-onyear according to CBRE. In the next significant delivery at the top end of the Budapest hotel market, Continued on page 22 ▶ ▶ ▶

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Continued from page 21 ▶ ▶ ▶ the Hungary-based, Jordanian-owned hospitality developer Mellow Mood is due to complete the

110

room and suite

Párisi Udvar Hotel in the historic center of Budapest by the end of the year, according to its latest completion date. The HUF 13 billion project has been designed

by Archikon and a franchise agreement has been reached with Hyatt Unbound Collection.

The Art Deco Párizsi Udvar building dates back to the 19th century. The project has been under development for several years, reflecting the difficulties associated with the redevelopment of historic, listed building in the heritage protected center of the capital. Despite this, the large number of historic buildings in key central locations do provide the opportunity for redevelopment as boutique hotels, and

Budapest is regarded as part of a Central European “golden triangle” – the other points being Prague and Vienna – from a hotel investment perspective by many hotel investment analysts. Further positive hotel market data and the large pipeline is expected to provide opportunities for investors. thus provides development opportunities in central areas of the city where there is otherwise a limited provision of plots.

In the redevelopment of a UNESCOprotected historical building the fivestar W Hotel Budapest on Andrássy út

by QPR Properties (part of Constellation Holdings), has been at the planning stage for several years; the latest news is that it is now scheduled to deliver 160 rooms by 2022. The project will be the seventh W Hotel in Europe.

In another development on Andrássy út, the BDPST Group, owned by István Tiborcz, the son-in-law of Prime Minister

Viktor Orbán, is planning to redevelop Andrássy 16 into a boutique hotel.

High-end Pipeline

In another high-end pipeline project due for delivery this year, Accent Hotel Management is constructing the 4-5 star, 210-room Hilton Garden Inn Budapest in District VI. The Egyptian-owned Zenobia Hungary is due to deliver the 150-room, five-star Zenobia Palace Hotel in District VIII this year. Another top-end hotel, under reconstruction by the Turkish Özyer Group, Matild Palace, is scheduled to deliver the 130 room Marriott The Luxury Collection branded hotel in 2020.

In the medium level of the market, Bedori Investment is developing 184, three-star rooms at the 7,500 sqm Meininger Hotel Budapest in Csarnok tér, next to the Great Market Hall, in the third quarter of the year. The hotel will be operated by Meininger Hotels based on a

20

year lease.

In the mid-range segment of the hotel market, the German Deutsche

Parizsi Udvar Budapest Hotel

Top: Matild Palace Marriott The Luxury Collection.

Above: Dreschler Palace W Hotel Budapest.

Hospitality in conjunction with the B&L Group has acquired construction permits for the 300-room and six conference room, 16,000 sqm InterCity Hotel Budapest, its first CEE InterCity Hotel, at Keleti Railway Station.

The company has a policy of developing the brand at what it sees as key train stations and airport locations, and the Budapest project is scheduled to complete in 2020.

Budapest is regarded as part of a Central European “golden triangle” – the other points being Prague and Vienna – from a hotel investment perspective by many hotel investment analysts.

Further positive hotel market data and the large pipeline is expected to provide opportunities for investors.

“As the markets continue to recover and finance becomes more available in some of the markets, it is expected that hotel development activity will grow further. However, in Prague, Budapest and Vienna it is relatively difficult to find available land or vacant

properties in central locations that would allow for large hotel developments or conversions,” concluded Cushman & Wakefield.

Outside of the capital in Nyíregyháza (230 km northeast of Budapest) the 9,000 sqm Hotel Sóstó Spa & Resort is due to deliver 122, four-star rooms this year. In Gyöngyös (78 km northeast of the capital), the Avar Hotel by Aranypart 2000 is scheduled to deliver 98 rooms. Late last year, a deal was signed between the Marriott group and the Benedictine Archabbey of Pannonhalma (130 km west of Budapest) to convert a 300-year-old building complex at the UNESCO World Heritage site into a four-star hotel under the Autograph boutique brand, through an investment of HUF 5 billion.

The government will support the project with a HUF 2.95 bln grant, it was announced at the time.

The project was originally scheduled to open at Easter 2020, although that has since slipped somewhat.

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Special Report

News///in brief R E A L E S TAT E

Skanska Hungary Appoints Jakub Krenk as Branch Director

joint HUF 11.17 billion tender for the construction of the new Bozsik Stadium for soccer club Budapest Honvéd, hvg.hu reported. The subcontractor will be ZÁÉV Építőipari Zrt. The owner of Honvéd, George F. Hemingway said that the New Bozsik Stadium will accommodate 8,200 spectators and be ready for the second half of 2020. Original plans included investment costs of HUF 5 billion, but none of the applicants contracted at this price. Honvéd is the only club in NBI (the first division of Hungary’s National Championship) without a refurbished arena. Pharos 95 previously worked on the Pancho Arena, while West Hungária Bau Kft has worked several times with the prime minister’s son-in-law, István Tiborcz, and billionaire investor, Lőrinc Mészáros, hvg.hu noted.

BlackRock Inaugurates Innovation Center Jakub Krenk Skanska Hungary, the local branch of one of the world’s largest construction and project development groups, has announced the appointment of Jakub Krenk as its new branch director for Skanska Construction Romania and Hungary, according to a press release sent to the Budapest Business Journal.

Krenk has 11 years of experience in a variety of managing roles in Skanska, bringing expertise in building large office projects and coordinating diverse teams in Skanska’s Hungarian and Romanian construction unit.

“My main objective is to strengthen the well-experienced and motivated teams that Skanska Construction has in Hungary and in Romania,” said Krenk. “In doing so, I am glad to work alongside open and transparent people, who share the same values with Skanska. This means we can grow together, engaging people and bringing to life the amazing projects of Skanska.”

The new branch director has spent years working in the company’s various branches. Besides holding a number of project management positions, Krenk was also part of task forces related to operational efficiency, risk management, process mapping, and BIM. In Hungary, Skanska has two business streams under the same roof. Skanska Property Hungary is led, since January 2016, by Marcin Łapiński in the position of managing director, while Skanska Construction Hungary is now managed by Krenk in the position of branch director.

Winners of HUF 11.17 bln Stadium Tender Named Pharos 95 Sportpályaépítő Kft and West Hungária Bau Kft have won a

U.S.-based global investment management corporation BlackRock has inaugurated its innovation center in Budapest at the GTC White House building, azuzlet.hu reported. Rachel Lord, head of Europe, Middle East and Africa for BlackRock, said the office is the company’s second largest in Europe and already has 450 employees.

Minister of Foreign Affairs and Trade Péter Szijjártó welcomed the company for employing Hungarian professionals to develop its financial and business technology, its marketing strategy and its client data management system.

He also added that BlackRock and many other companies will present job opportunities in London and New York this year to encourage the relocation of more professionals to Hungary, and encourage Hungarians working abroad to return home, azuzlet.hu said.

Dynamic Growth at Duna House Real estate service provider Duna House saw good growth in its preliminary Q3 figures, portfolio. hu reported. The report reveals that the franchise real estate brokerage activities of Duna House maintained their 20% year-on-year growth, with quarterly commission volume reaching another all-time high of HUF 2.7 billion.

Intermediated loan volumes jumped by 55% compared to the same quarter of 2017, while commissions in Duna House’s office segment rose by 14% y.o.y. due to a more than 25% increase in Czech Republic and Hungary. The intermediated loans for Polish activities had total value of HUF 9.2 bln in the third quarter of 2018, jumping 85% from a year earlier. However the performance of the franchise real estate network in Poland decreased by 8% y.o.y., mainly driven by lower office numbers. In Hungary, the franchise real estate brokerage arm continued to see strong performance

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Budapest Business Journal | October 19 – November 4, 2018

in the third quarter, with commission volume reaching a record high after an increase of 25% y.o.y. through a combination of office numbers increasing from 160 to 165 and continuously improved commission per office figures. Brokered loan volumes reached record high levels of HUF 16 bln, up 41% from a year earlier, while intermediated home savings started increasing again and reached HUF 6.3 bln.

Pharmaherb Lays Cornerstone of Production Unit Family-owned herbal preparation maker Pharmaherb laid the cornerstone of a HUF 400 mln production unit in Bükkszentkereszt (197 km northeast of Budapest, near Miskolc), borsodhir.hu reports. Managing director and owner Zsuzsanna Lopes-Szabó said grant money is covering half of the investment cost, which will boost capacity to meet growing domestic and foreign demand. Pharmaherb will first build a 585 sqm warehouse, followed by production and packaging facilities and offices. The project is

set to finish in 2020. Pharmaherb employs 40 people at present, but headcount is expected to rise by 5-10 when the investment is completed, borsodhir.hu said.

Number of Malls, Hypermarkets Stagnates Since 2010 The number of shopping malls and hypermarkets has stagnated in Hungary since 2010, a summary of data released by the Central Statistical Office (KSH) shows. There were 121 shopping malls in the country at the end of 2017, just seven more than at the end of 2010.

The number of hypermarkets dropped by two to 164 during the same period.

In the capital alone there were 41 shopping centers and 22 hypermarkets at the end of last year. Under KSH’s nomenclature, hypermarkets must have an area of at least 3,000 sqm and shopping malls an area of at least 5,000 sqm. KSH noted that Hungary introduced a general ban on construction of all retail units with an area larger than 300 sqm from 2012; however, investors and business owners may apply for an exemption to the rule.

Pre-Fab Home Builders Brush Off Impact Of Vat Rise Hungarian pre-fabricated home builders expect a VAT increase for home construction to have little impact on their business, József Kárpáti, head of the prefab section of national building association EVOSZ, told Magyar Idők, portfolio.hu reported.

Lawmakers lowered the VAT rate on home construction to 5% in 2016, but the rate is set to revert to its former level of 27%, which is Hungary’s main VAT rate, from the beginning of 2020.

“We hope and assume that the end of the 5% VAT rate will not affect the pre-fab home market. The pickup in recent years has become perpetual, and a

continued upswing is really only limited by the labor shortage,” Kárpáti said.

He also noted that a European Union directive will require all new homes to be “nearly zeroenergy buildings” from 2021, a requirement that pre-fab homes can already meet.

Last year, pre-fab homes accounted for 15% of all homes constructed in Hungary. Such homes take three-to-four months to build and cost HUF 270,000300,000 per sqm. Adding solar panels or more efficient heating to the home can raise that cost to HUF 320,000-350,000 per sqm, portfolio.hu wrote.

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Budapest Business Journal | October 19 – November 4, 2018

PRESENTED CONTENT

Developing Alongside Growth and Ever Changing Challenges

tenants and repositioned it into one that is sought after by investors. It is a success story I am proud to have been a part of.

BBJ: You have come a long way from senior controller to finance director to chief financial officer. Comparing these, what are the skills that your current position requires that the previous roles did not?

ZL: As a senior controller, I mostly dealt with administrative tasks. I had to produce reports for the management, which was a huge challenge as I had to make consolidated reports right from the start.

But it was mainly dealing with numbers and data and following the instructions of my superior. The difference between a finance director, my previous post, and the CFO is the responsibilities I now have. Now as a member of Chief Executives, I became responsible for continuously setting up the best possible and most effective operational model and at the same time being part of most relevant strategical presentations such as negotiating bank financing, preparation of a potential IPO or structuring project disposals or acquisition. These tasks are qualifying me as a key personnel within the organization.

Zoltán Lehoczky, the CFO at Granit Polus Group, talks about the challenges and rewards of climbing the corporate ladder within a company that is both family owned and international in outlook.

“I did not choose this profession because I wanted to deal with numbers, it just happened. But I wouldn’t decide otherwise today. It suits me.”

ZSÓFIA VÉGH

BBJ: Looking at your CV, one instantly notes that it’s been a while since you last had a job interview. You have been with this company for more than 15 years; what made you stay?

Zoltán Lehoczky: “In-house” I filled a number of positions, as did the companies I have dealt with. This group is always in motion and, therefore, my job is very versatile and challenging. Many – the core of the company – have been working here for equally long. Fluctuation is relatively low.

BBJ: Have you been approached by other companies? If so, why did you turn them down?

ZL: As long as my job is challenging enough… here there is a working environment I know. I know how it works and what I can expect. In a new environment, there is always some level of uncertainty. Despite new challenges, I would be probably more willing to accept uncertainty. But since here we always have a goal to attain, this has never come up.

BBJ: What makes this workplace so special that you like working here?

Zoltán Lehoczky ZL: It is an interesting mixture: it can be regarded a family business but it has an international portfolio, which introduced a multicultural environment. Up-to-date, we still we have many operations abroad.

The combination of the two results in this environment where – due to the company’s family-led nature – one gets to have responsibilities/rights one would not at a

multinational firm. This structure allows for more rapid and effective work. I, too, experience this and I like it.

BBJ: Beyond providing an environment where you feel motivated and challenged, what are the core values that have led you to stick with this company?

ZL: It is the core activities, what it does, what its products are, that I can identify with. A property itself, the fact that we build something from scratch, that will remain there and become the part of a city or community for decades are values that, I believe, are not difficult to identify with.

A shopping mall in Arad could serve as a good example for the versatility of the jobs I deal with. We became owners in 2013 and have been operating and managing the property ever since. When we took it over from the previous owner, I became responsible for the management of the project, not only from a financial but also from a business aspect. It was a completely different set of tasks; we had to make competitive a project that, both from bankability and operational view, was losing ground. The challenge was to turn a distressed asset into a prosperous one. We did it: we filled the facility with international

BBJ: This is all on the technical side.

What do you find the most challenging aspect of being a leader?

ZL: I am responsible for a number of fields, and my jobs have shifted towards the management of these fields and people from the execution of different tasks. It is not easy as, up until today, I have had tasks that are more “manual”. Every Monday, I meet with the heads of every department where we discuss what’s going on. As a finance director, I was part of these meetings but was only responsible for my department. This current function involves more people management.

BBJ: Do you enjoy working with people?

ZL: I did not choose this profession because I wanted to deal with numbers, it just happened. But I wouldn’t decide otherwise today. It suits me.

BBJ: How would define your role of the CFO within the organization?

ZL: What the CEO or the owner expects from me is the management and understanding of all financial duties and the presentation of these to them. They want a person who is up-to-date with financial and administrative work, cash flow, financing, who can answer whatever question they may have. As long as this responsibility is fulfilled without a rupture, they don’t really wish to get involved. They want to receive a report and also some forecast on what is going to happen or on the financial consequences of their decisions, as in this way they can make a responsible decision. This is what they want and expect from a CFO. In terms of the administrative part of the job, they leave it up to me and don’t want to get involved. That this function is filled by someone capable of handling it all is what they want to know.

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Budapest Business Journal | October 19 – November 4, 2018

3 making it easier for me to be accepted by colleagues. I also have the knowledge of the terrain, and have a good network both in-house and at an international level.

BBJ: At what level are you involved in strategic decisions?

ZL: Except for the exclusive shareholder meetings, I am involved in all levels.

Finance is related to everything from business strategy to business structures, from MIS to corporate governance, from HR to marketing, to leasing, to any technical field.

BBJ: When you were appointed, what were the goals you set for yourself?

ZL: Obviously getting up the career ladder, receiving a package of benefits in line with the responsibilities. If it was about producing a third report in place of two, I would not find that challenging. It should be something that has a financial aspect to it but is bigger than that. It has to be something I have not dealt with. The planned stock market launch of the WestEnd City Center is something different, an unknown territory for us; we never stop learning. If we can achieve that, it is a challenge itself. Similarly, if we can turn the Central Park project into a commercially attractive project, that is the kind of challenge that I could hardly find at other companies.

BBJ: Did you take stock of the operations and how you could do them more effectively when you became a CFO? ZL: How to innovate or reform existing processes is something that arises on a daily basis. I am not a fan of the argument of sticking with the methods in use just

because they work. We keep changing everything in line with the changing needs of the shareholders and the management; we adjust operations accordingly. It may be that in a report some parts are no longer read by the management, so we propose to cut it or replace it. Nothing is set in stone, they listen to professional proposals and it is good that we a have chance to show them our ideas. At a multinational firm, one is bound to follow the set rules; changing them takes a lot more effort and there are fewer opportunities to do so.

Here we have much more freedom.

BBJ: What would you say makes you a credible leader?

ZL: I think I am credible because I climbed the corporate ladder from the inside; that is, I am not someone who was delegated to this post from outside. I worked at different fields from controlling to billing to cash flow management. With each task, I became more, I widened my knowledge and these efforts were recognized by promotion. I am sure this was absolutely necessary, and it is also

BBJ: What do you consider the biggest challenge you have faced so far?

ZL: Challenges always have to be compared to a specific position. As a senior controller, preparation of the consolidated IFRS financial statements of our group was a milestone. It is entirely different to audit a report as an accountant to compiling it.

Then I moved on and became a financial manager. Here we automated the billing system, which improved efficiency and increased our cash flow considerably. No bill could be left out – and I am talking about mass billing here – which is the key to allowing the money to come in.

From the not-so-remote past, I could talk of transactions. The shopping mall project in Arad was out of my comfort zone and it has become a real success story, even in the eyes of [founder and owner the late] Sándor Demján. It was different from a green-field investment, as we had to put it back on a positive route. We continue to own and operate that property.

Another transaction I would mention is when, at the end of last year, Sándor Demján bought out Peter Munk. The buyout involved the considerable movement of funds between parties. Furthermore, it was a group, not a sole company, all elements of which – from the banks, to the owner’s interests, to taxation – had to be managed.

Beyond these, I would add the refinancing of the WestEnd City Center shopping mall which took place in parallel with the above transaction. The amount

Special Report | 27 Brief Bio Zoltán Lehoczky, Chief Financial Officer Granit Polus Group As CFO of Granit Polus Group since 2015, Lehoczky leads a team of 25. He is responsible for group level financial administration: cash-flow management, controlling, budgeting, accounting, reporting, taxation, supporting shareholder transactions, M&A activities and exit strategies. He coordinates and supports project (re)financing activity. He is also responsible for asset management of a Romanian shopping center, supervising IT management, and coordinating HR administration.

From 2009-2015, Lehoczky was finance director of what was then known as TriGranit, having previously been finance manager from 2004. He joined the company in 2002 as senior controller.

He previously worked as a senior associate at PricewaterhouseCoopers from 2000-2002, and as a stock exchange analyst for OTP Securities from 1998-2000.

He was educated at the University of West-Hungary, Faculty of Economics, where he obtained a finance master’s degree in finance administration, and at the College of Finance and Accountancy, where he graduated with a bachelor’s degree in finance.

of the credit itself is unprecedented in Central Europe; basically we paid off the existing loan and took out a new one from a different circle. It was a huge challenge with five banks involved.

BBJ: What plans do you have for the future?

ZL: I have already touched on the two big ones we are focusing on: the stock market launch of WestEnd City Center and the Central Park project. Besides these, we have to prepare the annual budget, which will be presented to the board in December.

It has to be prepared at a consolidated level, which means we need to plan a lot of companies separately and present the final report to the leadership. It is not easy, but we have coped and managed it every year.

BBJ: How about your personal goals as a leader?

ZL: Our group keeps changing. Not long ago, our group was separated from TriGranit, which was bought by an investment fund. Since then we have consolidated our business and adjusted our operations. This poses a number of challenges as there are fields where we need to cut back on both financial and human resources. There are also fields where we have to expand and allocate capacities. Managing it all in a way that minimizes pain and causes the least conflict of interest is a huge challenge.

We may need to move people from one position to another; they may cope equally well in a new position. It is our goal to at least offer new possibilities for these people. It is a more human approach, but we also try and pay attention to this as well.

Special Report

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Budapest Business Journal | October 19 – November 4, 2018

Green Architecture Going Further

Counting all the three building types in total, building highly energy efficient buildings would

cost

Green is becoming a synonym for cool when it comes to architecture. But why is it important to build sustainable buildings? Does it offer a financial return? And how is Budapest doing when it comes to forward-thinking architecture? ÁGNES VINKOVITS

Designing buildings with low energy consumption, putting a bicycle storage next to it and placing some nice flower beds on the rooftop is not enough anymore for people with a progressive approach and commitment for the environment, as these things have become the bare minimum even in Hungary by now.

Green architecture has to look far beyond that. “Who will use the building in five, ten or 20 years’ time? What needs will they have? How will digitalization change our lives and how will it affect architecture?” These are only few of the questions that have to be asked when sitting down at the drawing table for a new project, according to Gergely Paulinyi of Paulinyi-Reith & Partners. Operating under the name of Mérték Group

up to

2018,

Paulinyi-Reith & Partners is a collection of engineering companies and has been playing a leading role in sustainable

USD 44.3 trillion,

Gergely Paulinyi (left) and András Reith. architecture in the region for more than three decades.

Meeting future and often unforeseen requirements can only come through interdisciplinary design activity, the architects say. The integrated design process (IDP) refers to a process of creative work where architects and engineers cooperate with social sciences experts and business professionals throughout the entire design process. Ideally, the developers and the future operators of the property also take part in the process from the first sketch on the paper.

International Benchmarks

Advanced Building and Urban Design (ABUD), a consultancy firm empowered by architects, engineers and researchers specialized in sustainable building and urban design. Co-headed by András Reith of Paulinyi-Reith & Partners, it takes part in numerous international research projects and, for example, examines user behavior in completed projects and compares them to international benchmarks. The result of this research helps identify possible future challenges.

It seems undisputed by HR experts that the generations now entering the labor market are usually more environmentally conscious than those who are currently in

decision-making positions at companies.

It is not only flexible working hours or a trendy office environment that might be essential nowadays to attract young talents, but in certain sectors successful employer branding also has to mean that the company is sufficiently green.

“On top of all the tools, sustainability has to go handin-hand with smart thinking, which has to have deep roots in society as well.”

“The competition for manpower is fierce and complex,” Szilvia Bősze, business development director at Paulinyi-Reith & Partners says, adding that it is even more typical in the CEE region where the workforce has a willingness to leave the country and try their luck abroad. It makes the situation more challenging for employers and, as such, for architects and property developers as well.

However, the results of “greenness” can and should be measured. Back in 2012, the Global Buildings Performance Network (GBPN), with input from ABUD, conducted a large-scale research project into the ecological and economic impact of the various energy efficiency measures on buildings worldwide. The study aimed to model the monetary benefits of ambitious building energy policies and analyzed the additional investment costs and the total energy cost savings.

Possible Savings

Budapest ONE Business Park.

To get a picture about the additional costs and the possible savings of going greener in 11 world regions in the period from 2005-2050, the study considered three different scenarios – deep, moderate and low efficiency – regarding the level of energy efficiency that is likely to be reached in the future.

The study found that, with the deep efficiency scenario, which is the best among the three, additional investment costs stay well below the cost savings in the case of single-family buildings, multi-family buildings as well as commercial and public buildings.

while they would save some USD 99.2 tln.

The study also concluded that implementing energy efficient solutions has the lowest average additional investment cost in multi-family buildings out of the three building types. However, the cost-effectiveness of the investment under the moderate scenario is much lower.

Yet, the total cumulative investment needs are only slightly higher than the energy costs savings. Additional costs exceed savings both in single-family buildings and commercial and public buildings. The total of all the three building types show USD 44.6 tln extra spending versus USD 42 tln savings.

Another project made for the European Union between 2015-2018, the so-called COMBI (Calculating and Operationalizing the Multiple Benefits of Energy Efficiency in Europe) quantified the non-energy benefits of different energy efficiency provisions in the EU-28 area. The project will finally provide consolidated data on the varying impacts of end-use energy efficiency such as emissions, resources, social welfare, macro-economy and the energy system and so will develop appropriate modelling approaches and tools.

“On top of all the tools, sustainability has to go hand-in-hand with smart thinking, which has to have deep roots in society as well,” Reith points out. However, despite some favorable changes and an apparently growing environmental consciousness, it is still hard to tell when people will realize that “it is not the smart lamps and the public Wi-Fi that makes a city smart.”

Paulinyi-Reith & Partners is eager to share its knowledge. “Our aim is to provide information that enables society to place this growing need on professional basis.”

Green City

“Sustainable design necessarily involves an urbanistic approach, too,” says András Reith. When designing for the future, buildings can no longer be viewed as single, separate projects but should be looked at on a larger, city-wide scale.

Considering that buildings have a renewal cycle of about 100 years, street structures of 500 years and settlements of about 1,000 years, environmentally conscious, sustainable and energy efficient city development is more crucial than ever, Budapest 2030, a long-term and integrated urban development concept approved by the Budapest Municipality in 2013 points out. Reith was one of the architects contributing to the comprehensive planning document, together with leading experts of social studies and economics.

“Budapest has to find its way to the future in a changing – meteorological, economic and political – climate” the city strategy says.

Eiffel Square Office Building

Kálvin Square Office Building

CityZen Office Building

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CityZen Irodaház Budapest, H-1134 Váci út 37.

Tel.: (+36 1) 225 0912 www.convergen-ce.com

30 | 3

Special Report

www.bbj.hu

Budapest Business Journal | October 19 – November 4, 2018

Skanska Completes Mill Park

Paulinyi-Reith & Partners Zrt., it aims to meet the WELL Building Standard and will be the developer’s first Hungarian project to be so awarded.

“For us wellbeing is not only about soft features, but also about the technology that eases the life of our occupiers,” said Łapiński.

Skanska Development has officially handed over the 36,000 sqm Mill Park office complex. The eighth Budapest office development project by the developer, located in District IX, is 90% let and has been purchased by Erste Real Estate.

“For us wellbeing is not only about soft features, but also about the technology that eases the life of our occupiers.”

The complex will provide a 2,400 sqm landscaped garden, bicycle storage and electric car charging facilities, completion is scheduled for the

second quarter of

2020.

GARY J. MORRELL

A major prelease was concluded with IT Services Hungary, who have established their Hungarian headquarters at the complex. This reflects the ability of Skanska and other developers at the high end of the Budapest office market to successfully develop, let and sell a project on to investors.

The LEED Gold certified office complex, designed by M-Teampannon Architecture and Engineering Ltd., provides 36,000 sqm GLA of office space on seven levels with a further three levels of underground parking, totaling 538 spaces. The complex also provides direct tram and bus transportation links although, unlike the Váci Corridor, there is no direct metro link.

Mill Park courtyard.

Marcin Łapiński, managing director of Skanska Property Hungary, sees office accommodation as a core element for companies in hiring and retaining staff in the current tight labor market. He sees one of the main elements of the project as the

Skanska completed the sale of Mill Park to Erste Real Estate Fund in August. This is the second deal between the Hungarian investment fund and Skanska in Budapest following the Nordic Light transaction in 2016.

5,500 sqm internal garden,

which takes up around half of the total one hectare area of the site. This provides more relaxed meeting areas for staff in a different environment, in addition to which the green area also houses an outside gym and swings. The complex further provides space for 200 bicycles in addition to showers, changing facilities and service facilities.

Strong Demand

With demand in the market continuing to be strong, Skanska has also started construction of the 14,000 sqm Nordic Light Trio, the third phase of its Nordic Light office complex in Váci Corridor. The latest EUR 29 million addition is already 80% prelet. Designed by

Property Systems Opens BSQ Business Center The German-owned Property Systems has opened its first New Work shared services office center (NWSO) in the Buda side of the city at the Buda Square Business Center in District III. GARY J. MORRELL

The three-phased BSQ Business Center project will provide 390 work stations in 3,500 sqm of space at the Buda Square property, an earlier generation 15,000 sqm office center has been acquired by investors and is undergoing renovation.

The deal was signed last December and the first phase of the BSQ Business Center provides 133 work stations.

“The developer creates the shell and core and we bring life into the building, bringing the hospitality,” explains Hubert Abt, CEO/principal of Property Systems. “We regard ourselves as an incubator in a building, as we invest an average of EUR 500 in setting up

each work station. The BSQ Business Center will include a terrace area and a connected pedestrian area,” he adds.

Meanwhile, the latest NWSO development on the Pest side of the river, the RM2 Business Center in Váci út, will deliver 3,500 sqm of space with 300-400 work stations.

Abt sees a necessity for a presence in the Váci Corridor as over 25% of the Budapest office market is now concentrated there.

Locations are Rare

“In Budapest, suitable locations are rare and we are also limited by the highclass “A” office rents. We do not see the

BSQ Business Center.

The first two phases, totaling 26,000 sqm, were delivered in 2016.

Skanska has acquired a further plot in District IX and will undertake development of a first 20,000 sqm phase of what it is calling Skandanavian Gardens once a prelease has been agreed. The building is located at the intersection of Könyves Kálmán körút and Üllői út, providing direct metro, road and tram access. Again, the complex is being designed to meet WELL sustainability accreditation standards.

Skanska has been operating in the Hungarian market for around 30 years and in Central Europe can also be found in Czech Republic, Poland and Romania. This year the Swedish developer has sold its Visionary office center in Prague and the first phase of Campus 6 in Bucharest to CA Immo, the transactions occurring within a two-month period. The Central Europe strategy of the company is to offer projects to the market shortly after completion, a policy that would seem to be working well for it in the strong office markets in Hungary and across the region.

possibility to raise prices on our tenant side to meet these rents, so in this way there is no way for a serviced office provider to make a profit at this level of rent,” adds Abt. The company has a strategy of establishing offices in a variety of locations for various different profile companies in Budapest and the wider area. It began its operations in 2013 with its first NWSO complex at the R70 office center in Rákóczi út.

The NWSO network has an

80%

plus occupation

rate in Budapest, with clients spread across market sectors including IT, commerce and production, finance, engineering/construction and even eight from the legal field.

The company is not only operating in Hungary. In Poland, Property Systems plans to have a portfolio of around ten business centers by the end of next year; in Prague there will be two or three by the end of 2019; and a further one or locations in Bucharest will be signed.

“The company is currently valued at EUR 10 million and we need around 18 months to bring a center to life, to an occupancy of 75-80% plus,” Abt notes.

S CE

FI

OF TO LE

T!

WOULD YOU LIKE TO ENJOY THIS PANORAMA?  BUDAPEST, HUNGARY

LEASABLE

AREA

37 000 m2 PLANNED

COMPLETION

2020

LEASING: mgs@trigranit.com | +36 70 197 9189

office.hungary@cbre.com

www.milleniumgardens.hu

32 | 3

Special Report

www.bbj.hu

Budapest Business Journal | October 19 – November 4, 2018

Asset management companies

17,810

Ÿ

Infopark

155,000

Balance Hall, Gateway, Airport City Logistic Park

Ÿ

Arena Mall, Mammut, Park Centers, Nordic Light, Váci Corner, NIPÜF ipari parkok, Fashion Street

Ÿ

Bartók Udvar office complex, Polgár Indrustial Park, Karcag Indrustial Park



  



–

–

–

100

–

–

poRtFolio divseRsiFiCation aCCoRding to oWneRsHip stRuCtuRe (%)

–

addRess pHone Fax email

100

WING Zrt. (49) STRABAG Property and Facility Services GmbH (51)

lászló vágó Gyula Jászai Gábor Landi

1095 Budapest, Máriássy utca 7.

(1) 299-2150 (1) 210-0095 info@strabag-pfs.hu

–

– CPI Property Group (100)

mátyás gereben – Bea Déri

1138 Budapest, Dunavirág utca 2–6.

(1) 225-6600 (1) 225-6601 hungary@cpipg.com

Ÿ

– (100)

gergely pados Zsuzsanna Kiss Orsolya Németh

1052 Budapest, Deák Ferenc utca 5.

(1) 268-1288 – info.budapest@ cushwake.com

–

Székely family (100) –

ádám székely Gábor Nagy Zsuzsanna Makkai

1115 Budapest, Bartók Béla út 105–113.

(1) 481-4530 (1) 481-4530 info@infogroup.hu

noah m. steinberg – –

1095 Budapest, Máriássy utca 7.

(1) 451-4760 (1) 451-4289 info@wing.hu

oWned by Clients

oWn pRopeRty

ConstRuCtion site

Hotel

oFFiCe

industRial

otHeR

Retail

aCCounting seRviCes, ContRolling

pRojeCt management

ReCeivables management

tenant management

poRtFolio, pRopeRty and Real estate management

main pRopeRties managed in H1, 2018

total value oF pRopeRty managed in HungaRy in 2017 (HuF mln)

net Revenue FRom asset management in 2017 (HuF mln)

Ÿ

poRtFolio diveRsiFiCation aCCoRding to type oF pRopeRty managed (%)

top loCal exeCutive CFo maRketing diReCtoR

stRabag pRopeRty and FaCility seRviCes ZRt.

seRviCes oFFeRed in pRopeRty management

oWneRsHip (%) HungaRian non-HungaRian

1

Company Website

total net Revenue in 2017 (HuF mln)

Rank

Ranked by total net revenue

www.strabag-pfs.hu

Cpi HungaRy kFt. www.cpigroup.hu

2,270

2

3

CusHman & WakeField nemZetköZi ingatlan tanáCsadó kFt.

2,132

1,295

Ÿ

www.cushmanwakefield.hu

4

inFogRoup management kFt. www.infogroup.hu

5

Wing ZRt.

6

Ca immo HungaRy kFt.

7

www.wing.hu

www.caimmo.com

addval kFt.

www.addvalgroup.com

1,594

1,345

556

534

Ÿ

Ÿ

Ÿ

Ÿ

Ericsson HQ, ibis Styles Budapest Airport Hotel, Login Business Park, Studium office build187,000 ing, Honvéd Center, Máriássy Ház, Agria Park, East Gate Business, Park, MOM Park

Ÿ

Ÿ

Ÿ

Central Udvar office building, Corner6, Business Center, Ausztria House, Ilka Corner office building, Allee, Üllő Airport Logistics Centre, Goodman Kecskeméti Logistics center













  

  

  

  

  



–



–



–

–

–

–

42.80 9.90 43.50 3.80

28

–

26

50

46

50

–

–

–

–

–

100

Ÿ

100



–

22

48

28

2

–

100

–

Wingholding Zrt. (99), other (1) –



–

1

–

99

–

–

100

–

– CA Immobilien Anlagen AG (100)

ede gulyás – –

1074 Budapest, Rákóczi út 70–72.

(1) 501-2800 (1) 501-2801 office@caimmo.hu

100

AddVal Kft. (100) –

Hubert mühringer Ágnes Horváth Rita Szabó

1077 Budapest, Wesselényi utca 16.

(1) 479-6020 (1) 479-6029 office@ addvalgroup.com



–

10

30

60

–

–

–

www.gamma-am.hu

Ÿ

Ÿ

Ÿ

NR

www.immofinanz.com

m7 Real estate NR HungaRy kFt. www.m7re.eu/hu

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

–

–

–

Ÿ





–



–

–

100

–

– balázs magyar M7 Real Estate – Europe Limited – (100)

–

– CEE PropertyInvestment Immobilien GmbH (100)

géza barabás Tímea Földi –

1051 Budapest, Bajcsy-Zsilinszky út 12.

(1) 429-5050 (1) 429-5055 office@simmoag.hu

–

Ÿ Ÿ

árpád török Agnieszka Turowska Dániel Pazsitzky

1132 Budapest, Váci út 30.

(1) 456-6200 (1) 456-6295 info@trigranit.com

oWned by Clients

95

–

1134 Budapest, Váci út 45.

(1) 236-0435 (1) 236-0436 offices_hu@ immofinanz.com

oWn pRopeRty

5

–

–

viktor nagy, ottó vörös – Zita KovácsBertók

ConstRuCtion site

–

  

100

– Immofinanz AG (100)

Hotel

–

Millennium Gardens, Bonarka for Business



1093 Budapest, Közraktár utca 30.

(1) 382-7560 (1) 382-7570 office@gamma-am.hu

oFFiCe

–

Ÿ

tibor gasser – –

industRial

–

–

100

Individuals (100) –

Retail

–

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

www.trigranit.com

Ÿ

45

Ÿ

tRigRanit NR

–



www.simmoag.hu

Ÿ

55



s immo apm HungaRy kFt. NR



Aerozone Business Park, Liget Center, Csillagvár Shopping Center, Gödöllő Logistics Park, Eger Business Park 2

1134 Budapest, Váci út 37.

(1) 225-0912 (1) 375-0445 csaba.zeley@ convergen-ce.com

100

  



alan a. vincent – –

–

Rental, ownership contacts

Ÿ

immoFinanZ seRviCes HungaRy kFt.

  

100

(45) Alan A. Vincent (55)

–

Ÿ

Árpád Center, myhive Átrium Park, Central Business Center, Globe 3, myhive Thirteen (Globe), myhive Thirteen (Xenter), Optima A, myhive Greenpoint 7, myhive Haller Gardens, Office Campus, Szépvölgyi Business Park, 14 STOP SHOPs in Hungary



1123 Budapest, Alkotás utca 53.

(1) 785-4985 – info@celand.hu

–

Real estate asset management, rental, economic and financial building management, real estate management

Ÿ

Zoltán balla Anita Molnár-Széll Csaba Széll

100



  

Individuals (100) –

–

Business planning and execution, Corporate Financial Asset Property Management

Infopark D, Riverpark, Andrássy 93, Andrássy 100, K6, Merkur Palota, Art'otel



addRess pHone Fax email

–

Rental, ownership representation, project management, financial planning

98,000

top loCal exeCutive CFo maRketing diReCtoR

gamma NR pRopeRties kFt.

Ÿ

poRtFolio divseRsiFiCation aCCoRding to oWneRsHip stRuCtuRe (%)

oWneRsHip (%) HungaRian non-HungaRian

NR

otHeR

–

  

Eiffel Square Office building, Kálvin Square Office building, CityZen Offices, M7 Tárnok Business Park

ConveRgenCe

www.convergen-ce.com



poRtFolio diveRsiFiCation aCCoRding to type oF pRopeRty managed (%)

aCCounting seRviCes, ContRolling

Laurus

pRojeCt management

Ÿ

ReCeivables management

Ÿ

tenant management

main pRopeRties managed in H1, 2018

85

seRviCes oFFeRed in pRopeRty management poRtFolio, pRopeRty and Real estate management

total value oF pRopeRty managed in HungaRy in 2017 (HuF mln)

www.celand.hu

net Revenue FRom asset management in 2017 (HuF mln)

Ce land management kFt.

total net Revenue in 2017 (HuF mln)

Rank 8

Company Website

Special Report | 33

3

www.bbj.hu

Budapest Business Journal | October 19 – November 4, 2018

–

–

7

–

1

–

–

–

99

–

80.50 19.50

58

100

35

–

–

–

–

–

–

–

100

100

1013 Budapest, Krisztina körút 32.

(1) 848-0671 – info@m7re.cz

34 | 3

Special Report

www.bbj.hu

Budapest Business Journal | October 19 – November 4, 2018

Real estate developers(1) Ranked by total net revenue

Budapest One Business Park, Advance Tower 1, Advance Tower 2, Corvin Technology Park, Etele Plaza

Corvin Promenade, Nokia Skypark (2016), Vision Towers (2015), Corvin Corner (2015), Corvin Towers (2010), Corvin ONE (2008)

EPAM, KPMG, Nokia, P&G, Provident, Teva

Péter Futó (50), Gábor Futó (50) –

tibor tatár Pál Darida Tímea Szili

1082 Budapest, Futó utca 47–53.

(1) 266-2181 (1) 688-5499 info@futureal.hu

  – –   –   

Bank Center (1995) Pólus City Center, Budapest (1996) WestEnd City Center, Budapest (1999) WestEnd Hilton Budapest City (2000) Nemzeti Színház (2002) Művészetek Palotája (2005) Atrium Mall, Arad, Románia (2008), Arena Centar Zagreb (2010)

Ÿ

Ÿ Ÿ

gyula ágházi Zoltán Lehoczky Ernő Koncz

1062 Budapest, Váci út 3.

(1) 374-6500 (1) 374-6604 info@ granitpolus.com

   –    –  

Gateway Office Park (Budapest, 2018) Quadra (Budapest, 2017) Balance Loft (Budapest, 2017) Balance Building (Budapest, 2016), Quadrio (Prága, 2014), Europeum (Budapest, 2011), Courtyard by Marriott (Budapest, 2010), Airport City Logistic Park (Budapest, 2008)

Ÿ

– CPI Property Group (100)

mátyás gereben – Bea Déri

1138 Budapest, Dunavirág utca 2–6.

(1) 225-6600 (1) 225-6601 hungary@cpipg.com

 – – –    –  

Bartók Udvar office complex, Tiszaújváros BTS logistics hall, Polgár Industrial Park, Karcag Industrial Park, Club Velence Residential and Holiday Park

Jabil, Toyota, Tsusho, Sona, EUTAF, Tigra, Multicontact, Ness Hungary

Székely family (100) –

ádám székely Gábor Nagy Zsuzsanna Makkai

1115 Budapest, Bartók Béla út 105–113.

(1) 481-4530 (1) 481-4530 info@infogroup.hu

 – – –  – – – – 

Sasad Liget 1. phase (2008), Sasad Liget 2. phase (2010), Sasad Liget 3. phase (2018), Garibaldi Residence (2009), Audi Logistics (2014), Parkway Offices (2009), Broadway Residence (2017)

Ÿ

Tibor Nagygyörgy (100) –

tibor nagygyörgy Dániel Gajdos Eszter Sallai

1023 Budapest, Lajos utca 28–32.

(1) 225-2525 (1) 225-2521 info@biggeorge.hu

  –    –  

Ericsson House (2017), ibis Styles Budapest Airport Hotel (2017), East Gate Business Park B2 hall (2017), E.ON székház (2016), A66 irodaház (2015), Hegyvidék Bevásárlóközpont (2012), Dél-pesti Üzleti Park F csarnok (2012), Allianz székház (2010), Millenáris Irodaházak (2009), MTV székház (2009)

Ÿ

Wingholding Zrt. (99), other (1) –

noah m. steinberg – –

1095 Budapest, Máriássy utca 7.

(1) 451-4760 (1) 451-4289 info@wing.hu

Ÿ

(60) (40)

dr. gergely árendás – –

1117 Budapest, Kopaszi gát 5.

(21) 221-0081 – iroda@ propertymarket.hu

Ÿ

Ÿ Ÿ

Robert snow, yovav Carmi Ariel Ferstman Borbála Gedai

1139 Budapest, Váci út 81.

(1) 412-3680 (1) 412-3681 gtchungary@gtc.hu

Ÿ

– STRABAG Real Estate GmbH (100)

Rudolf Riedl, sonja Wertitsch – –

1027 Budapest, Ganz utca 16.

(1) 346-6400 (1) 346-6448 real-estate-hu@ strabag.com

asset management

Condominium opeRation

Real estate utilization

ConstRuCtion

pRojeCt management

Real estate bRokeRage

        –

–

built-to-suit development

addRess pHone Fax email

Real estate investment

majoR Clients in 2017

poRtFolio management

pReviously Completed ReFeRenCe pRojeCts, yeaR oF Completion

FaCility management

publiC building

industRial

inFRastRuCtuRal

   – – –

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

top loCal exeCutive CFo maRketing diReCtoR

www.futureal.hu

3,204

aCtivities and seRviCes oWneRsHip (%) HungaRian non-HungaRian

1

FutuReal management szolgáltató kFt.

Residential

CommeRCial

oFFiCe

Company Website

total net Revenue in 2017 (HuF mln)

Rank

types oF investment

gRánit-pólus management zRt. www.granitpolus.com

3,043

2

   – – 

–

Cpi HungaRy kFt. www.cpigroup.hu

2,270

3

4

5

inFogRoup management kFt. www.infogroup.hu

bn Ingatlanfejlesztő zRt.

1,594

1,391

  – – 

Balance Hall, 2019 Q4, – Airport Logistic Park, phase E-F, 2019 Q2

   –  –

Bartók Udvar II. (1. phase) - 4 bln Ft, 2018 Q4

   –  –

Sasad Liget 4. phase (2019), Sasad Liget 5. phase (2019), Sasad Liget 6. phase (2020), Emerald Residence (2019), Németvölgyi Residence 1. phase (2019), Németvölgyi Residence 2. phase (2020)

www.biggeorgeproperty.hu

6

Wing zRt.

www.wing.hu

1,345

     

Magyar Telekom HQ (50 mrd Ft, 2018), Skylight CITY (2017), evosoft HQ (2021), Wizz Air education center (2018)

–

pRopeRty maRket Ingatlanfejlesztő kFt. 7

8

www.propertymarket.hu

gtC magyaRoRszág Ingatlanfejlesztő zRt.

749

264

    – –

 – – – – –

BudaPart

Ÿ

www.gtc.hu

9

stRabag Real estate kFt. www.strabag.com

220

   –  –

Ÿ

 –  – –   –  

–

–

–

–

–

  – 

BudaPart

Center Point office building - 2003;2006, Spiral office building - 2008, GTC Metro office building - 2010, GTC White House office building – - 2018, Riverside Apartment House - 2004, Riverloft office building and apartment house 2007, Sasad Resort residential park - 2008; 2010

 –  – – –  –  –

Ÿ

–

–

–

–

–

atenoR HungaRy kFt. www.vacigreens.hu NR

Ÿ

budapesti ingatlan Hasznosítási és NR Fejlesztési nyRt.

Ÿ

 – – – – –

   – – –

Ÿ

Váci Greens (2020, Q1-Q2), Aréna Business Campus (2019 Q4-2020 Q1)

Ÿ

–

–

–

–

–

–

–

–

–

asset management

Condominium opeRation

Real estate bRokeRage

built-to-suit development

Real estate utilization

Real estate investment

ConstRuCtion

pRojeCt management

poRtFolio management

FaCility management

publiC building

industRial

–

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

 – –  –

   – 

NR

eCe pRojektmanagement budapest kFt.

Ÿ

Ÿ

  – –  –

–



–

–

–

–

Ÿ

Ÿ

NR

Ÿ

pRologis HungaRy

NR management kFt. www.prologiscee.com

Ÿ

skanska magyaRoRszág ingatlan kFt.

NR www.skanska.hu

Ÿ

     

–

–

–

–

 –

  – – – –

tRigRanit Fejlesztési kFt. NR

www.trigranit.com

WHite staR Real NR estate kFt.

Ÿ

www.whitestar-realestate.hu

Ÿ

  – – – –

     –

–

Ÿ

Millennium Gardens (2020)

Ÿ

dominique prince, philippe marie l. van der beken – –

1123 Budapest, Alkotás utca 53.

(1) 336-2270 (1) 336-2270 info-hu@ goodman.com

– Atenor S.A. (100)

zoltán borbély – –

1138 Budapest, Váci út 117–119.

(1) 785-5208 – info@atenor.hu

Ÿ

Pio21 Kft. (45.26), other (28,45) BFIN Asset Management AG (26.29)

gábor sajgál Róbert Hrabovszki Enikő Janák

1033 Budapest, Polgár utca 8–10.

(1) 332-2200 (1) 332-2200 bif@bif.hu

(45) Alan A. Vincent (55)

alan a. vincent – –

1134 Budapest, Váci út 37.

(1) 225-0912 (1) 375-0445 csaba.zeley@ convergen-ce.com

   –    –  

Eiffel Square office building (2010), City Point 9 City Logistics Center (2010), Park One office building, Bratislava (2007), CityZen office building (2016)

Ÿ

Árkád 1. Budapest, Örs vezér tere, (2002) Árkád Pécs, (2004), Árkád Győr, (2006), Debrecen Fórum, (2009), Árkád Szeged, (2011), Árkád 2. Budapest, Örs vezér tere, (2013)

Interspar, Media Markt, Zara, H&M, C&A, New Yorker, Hervis, Müller, Bershka, Pull&Bear, Stradivarius, Van Graaf, Reserved

Christoph augustin, michael Werner eckert, – jens jäpel, dr.

ECE Projektnóra kismarci, management gergely lászló, GmbH & Co. KG györgyné (100) szilvásy Györgyné Szilvásy –

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

Ÿ

attila kovács Individuals (100) – – Ildikó Rézműves

1052 Budapest, Türr István utca 8.

(1) 473-1209 (1) 473-1210 info@ horizondevelopment.hu



–



–

–



–

–



–

HoRizon development kFt.

Szervita Square Building (2020), Luxury Lifestyle Hotel

Ÿ

– Goodman Europe (Lux) S.á.r.l. (96.67), Goodman Belgium N.V (3.33)

 – – – –  – –  –

www.ece.com

www.horizondevelopment.hu

addRess pHone Fax email

Harsánylejtő Kertváros site development phase no. 1 and 2, 2nd phase finished in 2017

ConveRgenCe NR

Ÿ

majoR Clients in 2017

Váci Greens A, B, C, D building GE, Givaudan, – 80,000 m2. Openings: 2013 – Unilever, Accen(A), 2015 (C), 2016 (B), 2018 ture, Aon, Atos (D)

www.bif.hu

www.convergen-ce.com

pReviously Completed ReFeRenCe pRojeCts, yeaR oF Completion

top loCal exeCutive CFo maRketing diReCtoR

213

www.goodman.com

aCtivities and seRviCes oWneRsHip (%) HungaRian non-HungaRian

goodman 10 HungaRy kFt.

inFRastRuCtuRal

oFFiCe

Residential

CommeRCial

total net Revenue in 2017 (HuF mln)

Rank

types oF investment

Company Website

Special Report | 35

3

www.bbj.hu

Budapest Business Journal | October 19 – November 4, 2018

       –  

 –  – – –  –  –

 –    –  –  –

       –  

       –  

Eiffel Square (2011), Eiffel Palace (2014), Váci1 (2016), Promenade Gardens (2018)

Prologis Park Budapest-Sziget (DC6 2014), Prologis Park Budapest-Sziget (DC7 2016), Prologis Park Budapest-Sziget (DC8 2017)

Ÿ

1095 Budapest, Lechner Ödön fasor 7.

(1) 577-7700 (1) 577-7701 info-hu@ prologis.com

Ÿ

– Real estate funds (100)

lászló kemenes – Marta Tesiorowska

Ÿ

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

marcin Łapiński – –

1133 Budapest, Váci út 96–98.

(1) 382-9100 (1) 382-9129 property@ skanska.hu

Ÿ Ÿ

árpád török Agnieszka Turowska Dániel Pazsitzky

1132 Budapest, Váci út 30.

(1) 456-6200 (1) 456-6295 info@trigranit.com

– White Star Real Estate LLC (100)

jános gárdai Marietta Biczó Edina Magó

1117 Budapest, Budafoki út 91–93.

(1) 382-5100 (1) 382-5101 hu.office@ whitestar-realestate.com

Bonarka for Business building A-G, Kraków (2011-2017), K&H Bank Headquarters, Budapest (2011), Bonarka City Center, Euroclear, Krakkó (2009), Millennium Alexander Tower I., Budapest (2006), Mann Solutions, Millennium Tower II., Budapest GlobalLogic, (2008), Millennium Tower III., Herbalife, AT&T, Budapest (2008), Lakeside Lufthansa Park, Pozsony (2008), Palace of Arts, Budapest (2005), Westend City Center, Budapest (1999) Markó Irodák 9 (2018), IP AIG & Partners, West office building (2009), Heitman, GLL, The Quadrum office building Immofinanz, (2008), Haller Kert office Corpus Sireo, building (2008), Market Central Ferihegy retail park (2007), M1 DEKA Immobilien, Business Park (2006), Airport Patrizia, Logicor, Business Park (2004), Alkotás Erste Alapkezelő Point office building (2002), Zrt. Infopark (1999)

notes: (1) The list includes companies that are active in office, industrial, logistics or commercial real estate development.

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

This list was compiled from responses to questionnaires received by October 17, 2018 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.

4

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the Earth, and that a genetically modified human/Archon hybrid race of shapeshifting reptilians, also known as the ‘Babylonian Brotherhood’, the Illuminati, or the ‘elite’, manipulate global events to keep humans in a constant state of fear, so the Archons can feed off the ‘negative energy’.”

The only way to save ourselves is to wake up to the truth, whatever that is, and fill our hearts with love.

More recently, Icke’s beliefs have expanded to take in the idea that Silicon Valley is, as he put it in an answer to one of my questions, a “devil’s playground”. Here, “The same corporations that are just the most advanced surveillance operation in known human history… [are] at the cutting edge of the artificial intelligence agenda.

To hijack the human mind with AI.” I’d suggest that here you have the essence of Icke’s appeal. The New Age aspects of his belief system appeal to people like me and super-smart comedian, actor, writer, activist and semi-guru Russell Brand. Brand told The Guardian newspaper he thinks Icke is great, “though he loses me when it comes to the lizards”.

Learning From a Controversial Conspiracy Theorist When I noticed that English writer and public speaker David Icke would be bringing his “Everything You Need To Know” tour to Budapest on October 19, I was surprised.

One of the good things about encountering Icke is that it’s made me conscious of my need to be transparent. After all, as “the Hungarian media”, I have enormous power and the obligation to wield this for the good of all humankind.

DAVID HOLZER

I had vague memories of Icke being made to appear ridiculous back in the late 1990s for claiming that the British royal family were secretly reptiles. I thought he was languishing in the hell reserved for celebrities who make fools of themselves. I was wrong. Icke has become a phenomenon.

Describing Icke as simply a writer and public speaker doesn’t really do him justice. He says that online giants Google, Facebook and Twitter are “merely manipulating the population to silence itself”. But he and the people he works with are expert online marketers.

Icke was happy to grant my request for an interview. The deal was that he would record answers to my questions and send me the audio. I thought this was to make sure I didn’t misrepresent him.

Icke was a journalist and has good reason not to trust the media.

But when I started sniffing around on Icke’s website, I realized there was more to it than that. I noticed a link to a video titled “David Icke answers questions from the Hungarian media” uploaded to YouTube on October 8, around the time I received the audio.

I am “the Hungarian media”.

In just three days, the video had been viewed 18,275 times and received

302

comments.

Before we get into speculating why Icke enjoys such support, please allow me to offer a brief biography.

Enormous Power

I’ll freely admit that I’m basing this on Icke’s Wikipedia entry. One of the good things about encountering Icke is that it’s made me conscious of my need to be transparent. After all, as “the Hungarian media”, I have

David Icke enormous power and the obligation to wield this for the good of all humankind.

Icke was a professional soccer goalkeeper who became a British TV sports presenter.

In

1990,

when he was working for the BBC and also a spokesman for the Green Party, he was apparently told by a psychic that he’d been placed on Earth for a purpose and would start to receive messages from the spirit world.

Announcing that he was a “Son of the Godhead”, Icke predicted that Earth would soon be devastated by tidal waves and earthquakes. When he repeated this on national TV, he became a laughing stock.

Since then, Icke has written book after book. He’s developed his conspiracy theories, which include endorsing the

notorious and vile anti-Semitic forgery The Protocols of the Elders of Zion. This led to his then publisher refusing to work with him any longer. Now self-published, he’s been translated into 11 languages.

Icke’s lectures around the world often sell out. Advance publicity for the “Everything You Need To Know” tour promises that he’ll speak for four hours.

Icke’s stamina is not in question. But what does he actually believe?

Good Vibrations

According to his Wikipedia entry, “at the heart of Icke’s theories lies the idea that the universe is made up of ‘vibrational’ energy, and consists of an infinite number of dimensions that share the same space”.

So far, so New Age. Icke also believes that “an interdimensional race of reptilian beings called the Archons (or Anunnaki), have hijacked

The “inter-dimensional race of reptilian beings” bit brings in the kind of person who would swallow Scientology whole. And the anti-tech, pro-freedom of speech angle is designed to press a button for those of us who loath our obeisance to the Googles of this world.

Unfortunately, Icke’s broad appeal has led a surprising number of media commentators to regard him as a harmless eccentric. He is not. Nor are many of his supporters.

Now, you might be wondering when I’m going to get to the interview. I’m not.

This is not a cop-out or a sinister plot to silence Icke. It took me several tedious hours to transcribe Icke’s answers to my questions. Apart from references

to

9/11,

the U.S. Pentagon’s Defense Advanced Research Projects Agency (DARPA) and the devils of the Internet, he didn’t say anything remotely controversial. Sadly.

To listen to Icke’s answers to my questions go to www.davidicke. com and look for “David Icke answers questions from the Hungarian media”. He’s in Budapest on October 19, but it seems that the only way you can find out where he’s speaking is if you book a ticket. I wonder why.

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Budapest Business Journal | October 19 – November 4, 2018

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A Lighter Villány Begins to Venture Forth Villány, for so long the darling of Hungarian red winemaking, has seen cheeky upstarts like the fruit-forward Szekszárd threatening its crown. How will it respond?

ROBERT SMYTH

Pretentious wine critics like myself are forever bashing the big, muscular wines of Villány for being too old school – overly alcoholic, overripe, over-extracted and too tannic, but as long as people like them that way, then who are we to tell people what they should drink?

It was evident at the Villányi Aranykóstoló tasting, held at the Stefánia Palota in Budapest on October 12, that bigger is still better for many, with lots of people lapping up wines like Bock Magnifico 2011, and loving it. Indeed, it is not just Hungarians who like a robust style – I guide Americans through the region and

Despite long having lurked in the shadows in Villány, Kékfrankos, Hungary’s number one grape in terms of land under vine, is now making some very nice wine down there. many are very impressed by the power of the wines and the prices, which they find offer plenty of bang for the buck, with the wines generally much cheaper than their equivalents from Napa Valley.

However, the aforementioned Magnifico (100% Merlot) does cost a handsome HUF 19,500 (from Bortársaság), and even up to HUF 17,900 from Bock’s own webshop. Incidentally, when I drop in at Bock, I can’t resist a glass of its light but flavorsome Kadarka 2016 (HUF 2,950 from Bortársaság) with its rosehip notes and zesty palate – which shows that this Villány heavyweight can go down a couple of weight divisions and still make wines with suitable aplomb.

At the Villányi Aranykóstoló tasting, I found the kind of the elegantly restrained style that I crave in Péter Bakonyi’s wines.

His Cabernet Franc Makár 2016 from the Villány sub-region of Siklós had the kind

of tension, freshness and balance that I find missing in many Villány wines, while it was still sufficiently concentrated. It also had that leafy note characteristic of Cab Franc, as well as layers of black fruit with just a touch of oak. It feels that the grapes were picked before they got too ripe.

The larger part was aged in used French barrels while the smaller part saw no oak at all and was aged in tanks for eight months. This combination of oak and stainless steel really works and helps the grape put its best foot forward. Now that’s what I call great value at HUF 3,950 from Bortársaság. When Michael Broadbent, the British wine critic, writer and auctioneer visited Villány, he proclaimed that Cabernet Franc had found its natural home there and the region has created the Villányi Franc brand accordingly, but I do not often find the grape’s characteristics in the wines. I most certainly found this one to be varietally pure, however.

Open-minded Vintner

Bakonyi, a young and open-minded winemaker, also showed a pre-release sample of his Kékfrankos 2017, which was made only in the tank, enabling the freshness and fruitiness to come to the fore. It also has enough depth without the oak. It is expected to cost under HUF 3,000 a bottle when it hits the shelves and, if so, will again be cracking value.

Despite long having lurked in the shadows in Villány, Kékfrankos, Hungary’s number one grape in terms of land under vine, is now making some very nice wine down there.

Another good one comes from Vylyan.

Bakonyi is also the viticulturist for Jackfall, which is one of the 13 wineries involved in Villányi REDy, a new brand initiative of light and fruity wine (starting with the 2017 vintage) specifically tailored to appeal to Generation Y, as an alternative to the more robust, full-bodied, tannic wines for which Villány is noted. I’m sure there are many from Generation X, as well as from the Baby Boomers and even beyond who will appreciate wines that slip down with ease, or as they say in the trade these days – wines with good drinkability.

The REDy wines are blends based on a backbone of the Portugieser grape, which is Villány’s early-ripening, high-

yielding cash-cow of a grape that allows winemakers to get wines on the market shortly following the vintage.

In REDy, the 50% or more of Portugieser is fleshed out with the likes of Blauburger, Zweigelt, Kékfrankos and Kadarka. Blauburger and Zweigelt can be considered almost local – both being parented by the Austro-Hungarian Blaufränkish (Kékfrankos) grape and crossed in Austria in the early 1920s by Professor Fritz Zweigelt at the Teaching and Research Center for Viticulture and Horticulture (LFZ) in Klosterneuburg, close to Vienna. Blaufränkish was crossed with Portugieser to create Blauburger and with St. Laurent to bring Zweigelt into existence – the latter being infinitely more successful – supplanting Blaufränkish to become Austria’s most planted red wine grape today.

Jackfall and Heumann’s REDy Kollab 2017, which was featured in the Budapest Business Journal issue 16 (September 7-20), is the result of a cooperation between the two Villány wineries, and was the pick of the bunch for me among the wines that I sampled (although I didn’t get to try Vylan’s offering). Kollab is a blend of 51% Portugieser (provided by Jackfall), 35% Kekfrankos and 14% Kadarka (both grown by Heumann), vinified only in the tank (like most REDy wines).

Maczkó Pincészet’s REDy 2017 was also impressive – 60% Portugieser, 30% Blauburger and 10% Cabernet Franc, with just the Cabernet Franc spending some time in oak (four-to-five months). The REDy wines were overall of a good standard with a common theme of freshness, fruitiness and spiciness running through them. Other wineries to offer REDy wines are: Bíborka Pincészet, Bock Pincészet, Csányi Pincészet, Gere Tamás és Zsolt Pincészete, Mokos Pincészet, Ősi Pincészet, Polgár Pincészet, Szemes Pincészet, Tiffán Ede és Zsolt Pincészete, and Vylyan Szőlőbirtok és Pincészet.

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Kids Charity Fund Raising Party Expat community portal XpatLoop will be hosting its annual firework-themed charity fund raising party in the Grand Ballroom of the Budapest Marriott Hotel on Saturday, October 27.

BBJ STAFF

Photo by Russell Skidmore

The event is usually held closer to November 5, a traditional British occasion known variously as Bonfire Night or Guy Fawkes Night. A decision to avoid weekdays and Sundays has led to the earlier date this year.

“Experience has taught me that if you avoid those days and have it on a Friday or a Saturday, you attract more people and therefore can raise more money for the charities,” says XpatLoop founder Stephen Linfitt.

He says the goal is to raise around HUF 5 million from donations on the evening, all of which will be split between three charities. This year those are: UNICEF Hungary (works to save children’s lives, to defend their

rights, and to help them fulfil their potential, from early childhood through adolescence); Magic Lamp Wish Granting Foundation, also known by its Hungarian name of Csodalampa (helps children aged 3-18 suffering from life-threatening illnesses); and the Young People in Need (Rászoruló Fiatalok) non-profit organization (focuses on solutions to emotional abuse of Hungarian children up to the age of 18, and also supports other local charities helping children in need.

The international community in Hungary has come together for more than a decade to support the event, which also doubles as XpatLoop.com’s birthday party. This year the website will be celebrating its 18th anniversary.

Master of Ceremonies for the evening will be voiceover maestro Hans Peterson, with this year’s live auction – always a major contributor to the funds raised on the night, being run by celebrity chef Marvin Gauci, the owner of the Caviar & Bull restaurant.

Entertainment for the evening includes the now traditional virtual bonfire and fireworks display, live music

by Klára Hajdu, with Krisztián Oláh, and party tunes from DeeJay Mr. T. of Buddha Bar, and Taste & Play wine casino games.

The suggested entrance fee is a donation of HUF 10,000, or more, per person, payable upon arrival. All guests who, as spaces are limited, need to pre-register through the xpatloop.com website, get a free day pass worth HUF 6,000 for the Go Active premier health and fitness club.

FirstMed are the main sponsor, once again, along with venue sponsor Budapest Marriott Hotel, silver sponsor Special Effects International, and bronze sponsors Pászka & Partners, and Stan Ahuja Couture. The Budapest Business Journal is among the media supporters.

“As usual, there’ll be a smattering of celebrities, lots of refreshments, live music, plus a few surprises, which all combine to make this an enjoyable and worthwhile event to attend for the benefit of local children in need,” Linfitt promises.

The party runs from 6 p.m. until midnight. Dress code is smart casual.

Gabor Patzauer, founder and president of Csodalampa, said his team is “honored” that its work “is supported

by XpatLoop readers”.

Left, Saudi Ambassador Mohammed A. Al Matrafi and László Kövér, Speaker of the National Assembly of Hungary.

Saudi-Hungarian Links Praised at National Day Event Some 200 guests, including diplomatic representatives, Saudi citizens and Hungarian friends, enjoyed traditional Arabic sweets and coffee as they gathered at the Budapest Marriott Hotel on September 27 to celebrate the 88th anniversary of the national day of the Kingdom of Saudi Arabia.

BBJ STAFF

In his welcome speech, Saudi Ambassador Mohammed A. Al Matrafi spoke of the progress his country has made in building “a homeland that has evolved, thanks to God, into a country enjoying security, stability and prosperity”.

He also spoke of the government’s Vision 2030 that “aims at diversifying sources of income, facing economic and social challenges and encouraging foreign investors”.

Ambassador Al Matrafi applaud the level of bilateral relations between the Kingdom of Hungary “based on common interests and mutual respect” and praised the “positive and

effective contribution of parliamentary cooperation between our countries”.

In return, László Kövér, Speaker of the National Assembly of Hungary, representing the government, praised the “social and economic transformation” of modern Saudi Arabia. “Hungary strives for closer cooperation with the Arab world, including Saudi Arabia”, which he said “has traditionally been Hungary’s key trade partner in the region”, the Speaker added.

He welcomed and supported Saudi investment in Hungary and Hungarian businesses in Saudi Arabia, and said Ambassador Al Matrafi was “playing an outstanding role” in forging political, economic and cultural ties between the two countries.

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Galaxy Note9 Arrives The premium Galaxy Note9 smartphone from Samsung Electronics boasts: • Largest ever battery: talk, text, play games, watch movies from morning to night.

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