Budapest Business Journal 3219

VOL. 32. NUMBER 19 | OCTOBER 18 – NOVEMBER 3, 2024

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SPECIAL REPORT INSIDE THIS ISSUE

Real Estate Development

Developers Continue to Exercise Caution As developers and investors must justify projects as being financially sustainable and offering favorable returns on investment, ESG issues are becoming ever more predominant in determining the long-term viability of the lifecycle of a real estate asset.  16

Developers Moving to BTS, but Industrial Still a Growing Sector Industrial real estate is going through an upturn having grown on the back of increasing logistics demand in the COVID and postpandemic environment and demand for industrial space to meet significant FDI.  19

The Sustainability Pathfinder?

SOCIALITE

Budapest Embraces the Rhythm of Tango There’s some kind of tango class or event every night of the week in Budapest. How did Budapest become one of Europe’s leading cities for tango, and where does a complete beginner start?

David Holzer dug out his dancing shoes to discover for himself.  29

NEWS

Industry Starts to Suffer Again Although Hungary’s industrial sector showed signs of stabilization at the beginning of the summer, the latest data from August shows the stop on the slope was only temporary: compared to July, the volume of production shrank by 0.5%.  3

BUSINESS

Marjan Rintel, president and CEO of KLM, talks to the Budapest Business Journal about the importance of the Budapest route to the airline and its efforts to reduce its carbon footprint, both on its flights and in its services. 9 BUSINESS

‘Handling AI a Human Problem, not a Tech One’ “Let’s set responsible AI in motion!” was the motto of the 2024 Humans in Charge AI Symposium organized by the National Media and Infocommunications Authority on Oct. 7-8.  7

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Budapest Business Journal | October 18 – November 3, 2024

IMPRESSUM EDITOR-IN-CHIEF: Robin Marshall EDITORIAL CONTRIBUTORS: Luca Albert,

Balázs Barabás, Zsófia Czifra, Kester Eddy, Bence Gaál, Gergely Herpai, David Holzer, Gary J. Morrell, Nicholas Pongratz, Gergő Rácz.

LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES:

Should be submitted in English to news@bbj.hu LAYOUT: Zsolt Pataki PUBLISHER: Business Publishing Services Kft. CEO: Tamás Botka ADVERTISING: AMS Services Kft. CEO: Balázs Román SALES: sales@bbj.hu

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The Budapest Business Journal, HU ISSN 1216-7304, is published bi-weekly on Friday, registration No. 0109069462. It is distributed by HungaroPress.

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THE EDITOR SAYS

IN PRAISE OF FOOD FOR THOUGHT It has been another couple of weeks where, while no single business news item jumps out at you, there are many important stories to ponder. Take, for example, our Special Report on Real Estate Development. While you will never meet a developer who is less than enthusiastic (especially about their own projects), it is noticeable how relatively downbeat the market is at the moment, despite the strength of the industrial and hotel sectors.

Investors are in a wait-and-see mode. The old standby of the office sector faces questions over the exact space requirements in a post-pandemic hybrid world (and however much Amazon may insist on having everyone back in the office, most analysts seem to agree that a threetwo split between days in the office and days in home office is here to stay). Be assured, the new, spacious, flexible, ESG-compliant, third-party accredited office is far from dead. The trouble is that they are also far from common in Budapest, even less so in Hungary’s provincial cities.

As one of our expert witnesses tells us, only 3% of the Breeam-certified stock in Budapest reaches the highest “Outstanding” level; just 10% of Leed-classified offices achieve “Platinum.” It may not be true today, but it is not difficult tomorrow to envisage a world where non-ESG-compliant projects cannot find any financing. Given the presumption that a new building is more efficient than an old one, but more damaging to the environment in terms of emissions, noise and disruption during construction, we may be approaching a stage where renovation and restoration become the order of the day. And perhaps, when you look at all those fabulous turn-of-the-century Budapest buildings needing some TLC, that is no bad thing. Older office

blocks certainly don’t have that glamor, but why should they not be given new life and possibly a new function?

Elsewhere within the pages of this issue, it is heartening to see that the annual Hungarian Bank Blood Donor Drive is not only going strong in this, its fifth year, but it is expanding from a week to a month. It is a simple but effective way in which businesses, or in this case, an entire sector, can take a matter such as the constant need to keep Hungary’s hospitals supplied with blood and raise awareness both within those companies and the general population. More do-goodery (and I absolutely don’t mean that in a pejorative way) is evident from the Business Council for Sustainable Development in Hungary and its annual awards to promote not just sustainability but also diversity and much else besides Allow me one final pitstop on this journey around the food for thought on offer on our pages this issue: the third Pharma CEO Breakfast event we held on Oct. 8. There are issues aplenty in this sector, but I always come away from these events heartened by the level of engagement.

Participants (and for those who have not attended, we always invite representatives from government, pharma associations, and companies themselves to speak) are prepared to engage, to disagree, but also to discuss. And there are so many exciting possibilities that those discussions could lead to, not to mention the groundbreaking drug trials and scientific research being performed in this country. If they can keep talking, and listening, they can surely keep achieving.

Robin Marshall Editor-in-chief

• Independence. The BBJ’s journalism is dedicated to reporting fact, not politics, and isn’t reliant on advertising from the government of the day, whoever that might be.

THEN & NOW

• Community Building. Whether it is the Budapest Business Journal itself, the Expat CEO award, the Expat CEO gala, the Top Expat CEOs in Hungary publication, or the new Expat CEO Boardroom meeting, we are serious about doing our part to bind this community together.

For more information visit budapestbusinessjournal.com

Photo by Zoltán Balogh / MTI

• Value Creation. We have a nearly 30-year history of supporting the development of diversity and sustainability in Hungary’s economy. The fact that we have been a trusted business voice for so long, indeed we were the first English-language publication when we launched back on November 9, 1992, itself has value.

• Crisis Management. We have all lived through a once-in-a-century pandemic. But we also face an existential threat through climate change and operate in a period where disruptive technologies offer threats and opportunities.

Now, more than ever, factual business reporting is vital to good decision-making.

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Why Support the BBJ?

The black-and-white photo from the Fortepan public archive captures the first Ibusz Budapest Marathon on Népköztársaság útja (now Andrássy út), with the Millennium Monument and Heroes’ Square in the background, on April 14, 1984. Meanwhile, the color image from state news wire MTI shows runners crossing the Liberty Bridge during the 39th Spar Budapest Marathon Festival on Oct. 13, 2024.

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Budapest Business Journal | October 18 – November 3, 2024

News

• macroscope

After a July Pause, Industry Starts to Suffer Again

Although Hungary’s industrial sector showed signs of stabilization at the beginning of the summer, according to the latest detailed data from August, the stop on the slope was only temporary: compared to July, the volume of production shrank by 0.5%. In the meantime, inflation fell to the central bank’s target, but analysts warn it’s only temporary for the time being.

ZSÓFIA CZIFRA

In six of the last 10 months, industrial performance stagnated or decreased compared to the previous month, so it is no wonder that production (calendaradjusted) is 4.1% lower than a year ago.

Considering this, it is almost good news that the last three months as a whole did not bring a decline in the sector, which has been in recession for nearly two years. Even so, the August decline strongly worsens the meaning of this.

According to the second detailed reading of the data by the Central Statistical Office (KSH), the volume of industrial production dropped in August 2024 by 9.5%; based on working-day adjusted data, production declined by 4.1%, year-on-year.

Compared to crude data from the first reading, the significant difference is due to the fact that there were two fewer working days in this month than in August 2023.

According to seasonally and working-day adjusted data, industrial output was

0.5% lower

than in July 2024.

Production volume fell in August 2024 in the vast majority of manufacturing subsections and grew in only three. The best-performing

Industrial production in Hungary, January-August 2002-2024 Production volume index, same period of previous year equals 100

Source:

rate was found in the manufacture ofchemicals and chemical products.

Looking across the whole of the first eight months of the year, production was 3.8% lower than in the same period of 2023.

No Significant Turnaround

In light of the July-August data, we can justifiably say that the third quarter did not bring about a significant turnaround in the industry.

While the industry continues to suffer, inflation fell into the target range of the National Bank of Hungary (MNB) of 2-4% for the first time in three and a half years: in September, consumer prices increased by 3% on average compared to the same month of the previous year.

Over one month, they decreased by 0.1% on average, within which motor fuels became 3.7% cheaper.

According to analysts, we most likely saw the bottom of the inflationary curve in September, and the road from here is up regarding the rate of monetary deterioration. There is a unanimous opinion among analysts that if you pair the latest inflation figure with the current HUF exchange rate, it does not leave the MNB room to cut interest rates further.

“The service sector accounts for nearly three-quarters of the

3%

inflation

calculated on an annual basis. As in developed and regional countries, this item is still responsible for

a significant part of inflation,” notes ING Bank analyst Péter Virovácz.

“This is important because this type of inflation is more sticky than the price effect of items outside the core inflation basket. Looking ahead, we can expect a substantial rise in inflation rates next month.” Virovácz expects an average price increase of 3.8% this year and 4% next.

According to Gábor Regős of Gránit Alapkezelő, inflation is expected to rise in the coming months: base effects and rising oil prices due to the Middle East conflict will have a negative impact.

Having said that, while for a long time, the question was whether inflation would exceed the 5% level by the end of the year, the probability of this has now decreased significantly.

Looking at the year as a whole, inflation maybe 3.7-3.8%, while next year it may remain slightly below the top of the central bank’s target range, Regős says.

A Temporary Phenomenon

“For the time being, inflation remaining within the target band is a temporary phenomenon,” János Nagy of Erste Bank warns. “The base effect is quite unfavorable for the rest of the year. In the coming months, the biggest question is how much room the economy, which is starting to recover after a year and a half recession, will allow for further price corrections at the end of the year,” he adds.

He expects rising inflation for the rest of this year, reaching 4-4.5%

by December. According to Nagy’s expectations, a downward trajectory could

start again next year, but inflation may return consistently to the MNB’s target band only in the second half of 2025.

While it may arise that the central bank could be more relaxed than expected at the next meeting, core inflation, which was

close to

5%

in September, and the weakening of the forint should orient the National Bank of Hungary towards holding the current rates, Márta Balog-Béki, head analyst at MBH Bank, believes “For this year, we continue to expect average annual inflation of 3.8%. After the favorable data releases in August and September, annual inflation may rise again by the end of the year, primarily due to the very low base. By the end of the year, the headline index is still expected to be around 4.5%,” she says.

Like Nagy, she says some disinflation can be forecast for the beginning of 2025, but the likely pace of returning to the inflation target will be a slow process. The development of core inflation does not suggest that inflation could easily be reduced to 3% next year. The dynamics of wage increases may remain relatively high until 2026, which may also pressure inflation. Balog-Béki expects the central bank’s 3% inflation target to be stably and sustainably achieved only in the second half of 2026, almost a year behind Nagy’s prediction.

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Budapest Business Journal | October 18 – November 3, 2024

Photo by Vivien Cher Benko / Prime Minister’s Press Office / MTI

Ukraine EU Head, Orbán Clash Over Energy, Visas, Russia and Ukraine Crisis Roundup

European Commission President Ursula von der Leyen criticized Hungary’s government in a debate with Prime Minister Viktor Orbán at the European Parliament in Strasbourg on Oct. 9, attacking to its approach to Ukraine and its relationship with Russia.

NICHOLAS PONGRATZ

“The world has witnessed the atrocities of Russia’s war. And yet, there are still some who blame this war not on the invader, but the invaded,” von der Leyen said of Hungary. “There are still some who blame this war not on [Russian President Vladimir] Putin’s lust for power but on Ukraine’s thirst for freedom. So, I want to ask them, would they ever blame the Hungarians for the Soviet invasion in 1956?” she said.

In his response, Orbán rejected this comparison out of hand.

“Any analogy and comparison of the Hungarian freedom fighters of 1956 with Ukraine is a mistake and insults the memory of the Hungarian freedom fighters of 1956,” Orbán retorted. “1956 and the Russo-Ukraine war have nothing in common,” Orbán said flatly.

“In the name of the Hungarian freedom fighters, I reject all false and misleading historical analogies.”

But von der Leyen also had other areas of concern, and criticized the Orbán government for easing visa restrictions for Russian nationals.

“How can it be that the Hungarian Government invites Russian nationals into our Union without additional security checks,” she asked. The EC President said this made the new Hungarian visa scheme a security risk, “not only for Hungary but for all member states.

This is not defending Europe’s

In this picture released by the Press Office of the Prime Minister, President of the European Commission Ursula von der Leyen and Prime Minister Viktor Orbán greet each other before the presentation of the program of the Hungarian Presidency of the Council of the EU at the European Parliament session in Strasbourg on Oct. 9. That same day the pair clashed over Hungary’s reliance on Russian energy, its attitude to the war in Ukraine, and its relations with Russia. sovereignty,” she said. “This is a backdoor for foreign interference.”

Orbán acknowledged that the change in visa restrictions had nearly doubled the amount of Russians working in Hungary.

While previously there had been around 3,000, the visa change enabled roughly another 3,000 Russians to work in Hungary, which he said brought the total closer to 7,000.

However, Orbán noted that this still paled in comparison to the number of Russians working in Germany, which amounted to nearly 300,000.

Von der Leyen also singled out Hungary for its continued reliance on Russia for cheap energy. She referred to a meeting in Versailles following Russia’s invasion in February 2022, where EU leaders agreed to “diversify away from Russian fossil fuels as soon as possible. Not everyone has acted on the Versailles commitments,” she said. “Instead of looking for alternative sources, one member state in particular just looked for separate ways to buy fossil fuels from Russia.”

“Hungary trades transparently,” Orbán replied. “But what about your

The visa change enabled roughly another 3,000 Russians to work in Hungary, which Orbán said brought the total closer to 7,000. However, he noted that this still paled in comparison to the number of Russians working in Germany, which amounted to nearly 300,000. countries?” He insisted that other member states also continued to trade with Russia by circumventing sanctions through third parties in Asia. Rolling out some figures, Hungary’s PM claimed that every month the EU exported USD 1 billion more to certain Central Asian countries than it did before Russia

invaded. “German, French, Spanish companies, this is how they circumvent the sanctions,” he said.

With regard to energy, Orbán said that Western countries also continued to purchase Russia oil via refineries in Turkey and India to the tune of USD 8.5 bln since the outbreak of the war. In 2023, he said Western countries bought 44% more Russian crude than the year prior.

“Your companies paid USD 1.7 bln in tax revenue to the Russia budget,” he said. “And you criticize us?” Orbán emphasized. “This is hypocrisy.”

Meanwhile, Minister of Foreign Affairs and Trade Péter Szijjártó noted that the TurkStream pipeline that ships Russian gas to Turkey via the Black Sea “may help not only Hungary, but other countries of Central Europe if they face a serious situation in case there is no transit via Ukraine,” at the St. Petersburg International Gas Forum on Oct. 10. A five-year deal between Kyiv and Moscow on Russian gas transit via Ukraine to Europe will expire on Dec. 31, and is unlikely to be renewed.

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Budapest Business Journal | October 18 – November 3, 2024

Differing Views Regarding Hungarian GDP Growth and Inflation Many may recall last year’s inflation as a bad dream, with its highest watermark as far back as January 2023, at 25.7%.

By October 2023, it had shrunk to single digits, albeit barely, at 9.9%. One year later, in September 2024, it was 3%, slap bang within the target range set by the National Bank of Hungary (MNB).

So, is Hungary on the right track now?

Well, the track has several lanes, and inflation is only one.

The government and the MNB also have to deal with fluctuating interest rates and a challenging fiscal environment, to name just two.

BALÁZS BARABÁS

A significant challenge continues to be the government’s deficit and debt burden.

To cope with these, the cabinet introduced (and maintains) a freeze on public investments and reduced public sector spending, especially in the energy sector.

Paradoxically, higher inflation would ease the burden. According to a study published on telex.hu by Ádám Zawadoski, a researcher at the Central European University, over the past four years, the debt has grown by 2.1% annually, fueled by overspending.

Before COVID, inflation had reduced the debt-to-GDP ratio by 2-3 percentage points per year. Later, as we have seen, the inflation rose to

more than

20%,

which reduced the debt-to-GDP ratio by 6.8 percentage points annually.

News | 5

Finance Matters A monthly look at financial issues in Hungary and the region

Government Sector Balance as a Percentage of GDP (2011-H1 2024)

Maastricht criteria

*preliminary data

Source:

Is this a negative development?

Not necessarily, but in the long term, it could be, Zawadoski says.

“It has often occurred in world history after wars and major crises since, in this way, the state can quietly ‘tax’ domestic and foreign investors without cutting spending. The prerequisite for this is that the loans of the Hungarian state are in forints, which the government consciously sought in the past,” the researcher notes.

“Perhaps this is also why the government was never in a hurry to introduce the euro since then it would not be able to inflate the debt if necessary. In the long term, however, this method is dangerous, because the government could get comfortable with this solution. It is always easier for the current government to devalue the debt by inflating the forint than to raise taxes or cut spending. And this leads to higher inflation in the longer term. We have experienced the negative consequences of higher inflation firsthand in recent years,” Zawadoski points out.

Mid-term Optimism

A higher GDP rate would mean a lower debt rate, and the government remains optimistic about medium-term growth.

Hungary’s Minister of Finance Mihály Varga recently emphasized that GDP growth could rebound to 3-4% in 2024. Prime Minister Viktor Orbán even envisioned 6%, which was helped by robust investment activity and an improving external balance.

However, managing inflation and avoiding the EU’s excessive deficit procedure remains a priority, with further fiscal tightening likely necessary, Varga said.

Often, governmental forecasts and analysts’ assumptions differ, but on this occasion, Viktor Zsiday, portfolio manager at Hold Asset Management, commented in harsh terms on the data. In an interview with penzcentrum.hu, Zsiday said that Hungary’s potential GDP growth could not be more than 1-2% annually.

“I would be very much surprised if, in the years

to

2030,

we reached an average of 3%. But 6% has absolutely no basis whatsoever,” he critiqued.

A significant factor in handling inflation are the measures taken by the MNB. One of the most important actions across the last quarter has been the gradual reduction of the base interest rate, which stood at 13% for most of 2023.

In light of improving inflation trends, the MNB began cutting rates incrementally, with the base rate falling to 6.5% by October 2024. This marks a shift from the highly restrictive monetary stance the central bank had maintained in the face of inflationary pressures in 2022 and early 2023.

Cautious Over Victory

Despite these rate cuts, MNB officials, including Governor György Matolcsy, have remained cautious about declaring victory over inflation.

The central bank expects inflation to continue decelerating, but it has emphasized that the disinflationary process could be slow and vulnerable to external shocks, especially if global energy prices rise again.

Another critical issue addressed by the MNB is the housing market.

The central bank has warned that the Hungarian real estate market remains overvalued, with commercial real estate facing rising vacancy rates.

Housing transactions have declined significantly due to high interest rates and inflation, but the MNB noted that risks related to mortgage lending remain contained.

The bank’s cautious stance reflects broader concerns about how global and local economic trends could impact the stability of Hungary’s financial system. Looking further, with interest rates still elevated and economic uncertainty persisting, demand for household credit is likely to continue to weaken, particularly for mortgages and consumer loans.

The government’s push to encourage savings in high-yield bonds will further reduce the attractiveness of traditional bank deposits, placing additional strain on banks’ liquidity positions.

The Hungarian banking sector has already exhibited a slowdown in lending, particularly in household and corporate segments. With high inflation and economic uncertainty continuing to dampen consumer confidence, the demand for new loans has decreased, especially for mortgages and small business loans.

The sector’s loan-to-deposit ratio has increased due to a decline in deposits, but despite these challenges, Hungarian banks remain wellcapitalized, with substantial liquidity buffers. According to the MNB, the banking system is resilient and wellpositioned to weather future economic shocks. Profitability, while impacted by government taxes and lower consumer demand for credit, remains supported by income from central bank deposits.

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Budapest Business Journal | October 18 – November 3, 2024

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New GM Takes Helm at Matild Palace From Oct. 1, Serkan Hüsünbeyi has taken over as the general manager of the Matild Palace, a Luxury Collection Hotel Budapest. The new leader joins the hotel with more than two decades of management experience, during which he has worked in some of the world’s most renowned hotel chains.

Hüsünbeyi has held senior roles at hospitality brands such as Kempinski, Accor, Rixos and Swissotel, where he consistently achieved excellent results, proving his deep understanding of the art of delivering exceptional service, Matild Palace says.

“I am honored to join Matild Palace, one of Budapest’s iconic hotels. I am excited to work with the talented team to further build on the hotel’s outstanding reputation and provide our guests with an unforgettable, worldclass experience,” said Hüsünbeyi.

The renovated Matild Palace building, in a UNESCO World Heritage Site, is part of Marriott International’s Luxury Collection.

Serkan Hüsünbeyi Since its opening in 2021, the hotel has been home to world-renowned chef Wolfgang Puck’s first European Spago restaurant, the “secret” rooftop bar known as The Duchess, and the Matild Ballroom, a reinterpretation of the former “Downtown Café,” which dates back more than 120 years.

Bruno van Pottelsberghe Takes Over as Corvinus Uni Rector Following his appointment, effective as of Aug. 1, Bruno van Pottelsberghe has taken over the leadership of Corvinus University Budapest, combining the role of president and rector. Anthony Radev, who has served as president for the last five years, remains a strategic advisor.

Under Radev, Corvinus became the first Hungarian university to change its business model to one where it was run by a foundation, and it launched its transformation program

in 2019. The university will continue along this path, focusing on the internationalization of its educational programs and research excellence, it told the Budapest Business Journal.

Europe, making it a reference point for higher education in Hungary as a whole. We thank him for his expertise, his dedication, and all that he has done for Corvinus in recent years.

He has played a lion’s share in making the idea of model change a viable reality,” the board chairman added.

Radev, the former university president, said, “In 2019, we embarked on a joint venture spanning several decades.

Our goal was to build on the strengths of Corvinus yet fundamentally renew and take it to a different level. In keeping with our best traditions, the changes have been surrounded by many constructive discussions, which have greatly contributed to the achievement of our objectives. We have created the conditions to ensure that Corvinus will continue to enjoy a stable position among internationally recognized universities in the long term.”

to ensure that OMV Hungária becomes an indispensable player in Hungary in the promotion of sustainable mobility, in line with the international corporate strategy,” said Hrivňák.

Vladimír Dočekal Named MD of Orlen Hungary Vladimír Dočekal has been appointed to take over as managing director of Orlen Hungary.

The new boss has more than 10 years of experience at Orlen Unipetrol Group, where he was operations director of the retail segment in the Czech Republic from 2015 and retail director from 2022.

OMV Hungary Gets Fresh Managing Director Ján Hrivňák has taken over as managing director and head of the Bruno van Pottelsberghe retail division of OMV Hungária Kft. The Slovakian-born specialist had worked for OMV for about 10 years before he was appointed managing In line with the ambitions of its new director and had previously headed development cycle, the university’s governance system was also transformed, OMV’s regional card business.

His predecessor, Tibor Balogh, with the duties of the rector (responsible will continue his career as a company for the academic side) and those of the director within OMV Hungária. president (dealing with non-academic Hrivňák will be responsible for the issues) combined into one role. operation of OMV Hungária’s 203 “I want to focus on three priorities: internationalization, research orientation, filling stations in Hungary. He holds a master’s degree in strategic management and branding. My aim is to continue from Comenius University in Bratislava on the path already begun and to work and is fluent in Hungarian. towards making Corvinus not only visible but also a leading international player, with even higher performance,” van Pottelsberghe has said of his plans.

“It is necessary to further strengthen our interdisciplinary relations in cooperation with the university community and to increase the number of international faculty and students, thus strengthening the global reputation of the university,” he explained.

“I believe it is important to promote ambitious research programs and to strengthen opportunities for cooperation with the business community. I am also committed to ensuring that the big issues of our time, such as sustainability and artificial intelligence, become issues for the whole university community,” van Pottelsberghe added.

Zsolt Hernádi, chairman of the board of trustees of the Maecenas Universitatis Ján Hrivňák Corvini Foundation, which maintains Corvinus University, emphasized the critical role van Pottelsberghe’s After his university years, he built his predecessor had played in pioneering career at IBM and then at Holcim Group, the model change. holding positions in sales, logistics, “Under Anthony Radev’s leadership, and supply chain management. At Corvinus completed the massive Holcim, he achieved success first as a work of fundamentally restructuring procurement specialist responsible for a leading university to embrace an four countries and later as a category outward-looking, innovation-leading, manager covering 10 countries. internationalizing organizational “I am looking forward to the challenge culture and results-oriented way of leading OMV Hungária, a company of working,” Hernádi said. that plays a key role in Hungary’s “He has laid the foundations for mobility. In line with the company’s Corvinus to become a stable, leading renewed image, I will do my utmost university in its field in Central

Vladimír Dočekal “He has done an outstanding job in leading the Czech retail network, significantly increasing market share and completing the transition to the Orlen brand,” Agnieszka Bobrukiewicz, a member of the board of directors of Orlen Unipetrol Group, commented. “We are confident he will bring the same expertise and commitment to Hungary, where we see significant growth opportunities.”

Dočekal added, “I look forward to the new challenges in Hungary and am confident we can strengthen the Orlen brand presence further.

We aim to provide customers with the highest level of products and service, especially with high-quality Efecta and Verva fuels. And, of course, we are open to further growth through larger or smaller acquisitions and becoming an even more significant player in the Hungarian market.”

In the first half of 2024, Orlen Hungary took over 60 refueling stations, bringing its domestic network to 139 units. During the year, it launched its own brand Stop Cafe range, which is popular in several European countries and includes smoothies, juices, snacks, and 100% Arabica coffee.

The refurbishment will continue, and the fuel stations will be modernized, giving Orlen customers access to a broader range of convenience products.

The company’s fuel range includes premium Verva 100 and Verda diesel products, which Orlen says are unique in the market, alongside Efecta fuels, which have an engine-cleaning effect.

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Budapest Business Journal | October 18 – November 3, 2024

Business

‘Handling AI is a Human Problem, not a Tech Problem’ “Let’s set responsible AI in motion!” was the motto of the 2024 Humans in Charge AI Symposium organized by the National Media and Infocommunications Authority on Oct. 7-8.

Experts agreed that it will take everybody to implement that call to action, and that AI is exciting and scary at the same time.

LEVENTRE HÖRÖMPÖLI-TÓTH

Artificial intelligence is a weird thing: the more you learn about it, the less you know. That statement is underscored partly by the so-called black box effect, according to which nobody is really sure what algorithms do with all that data they are fed, and how they deliver any given output. Not least because of this, regulation is critical. Hence the widely shared notion of the conference: “We live under surveillance capitalism.”

But the experts highlighted it would be a mistake to demonize technology.

“Nature is always losing at this point in AI, and that’s wrong. This could be, in fact, a time for illumination,” John C. Havens, founding executive director of the Global Initiative on AI Ethics said. As long as competitiveness is part of the equation, there will always be losers, he said.

“Instead, caregiving and the planet should matter the most, and only those AI systems should be developed that make sense; that is, improve something.”

Theodore S. Boone, of counsel at law firm Dentons (and a former president of the American Chamber of Commerce in Hungary), recalled a well-known parallel to put things in context.

“It’s like nuclear energy: you can’t separate the good from the bad. But at some point, the International Atomic Agency was set up, and ever since, the whole industry has been strictly regulated, and things have been going in an orderly fashion,” he noted.

Speakers at the NMHH’s 2024 Humans in Charge AI Symposium.

Regulation takes place most of all in Europe. The relevant legislation represents a heavy administrative burden, but it’s the first legal framework in the world; therefore, it must be welcomed.

A remarkable legislative tool is the new AI Liability Directive that shifts the normal burden of proof: in case damage is caused by an AI system, it will be the manufacturer’s responsibility to show the damage didn’t happen. Normally, the party that allegedly suffered damage must demonstrate that the harm occurred.

Building the Framework

The Hungarian Government is also working on legislative measures.

Kids in the Crossfire Among the most vulnerable are children who are exposed to the risks of the technology. The press even talks about “A generation of AI guinea pigs.” What is certain is that the education system can’t keep up with the pace of development.

On the pro side are personalized AI assistants that can serve entertainment purposes. On the other hand, as Maria Axente, a senior research associate at the University of Cambridge, pointed out, children’s health and wellbeing are at stake. The good news is that around half of them are aware that AI can “hallucinate” and will, therefore, seek to validate AI-generated information.

The role of parents can’t be emphasized enough. According

In fact, a very recent decision provides for an implementation framework under which an AI Board will be set up to issue recommendations and engage the competent authorities to apply AI-related questions in a uniform manner.

Prevailing in the age of AI will require an unprecedented level of adaptability that humankind is simply not used to.

“There have been paradigm shifts, but nothing on today’s scale. Humans are wired to think linearly, they are not mentally equipped to deal with the current exponentiality we are experiencing,”

Imre Porkoláb, speaking on behalf of the National Security Office, noted.

Another problem lies in the fact that the technology is controlled by just a handful of providers.

“Putting humans in charge is a great idea. But now is time to think through who those humans actually are.

Governments? Scientists? Developers?

This could be the final kick for humanity to work together,” Porkoláb concluded.

The ultimate take-away was shared

by László Drajkó, founder and managing partner of Cydrill Software Security: “AI is in a super position: it’s exciting and scary at the same time. And we are just opening the box AI is in.”

to Cécile Aptel, deputy director of the UNICEF Global Office of Research and Foresight, while we must let kids experiment with ChatGPT and the like, parents must embrace the tech themselves so that they can guide their offspring in the process.

“AI should be regarded as a complementary tool, while the engagement of well-trained teachers remains crucial.”

But what about critical thinking skills? Won’t they be gradually killed off by AI? While the current interaction doesn’t serve the purpose of maintaining or developing such skill sets, the speakers expressed the hope matters will evolve along the way.

“Humans have the need for critical thinking in their DNA, and time will tell whether the new generations

will have it too,” Aptell said. She also highlighted that minimizing risks and maximizing opportunities for children are equally essential, while “handling AI and its use is a human problem, not a tech problem.”

Faisal Mohammed AlShimmari, founding chairman of the UAE Child Protection Association, drew attention, in turn, to the responsibility of corporations and set a rather pessimistic tone. Family is the first line of defense, but tech gurus won’t do a thing until they have kids and realize the dangers they are exposed to, or their companies are penalized, he said.

“Corporations should be forced to do their part, if necessary, by applying criminal law to them. They won’t invest in child protection on their own because it doesn’t bring money.”

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Business

www.bbj.hu

Budapest Business Journal | October 18 – November 3, 2024

Inequality continues to rise in Hungary and globally, presenting a growing threat to economic stability.

Currently, the wealthiest 1% of the world’s population controls 45.6% of global wealth, while the poorest half owns less than 1%. The top 10% of earners in Hungary capture 40% of all income and 90% of capital income.

Those are figures the Business Council for Sustainable Development in Hungary (BCSDH) wants to tackle.

GERGELY HERPAI

Photo by BCSDH.

BCSDH Launches 5-Point Action Plan to Tackle Inequality

The lineup of Sustainable Future Award 2024 winners. inequality threatens the foundations of economic stability, and addressing it is crucial for long-term business success.

The action plan outlined steps such as paying fair wages, creating safe and inclusive work environments, and fostering opportunities for lifelong development. In taking these actions, companies can help ensure that their employees and value chains are resilient and sustainable in the face of growing social challenges.

Carolien De Bruin, senior director of equity action at the World Business Council for Sustainable Development (WBCSD), echoed these sentiments in her keynote speech.

are increasingly being called upon to address social issues, and the introduction of regulations such as the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) makes this not only a moral but also a legal requirement.

The overarching theme of the BCSDH event was the need for systemic change to address the growing inequalities in society. While businesses have traditionally focused on profitability and shareholder value, the conversation is shifting toward a more holistic approach that considers the wellbeing of employees, communities, and the environment.

“Systemic transformation is essential if we are to address the root causes of inequality,” said Chikán in his closing remarks. “Businesses must work in partnership with governments, civil society, and other stakeholders to create an inclusive and sustainable economy.”

The imbalances these numbers represent Moral and Legal undermine social and economic Requirement development and pose risks to business “Rising inequality and the need to sustainability. At its annual business tackle the ‘S’ in ESG in an integrated lunch on October 10, the BCSDH manner is both a material risk and an handed over its Sustainable Future opportunity for businesses,” she stated.

Awards. The event highlights the role De Bruin pointed out that businesses of businesses in reducing inequalities and driving systemic transformation.

Recognizing an urgent need for action, BCSDH has introduced a fivepoint action plan to help businesses BCSDH Sustainable Future Awards address social inequalities. The annual This year’s Sustainable Future the company’s core business awards ceremony celebrates leaders Awards recognized leaders and practices, particularly in employee already making significant contributions, companies taking significant engagement and development. acknowledging their efforts in steps toward creating a more “Károly Nyári is a true leader transforming corporate practices to create equitable and sustainable business in sustainability, guiding his a more equitable and sustainable future. landscape.

The awards were company and its partners toward At the core of the discussions at the presented in four categories meaningful and impactful BCSDH event was the acknowledgment (Change Leader, Leading Woman, change,” the jury remarked. that inequality is not just a social issue; Business Solution, and Corporate Two prominent women in it is also an economic one. Companies Transformation) and highlighted the business world were also have a pivotal role in mitigating the the critical role of companies in recognized for their leadership in effects of inequality, not only within addressing systemic inequalities. promoting sustainability. Anikó their own operations but also across their Károly Nyári, vice president and Körmendi, CEO of Arriva Hungary, value chains. The action plan presented head of group finance at Grundfos, and Zsuzsa Nagy, managing at the event provided a framework for was awarded the Change Leader director of E.ON Hungária Group, how businesses can take meaningful Award for his visionary leadership were both honored with the steps toward addressing these disparities. in sustainability. He was praised Leading Woman Award. Körmendi “Reducing inequality is not only for his forward-thinking approach was commended for her work a social obligation but a business to integrating sustainability into advancing electromobility imperative,” said BCSDH president Attila Chikán Jr. He emphasized that

The importance of systemic change was further underscored by De Bruin, who noted that companies have the power to influence not just their employees but also the workers in their supply chains, their consumers, and the communities they serve.

“Collective, bold, and decisive action is needed to make this vision a reality,” she stated. “Through the Business Commission to Tackle Inequality, we are investing in the solutions of tomorrow and squarely putting equity into the boardroom.”

The event’s roundtable discussion, moderated by Márta Irén, BCSDH director, featured insights from top executives, including Raffaella Claudia Bondi, managing director of Roche Hungary, Viktória Lucenko, CEO of Auchan Hungary, and Zoltán Mikó, CEO of Future FM. The discussion focused on the practical steps companies can take to implement the action plan and ensure that they contribute to a more equitable and sustainable future.

in Hungary, while Nagy was recognized for her innovative solutions promoting the country’s green energy transition.

The awards also celebrated innovative business solutions that are helping to drive systemic change.

K&H Bank received recognition for its Agricultural CO2 Calculator, a tool that helps farmers measure their carbon footprint. Saint-Gobain Hungary and SolServices were honored for their contributions to biodiversity restoration and renewable energy, respectively. The Corporate Transformation Award went to Continental Automotive Hungary, which has made significant strides towards achieving carbon neutrality and circularity across its entire value chain, the BCSDH said.

www.bbj.hu

Budapest Business Journal | October 18 – November 3, 2024

PRESENTED CONTENT

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Business | 9

Air France-KLM Aims to act as a Decarbonization Pathfinder Marjan Rintel, president and CEO of KLM, talks to the Budapest Business Journal about the importance of its Budapest route and its efforts to reduce its carbon footprint, both on its flights and services.

BBJ STAFF

BBJ: KLM had only existed for five years when Budapest first appeared on its map. What are the plans for the winter schedule and the expectations for summer 2025?

Marjan Rintel: This winter, KLM intends to operate 28 flights weekly to Budapest, which aligns closely with the schedule we offered last year. Regarding the summer timetable, we are currently assessing our options; however, our primary objective is to establish a daily frequency of five flights, matching this year’s summer offering regarding frequency. As always, our schedules are subject to change based on bookings and market conditions. At this time, we do not foresee any disruptions.

BBJ: How important is the Hungarian market for the business? How much does it generate? What are the passenger numbers like, and what is the trend? Is there any scope for expanding your presence here?

MR: Regarding passenger numbers and capacity, the traffic has returned to prepandemic levels. In fact, we are offering more seats in 2024 than we did before COVID. Regarding Budapest, the trend remains fairly consistent; a significant portion of our passengers transfer in Amsterdam, with their main destinations being the United States, Canada and Great Britain. Additionally, our presence in the country significantly enhances community connections, cultural exchange, and economic relations.

BBJ: You have a fleet replacement program underway, with older Boeing 737s replaced with new Airbus A321neos. Boeing has had air safety question marks, and a strike by its largest union is almost certain to cause delays in its new aircraft delivery.

Is any of this behind the switch?

What is the cost of the investment, and what are the advantages of the A321neos over the 737s?

MR: We expect to receive five Boeing 787-10 aircraft next year.

These planes come from Charleston, a Boeing location with no strikes.

While this does not mean there are no problems with deliveries, the entire industry faces supply chain issues.

Marjan Rintel, president and CEO of KLM When choosing a type of aircraft, we primarily consider performance, network fit, and specifications that contribute to our ambition to fly more quietly and efficiently. Purchasing the new Airbus fleet is an important step toward flying cleaner, quieter, and more fuel-efficient aircraft. The A320neo family of aircraft has 50% lower noise levels than the current older generation aircraft and reduces fuel consumption and CO2 emissions by 21% (A321neo compared to 737-800 per passenger-kilometer). Additionally, Airbus offers excellent comfort for customers, with spacious cabins, comfortable seats, and ample overhead baggage space.

KLM will invest EUR 7 billion in its fleet renewal program over the next few years, accounting for a substantial share of its total investment portfolio. Our fleet will remain a mix of Airbus, Boeing, and Embraer aircraft. Airbus will replace the 737, 777, and 747F (cargo).

BBJ: One obvious benefit of new aircraft is that they are more fuel efficient. What are the long-term goals for AF/KLM in reducing emissions? How much do you invest in sustainable air-fuel, and what are the expectations for the future?

MR: As Air France-KLM Group, we’re the world’s leading sustainable air-fuel user, buying 16% of the world’s supply in 2023. However, more investment in SAF production is needed to make it more readily available at a better price. This way, it can compete with regular kerosene.

BBJ: What other sustainability steps are you taking in day-to-day operations? Do you have published targets, and what is the progress in achieving them?

MR: We aim to reduce our CO2 intensity by 30% by 2030 compared to 2019 levels

and blend 10% of SAF into our fuel mix. distinctive catering concept. KLM offers We remain steadfast in this commitment. Premium Comfort Class exclusively At the same time, we acknowledge that on intercontinental flights, and it is decarbonizing the aviation industry is available for booking on all Boeing 777 not easy. In 2022, KLM published its first and 787 aircraft for the winter season.

Climate Action Plan. In it, we shared our climate strategy, targets, and actions and BBJ: Do you get to visit Budapest showed how they align with KLM’s purpose and Hungary often? What are your and strategy and the challenges of the impressions of the country? aviation industry. Two examples from our MR: I was delighted to be present at Climate Action Plan show the breadth of our the 95th anniversary of the Amsterdamefforts beyond aircraft and their emissions.

Budapest route. It’s always a pleasure Catering: We are committed to to visit one of KLM’s destinations reducing food waste in our in-flight and experience the rich culture and catering services. We deploy AI to history. Budapest is a beautiful city predict what our customers want to eat, with impressive architecture and which helps us minimize food waste. a warm, welcoming population.

AI programs enable us to forecast better how many passengers who have booked BBJ: Finally, you worked for KLM will actually board a flight. Annually, we for 15 years before becoming the can save more than 100,000 kg of meals. head of Dutch Railways and returned Ground operations: We aim to achieve to the airline as president and zero emissions for ground operations by CEO in July 2022. How similar or 2030. Electrification of ground support different are the two industries? equipment is a significant step towards MR: The aviation and rail industries reducing the impact of our ground are wonderful sectors in which millions operations. KLM is trialing electric of people travel every year for work, alternatives to traditional ground power units, to visit family and friends or to see pushback trucks, and towing equipment, and create memorable experiences. with around 70% already electrified.

Safety, punctuality, and customer satisfaction are central at KLM and BBJ: Last year, you introduced a new Dutch Railways. My experience in both Premium Comfort Class category. the rail and airline industry has taught Where does this sit in the seating me how important it is to be flexible and hierarchy, and what do passengers constantly strive to improve and provide get with the service? the best service to our customers. One MR: Premium Comfort Class is an notable difference is that KLM is more intermediate cabin that offers more internationally oriented, operating 24/7 space, luxury, service options, comfort, across the entire globe. This means that, and privacy than Economy while being for example, geopolitical developments more affordable than World Business. have a greater influence on us.

The seats in Premium Comfort are Additionally, the aviation industry faces wider than standard, providing more significant challenges in sustainability. legroom, a larger screen, and a footrest.

Decarbonizing the aviation industry is Additionally, this class features a not easy, but it is essential for our future.

10 | 2

Business

www.bbj.hu

Budapest Business Journal | October 18 – November 3, 2024

Roundtable Panelists Engage with Pharmaceutical Challenges About 50 guests attended the third Pharma CEO Breakfast, organized by the Budapest Business Journal and its professional partners Phoenix Pharma and Benu at the Anantara New York Palace Hotel Budapest on Oct. 8.

BBJ STAFF

The morning began with a keynote presentation by Sylvain Hanssen, group director for digital commerce at Phoenix Pharmahandel GmbH & Co KG, headquartered in Mannheim, Germany.

Hanssen’s presentation focused on an area he described as his “passion” for the past decade: pharma digitization. Making the admittedly provocative point that you don’t realize something is here until it hits you in the face, he said there had been a marked if patchy shift across Europe to online over-the-counter drug sales.

The fourth most significant player in the United Kingdom, for example, is the online vendor Pharmacey2U. Meanwhile, online accounts for only 1% of the market in Germany, although it is growing fast.

In Hungary’s much smaller and “less mature” market, regulatory hurdles were slowing uptake, Hanssen suggested, although there are already 700-plus pharmacies with an online license in the country. He believes it should be relatively easy to remove “friction” from the system.

Combined Channels

Hanssen, who flew in from Zurich to make his presentation, also made the point that digital should be seen as a “new channel, not a new business” and that patients, regardless of country of origin, wanted a combination of bricks-and-mortar pharmacies and online options, not either-or.

The keynote was followed by a roundtable discussion featuring Dr. Judit Bidló, Deputy State Secretary for the Professional Management

of Health at the Ministry of the Interior; Christoph W. Sensen, director general and CEO of HCEMM Nonprofit Kft. in Szeged, which runs the Hungarian Center of Excellence for Molecular Medicine; Dr. Katalin Szalóki, CEO of the Association of Innovative Pharmaceutical Manufacturers of Hungary; and Wolfgang Wallisch, the CEO of Phoenix Group in Hungary and the man who launched the franchisebased Benu pharmacy chain in Hungary.

Highlights of a conversation notable for the willingness of participants to engage with the topics rather than merely agree with one another included the need for research organizations such as HCEMM to work with industry on what industry wants (rather than what academics think it needs).

There is a need for cooperation across the board and in all elements

The fourth most significant player in the United Kingdom, for example, is the online vendor Pharmacey2U. Meanwhile, online accounts for only 1% of the market in Germany, although it is growing fast. of healthcare for economic predictability and improved patient healthcare education. While panelists agreed there was a readiness to talk, there was also a Europe-wide lack of vision.

Deputy State Secretary Bidló thought Hungary’s healthcare suggestions

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Budapest Business Journal | October 18 – November 3, 2024

Business | 11

INSIDE VIEW

CSDDD: A new era of Corporate Responsibility and how to Prepare for It Managing Partner

BSLAW BUDAPEST

under its Presidency of the Council of the European Union had been well received. There was agreement that more must be done to improve efficiency for all stakeholders, including doctors and patients, as much as governments and industry.

Pan-European Approach

While a pan-European solution to healthcare is probably unrealistic, a common approach on things such as pricing and, in particular, logistics would undoubtedly help.

While there were concerns expressed about the level of STEM education, and Szalóki and Wallisch were particularly worried about whether there were enough inspirational teachers to fire the required passion, Sensen, a German national who had previously worked in the German

and Austrian university fields, said things were demonstrably better here. He has no qualms about the quality (or quantity) of the Hungarian researchers he is taking on.

Networking opportunities bookended the keynote and roundtable as the Pharma CEO Breakfast lived up to its mission of bringing together critical stakeholders from the Hungarian pharmaceutical industry to discuss challenges and explore opportunities for growth and innovation.

The goal of the breakfast is to facilitate comprehensive discussions on the latest issues but also to promote collaboration and knowledge-sharing between industry leaders and government representatives, and to foster stronger relationships within the Hungarian healthcare ecosystem.

The European Union has taken a significant step forward in promoting sustainable and responsible business practices by adopting the Corporate Sustainability Due Diligence Directive (CSDDD). Approved on April 24, this directive requires large companies operating within the EU to integrate human rights and environmental due diligence into their operations and value chains.

The CSDDD applies to large EU companies with a minimum of 1,000 employees and a net turnover exceeding EUR 450 million globally.

The legislation also applies to non-EU companies with a substantial presence in the EU, particularly those generating more than EUR 450 mln in revenue from their EU-based operations. While the legislation does not directly apply to SMEs, they may still be affected as part of the supply chains of larger companies.

Though the directive’s application is further down the road, compliance may take several years because of the intricate global value chains of companies. The CSDDD represents a paradigm shift in how businesses operate within the EU, with significant implications for corporate governance, risk management, and stakeholder engagement.

Key Implications

• Increased legal certainty and uniformity: The directive provides a harmonized legal framework across the EU, reducing the fragmentation of national due diligence regulations and creating a level playing field for businesses.

• Enhanced Reputation and Trust: By demonstrating a commitment to human rights and environmental sustainability, companies can foster greater trust with customers, investors, and employees.

• Risk Management and Competitiveness: The implementation of robust, well-established, documented and prepared due diligence processes enables companies to identify and mitigate risks at an early stage, thereby reducing the likelihood of legal disputes and reputational damage.

• Global Influence: The CSDDD establishes a rigorous standard for corporate due diligence that has the potential to shape international norms and practices. As EU companies implement these requirements, their global business partners may also be encouraged or required to adopt similar standards, thus promoting sustainability beyond the EU’s borders.

Practical Implications

The correct implementation of CSDDD is a crucial aspect of ensuring compliance, and as such, it places an increased responsibility on a company’s senior management. To integrate sustainability factors into an existing compliance system and ensure the timely commencement of the pre-compliance phase, a dedicated team or a third-party advisory firm with expertise in sustainability, legal and compliance, and industry knowledge may be required.

Once a dedicated team is engaged, the relevant sustainability criteria must be identified first across the company’s entire value chain. This can be achieved by reviewing and assessing internal regulations and partner contracts.

Based on the general compliance project plans, the team may establish a comprehensive due diligence checklist and a thorough risk assessment process. This will involve identifying and prioritizing environmental, social and governance risks based on their potential impact. This will be based on the data collected through stakeholder interviews and an “issue-spotting” review of documents and policies.

Once the critical risk factors have been identified, focused compliance audits will be conducted, with reports summarizing the findings, key risks and recommendations for improvement.

This recommendation may form the basis of further action plans, including actionable recommendations, clear sustainability goals, and a practical implementation plan outlining steps, resources, and timelines for the company to comply with CSDDD. The CSDDD has the potential to establish new global standards for corporate sustainability, influencing practices beyond the EU and contributing to a more sustainable future for all.

Businesses, policymakers and civil society must work together to guarantee this pioneering directive’s successful implementation and enforcement, enabling it to fulfill its potential to benefit people and the planet.

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

Dr. Róbert Szuchy

12 | 2

Business

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Budapest Business Journal | October 18 – November 3, 2024

Banking Sector’s Annual Blood Donation Drive Grows from 1 Week to 1 Month The Bank Blood Donor Week marks its fifth anniversary, with the banking sector coming together to raise awareness about the critical importance of blood donation.

The Hungarian Banking Association, in collaboration with the National Blood Service and the Hungarian Red Cross, aims to support the national blood supply through a sector-wide campaign.

community’s example will inspire many more to get involved,” he said.

Kovács Levente, secretary-general of the banking association, emphasized the importance of extending the duration of the event to a month this year, recognizing the ongoing need for a reliable blood supply.

The Hungarian banking sector’s commitment to addressing this national need was formalized

in

2020

with the launch of the “Good Deed Bank” initiative, a CSR program aimed at uniting member banks with various socially beneficial activities.

Alongside the high street banks, several high-ranking officials from the Ministry of Finance and the MNB joined forces in the program’s initial phase. Through initiatives such as educational programs, charitable donations, and support for cultural, social, and sports organizations, banks have demonstrated their dedication to fostering a more equitable society.

The program places particular Radován Jelasity, president of the Hungarian Banking Association. emphasis on activities that enable bank employees to showcase their collective efforts, whether through helping to Csaba Kandrács emphasized replenish blood supplies or promoting the This year, the event has expanded the importance of the effort. spread of essential digital literacy skills. significantly into the Bank Blood “Over the past year, the MNB has By fostering a culture of giving and Donor Month, from Oct. 8 to Nov. 8, organized 10 blood donation events, with emphasizing the critical importance of with donation drives across our colleagues participating more than voluntary blood donations, for example, 1,100 times, a nearly 10% increase from the the banking community sets a powerful previous year. These donations have directly example of how businesses can play a pivotal banking locations. contributed to the recovery of more than role in addressing societal challenges.

GERGELY HERPAI The participation of MNB executives and staff further elevates the initiative, The Hungarian Banking Association of our underscoring the collaboration’s fellow citizens, clearly demonstrating initiative, extended to a month this year, importance across the banking sector.

Building up a Blood Bank the immense power of collective action showcases the sector’s commitment The technical coordination of the The Bank Blood Donor Week aims toward a shared goal,” he said. to corporate social responsibility program is handled by the National Blood to assist the nation’s blood supply Speaking at the event, Deputy and saving lives, has the support Supply Service (OVSz) and the Hungarian by encouraging bank executives of the Hungarian National Bank Red Cross, which ensure smooth operations Governor Virág Barnabás urged everyone and employees to contribute to contribute regularly if possible.

(MNB) as a longstanding partner. and handle the logistics of blood donation directly. Ensuring a safe and reliable “By donating blood multiple times a It aims to encourage bank drives. Apart from 18 sites in the capital, blood supply in Hungary requires year, we are not only helping our fellow employees to donate blood and blood donations will also take place approximately 500,000 units citizens recover but also reinforcing the promote the importance of this at regional bank offices in Nyíregyháza of blood annually, which means importance of societal solidarity and life-saving practice on a sector(232 km northeast of Budapest by road) the participation of around mutual support. I extend my heartfelt wide level. The collective efforts and Békéscsaba (209 km southeast).

500,000 voluntary donors. Daily, thanks to all blood donors and hope that of these employees are expected 1,600-1,800 donations are necessary, Important Effort more people will follow the example set to contribute to the production with a single unit of blood having At the launch event hosted by by the banking community,” he said. of thousands of blood products the potential to help three UniCredit Bank, Deputy Governor Nagy Sándor, the deputy director of the essential for medical treatments and or four patients. of the Hungarian National Bank National Blood Supply Service, expressed emergency care across the country.

The banking community’s gratitude for the banking sector’s support involvement in the Blood Donor Week of donation initiatives, noting the growing initiative has grown significantly each participation and the increasing number year, indicating that the program of volunteers. The program’s impact has achieved multiple objectives. is steadily expanding, with the banking First, it has successfully engaged an sector demonstrating its commitment increasing number of participants to corporate social responsibility through during a critical period when the OVSz active engagement in life-saving efforts. most needs to replenish blood stocks.

As part of the program’s fifth Second, it inspires societal solidarity, anniversary, the National Blood Supply encouraging others to participate Service presented the Hungarian in helping those in need.

Banking Association with a certificate With this year’s initiative expanded to of recognition, honoring its outstanding a month, the sector’s collective efforts organizational efforts. Radován Jelasity, will have an even more significant chairman and CEO of Erste Bank, impact, potentially saving thousands president of the association and a regular of lives nationwide. With the support donor with more than 50 donations of bank employees and volunteers to his name, expressed his gratitude. across the country, the banking sector is proving that its role extends beyond Proud Support financial services, encompassing From left, Levente Kovács, Secretary General of the “I am proud of those who support the broader well-being of society.

Banking Association and Sándor Nagy, the deputy others through blood donation, and Director director of the National Blood Supply Service. I remain hopeful that the banking

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3,000

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Budapest Business Journal | October 18 – November 3, 2024

PRESENTED CONTENT

Kimpton BEM Budapest: ‘Approachable Luxury With a Playful, Avant-garde Twist’ General manager Attila AE Domby talks to the Budapest Business Journal about debuting a new hotel brand not just in the Hungarian capital but in Central and Eastern Europe.

BBJ STAFF

BBJ: The hotel had its grand opening party on Sep. 12. What reception have you received?

Attila AE Domby: It has been overwhelmingly positive. We extended the celebrations over three days to ensure we could host everyone we wanted to invite, with close to 1,000 guests in total. The events were spectacular, showcasing the Kimpton BEM brand’s luxury ethos with a touch of playfulness. Highlights included a White Party with DJ Dimitri from Paris to honor the colorful design by Marcel Wanders. Guests have praised the hotel’s design, which balances elegance and bold creativity, as well as the quality of service, drinks, and meals.

Both local and international guests are excited about this fresh, modern take on luxury in Budapest. The feedback has been fantastic, and we look forward to maintaining this momentum.

BBJ: This is the first Kimpton brand hotel in Eastern Europe. Is there greater pressure when you are not just opening a new building but debuting a brand?

AED: Absolutely, there’s an added layer of responsibility when introducing a luxury lifestyle brand like Kimpton to an entirely new market. We’re not just opening a hotel but setting the tone for the Kimpton experience in Budapest, Hungary and Eastern Europe.

It’s about translating Kimpton’s ethos (bold design, heartfelt service, and an approachable luxury experience) into a new cultural context. The pressure is there, but it’s also incredibly exciting to be the ones setting that standard.

BBJ: What brought Kimpton to Budapest, and why now?

AED: Budapest has grown as a cultural and tourism hub, attracting diverse travelers, from leisure to business guests. The city has a vibrant energy, and it’s a destination that blends history, innovation, and creativity, qualities

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sets us apart in the market, with a prime location near historic baths and the proximity of Margaret Island. There’s simply no other hotel like it in Budapest!

BBJ: The hotel itself is a restored 19th-century building. What is its history, and did Kimpton pick it for its potential or the rather splendid surroundings?

AED: The building holds rich historical significance, which the developer Sándor Scheer recognized as an exciting opportunity for the transformation of the entire area. IHG and Kimpton eagerly embraced this once-in-a-lifetime project, where a top construction company partnered with the brilliant designer Marcel Wanders to create something unique. We are proud of preserving the building’s historic character while incorporating modern, creative elements inspired by Hungary’s mythology and history and impeccable service.

The result is a stunning blend of oldworld charm and contemporary flair right in the heart of Buda.

BBJ: Budapest doesn’t just represent Kimpton’s first steps into the region; it was also the first time the brand had worked with designer Marcel Wanders. How would you describe his approach to this project?

AED: It was truly a dream come true. Marcel Wanders is an incredible person and a visionary designer with a breathtaking imagination. I believe IHG, the Kimpton team, and the owners are incredibly proud of the Kimpton BEM Budapest. Sándor Scheer, the owner, is one of the most forward-thinking individuals I’ve had the pleasure of working with.

Attila AE Domby that align well with the Kimpton brand and IHG / Intercontinental Hotels and Resorts. The market is ready for a brand that offers luxury with a personal touch and unique local experiences.

BBJ: Will you cooperate with other IHG hotels in the capital, or is it “every brand for itself?”

AED: While each IHG brand has its unique identity, there is always room for collaboration. We work closely with other IHG properties in Budapest, such as the InterContinental Budapest and Crowne Plaza. I would like to express my gratitude for their continued support in ensuring that we collectively meet the needs of a broad range of travelers.

However, Kimpton’s distinctiveness lies in its personalized service and creative flair, which means our approach to the market will remain unique and tailored.

BBJ: What guest sectors are you targeting? And given that the best hotels become part of their community, what about locals?

AED: We’re targeting a mix of business, leisure, and bleisure travelers. Budapest is a key business destination, but it’s also rich in culture, so we anticipate a strong leisure segment as well.

Regarding locals, we’re making a concerted effort to ensure that Kimpton BEM Budapest becomes part of the community. We’ve already hosted private events and CEO conferences from the Middle East and Asia and welcomed staycation guests from other parts of Hungary and Budapest. Our restaurant, rooftop bar, and events are open and welcoming to locals, creating a vibrant space that encourages interaction between international guests and Budapest residents.

BBJ: The Kimpton brand is a relative newcomer, founded in 1981, but has a reputation for combining luxury and the avant-garde. What will make the brand stand out in Budapest?

AED: Kimpton’s strength lies in its ability to deliver luxury that is approachable, with a playful, avantgarde twist. In Budapest, we stand out by offering not just a place to stay but a full sensory experience, from Marcel Wanders’ imaginative designs to our unique culinary offerings and personalized guest services. We are also pet-friendly (very friendly, in fact), which is rare for luxury hotels. This combination of quirky luxury, heartfelt service, and an inclusive atmosphere

BBJ: The hotel only just opened, but you came on board as pre-opening GM about a year ago, so you must know the building pretty much as well as anyone.

What’s your favorite spot, and why?

AED: This pre-opening journey has been one of my favorite experiences.

Our owner, along with the pre-opening team, the IHG team and the Kimpton BEM Budapest team, were all incredibly forward-thinking and proactive during the process. Managing this project felt like steering a “flying dragon.” Of course, I became intimately familiar with every concrete wall, bare column, and hidden pipe in the building. My favorite part, however, might be the craftsmanship you don’t see but is present throughout the entire Kimpton BEM Budapest.

BBJ: What are your targets for the run-up to Christmas and next year?

How will we be able to judge success?

AED: The festive season is right around the corner, beginning with Halloween, followed by Christmas parties, Christmas itself, and New Year’s Eve. Halloween, NYE, and the carnival parties will be fun and vibrant with live DJs. We’re also planning a special Christmas tree contest, which we hope will become a Budapest Art moment in the city. Luxury is both an experience and a state of mind, and we measure our success by how much our guests feel seen and how their lives are enriched during their stay at Kimpton BEM Budapest.

14 | 2

Business

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Budapest Business Journal | October 18 – November 3, 2024

Zwack Unicum Enters Luxury Market With Family ‘Trezor’ Zwack Unicum has debuted Unicum Trezor XO, a limited edition, exclusive herbal liqueur that marks the company’s first foray into the high-end luxury liqueur category.

BENCE GAÁL

Aged for 10 years in oak barrels, followed by months of maturation in French wine brandy casks, the liqueur is marked with the “XO” label, signifying “Extra Old” in cognac production, reflecting the decades-long process that gives it its unique character.

According to the distillery, the aroma features vanilla, tropical spices, and oaky notes from the barrel aging. The flavor combines the complex taste of more than 40 herbs with chocolate notes.

Unicum Trezor XO comes in a unique, square bottle with clear glass showcasing the liqueur’s pure color rather than the signature opaque green round bottle of “regular” Unicum. Each bottle is individually numbered by vintage, and every year will have its unique ADVERTISEMENT

character, as no two harvests are alike.

The herbs’ flavor profile is influenced by the weather when they are picked.

The newcomer is stored in the most secure section of the firm’s Soroksári út cellars, known as the Trezor branch, which only members of the Zwack family can access. The first batch of Unicum set aside for the creation of Trezor XO was put away

in

2013.

This represents the longest product development in the company’s history and a process that has been kept under wraps for 10 years.

Limited Production

Due to the capacity limitations of the aging area, the production of Unicum Trezor XO is highly limited: only enough

on these bottles were handwritten by Sándor Zwack, chairman of the board of Zwack Unicum Nyrt. himself.

The company says Unicum Trezor XO is best enjoyed neat, at room temperature, in a cognac glass, allowing the rich aromas of the liqueur to unfold fully. This suggestion is more than just a tip; it’s also a nod to Sándor’s father (and predecessor as chairman), the late Péter Zwack, who drank his Unicum in this way.

“The creation of Unicum Trezor XO is the result of many years of hard work, but for us, it holds an even greater meaning, as it not only embodies the best of tradition and innovation but also expresses the love and respect I have for my father,” Zwack says of the latest creation.

“I am happy and proud that we have succeeded in creating something new Sándor Zwack with a bottle of the that both honors his memory and luxury liqueur in the Trezor branch introduces a true rarity into the world of the House of Unicum cellars. of spirits,” the chairman added.

With the introduction of this liqueur, the company is looking to appeal to Unicum to produce 2,000 to 3,000 bottles collectors of rare spirits and dedicated per year is available. From the 2013 fans of Unicum and its storied past. vintage, just 3,200 bottles were made; in Unicum Trezor XO is available 2024, only 2,000 bottles will be available. exclusively at the House of Unicum store The Trezor branch stores 200 bottles or through the Zwack webshop until Nov. from the first batch, and the plaques 10 at a cost of HUF 39,990 per bottle.

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Budapest Business Journal | October 18 – November 3, 2024

PRESENTED CONTENT

2

Business | 15

Driving Innovation at Continental Nyíregyháza impact on our markets. Consequently, our target is to remain a benchmark among other Conti plants in the region, as organic growth in the coming period seems very limited.

From humble beginnings as a translator, Continental Nyíregyháza’s managing director, Zoltán Adorján, reflects on his journey through the company, highlighting the mentorship, ambition, and adaptability that propelled him to the top. He shares insights on how the company is tackling industry challenges with innovation and sustainability at the forefront.

BBJ: With technology rapidly evolving, how is Continental Nyíregyháza leveraging new technologies to stay competitive and deliver value to its customers?

ZA: We started to industrialize new products requiring new technologies in rubber and plastic injection three years ago; these are less labordependent and more automated.

Next year, we will invest significantly in upgrading some of our technologies related to air spring production to reach even higher competitiveness and tackle the problems of the challenging labor market.

“Next year, we will invest significantly in upgrading some of our technologies related to air spring production to reach even higher competitiveness and tackle the problems of the challenging labor market.”

BENCE GAÁL

BBJ: You’ve had a remarkable career trajectory, starting as a translator and moving into executive roles.

What critical factors contributed to your successful career progression at Continental Nyíregyháza?

Zoltán Adorján: Even though a translator position is not high in a company hierarchy, it gave me a lot of insights into various areas such as operations, finance, HR, strategy, and so on, and helped me understand how a multinational company works.

It also gave me the drive and ambition to become an active member of the organization as a leader instead of a passive contributor.

My endeavors were observed and appreciated. I got my first assignment as a material disponent [buyer], and then I was fortunate that a mid-level manager position became vacant, and I was selected at the age of 27. That was followed by different assignments and positions with increasing complexity and responsibility in the coming years in areas like purchasing, logistics and, finally, as deputy managing director.

I believe that the key was that my talent and ambition were supported from the first day by my mentor, the former managing director, who systematically

Zoltán Adorján, managing director of Continental Nyíregyháza coached me and supported my career with all the possible training, guidance and networking during my 20 years in Nyíregyháza. One of these Continental high-level management training programs gave me the chance to meet and then receive an opportunity from my next mentor, the former managing director of another Continental plant of a significantly bigger size and with a different profile: automotive sensors rather than technical rubber products. I attribute my subsequent development stage to the move to a new management role at this location, which took me out of my comfort zone and pushed me to learn and develop into an executive role step by step.

BBJ: Having joined Continental over two decades ago, how would you describe the most significant changes in the company and the industry since you started?

ZA: We live and work in an ever faster-changing social and industry environment, which is perfectly

reflected in a company’s life and development. I remember times with overhead projectors and fax machines, and now we have task planners reachable by cell phones, PowerBIs [data analytics] and AI-supported processes. Times are changing, and so are the requirements in terms of reaction speed, flexibility and demands from all stakeholders, including customers, suppliers and top management. Success is now based on how we can efficiently manage the new requirements.

BBJ: Back in the present day, what do you see as the most significant challenges for Continental Nyíregyháza, and how are you preparing the company to overcome them?

ZA: Our business area is working for Europe, and this continent has an economic outlook challenged by an aging society, slow growth, political and immigration issues and less global business due to regionalization, which will definitely have a negative

BBJ: Given the growing importance of sustainability, what steps is Continental Nyíregyháza taking to ensure its operations are environmentally responsible?

ZA: Sustainability is critical; we are making continuous efforts and investments to lower specific energy consumption and increase the recycling rate within production. In line with the requirements, we are running environmental and energy management systems at the plant level certified according to ISO 14001 and ISO 50001, respectively.

On top of that, we are fostering a company culture supporting our targets through regular awareness workshops and training.

BBJ: Where do you see Continental Nyíregyháza in the next five years, and what are your primary goals for the company during this period?

ZA: We have a clear plan, Vision 2030, which positions our company as a leading benchmark operation within the region, thus contributing more added value to the ContiTech Industry EMEA business area. The foundations for the future and the essentials to realize are available: An experienced and motivated team, technological know-how, cost competency and further potential to grow in multiple areas. We are looking forward to the following years with optimism.

3

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Budapest Business Journal | October 18 – November 3, 2024

Special Report Real Estate Development

Developers Continue to Exercise Caution in Many Hungarian Sectors As developers and investors must justify projects as being financially sustainable and offering favorable returns on investment, ESG issues are becoming ever more predominant in determining the long-term viability of the lifecycle of a real estate asset.

That includes an exit strategy on favorable terms and at a time of choosing for the vendor.

GARY J. MORRELL

Whether talking about a development, redevelopment, renovation or an investment project, institutional (and, increasingly, private) investors are expected to justify the ESG elements of an asset to their board, shareholders or ownership.

Further, continuous proof of ESG elements and procedures is needed for EU Taxonomy purposes, involving an efficient and accurate accounting process that is transparent, easily accessed and verifiable by a third party.

“The most significant challenge developers are facing is the uncertainty of the divestment, especially arising from the lack of international institutional investors. In addition, what affects all sectors are the high financing costs, although there is some easing in the continued elevated construction and labor costs,” comments Kata Mazsaroff, managing director of Colliers Hungary.

“In the logistics market, there is healthy demand, as opposed to the office market, where we still see a slight uncertainty in occupier demand. The moderate demand from the retail sector,

and ESG-focused investment funds,” predicts Barta of the HuGBC. “Governments and financial institutions are increasingly offering incentives, tax benefits, and lower interest rates for sustainable projects. Additionally, developers and investors will seek private capital from institutional investors who prioritize ESG criteria, while regulatory frameworks like the EU Taxonomy will guide capital flows towards compliant, sustainable ventures,” he argues.

Attractive Destination

The Marina City development by the Hungarian developer Cordia, part of the Futureal Group. combined with declining corporate and household consumption, could contribute to uncertainty,” she says.

“There is a growing interest in the hotel market for development opportunities, significantly fueled by the recovery in international tourism. This trend may continue to drive demand not only for lower-category hotels but also for higher-category ones,” Mazsaroff adds.

Multiple stages of the real estate development process are impacted by EU Taxonomy and ESG expectations, says Zsombor Barta, ambassador to the Hungarian Green Building Council (HuGBC). He lists them thus: Planning and design: incorporating sustainable materials, energy efficiency, and biodiversity protection.

Construction: ensuring minimal environmental impact, reducing carbon emissions, and waste management.

Operation and Maintenance: energy performance monitoring, water management, and health and safety protocols.

Financing and Investment: aligning with green finance criteria and sustainable investment principles.

Spreading Influence

The influence of EU Taxonomy and ESG expectations extends beyond the office and logistics sectors, where ESG elements are already established, and they are now significantly impacting areas such as residential real estate, retail, hospitality, and healthcare.

“The real estate industry has a lot to do in terms of implementing the

principles of sustainable development,” comments Veronika Themerson, center of excellence director for environment at Skanska CEE. “First of all, the construction process should be viewed holistically in terms of the possibility of implementing the principles of sustainable development, starting from the selection of the plot for investment, the selection of the leading and accompanying functions, construction and finishing materials, the method of construction, up to the configuration of the building and providing instructions to the users on how to use the facility in the most optimal way,” she explains.

“Only the joint actions of the investor, designer, contractor and user, based on shared values of supporting the planet, bring the most beneficial solutions. This requires trust and dialogue between stakeholders from the earliest possible stage of implementation,” Themerson says.

ESG-compliant developers and investors are more likely to thrive in the future market as regulatory requirements, investor priorities, and consumer demand increasingly coalesce in favor of sustainable practices. Those who fail to adopt ESG standards may struggle to attract funding, face regulatory hurdles, and lose market share, all of which make compliance critical for longterm survival and competitiveness.

“New ESG expectations will be financed through a combination of green financing options, such as green bonds, sustainability-linked loans,

Hungary has generally been regarded as an attractive investment destination as it provides a significant yield premium on both Western Europe and Poland and the Czech Republic (the two biggest markets in CEE) for investors seeking highquality, fully-let sustainable assets with a price premium. However, investors are now adopting a wait-and-see approach towards the country with the ongoing yield correction and resulting low liquidity.

“In terms of investment, the most preferred and sought-after assets, apart from industrial properties, are new office buildings developed in good locations that prioritize sustainability and energy efficiency,” says Colliers’ Mazsaroff.

“ESG-compliant office buildings typically exhibit lower vacancy rates and higher rental fees compared to the market average, ensuring stable cash flow. Therefore, they and other ESGcompliant assets can ensure profitable operations in the long term, making them a clear priority in investment decisions,” she notes.

Avison Young estimates yields for Hungary

at

6.75%

for prime office, 6.75-7% for prime industrial, and 7.5-8% for strip malls.

“ESG-compliant developers and investors are more likely to thrive in the future market as regulatory requirements, investor priorities, and consumer demand increasingly favor sustainable practices.

Those who fail to adopt ESG standards may struggle to attract funding, face regulatory hurdles, and lose market share, making ESG compliance critical for long-term survival and competitiveness,” concludes Zsombor Barta.

Analysts see an increasingly positive impact on the different real estate segments; market influences and ESG are connected (and pulling-pushing in the same direction), and, therefore, all parties are in a potential “win-win” position.

In this way, the more deeply entrenched ESG elements and processes are in a project, the more the various stakeholders can benefit and the greater the returns for the financial stakeholders.

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Budapest Business Journal | October 18 – November 3, 2024

PRESENTED CONTENT

New Tenant Benefit System set to Disrupt Domestic Real Estate Market CPI Hungary is offering a groundbreaking opportunity to its partners with a complex solution that is unique, even in international terms. The newly introduced CPI Club membership provides advantages to office building tenants that not only make company operations more flexible but also elevate the employee experience and office environment to a new level.

Special Report | 17 CPI’s office business development director. “Through our asset management expertise, we have created a tenant benefit system that sets us apart from our competitors. We offer services and, starting early next year, portfoliolevel accessibility advantages, so-called location mobility, for employees, providing customized solutions for the changing needs of tenants.”

The company recognized early on that by connecting the services, locations, and tenants within its office buildings and hotels, it could create a new tenant benefit system and operational model that simplifies the daily lives of employees, and, adding to this, significant and exclusive club membership discounts.

“This means that if a partner signs a contract with us, their employees won’t have to travel across the city to use their dedicated office space. Instead, through CPI’s tenant benefit system, they can work in any building in our portfolio or use comfort and well-being service packages,” adds Kovács-Bertók.

“This smart solution increases tenants’ advantages in terms of spatial and temporal efficiency, cost-effectiveness, employee retention, and other benefits.”

Practical Examples

BBJ STAFF

In recent years, economic players, business owners, and office tenants have been unable to get off a rollercoaster for which they never bought a ticket. Financial and environmental changes are happening rapidly, significantly impacting various sectors, including real estate.

These factors create significant uncertainty for both tenants and landlords. Companies are hesitant to plan for long periods, as employer and employee needs are constantly changing. In this environment, office owners and operators must provide up-to-date, tangible support to tenants, which requires a fundamentally new approach.

3

In response, CPI no longer offers mere rental spaces but ownership services, partnerships, and landlord advantages. One of the latest elements of this approach is the CPI Club, a tenant benefit system that is innovative even on the international level.

Tailored Responses to Individual Needs CPI recently expanded by merging with two companies that share its valuecreating mindset, opening extraordinary

For instance, if an employee lives far from the main office but has a meeting, they can easily book a meeting room in a CPI office building closer to their home or use the club corners designed for members (workspace areas or hotel-like lounge spaces for meetings) via the online system.

Similarly, if a community event, Zita Kovács-Bertók venue for a family birthday, or even sports, beauty, health, or comfort services are available within the opportunities. The firm is currently network, the club membership entitles the largest real estate owner and them to access the full range of asset management company in the services at a discounted rate. domestic market, managing more than “We encourage our tenants to 650,000 sqm, half of which is office space, think in terms of our entire portfolio,” while the rest includes shopping centers, Kovács-Bertók emphasizes. “With retail parks and hotels. This diverse club membership, they are entitled portfolio allows tenants and employees to hold business meetings in other to find solutions that meet their needs buildings and use the unique services in key business hubs in the capital. and features of any building, which “We are thinking in terms of network can give them a competitive edge solutions, leveraging the diversity and size in the market while also simplifying of our portfolio,” says Zita Kovács-Bertók, their hours of relaxation.”

18 | 3

Special Report

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Budapest Business Journal | October 18 – November 3, 2024

Office Builders Exercise Caution in Uncertain Market Development in the Budapest office market continues to be limited, with developers exercising caution in their strategies and new projects being put on hold given an uncertain geopolitical environment, unclear demand and, critically, concerns over the cost of finance.

GARY J. MORRELL

Phase I of H2Offices, by Skanska. Phase II is ready to get underway once preleases are secured.

However, some large projects are ongoing and the current market is favorable for those developers that can self-finance. As demand has fallen overall, the vacancy rate has risen to 14%, albeit with a wide variation range of 7.7% and 33%, reflecting the popularity of central and suburban locations instead of those on the periphery.

As the number of developments in the pipeline is falling, there are concerns over the future availability of larger contiguous, quality, welllocated and ESG-compliant spaces in the longer to medium term.

“Financing is crucial, and most banks require a 45-50% prelease for an office development. Securing sufficient preleases for each phase is crucial to avoid financial strain,” comments Valter Kalaus, managing director of Newmark VLK Hungary.

Colliers has traced 213,000 sqm of speculative office space under construction in Budapest, representing

15

projects

with a possible handover date of the end of 2025. Total Budapest stock stands at around 4.3 million sqm, according to the Budapest Research Forum, which comprises CBRE, Colliers, Cushman & Wakefield, Eston International, iO Partners and Robertson Hungary. Around 3.5 million sqm of this was developed on a speculative basis, the BRF says.

CBRE puts the total Budapest office delivery at 160,000 sqm for 2024 (representing a 30% year-on-year increase), with a total of 520,000 sqm under construction, of which 18,000 sqm is refurbishment of existing buildings.

The consultancy has traced about 100,000 sqm due to be delivered in

2025 with a significant prelease ratio.

A further 256,000 is scheduled for 2026 with a very high prelease ratio (in large part due to public sector authority take-up). An additional 213,000 sqm is at an advanced planning stage and could be completed by 2027. Office demand is expected to rise with the beginning of a fall in vacancy rates, according to CBRE.

Unconducive Climate

“The current economic and financial climate is not conducive to new starts on a speculative basis, so we expect these projects to commence after a reasonable level of pre-letting or owneroccupation,” says the consultancy.

A few new development projects are being initiated. Futureal is developing phase II of the Corvin Innovation Campus. Longer-term phased developments can be seen as a viable development option in the current environment, with phases going ahead based on preleases. Skanska, for example, is in a position to undertake phase II of H2Offices and phase III of the Hold utca office project if preleases are concluded.

“They are a good way to mitigate leasing risk, although the currently soft investment market conditions in the CEE make it difficult to put together profitable schemes, even with prelease tenants and careful phasing,” comments Norbert Schőmer, country manager at Atenor Hungary.

Importantly for market development, a meager percentage, probably not more

than

30-35%

of the stock, is EU Taxonomy and ESG-compliant in the view of Kalaus of Newmark VLK.

“In the Hungarian office market, integrating ESG and EU Taxonomy features into office development projects is increasingly important for attracting tenants, securing financing, and ensuring long-term profitability while properly operating the building in an efficient way. Both ESG and the EU Taxonomy emphasize sustainability, resource efficiency, and social responsibility, aligning developments with broader EU climate and social goals,” he says.

Regarding demand, the hybrid model is here to stay, with three or four days per week in the office seen as well-balanced for team members.

This encourages loyalty, brand awareness and teamwork, Kalaus says.

In addition to EU Taxonomy considerations, leading companies increasingly seek high-quality, ESGcompliant offices. Developers who can guarantee modern, sustainable spaces are better positioned to secure preleases.

Highest Levels

Concerning sustainability, only 3% of the Breeam-certified office stock in Budapest reaches the highest level of “Outstanding,” according to CBRE. Just 10% of the Leed-certified stock achieved “Platinum,” the highest level in the other primary third-party sustainability accreditation system.

“Creating spaces that prioritize occupant health, including good air quality, natural lighting, and biophilic design (for example, indoor plants and green spaces) is increasingly important,” Kalaus insists.

“Well certification could be pursued to demonstrate commitment to employee well-being. Office developments must ensure that ESG-related efforts are

transparent and measurable. Regular reporting on energy usage, carbon emissions, water consumption, and waste management should be integrated into the project’s governance framework.

This aligns with the EU’s focus on improving corporate sustainability reporting,” he adds.

Analysts believe that the office sector in Hungary and Central Europe will continue to be considered a leading development option and a prime investment destination.

“New developers could certainly enter the market, especially if they have the capital and innovative approaches to meet the current demands of the office sector, such as sustainability and ESG compliance,” Kalaus argues.

“It would definitely benefit the entire industry, as some wellknown developers are leaving the market. The number of key players is decreasing; therefore, competition is not as fierce as it should be. Given the established presence and expertise of CEE and Hungarian developers, they will likely remain dominant players in the short-to-medium term. These experienced developers have a deep understanding of the market and strong networks, which gives them an edge,” he says.

The office has been an investment benchmark for the past 50 years.

Nowadays, the sector has lost some of its appeal, but companies tend to employ a more educated workforce that works in teams. For their accommodation, “the obvious solution is still a centrally located, flexibly usable closed space, called an office building. Consequently, I think the office sector will still be a benchmark in the future,” concludes Atenor’s Schőmer.

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Budapest Business Journal | October 18 – November 3, 2024

Special Report | 19

Developers Moving to BTS Approach, but Industrial Still a Growing Sector Significant Responsibility and HelloParks all developing more highly specified Breeam and Leed accredited complexes.

Industrial real estate is going through an upturn with both leading regional industrial park developers and operators and Hungarian players active. The sector has grown on the back of increasing logistics demand in the COVID and post-pandemic environment and demand for industrial space to meet significant FDI, notably in the electric vehicle and EV-related industries.

GARY J. MORRELL

The market is continuing to grow despite concerns over perceptions that demand may be moderating, encouraging developers to move towards a more cautious built-tosuit development model rather than a more ambitious speculative (“build it andthey will come”) approach.

There is currently more than 5.1 million sqm of modern logistics and light industrial space in Hungary, with over 3.5 million sqm of this in the Greater Budapest area, according to the Budapest Research Forum (consisting of CBRE, Colliers, Cushman & Wakefield, Eston International, iO Partners and Robertson Hungary).

Vacancy has risen to more than 8% in Hungary, but is still below the 10% CEE regional vacancy threshold. Cushman & Wakefield has

traced

484,000 sqm

of industrial space due to be delivered this year. CBRE sees vacancy in Greater Budapest and regional Hungary as meeting at around 8.5%.

“The real estate sector is the biggest energy consumer in the EU; hence, it carries a significant responsibility to fulfill climate neutrality criteria,” notes Anna Bencze, head of sustainability at HelloParks.

“Such an achievement calls for a substantial reform of current practices, which we perceived as a promising opportunity from the beginning. The industry must anticipate forthcoming scenarios that would satisfy the interests of the environment, local communities and businesses alike. Our explicit goal is to motivate the entire industry through our ambitious targets,” she adds.

HelloParks Maglód Megapark was the first industrial property in Hungary to achieve the Breeam New Construction “Excellent” ranking, while MG3, completed in the second phase, was the first to achieve an “Outstanding” rating. Among its energy efficiency features are roof-mounted solar panels, which allow the offices to operate with The HelloParks Maglód MGE building was the first in the country zero primary energy consumption. to receive a Breeam New Construction “Outstanding” certification. Rain is also harnessed and collected in a separate storage tank for irrigation.

“ESG demands and the EU Taxonomy The amount of industrial stock (93 km northwest of Budapest), are significantly influencing the logistics in Hungary is still relatively small the Belgium VGP has developments real estate market in Hungary. These compared to the major Central in Kecskemét (87 km southeast) and factors are driving a shift towards European players of Poland and Győr (120 km west) and the leading more sustainable and environmentally the Czech Republic and, increasingly, European industrial developer, friendly practices within the the rapidly growing Romania market.

Panattoni, has a development industry,” says Hunyadi of Prologis.

However, a regional crossproject in Debrecen (230 km east). country logistics and light industrial The VGP and Panattoni projects network has finally emerged, as has are based on preleases.

“The industry must long been the model in other CEE The Hungarian Infogroup, which markets. Developers are also meeting in September changed its name to anticipate forthcoming more complex tenant demands.

Innovinia, is developing its IGParks scenarios that would These, alongside increasingly network in regional industrial hubs. stringent EU Taxonomy regulations, This also reflects a shift towards satisfy the interests mean developers are delivering regional cities by developers in of the environment, increasingly ESG-compliant logistics response to incoming investment. and light industrial facilities.

“It is clear that the needs of a local communities The industrial pipeline for Hungary production assembler are completely currently stands at 460,000 sqm, a different from those of a logistics and businesses alike. large proportion of which is preleased, service provider. Their utility Our explicit goal is according to Colliers. The largest needs are very specific, which projects are a 118,000 sqm warehouse can be a particular challenge to motivate the entire at CTPark Szigetszentmiklós (20 km in the market, as it can be very industry through our south of central Budapest by road), time-consuming to acquire and a 56,000 sqm manufacturing facility build the required capacity,” ambitious targets.”

by Weerts at its Vecsés Airport comments Zsuzsanna Hunyadi, park, and a 45,000 sqm facility at director of leasing and customer HelloPark Maglód Budapest Airport. experience at Prologis Hungary.

“There is an increased demand for “At Prologis, we have been working Specialist Interest sustainable buildings; customers with production and manufacturing The industrial market has attracted and regulatory bodies are more and companies for more than 10 years, with specialist international industrial more prioritizing sustainable logistics developers and park operators in facilities. At this moment, this demand addition to established Hungarian is especially strong with larger of our portfolio containing developers, moving into what international companies,” she notes. manufacturing-assembly customers, has become an attractive market.

“As ESG also encompasses so our experience allows us to respond The leading developers with regard social factors, at Prologis, we are quickly and with great expertise to supply are currently, HelloParks committed to focusing on the wellto such requests. Our Prologis (a relative newcomer and part being of our customers. We created Park Budapest-Sziget II park can of the Hungarian Futureal Group) ParkLife spaces to improve the local fully and immediately meet large and the prolific CEE industrial quality of life and help our customers capacity requirements,” she adds. developer CTP. Wing, an established attract and retain workers. These Sustainability accreditation Hungary and CEE developer include green spaces, sports and is becoming the norm in the upper and investor, has ongoing industrial fitness facilities, job training centers strata of the industrial sector with projects in the Budapest area. and recreational and community developers and park operators Outside of the capital, CTP, for engagement spaces as an added such as Prologis, CTP, Panattoni example, has a project in Komáron value,” Hunyadi concludes.

40%

20 | 3

Special Report

www.bbj.hu

Budapest Business Journal | October 18 – November 3, 2024

Budapest Hotel Sector an Attractive Investment Option The latest such renovation is the luxury, 127-room Kimpton BEM Budapest hotel by InterContinental Hotel Group, with interior design by Marcel Wanders.

The hospitality sector is considered an attractive development and investment option; Hungary and the Central European region are popular tourist destinations, and guest nights are rising toward the record highs of pre-pandemic levels.

Unique Opportunities

“The redevelopment of historic buildings offers a unique branding opportunity and capitalizes on Budapest’s rich cultural heritage, appealing to all levels of tourism demand,” says Takács.

“However, such projects often face regulatory hurdles and higher renovation costs due to preservation requirements; usually, there is a constraint on the number of buildable rooms. A new building is just more efficient; on the other hand, empty plots and demolishable buildings in good locations are hard to find. That is why we will see more conversions,” he argues.

Central and Eastern European hotel assets are significantly behind those in Western Europe with regard to ESG issues, as investors in CEE still tend to be private individuals with less developed environmental, social and governance strategies. As of 2023, only

GARY J. MORRELL

Despite the perceived complexities of hotel development in comparison with the more established market sectors such as office and industrial, where debt finance and required income can be achieved through long-term leases, hotels and hospitality are successfully attracting developers and investors from other fields.

In a reflection of the popularity of the sector, investors are concluding longterm leases or franchise partnerships with leading branded international hotel operators, who provide the expertise needed for the day-to-day operation of the assets, leaving the owners to concentrate on asset management.

Although several hotel projects have been put on hold or are subject to delays due to the complexities of the development process, as well as concerns over longer-term guest demand and rising construction, operational and financing costs, there is still a significant hotel pipeline with a number of international brands entering the market. Analysts report that the Hungarian hospitality industry is looking to market itself to a more up-scale profile of tourists.

“Budapest is approaching prepandemic visitor numbers; with tourism rebounding strongly, 2024 is promising to achieve

nearly

90%

of 2019 levels,” comments Péter Takács, a partner at Newmark VLK Hungary.

“International arrivals are supported by a renewed focus on leisure and business travel, alongside an increasing number of direct flight connections. There is still room for growth, though, both in revenues and especially profitability,” he says.

“Budapest has approximately 2,500 hotel rooms in the pipeline. I would say it is healthy. Outside Budapest is

about

2%

The Kimpton BEM Budapest, in a restored 19th-century building, is the latest luxury hotel to open in Budapest. a slower, more careful market due to negative sentiment on local purchasing power for domestic stays,” Takács notes.

“International leisure travelers could be attracted by well-known brands to countryside spa and wellness resorts, but we do not see enough brand proliferation and unique value propositions to trigger significant foreign demand,” he adds.

Consultancy CBRE sees a strong pipeline for both Budapest and Prague in the CE region. “Based on our pipeline, hotel stock will be expanded with circa 1,750 rooms in 2024,” it reports.

Increasingly Attractive

As an increasingly attractive development option, the hotel market has drawn in developers such as Wing and CPI Property Group, who operate across various property sectors. Wing, for example, has delivered the 12,000 sqm Tribe Hotel within its 42,000 sqm Liberty office development in Budapest.

“As one of the leading real estate firms in Hungary and the region, we are committed to projects that represent high architectural quality and create long-term value. The Liberty reflects our ambition to create a dual-branded hotel with a wide range of services and an outstanding guest experience as part of an internationally acclaimed mixeduse development,” comments Noah Steinberg, chairman and CEO of Wing.

Wing is also constructing a second hotel at Budapest Ferenc Liszt International Airport in cooperation with the airport operators Budapest Airport.

The new 167-room Tribe Hotel is being built next to the existing Ibis Styles Budapest Airport Hotel, also developed

by Wing and opened in 2018.

In a new mid-level Budapest project, IHG Hotels & Resorts has announced its first 170-room Holiday Inn & Suites property in Europe with the signing of Holiday Inn & Suites Budapest Centrale. Set to open in

late

2026,

within a new mixed-use development located directly above the Puskás Ferenc Stadion metro station and intermodal transport hub. The project’s developers, Chain Bridge Ventures, and hotel lease operators, Mogotel Hotel Group, have entered into a long-term franchise agreement with IHG. A notable trend in Budapest, with its UNESCO-protected historical center, has been for the purchase and redevelopment of listed Central European buildings into hotels in prominent heritage-protected locations, giving the buildings a new use-value while at the same time preserving the turn-of-the-century feel of the historic center of the city.

of hotels were sustainability accredited in Budapest, according to Cushman & Wakefield. Hungary had five accredited hotels.

ESG features are crucial for larger institutional and branded hospitality investments. They not only align with existing corporate values but also attract a more conscientious clientele, driving long-term business. For instance, hotels that cater to multiple market segments can benefit as MICE organizers, leisure groups, travel agents, and corporate clients increasingly prefer hotels with strong ESG practices. Nevertheless, for smaller standalone properties, the process will be slower until they begin to prioritize, says Takács.

“I think it is more complex and difficult to start an office project today than a hotel one. When you build an office building, you take a broader demand profile for your location (unless it is built-to-suit), build your building and hope to attract tenants, which, in a market such as today, can take quite a long time,” he explains.

“A hotel development takes longer in the preparation phase because you need to find your market niche and service matrix, based on which you secure the operator. But once you have that in place, it goes quickly. You build it, hand it over, and you are all set for at least 10 years,” Takács says.

“Location remains critical, along with adaptability to market shifts and guest preferences. Whether it is a hotel management agreement, a lease, or a hybrid model, it has to be a win-win. For this, you need to find the right accommodation and service matrix and the right brand and operator for your particular location and building,” he concludes.

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Budapest Business Journal | October 18 – November 3, 2024

PRESENTED CONTENT

3

Metrodom to Focus on Budapest as it Transitions to Premium Residential Market András Kígyósi, sales director at Metrodom, discusses changes in the market over the past seven years and a switch in focus for the developer as it moves into the premium residential sector.

BBJ: And how has Metrodom changed over that period?

AK: Metrodom has always supported the goal of developing housing projects, even in challenging market conditions, since we are specialists in residential real estate. We adapted to the changing environment by concentrating our

broadest range of potential customers.

For this reason, both investors and private buyers can be found among our customers. At the start of a project, the proportion of investors is typically higher due to the more favorable prices per square meter. As you get closer to the date of moving in and the predictable timing, those factors are more significant for private buyers, so they begin to dominate. It can also be observed that investors prefer smaller apartments, while private buyers look for larger homes. The overall ratio of investors at Metrodom is similar to the market average, which is around one-third of the total buyers.

“Fortunately, since the beginning of this year, there has been a noticeable upswing in the market.

A restrained optimism can be felt, which can be seen in the sales of apartments and the willingness of developers to start projects.”

BBJ STAFF

BBJ: You became sales director at Metrodom over the summer but led the research and analysis department for several years before that. How have you seen the Hungarian residential market change over the years?

András Kígyósi: When I joined Metrodom in 2017, we were in the period of the so-called 5% VAT and Csok (Family Housing Allowance Program) era. Due to the inflexibility of the supply, the new build apartment market could not keep pace with the increased demand, meaning prices went up in the short term since the planning, launch, and implementation of projects span several years.

This housing market expansion lasted until the end of 2019. At the beginning of 2020, the first shock appeared on the market, as the COVID-19 pandemic broke out and the VAT on newly built apartments returned to 27%. The epidemic reorganized supply chains, which also caused an increase in the price of construction materials and costs.

It also impacted the interest rate environment as corporate HUF interest rates started to rise. The energy crisis and uncertainty following the outbreak of the war between Russia and Ukraine was a further shock to the market.

Fortunately, since the beginning of this year, there has been a noticeable upswing in the market.

A restrained optimism can be felt, which can be seen in the sales of apartments and the willingness of developers to start projects.

Special Report | 21

András Kígyósi resources and focusing on projects with optimal locations. In the more restrained sales periods of recent years, our company focused on developing our internal structure, digitalization and innovation, which enabled the professional renewal and change of direction that is now not only present on the design table but also takes shape in a physical sense.

BBJ: Metrodom was known for affordable, compact, high-quality mid-level apartments but has started to develop premium, high-end, sustainable flats. What brought that change, and how has it been received in the market?

AK: The first step of the premium transition was probably our Metrodom Őrmező residential park, handed over in 2021. The great success of this project encouraged us to design others with higher technical content and added value. At the Metrodom River project in District XI, residents can already perceive the full spectrum of our premium quality; their lives are characterized by numerous green solutions, plenty of community

services, comfort and a high standard of living thanks to planning awareness.

BBJ: Metrodom launched a rebranding campaign in September. What are the main elements of this, why now, and how has it been received?

AK: The slogan of our campaign is “Lift your life to a new level! Metrodom hi-life,” and you can meet it on TV, in the cinema, on outdoor surfaces, and, of course, in online spaces, too.

The main aim of this campaign is to highlight our premium transition.

It is designed to increase brand awareness for Metrodom; on the other hand, we would also like to educate potential buyers about the aspects that should be considered when choosing a newly built apartment.

BBJ: Your Metrodom Green development in Millennium City Center, District IX, will be handed over in Q1 2025. Are you targeting new homeowners or investors with these apartments? What would be the investors’ rationale?

AK: We design our housing mix on each project to be able to reach the

BBJ: Have government policies like the 5% VAT on new homes helped your business grow?

Are there other state interventions you would like to see, or should the market be allowed to operate more freely?

AK: The 5% VAT has contributed a lot to projects with approved plans appearing on the market. It is also worth mentioning here that the construction of 10,000 new apartments increases the GDP by approximately 0.8-1 percentage point, so it is in the interests of both the government and the real estate developers to establish a long-term, predictable incentive system for the sector. We would like to see additional market support interventions. As long as the interest rates for housing market lending are at the current level of around 6.5-7%, the market will stagnate or show only minimal growth.

Fortunately, signs are already visible that this is changing, and we hope for a positive continuation of the trend.

BBJ: What projects does Metrodom have lined up for the future? Are you focused on Budapest, or are you also operating in other towns and cities in the countryside?

AK: We currently have two ongoing projects that we plan to continue, namely Metrodom River in District XI and Metrodom Green in District IX. We also have a completely new residential park in preparation in District XIII, which has been named Metrodom Beat.

We plan to deliver approximately 1,500 apartments in the next couple of years, focusing on Budapest.

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Special Report

www.bbj.hu

Budapest Business Journal | October 18 – November 3, 2024

Real Estate Market Talk: Balancing Supply and Demand Developers are exercising caution against a background of geopolitical and economic worries, development costs, long-term demand, and concerns over investment markets and the provision of an exit strategy. Further, actors at all market levels and stages need to adapt and develop their activities to meet EU Taxonomy and ESG requirements.

The Budapest Business Journal asked leading professionals about the opportunities and challenges facing Hungary’s real estate development markets.

However, quantitative demand will be replaced by qualitative demand, with a particular emphasis on ESG criteria. This is the kind of demand we satisfied with our new preleased E.On headquarters building, BakerStreet 1. The development market is open to everyone; however, currently, it is not a profitable sector. Therefore, newcomers do not tend to enter from international markets. On the other hand, we are experiencing frequent market entries from the local construction industry side, often associated with less transparent, off-market transactions.

Norbert Schőmer Country Manager Atenor Hungary Poland and Spain are popular investment destinations, while there are concerns about doing so in the United Kingdom and Germany.

Benjamin Perez-Ellischewitz Hungary stands somewhere in between these positions as investors are maintaining a wait-andsee position towards the country. A fall in interest rates and open trading are priorities for investment everywhere.

Although volumes have risen in Poland and Romania in the first half year, they have fallen in Hungary.

If one or two office deals are closed, this will help the market, although investment volumes will be limited to EUR 350 million-400 mln for the year.

After a dry period for the Hungarian investment market, there should be more stability by the end of 2025.

Benjamin Perez-Ellischewitz Principal Avison Young Hungary

Retail development is dominated by smaller retail parks and strip malls, as stagnant retail sales do not justify large retail developments. There is market demand for retail parks of GARY J. MORRELL 15,000-20,000 sqm in the Budapest area, but outside the capital, these In the long run, are 4,000-7,000 sqm, adjacent to or I am optimistic including a food market. Such projects because that provide a fresh-air environment new office are popular with customers in the developments, post-COVID period and popular especially with retailers due to their low service refurbishments, charges. Regarding existing shopping are needed in center stock in Budapest, the first-tier several parts centers have very low vacancy rates of of Europe. around 1-2%. There are existing tenants Lisbon is waiting to relocate within shopping a perfect centers such as Allee, Westend and Norbert Schőmer example, Arena Plaza. However, new brand where Atenor entrants such as the Polish W.Kruck [its is building two large office projects oldest jewelry retailer] have successfully and cannot build quickly enough. I am created a critical mass of stores in convinced that moderate demand will a short time by locating to what return to the Budapest market as well. are considered second-tier centers.

In the current demand environment, a number of shopping center owners have improved their F&B and food court offerings.

Further, Leed Anita Csörgő and Breeam In-Use sustainability accreditation is seen as necessary for owners to obtain finance. From the tenants’ perspective, the concern is for lower energy and service charges.

Retail saturation for Hungary per 1,000 inhabitants is below the EU average, and that of other Central European countries, and evidence shows that Hungarians have a preference for the physical shopping experience. With rising tourism visits, footfall is growing in the Váci utca and Andrássy út areas, with more midand high-end retailers locating on these major Budapest high streets.

Anita Csörgő Director, head of retail Colliers Hungary In the longer term, ESGcompliant projects will likely become the standard for viability as regulatory pressures, investor expectations, and consumer Zsombor Barta preferences increasingly prioritize sustainability. Non-ESGcompliant projects may face higher risks, reduced funding opportunities, and declining market appeal, making ESG alignment essential for long-term success and competitiveness.

The influence of EU Taxonomy and ESG expectations extends beyond the office and logistics sectors, significantly impacting residential real estate, retail, hospitality, and healthcare.

These industries will need to adopt sustainable practices, focusing on energy efficiency, waste reduction, and responsible resource use. In addition, social factors like labor rights, community engagement, and sustainable supply chains will become critical.

Regulatory pressures and evolving investor expectations will drive these changes across various sectors, pushing them to align with ESG principles.

Zsombor Barta Ambassador, Hungarian Green Building Council Industrial development seems to be on a steadily increasing path in Hungary.

The 2024 FDI is forecast to reach

a record level this year, which is fundamentally linked to industrial development, more precisely to the automotive industry.

Domestic logistics is potentially not growing as it is strongly related to local consumption (in a slight decline), but international logistics has evident growth this year. The tendency is not clearly visible yet, as the Budapest logistics property market is starting to become slightly overheated due to a possible oversupply of space.

The industrial market, on the other hand, is on the rise due to Tier 1 and Tier 2 suppliers and 3PLs [third-party logistics] serving the performing industry sectors. This is more of a regional trend these days.

Our strategy targets all of the above, and we are growing our regional industrial development portfolio yearon-year. We have managed to win key built-toBalázs Czifra suit projects, for example, in Kecskemét and Miskolc, and we are focused on not only providing speculative space for immediate requirements but even more so for more complex BTS requirements. Our portfolio has a fair balance of around 25,000-40,000 sqm of speculative space, and a similar amount of BTS schemes developed year-by-year.

Balázs Czifra Director of sales and asset management Innovinia The Hungarian office market presents a mixture of challenges and opportunities with several critical influences shaping the landscape: rising vacancy Valter Kalaus rates and limited good space availability, ESG compliance pressure, increasing fit-out costs and service charges.

In the current environment, longerterm phased developments based on preleases can be viable, but their success largely depends on several key factors. With vacancy rates around 14% and many office leases signed preCOVID now expiring, there is some uncertainty about future demand for large office spaces.

However, if developers can secure strong prelease commitments from corporate tenants early in the

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Budapest Business Journal | October 18 – November 3, 2024

process, phased developments can provide flexibility. Large companies are increasingly looking for highquality, ESG-compliant office spaces, which can generate demand for new projects. Developers who can guarantee modern, sustainable spaces are more likely to secure these preleases, mitigating the risks of longer-term projects.

Valter Kalaus Managing principal Newmark VLK Hungary At Prologis, we focus on the balance between supply and demand, one of the most critical factors in the economy, and develop accordingly. It Zsuzsanna Hunyadi is important for the market’s long-term health that all participants monitor the marketaffecting factors and react appropriately.

The cyclical nature of the market requires speculative development to take a back seat every few years until the market absorbs the available capacities. We are currently focusing on BTS requirements.

The momentum in the industrial logistics segment started to slow down significantly more than a year and a half ago since the absorption capacity of the market was below average. This is partly due to the fact that most companies had already halted their operations in the first half of 2023 because of the general slowdown in consumption, with many postponing previously scheduled expansion plans.

Furthermore, the lack of demand has been compounded by the already evident speculative oversupply.

Logistics demand is currently much lower in and around the Budapest area, with industrial demand coming largely from Asian inquiries related to the electric vehicle industry.

Zsuzsanna Hunyadi Director of leasing and customer experience Prologis Hungary All phases of the development process are thoroughly impacted

by EU Taxonomy and ESG expectations. Already, and especially in the concept generation process, one needs to consider all that we know about ESG and its course of development. This very process itself can also be ESG-conscious, when using BIM planning tools and extensive financial modeling solutions.

In the process, the function (residential, public, commercial), size

3 (in harmony with its environment), layout (much open, collaborative space, natural light, amenities), location (public transport Péter Kocsis access, greenor brownfield), engineering content (EPC conscious heating and cooling, photovoltaic electricity generation, use of rainwater, intelligent building monitoring and controls), building materials (carbonconscious and recycled materials, plus the potential for later recycling), and building process (ESG certification of suppliers and contractors, energy and time-saving methods and transport options) all factor into the future ESG credentials of the new building.

This is completely future-oriented work. Project development has always targeted customers (tenants and investors) five or six years into the future from the start of the concept development process.

Péter Kocsis Deputy CEO (strategy, risk management information systems data) and CFO Wing

Special Report | 23 Our Market Talk Panel (sorted by company alphabetical order) Norbert Schőmer, country manager, Atenor Hungary Benjamin Perez-Ellischewitz, principal, Avison Young Hungary Anita Csörgő, director, head of retail, Colliers Hungary Zsombor Barta, ambassador, Hungarian Green Building Council Balázs Czifra, director of sales and asset management, Innovinia Valter Kalaus, managing principal, Newmark VLK Hungary Zsuzsanna Hunyadi, director of leasing and customer experience, Prologis Hungary Péter Kocsis, deputy CEO (strategy, risk management information systems data) and CFO, Wing

PRESENTED CONTENT

Aréna Business Campus Reborn as Olympia New Services Coming Online

The Aréna Business Campus has been given a new name, Olympia, as it adopts what developer Atenor calls a “fresh identity and innovative approach,” positioning itself as one of Budapest’s most modern office campuses.

BBJ STAFF

According to Atenor, Olympia is embracing new workplace trends, such as remote work and hybrid schedules, prioritizing teamwork and flexibility in response to shifting market dynamics.

“As part of this transformation, a complex strategic asset reconfiguration is underway. The rebranding of the Hungária körút project as Olympia signals a decisive shift towards adaptability and innovation, addressing tenants’ growing focus on employer branding through attractive office designs,” the company says.

The hybrid work model, blending remote and office-based operations, has reshaped tenant preferences.

Atenor believes Olympia will stand

as a “revolutionary example, showcasing enhanced communal spaces designed for collaborative teamwork, innovative services and flexible leasing conditions tailored to the evolving needs of tenants, including those with smaller space needs, but frequent requirements for extended services, such as presentation rooms, co-working or catering.”

While the long-term development plan for the Hungária körút project includes

two additional phases, immediate upgrades include a public parking lot and a communal park, extending from the corner of Stróbl Alajos utca into Olympia’s internal garden.

The campus development spans four plots, comprising a total area of 72,000 sqm. The first 21,000 sqm space is home to international and local companies, such as Heineken, Cargill, and Uber’s Hungarian partner.

New services will be introduced through the last quarter of this year and into the first half of 2025 to enhance the appeal of Olympia’s office spaces, catering to diverse tenant needs.

Besides the existing shops, pharmacy and a GP’s office, Olympia Building “A” will get a new restaurant next year and a café with co-working spaces, including a large meeting room to maximize flexibility for the building’s existing tenants as well as new occupiers with smaller spatial requirements.

A stunning inner courtyard with water features will be delivered as the final upgrade of the extensive rebranding project.

The 15,000 sqm Building “B” is being considered for functional repurposing, in line with Olympia’s commitment to adaptive redevelopment.

The revitalization of the campus project reflects a broader effort within its vicinity, driven by collaborative initiatives between the developer and local authorities.

“Situated in a buzzing area of the capital gaining more traction with local developers, Olympia is set to redefine the submarket’s office landscape, offering a compelling alternative to traditional office hubs like the Váci Corridor with outstanding public transportation including the metro, the central bus station and the Keleti railway station,” Atenor says.

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Special Report

www.bbj.hu

Budapest Business Journal | October 18 – November 3, 2024

Strong Sales, Increasing Rentals, but Retail Stock is Static Retail and shopping center development remains understandably constrained, given concerns about spending power and increasing e-commerce use; no major mall projects are in the pipeline.

GARY J. MORRELL

Center owners are essentially concerned with redeveloping and upgrading their retail, leisure and services offer and looking to enhance the retail experience to meet ever more sophisticated demands from consumers.

Perceived consumer, and therefore tenant, demands include an improved F&B offering, a more varied shop mix and what are seen as imaginative designs. Where there are retail developments, they are generally part of larger mixed-use projects, retail parks or strip malls.

According to Anita Csörgő, head of retail at Colliers Hungary, there is market demand for larger retail parks and strip malls of

up to

20,000 sqm.

Outside the capital, Hungary lacks the larger provincial cities of other Central and Eastern European countries.

Despite the developmental concerns for the retail market, the evidence is that there is still a preference for the brick-and-mortar retail experience in Hungary, combining shopping and other leisure activities. According to Cushman & Wakefield, offline stores maintain their dominance in the retail landscape, accounting for more than 90% of retail sales.

As elsewhere in CEE, developers are currently opting for smaller provincial retail formats such as retail parks and strip malls that provide more flexibility for retailers and where developers do not need to commit to the higher critical mass of tenants required to build shopping centers. The mall stock in Budapest is low by European standards, and there is little prospect of oversupply with low-to-zero vacancy rates, particularly for the top-tier centers.

New City Quarter

One ongoing Budapest project is the suburban Zugló Mall by the residential constructor and developer

The Etele Plaza, delivered by the Futureal Group, opened in September 2021.

It was the first mall in more than 10 years. There hasn’t been one since.

Low Retail Density

Bayer Property Hungary, which will provide around 11,000 sqm of retail in District XIV as part of a mixed-use project that includes office and residential elements.

The developer is aiming to create what it terms as a new city quarter.

Another ongoing mixed-use development in the same district is theCentrale multifunctional complex by the Hungarian Chain Bridge Ventures, which is being developed at the Puskás Ferenc Stadion metro station on the M2 line. The 29,000 sqm project will provide service space, an F&B hub, an office center and a hotel at the residential and commuter hub.

Chain Bridge Ventures is a relatively new boutique developer formed by partners with experience as investors.

The complex, designed by Bánáti + Hartvig Architects, will include

The mall stock in Budapest is low by European standards, and there is little prospect of oversupply with low-to-zero vacancy rates, particularly for the top-tier centers.

and service outlets on a 6,000 sqm area on the ground floor, including a supermarket, drugstore, pharmacy, banks, telecoms, FMCG and beauty services and a 2,000 sqm F&B area. The retail areas are more than 50% preleased.

Duna Plaza, arguably the first modern shopping center in Hungary and Central Europe, will be demolished and rebuilt by 2028 in its location on Váci út, an area with extensive residential and office stock and development.

In a rare new development, the circa 6,000 sqm Dera Park being built by Hungarian developers in Szentendre (a former artist’s colony, now a popular tourist destination about 22 km north of central Budapest) is fully let and due to deliver in 2025.

Some 35 new shop brands have entered the Hungarian retail market since 2019, according to Cushman & Wakefield.

Cushman & Wakefield put the total modern shopping center stock in Budapest at around 815,000 sqm, and it has traced a total of 1.3 million sqm of shopping center space across Hungary. In addition, there are 1.6 million sqm of retail parks and warehousing nationwide.

CBRE has traced circa 2.1 million sqm of modern retail stock in the Greater Budapest area, including 910,000 sqm of shopping center space.

Many leading Budapest shopping centers have changed hands since completion, and owners

40 shops

Retail sales remain strong, and rentals are increasing, particularly in the countryside, but the stock level is static, and Hungary has the lowest shopping center density in the CEE region.

The current Hungarian stock is divided between shopping centers (the dominant form in the capital) and retail parks (the leading force outside the capital).

have conducted or are planning redevelopments and renovations. The six leading centers in Budapest are close to full, while second-tier centers have a

6-10% vacancy rate,

according to CBRE. Of the 22 shopping centers spread across Budapest, only eight meet institutional investment standards, according to Cushman & Wakefield. Few investors are currently prepared to commit to such large lot sizes, and some are not prepared to invest in the Hungarian market at all.

In one of the latest refurbishments, the retail asset manager Multi Corporation, as center manager and designer, has completed the refurbishment of the Allee Shopping Center, enhancing the “interior and exterior design and investing in sustainability to pave the way to carbon neutrality.” The complex has received Breeam “Outstanding” accreditation following the renovation.

Outside of Budapest, one avenue for retail development is retail parks with a large hypermarket or food content that, in turn, attract brands offering lower-priced products. These have a lower critical mass than shopping centers and provide flexibility in lease sizes for tenants, often in areas of the country where there has been limited modern retail provision.

Further, a number of retail parks in regional cities are attracting investors.

Adventum is committed to redeveloping its Tesco-anchored hypermarkets across Hungary. Outside the capital, there are development possibilities of between 4,000 and 7,000 sqm, often adjacent to or including a food market.

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Special Report | 25

of Budapest’s District VI voted to ban short-term rentals from 2026, the first such ban in one of Europe’s most popular tourist destinations.

Some residents in European tourist hotspots blame short-term lets for driving up home prices.

Debrecen (225 km east of Budapest) averaged HUF 839,000/sqm. Homes were cheapest in Salgótarján (110 km northeast of Budapest) at HUF 282,000/ sqm. Next year, ingatlan.com augurs a 10-15% increase in home prices.

www.bbj.hu

Budapest Business Journal | October 18 – November 3, 2024

News Real Estate

Home Sales Could Reach 130,000 This Year Home sales in Hungary could reach 130,000 this year, climbing from around 100,000 in 2023, Dávid Valkó, the chief analyst for OTP Ingatlanpont, the real estate broker of OTP Bank, said on Oct. 14, according to portfolio.hu. Next year, rules allowing Hungarians to tap their savings in voluntary pension funds for home purchases could rechannel as much as HUF 1 trillion to the market, Valkó said. Erika Kasziba, in charge of business development for home lending at OTP, said local lenders’ home loan outlays could double in 2024 from HUF 600 billion a year earlier.

Pension can be Used for Home Purchase, Renovation in 2025 Hungary’s government has drafted a measure that would allow Hungarians to use savings in voluntary pension funds for home purchases or renovations, tax-free,

in Brief during the 2025 calendar year, the Ministry of National Economy said in a statement on its website on Oct. 14.

Social consultations on the measure started yesterday, the ministry said.

More than one million Hungarians are members of voluntary pension funds, with savings of more than HUF 2 mln per member, on average.

Gov’t Mulling Moratorium on Airbnb Licenses Hungary’s government is considering a plan to impose a moratorium on new Airbnb licenses in Budapest and to raise taxes on short-term apartment rentals in the capital city, Minister of National Economy Márton Nagy said yesterday, according to state news agency MTI. “We are thinking about a possible moratorium and a tax hike in Budapest,” Nagy told a press briefing, adding that the government had not decided yet. “The Airbnb market will change, and it is sure that it cannot grow further,” he said, calling the issue a question of housing policy. The minister announced the plans about a month after residents

Construction Sector Output Down 6% y.o.y. in August

Real Estate Market Picked up in Q3 The national real estate market picked up speed in the third quarter, according to data from the real estate search and advertising portal zenga. hu. September set a record for the year for the number of properties for sale, and the demand is increasing.

The website said that properties for sale are advertised at a price nearly 14% higher compared to the same period last year.

Home Prices Rise 6.7% y.o.y. in September Home prices in Hungary rose 6.7% yearon-year in September, the listing site ingatlan.com said on Oct. 10. Home prices in the capital climbed 9.1%.

Price growth continued to accelerate, the website said. Prices of homes in Budapest averaged HUF 1.07 mln/ sqm at the start of October but were as high as HUF 1.73 mln/sqm in central District V. Home prices in Hungary’s second most populous city,

The output of Hungary’s construction sector fell 6% year-onyear in August, according to data released by the Central Statistical Office (KSH) on Oct. 15. The output of the building segment slipped by 3.2%, and civil engineering output dropped by 10.2%. In absolute terms, construction sector output reached HUF 614 billion in August. The buildings segment accounted for 63% of the total. In a month-onmonth comparison, construction sector output edged down 2.1%, adjusted for seasonal and workday effects. The order stock was 22.8% higher at the end of August than 12 months earlier. Buildings segment orders fell 5.8%, but civil engineering orders rose 51.4%. New orders fell 19.6% during the period. New orders in the buildings segment dropped 27.1%, and civil engineering orders declined 11.1%. For January-August, construction sector output rose 1.8% from the same period a year earlier.

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Special Report

www.bbj.hu

Budapest Business Journal | October 18 – November 3, 2024

Real Estate Developers

1

BIGGEORGE PROPERTY www.biggeorgeproperty.hu

2

INNOVINIA www.innovinia.hu

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4

5

6

ECE PROJEKTMANAGEMENT BUDAPEST KFT. www.ece.com

FUTUREAL HOLDING ZRT. www.futurealgroup.com

WING ZRT. www.wing.hu

PROLOGIS HUNGARY MANAGEMENT KFT. www.prologiscee.eu

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ASSET MANAGEMENT

REAL ESTATE BROKERAGE

CONDOMINIUM OPERATION

BUILT-TO-SUIT DEVELOPMENT

REAL ESTATE UTILIZATION

REAL ESTATE INVESTMENT

CONSTRUCTION

PROJECT MANAGEMENT

PORTFOLIO MANAGEMENT

ONGOING PROJECTS IN HUNGARY (INVESTED VALUE IN HUF, EXPECTED YEAR OF COMPLETION)

FACILITY MANAGEMENT

ACTIVITIES AND SERVICES

PUBLIC BUILDING

INDUSTRIAL

INFRASTRUCTURAL

RESIDENTIAL

COMMERCIAL

TYPES OF INVESTMENT

OFFICE

COMPANY WEBSITE

TOTAL NET REVENUE IN 2023 (HUF MLN)

RANK

Ranked by total net revenue in 2023

PREVIOUSLY COMPLETED REFERENCE PROJECTS, YEAR OF COMPLETION

✓

Europe Garden (2005), Sasad Liget (Phases I-VII) (2008-2021), Garibaldi Residence (2009), Parkway Offices (2009), Bécsi Corner Office Building (2009), Audi Logistics (2014), Broadway Residence (2017), Dagály Residence (2019), Emerald Residence (2020), Emerald Hotel & Suites (2020), ✓ Elisabeth Residence (2021), Németvölgyi Residence (2021), Waterfront City I-III (20212023), Westside Residence (2022), LogStar Park Városkapu (2022-2023), Westside Garden (2023), LogStar Park Városkapu (2022, 2023), Spirit Residence (2024)

✓

IGPark Miskolc phase 1, IGPark Kecskemét dél buildings A, B, IGPark ✓ Tiszaújváros, IGPark Polgár, IGPark Karcag

MAJOR CLIENTS IN 2023

OWNERSHIP (%) HUNGARIAN NONHUNGARIAN

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE EMAIL

A

Tibor Nagygyörgy (95), Tamás Nagygyörgy (5) –

Tibor Nagygyörgy Dávid Farkas Ildikó Rézműves

1023 Budapest, Lajos utca 28–32.

(1) 225-2525 info@biggeorge.hu

A

Individuals (100) –

Ádám Székely Máté Kovács Balázs Czifra

1115 Budapest, Bartók Béla út 105–113.

(1) 481-4530 info@innovinia.hu

Sandra Brigitte Müller, Dr. Nóra Kismarci, Gabriella Szarka, Mária Verebélyi, Ulrich Schmitz, Monika Adrianna Pyszkowska – –

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

–

Árkád 1. Budapest, Örs vezér tere (2002), Árkád Pécs (2004), Árkád Győr (2006), Debrecen Fórum (2008), Árkád Szeged (2011), Árkád 2. Budapest, Örs vezér tere (2013)

A

– ECE Projektmanagement International GmbH (100)

✓

–

HelloParks Páty PT1 – 2023, HelloParks Páty PT2 – 2024, Budapest ONE phase 1 (2020), Budapest ONE phases 2-3 (2022), ETELE Pláza (2021), Corvin Innovation Campus (phase 1) (2022)

dm-drogerie markt, DHL, Gebrüder Weiss, IBM, Oracle, Roche,

(100) –

Péter György Futó – Tímea AladicsSzili

1082 Budapest, Futó utca 47–53.

(1) 266-2181 info@ futurealgroup.com

✓

Liberty I. (2023), ibis&TRIBE Budapest Stadium (2023), East Gate PRO Business Park (2023), Lighware-HQ I. - HOP (2023), Park West 1 (2022), & Park West 2 (2023), Kassák Passage (2022), ✓ GOBUDA Mall (2022), B&B Hotel Budapest City (2021), Metropolitan Garden (2021), Siemens-evosoft HQ (2020), Telekom Campus (2018), Wizz Air Training Center (2018), ibis Styles Budapest Airport Hotel (2017)

eMAG, Geodis, Lightware, Accor, IHG Hotels & Resorts, Deutsche Telekom IT Solutions

Wingholding Zrt. (100) –

Noah M. Steinberg – –

1095 Budapest, Máriássy utca 7.

(1) 451-4760 info@wing.hu

A

Real estate funds (A) Real estate funds (A)

Martin Baláž, Zsuzsanna Hunyadi, Lóránd Gárdonyi – –

1095 Budapest, Lechner Ödön fasor 7.

(1) 577-7700 zhunyadi@ prologis.com

✓

✓

✓

A

3

www.bbj.hu

7

8

9

WHITE STAR REAL ESTATE KFT. 1,906 www.whitestar-realestate.com

METRODOM www.metrodom.hu

PROPERTY MARKET KFT. www.propertymarket.hu

HB REAVIS INVESTMENTS 10 HUNGARY KFT. www.hbreavis.com

SKANSKA MAGYAR11 ORSZÁG INGATLAN KFT. www.skanska.hu

HORIZON 12 DEVELOPMENT KFT. www.horizondevelopment.hu

GTC MAGYARORSZÁG 13 INGATLANFEJLESZTŐ ZRT. www.gtcgroup.com

TRIGRANIT 14 FEJLESZTÉSI KFT. www.trigranit.com

CONVERGENCE 15 HUNGARY KFT. www.convergen-ce.com

CODIC HUNGARY KFT. 16 www.codic.eu

1,755

1,626

1,470

1,313

1,264

1,082

670

431

173

✓

–

✓

✓

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–

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–

–

–

–

–

–

–

✓

–

–

–

–

–

–

✓

–

–

–

Eötvös12 (2024), Park22 Üzleti Park I. (2024 Q3)

–

Metrodom Green phase 1, 2025 Q1 Metrodom River phase 4, 2027 Q1 Metrodom River phase 3 2028 Q1

–

–

–

–

–

A

A

A

A

A

✓

–

–

✓

–

✓

✓

–

Millennium Gardens phases 1, 2 ; Completed ✓ by: 2022 (phase 1), 2024 (phase 2)

–

ACADEMIA Offices, Kálvin Square, CityZen, ZenGarden, Árpád Center, Canada Square

–

A

✓

–

✓

–

–

✓

–

✓

✓

–

✓

–

✓

✓

✓

✓

✓

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✓

–

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–

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–

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–

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–

–

–

–

–

–

–

–

–

REAL ESTATE BROKERAGE

OWNERSHIP (%) HUNGARIAN NONHUNGARIAN

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE EMAIL

Markó Irodák 9 (2018), IP West office building (2009), The Quadrum office building (2008), Haller Cain Inter– Kert office building (2008), national, White Star Real Market Central Ferihegy Europa ✓ Estate LLC shopping park (2007), Capital, DEKA, (100) M1 Business Park (2006), Erste, M7, Airport Business Park Raiffeisen (2004), Alkotás Point office building (2002), Infopark A (1999)

Krisztián Barabás Marietta Biczó –

1124 Budapest, Csörsz utca utca 49-51.

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

A

Individuals (A) Individuals (A)

Gábor Kiss Zsolt Nagy András Kígyósi

1139 Budapest, Teve utca 33–41. building C (1) 919-3333 info@metrodom.hu

A

Market Építő Zrt. (100) –

Ákos Kiss – –

1117 Budapest, Dombóvári út 27.

(30) 147-0421 iroda@ propertymarket.hu

A

– HB Reavis Investments Holding S.A. (100)

A

– Skanska Commercial Development Europe AB (100)

Aurelia Luca András Péterfy –

1133 Budapest, Váci út 96–98.

(1) 382-9100 property@skanska.hu

A

(100) –

Balázs Czár – –

1052 Budapest, Deák Ferenc utca 5.

(1) 473-1209 info@ horizondevelopment.hu

A

– Globe Trade Centre S.A. (100)

Gyula Nagy, Zsolt Farkas – –

1138 Budapest, Népfürdő utca 22.

(1) 412-3680 info.hu@ gtcgroup.com

–

Bonarka for Business (Krakow, Poland) 2017.

Silesia City Center (Silesia, Poland), 2005. Poznan City Center (Poznan, Poland), 2013.

MSD Magyarország, Henkel Hungary, Fressnapf, Provident Pénzügyi Zrt, ION Dealogic, Aestella Klinika

– Revetas Capital (100)

Tom Lisiecki Bálint Brenner Hajnalka Király

1095 Budapest, Lechner Ödön fasor 10/B (1) 456-6200 info@trigranit.com

✓

ACADEMIA Offices September 2023

Europa, KGAL, Investum

(69) (31)

Csaba Zeley Balázs Kovács –

1027 Budapest, Horvát utca 14–26.

(1) 225-0912 office@ convergen-ce.com

–

Krisztina Palace (2010), Green Court Office (2021)

A

– Codic Hongrie S.A. (100)

Kornél Kalapács Hervé Bodin Ibolya Csiernik

1138 Budapest, Népfürdő utca 22.

(1) 200-3815 info.hungary@ codic.eu

–

–

Váci Greens A, B, C, D – 2013–2018, Olympia A – 2020, Váci Greens E, F – 2020, RoseVille – 2023, BakerStreet – 2024

A

Norbert – Schőmer Atenor S.A. (90) – Atenor Group Máté Galambos, S.A. (10) Nikolett Püschl

1034 Budapest, Bécsi út 68–84.

(1) 785-5208 info@atenor.hu

✓

Andrássy Palace office building (2022), Balance Hall (2019), Gateway Office Park (Budapest, 2018), ✓ Quadra (Budapest, 2017), Balance Loft (Budapest, 2017), Balance Building (Budapest, 2016)

A

– CPI Property Group (100)

–

✓

✓

✓

ASSET MANAGEMENT

CONDOMINIUM OPERATION

BUILT-TO-SUIT DEVELOPMENT

REAL ESTATE UTILIZATION

REAL ESTATE INVESTMENT

CONSTRUCTION

PROJECT MANAGEMENT

PORTFOLIO MANAGEMENT

FACILITY MANAGEMENT

ONGOING PROJECTS IN HUNGARY (INVESTED VALUE IN HUF, EXPECTED YEAR OF COMPLETION)

–

A

✓

–

✓

–

–

–

A

–

–

–

–

✓

–

✓

–

A

✓

✓

–

–

–

–

A

✓

✓

✓

–

✓

–

✓

–

Metrodom Panoráma 2020, Metrodom Őrmező 2021, Metrodom River phases 1-2 2024

A

✓

Váci Corner Offices (2014), Agora Budapest (phase 1 2020)

–

A

✓

✓

Eiffel Square (2010), Eiffel Palace (2014), Váci1 (2016), Promenade Gardens (2018), Szervita Square Building (2020), Villányi Gardens (2023

✓

White House office building (2018), GTC Metro office building (2010), Spiral office building (2008), Sasad Resort residential ✓ park (2008, 2010), Riverloft ioffice and apartment house 2007), Riverside apartment house (2004)

✓

✓

✓

✓

CPI HUNGARY KFT. www.cpigroup.hu NR

PREVIOUSLY COMPLETED REFERENCE PROJECTS, YEAR OF COMPLETION

–

ATENOR HUNGARY KFT. www.atenor.eu NR

Special Report | 27

ACTIVITIES AND SERVICES

PUBLIC BUILDING

INDUSTRIAL

INFRASTRUCTURAL

RESIDENTIAL

COMMERCIAL

TYPES OF INVESTMENT

OFFICE

COMPANY WEBSITE

TOTAL NET REVENUE IN 2023 (HUF MLN)

RANK

Budapest Business Journal | October 18 – November 3, 2024

MAJOR CLIENTS IN 2023

Marcel Sedlák, 1138 Budapest, Matús Lipták, Esztergomi út 31-39.

Tomás Krajcír (70) 672-1580 – hungary@ – hbreavis.com

Mátyás Gereben Tamás Pók Bea Déri

1139 Budapest, Váci út 99–105.

(1) 225-6600 hungary@cpipg.com

28 | 3

Special Report

www.bbj.hu

Budapest Business Journal | October 18 – November 3, 2024

Asset Management Companies

3

CUSHMAN & WAKEFIELD NEMZETKÖZI INGATLAN TANÁCSADÓ KFT. www.cushmanwakefield.com

3,366

4

ADDVAL GROUP www.addvalgroup.com

1,020 (2022)

A

✓

✓

–

✓

✓

–

A

A

A

A

A

A

A

AddVal Group Kft. (100) –

830

Millennium Towers I, II, III, H, City Gate, Capital Square, IP West, Bartók Ház

✓

✓

✓

✓

✓

–

–

–

100

–

–

100

–

– CA Immobilien Anlagen AG (100)

Judit Varga – –

1095 Budapest, Lechner Ödön fasor 6.

(1) 501-2800 office@caimmo.hu

A

Robertson Hungary Kft. (100) –

Róbert Tilki – –

1138 Budapest, Váci út 117–119.

(1) 688-4400 office@ robertson-pm.hu

A

– Revetas Capital (100)

Tom Lisiecki Bálint Brenner Hajnalka Király

1095 Budapest, Lechner Ödön fasor 10/B (1) 456-6200 info@trigranit.com

Csaba Zeley Balázs Kovács –

1027 Budapest, Horvát utca 14–26.

(1) 225-0912 office@ convergen-ce.com

5

CA IMMO HUNGARY KFT. www.caimmo.com

6

ROBERTSON PROPERTY MANAGEMENT ZRT. www.robertson.hu

7

TRIGRANIT FEJLESZTÉSI KFT. www.trigranit.com

8

CONVERGENCE HUNGARY KFT. www.convergen-ce.com

706

A

A

670

A

431

ACADEMIA office building, ZenGarden office building, CityZen office building, Kálvin Square office building

OTHER

ACCOUNTING SERVICES, CONTROLLING

PROJECT MANAGEMENT

RECEIVABLES MANAGEMENT

TENANT MANAGEMENT

PORTFOLIO, PROPERTY AND REAL ESTATE MANAGEMENT

OWNED BY CLIENTS

A

OWN PROPERTY

4,714

CONSTRUCTION SITE

WING ZRT. www.wing.hu

HOTEL

2

OFFICE

10,870

INDUSTRIAL

1

INNOVINIA www.innovinia.hu

IGPark Miskolc, IGPark Kecskemét-dél, IGPark Kecskemétnyugat, IGPark Polgár, IGPark Tiszaújváros, IGPark Karcag, Bartók Udvar office complex

COMPANY WEBSITE

SERVICES OFFERED IN PROPERTY MANAGEMENT

RETAIL

MAIN PROPERTIES MANAGED IN H1, 2024

RANK

TOTAL NET REVENUE IN 2023 (HUF MLN)

PORTFOLIO DIVERSIFICATION ACCORDING TO TYPE OF PROPOERTY MANAGED (%)

PORTFOLIO DIVERSIFICATION ACCORDING TO OWNERSHIP STRUCTURE (%)

Ranked by total net revenue in 2023

OWNERSHIP (%) HUNGARIAN NONHUNGARIAN

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE EMAIL

Ádám Székely Máté Kovács Balázs Czifra

1115 Budapest, Bartók Béla út 105–113.

(1) 481-4530 info@innovinia.hu

✓

✓

✓

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–

A

A

A

A

A

A

A

Individuals (100) –

✓

✓

✓

✓

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11

52

32

5

–

A

A

Wingholding Zrt. (100) –

Noah M. Steinberg – –

1095 Budapest, Máriássy utca 7.

(1) 451-4760 info@wing.hu

A

– (100)

Gergely Pados Zsuzsanna Kiss Orsolya Németh

1052 Budapest, Deák Ferenc utca 5.

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

Hubert Mühringer – –

1077 Budapest, Wesselényi utca 16.

(1) 479-6020 office@ addvalgroup.com

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Real estate development

A

A

100

A

A

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–

A

A

–

–

A

A

–

A

A

A

–

A

A

A

–

A

A

A

A

A

A

(69) (31)

–

–

100

(100) –

Tibor Gasser – –

1093 Budapest, Közraktár utca 30.

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

9

GAMMA PROPERTIES KFT. www.gamma-am.hu

229

A

✓

✓

✓

✓

✓

Sustainability qualifications: BREEAM in USE, BREEAM NEW CONSTRUCTION, ESG

10

CE LAND MANAGEMENT KFT. www.naiceland.hu

85

A

✓

✓

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–

–

–

A

A

A

A

A

A

A

Individuals (100) –

Csaba Széll Zoltán Balla Anita MolnárSzéll

1123 Budapest, Alkotás utca 53.

(1) 785-4985 info@naiceland.hu

A

A

✓

✓

–

✓

–

–

31

–

53

14

2

100

–

– CPI Property Group (100)

Mátyás Gereben Tamás Pók Bea Déri

1139 Budapest, Váci út 99–105.

(1) 225-6600 hungary@cpipg.com

80.50 19.50

CPI HUNGARY KFT. www.cpigroup.hu NR

A = would not disclose,

NR = not ranked, NA = not appliacable

This list was compiled from responses to questionnaires received by October 16, 2024, and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

The list is based on companies’ voluntary data submissions. 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

www.bbj.hu

Budapest Business Journal | October 18 – November 3, 2024

Socialite

Budapest Embraces the Rhythm of Tango

There’s some kind of tango class or event every night of the week in Budapest, often more than one.

So how did Budapest become one of Europe’s leading cities for tango, and where does a complete beginner start?

I spoke to Budapest dance teacher Endre Szeghalmi and tango aficionado and teacher Andreas Thau Loftager.

how tango will grow. They’re also not so happy about the privileged aspect of tango in Europe. Not everyone has the money to go to some fancy venue. But they can go to local classes and events, of which there are so many. When I plan my tango trips around Europe, I’m always spoilt for choice,” he notes.

Thau Loftager is an enthusiastic and persuasive ambassador for tango.

Asked why he fell in love with the dance, he waxes lyrical.

“It’s a very broad form of expression.

You choose the style, movements and music you like, and there are no limits to how you can apply them. In the end, it’s just people coming together to embrace, bringing their personalities to the dance. It’s analog, pure, unique.

Every time you go on the dance floor, you’re doing something that will never exist in time and space again.”

Budapest teacher Endre Szeghalmi discovered tango around 2008. His girlfriend was a professional dancer, and the couple wanted to dance together.

They found tango and a great teacher who also taught Pilates.

“She explained how the movements of tango were related to body language,” he says, “We liked it very much. I’ve been dancing since then.”

That doesn’t mean Szeghalmi fell in love with tango instantly, though.

“I was very lazy for the first few months. Then, I entered a competition for beginners. I’m very competitive.

I was forced to pay attention and listen.

We won the competition.”

Winning Drive

Winning spurred Szeghalmi on. He came first in an advanced Hungarian competition, went to the European tango championships and got to the final. Dancing more, he was invited to perform in tango theater.

DAVID HOLZER From there, he became a soloist. Next, he was asked to replace his teacher.

Tango originated in the 1880s in the poor But at that time, tango was still a hobby. port areas of Argentina and Uruguay Then, in around 2012, Szeghalmi along the Rio de la Plata. It was often studied tango in Buenos Aires for danced in bars and brothels, which led eight months, learning from teachers to a racy reputation. When tango began who’d been dancing for decades. to spread internationally from around It was the first of several trips.

1900, this sensuality was shocking and “I’ve been to Buenos Aires seven titillating. So much so that teachers times. My teacher is 81, and he can Budapest tango teacher Endre Szeghalmi and one of his partners. do things I can’t do now.” who’d introduced tango to Paris in 1913 were kicked out of the city in 1914.

Returning to Hungary, Szeghalmi In 1913, tango arrived in New left his job as a computer programmer York and, for some reason, Finland. and began teaching tango full-time. it became less folkloric and more “electro tango.” Check out Gotan Discovering the Finland connection For anyone looking to dip their toes visually expressive and spectacular.

Project’s 2001 album “La Revancha sent me off into a whirl of speculation in tango waters, it starts with finding On enormous Broadway stages, del Tango” or 2010’s “Tango 3.0.” as to whether the linguistic and cultural a teacher you feel comfortable with. dancers did their thing on small tables.

Bringing Tango Back similarities between Finland and “You need to be inspired by the teacher “When Argentina opens up and As Thau Loftager says, “The first Hungary might be one of the reasons and have trust,” Szeghalmi says. dancers surface again, a new European tango tourists encounter a new the dance is so popular in this country.

Tango has changed the lives of generation falls in love with tango,” wave of tango in Buenos Aires. Some Perhaps unsurprisingly, I couldn’t Szeghalmi and Thau Loftager. It’s Andreas Thau Loftager tells me. get hooked and bring tango back to their a practice they’ll never tire of and find any evidence to back up my “It becomes wildly popular. This is own countries. Since then, tango has theory. What I did find, though, is will spend their lives learning. the generation that develops ‘tango been growing steadily in Europe.” that, apparently, Finnish “milongas,” “I feel so satisfied when I’ve been in a nuevo,’ one of the several forms European enthusiasm for tango the tango name for dance marathons, tango environment. I come out happier, of tango we have today. Tango nuevo has put some Argentinian tango noses can go on for days and feature my shoulders relax, my breath is normal, is influenced by the codes and slightly out of joint. saunas and jumping into icy water.

I’m less stressed,” Thau Loftager says. conventions of the older forms of “In Europe, people love doing tango Back in Argentina, tango tango, but they’re slightly different.” marathons with lots of dancers and DJs flourished until the late 1950s Tango nuevo features a more open, where we dance nonstop, and there’s not when the military dictatorships elastic embrace that allows whoever’s Find out more about what Endre necessarily any folkloric Argentinian banned it. For the next 30 years or leading to introduce moves that can Szeghalmi offers at endretango.com. dancing or classes,” Thau Loftager explains. so, the dance only lived on stages in be very complex and didn’t exist in Details of Budapest milongas “Argentinian dancers have told me the United States and Europe, where the golden age of tango. It’s danced are listed at milonga.hu that this is not ideal. Classes attract the great Argentinian tango dancers to music that fuses traditional tango the public, which is true, and this is had fled. To appeal to audiences, with jazz and electronica to create

30 | 4

Socialite

www.bbj.hu

Budapest Business Journal | October 18 – November 3, 2024

Remember, Remember to Do Good This November

Culture Matters A regular look at culture issues in Hungar y and the region

Not only have they been some of the best parties in town, but also events that have raised incredible amounts of funds for a number of worthy causes,” the British ambassador said last year.

Tickets are available online from the XpatLoop website and cost HUF 25,000 per person or

HUF 50,000 per person for a limited number of VIP Philanthropist seats, guaranteeing an exclusive gala table near the main stage. If any tickets are unsold, entrance can be bought on the door for HUF 35,000, but paying in advance is the recommended route to guarantee admittance.

Henry Scullion will be the MC for the evening, along with Hungarian TV star Zsuzsa Demcsák. The pair will host a live auction, a business card prize draw and announce the winners of the silent auction.

The organizers promise the best food lineup to date for the international buffet dinner, with contributions from restaurants and hotels across the city, alongside a selection of desserts and a wide range of alcoholic and soft drinks.

Other entertainment will include live music from the Just Show Band, a “Wine Mafia” blind-tasting game, roulette and blackjack (played for fun, not money) and a drag show featuring Valerie Devine.

interested in the creative industry with creative programs, temporary exhibitions, workshops and guided tours until Sunday, Oct. 20.

New National Gallery Expected to Open This Decade

XpatLoop’s annual “Bonfire Night” charity fundraising party will again be held at the Grand Ballroom of the Budapest Marriot on Saturday, Nov. 2, from 6-11 p.m.

BBJ STAFF

The event takes as its inspiration the British celebration also known as “Guy Fawkes Night,” held annually across the United Kingdom close to Nov. 5 to mark the anniversary of the foiling of a plot to blow up the Royal Family and the Houses of Parliament in London in 1605.

Here in Budapest, it serves as an excuse to unite “good-hearted guests from the international community in Hungary to #FeelGoodDoGood!” as organizer XpatLoop.com (which will also be celebrating its 24th birthday) puts it. All funds raised on the evening will go to local charities that help Hungarian children.

This year, the money raised will be split between the Autistic Art Alapítvány (Autistic Art Foundation), Magyar Vöröskereszt (Hungarian Red Cross), Rászoruló Fiatalok (Young People in Need Non-Profit Organization) and UNICEF Hungary.

Entertainment includes a virtual bonfire and fireworks display (essential elements of any Guy Fawkes Night), live music, dancing, and plenty of prizes to win.

Confirmed guests of honor include Antónia Mészáros, executive

director of UNICEF Hungary and Paul Fox, the ambassador of the United Kingdom to Hungary.

‘Incredible Amounts’ Raised

“As a Brit and as ambassador, I am proud that XpatLoop.com has held celebrations for ‘Bonfire Night’ for over a decade.

Budapest Design Week Underway Across Hungary Budapest Design Week is underway in more than 100 locations in Budapest, Sopron (210 km west of Budapest) and Pécs (195 km southwest). At the event’s opening, State Secretary for Architecture Regő Lánszk of the Ministry of Construction and Transport stressed the importance of nourishing the role of art and applied art in architecture, according to kultura.hu. From 2025, a small proportion of spending on state building investments will go towards works of art or applied art as integral parts of buildings, Lánszki said.

Budapest Design Week welcomes those

City Park a ‘Pilgrimage Site of Hungarian National Culture’ Városliget (City Park) is not only a public park but also “a pilgrimage site of Hungarian national culture,” Prime Minister Viktor Orbán said, opening the new, permanent exhibition of the Museum of Ethnography in Budapest on Oct. 10. According to state news agency MTI, this event is an integral part of the government’s efforts to renew the entire City Park, Orbán said.

Construction of the new National Gallery is scheduled to start in City Park next year and will open its doors to the public by the end of this decade, Városliget Zrt., the company in charge of the project, said in a press release. The new museum now has a valid building permit, and a public procurement procedure has begun. It will be built on the site of the previously demolished Petőfi Hall and will host the modern collections of the Museum of Fine Arts and the Hungarian National Gallery.

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05 OCTOBER 2024 – 02 FEBRUARY 2025 Striding lion from the Processional Way of Babylon | Kunsthistorisches Museum, Vienna | © KHM-Museumsverband

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In collaboration with MTA-ELTE Momentum Assyrian and Babylonian Divine World Research Group.

Exposition realized with the exceptional collaboration of the Bibliothèque nationale de France.

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Budapest Business Journal | October 18 – November 3, 2024

Chamber of Commerce Corner This regular section of the Budapest Business Journal features news and events from various international business chambers. For further information and to register for specific events, visit the organizing chamber’s website. If you have information for inclusion on this page, send an email in English to Annamária Bálint at annamaria.balint@bbj.hu

Swiss-Hungarian Chamber of Commerce (Swisscham) Why should leaders start thinking about their leadership legacy in their most active years? Why is the choice between profit and goodwill not necessarily a choice? And what are the jobs where our children will want to work? Along the lines of the Legacy Leadership approach, members of Swisscham partner chambers sought answers to these questions at the Bridge Legacy Lab event on Oct. 1 in the Kinnarps Showroom. Invited legacy leaders talked about why a company health day can be more profitable than a sick day, what the noise level in the company canteen indicates, why it is worthwhile to lead an association and give back to the broader community and even to your competitors, or why the role of the big company car as a status symbol can be questioned in the future with sustainability in mind. Swisscham thanks its co-chambers and professional partners for their organization and active participation.

Italian Chamber of Commerce for Hungary (CCIU)

Belgian Business Club in Hungary (Belgabiz) Belgabiz hosted an insightful and engaging networking event at the beautiful winter garden of Vadrózsa Restaurant on Oct. 10. The evening focused on the European Union’s AI Act. This groundbreaking regulation will shape the future of artificial intelligence in business and industry across Europe. The speakers from SmartLegal Schmidt & Partners, Richard Schmidt, Anita Vereb, and Péter Korózs, presented the most critical aspects of the practical implications of the AI Act, sparking discussions about how the chamber and its membership can prepare for the upcoming changes.

The “Navigatorvilág Conference 2024,” promoted by CCIU associate T.O. Delta S.p.A., is organized by Közlekedésvilág Publishing Company in collaboration with the Association of Freight Forwarders of the Port of Trieste (Apt Astra), with the participation of the president of the CCIU on Nov. 27-28. It is a key gathering in the cargo shipping and logistics sector, focusing on Italy’s role in the logistics landscape. The conference will delve into the evolving trade relations between Italy and Hungary, featuring representatives from leading Italian logistics companies. Discussions will address green logistics, emphasizing sustainability initiatives aimed at reducing the environmental impact of transportation. Innovations in road transport will be highlighted, along with updates on customs regulations that can facilitate smoother crossborder operations. The conference will also explore the air freight market, examining current trends and future opportunities. There will also be a focus on the rail freight sector, particularly sustainable railway solutions that enhance efficiency and minimize carbon footprints.

Participants will gain insights into how these various modes of transportation can work together to create a more integrated and environmentally friendly logistics network.

EU-Chambers of Commerce in Hungary (EU-Chambers)

Canadian Chamber of Commerce in Hungary (CCCH) The CCCH invites guests to the 30th Annual Lobster Night. This milestone event promises an unforgettable celebration, bringing together the Hungarian and expat business communities for a night of fun and networking. Attendees will be treated to a lavish menu featuring full-sized lobsters flown straight from Nova Scotia, Canada, complemented by an unlimited cocktail bar sponsored by Hold Private Wealth Management and unlimited alcoholic drinks. The night will include live music and entertainment, a silent auction and raffle prizes.

The Annual Lobster Night provides an excellent opportunity for business professionals to connect while enjoying the company of other guests.

• When: Saturday, Nov. 16, 6-11:30 p.m. • Where: Intercontinental Budapest, Apaczai Csere J.u. 12-14, Budapest 1052 • Fee: TBC

EU-Chambers will hold its “EU Chambers 2024” this month. The chamber grouping was founded in 1994 to support Hungary’s integration into the European Union. It is currently chaired by Bernardino Pusceddu, president of the CCIU. This signature event features Minister of Public Administration and Regional Development Tibor Navracsics and Minister for European Union Affairs János Bóka. It has the dual purpose of focusing on the Hungarian semester of the EU Presidency and celebrating the EU-Chamber’s 30th anniversary.

• When: Friday, Oct. 25, 12:15-2:30 p.m. • Where: Marriott Hotel, Apáczai Csere János u 4, Budapest 1052. • Fee: EU-Chamber members HUF 30,000; non-members HUF 36,500

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German-Hungarian Chamber of Industry and Commerce (DUIHK) On March 25, the DUIHK held its first workshop focusing on the importance of Upskilling in Finance.

It discussed the skill sets needed to keep finance organizations relevant in the future, shared best practices from PwC, Magyar Telekom, BBraun and Audi Hungary and agreed to focus on four skills in follow-up events: Data and digitalization; interaction skills; design thinking; and ESG. On Nov. 13, DUIHK will offer a deep dive into the first two of those.

Interaction Skills Workshop: Over the past five years, there has been a clear shift in business needs, with finance organizations placing equal importance on business partnering and advisory skills alongside traditional finance expertise. This interactive skills workshop will focus on stakeholder management, active listening, target orientation and situational communication.

Data & Digitalization Workshop: In this digital age, reliable and efficient digital data processing is a high priority. This workshop will cover areas such as data visualization and relational database skills, as well as storytelling and presentation skills. It will also showcase best practice examples on advanced automation techniques in finance. Contact the chamber for more details.

Netherlands-Hungarian Chamber of Commerce (Dutcham) Dutcham invites you to its upcoming Autumn Business Drinks networking event. Make valuable business connections in the pleasant atmosphere of the Paulaner Sörház. • When: Wednesday, Nov. 13, 5:30-8:30 p.m. • Where: Paulaner Sörház, Alkotás u. 53, Budapest 1123 • Fee: Members HUF 7,900 (incl. VAT); non-members HUF 12,900 (incl. VAT)

Hungarian-French Chamber of Commerce and Industry (CCIFH) The CCIFH’s latest Hot Topic event is called “Carbon Neutrality: Opportunities for Municipal and Corporate Cooperation on Climate Protection,” a conference and round table discussion with Barbara Botos, Ambassador-at-large for Climate at the Ministry for Energy, with Márta Nagy, director of Budapest Global, and Orsolya Barsi, head of the climate and environment department at the Office of the Mayor of Budapest. Topics will include corporate carbon neutrality initiatives, Budapest’s activities in the global CSR strategy, opportunities for cooperation between municipalities and companies, and collaboration between companies on the path to climate neutrality. • When: Wednesday, Nov. 6, 9 a.m.-noon • Where: Kristály Színtér, Margitsziget 23800/7, Budapest 1138 • Fee: Members HUF 29,000 (+ VAT); non-members HUF 44,900 (+ VAT).

The CCIFH invites guests to Le Grand Bleu, its annual large-scale gala dinner and show. This year’s theme is a wonderful underwater world full of enchanting power. Enjoy the limitless feeling of freediving among the French business community.

• When: Saturday, Nov. 16, 6:30 p.m.-2 a.m.

• Where: HungExpo Sun foyer, Albertirsai út 10, Budapest 1101. • Fee: Members HUF 54,000 (+ VAT); non-members HUF 72,000 (+ VAT).

www.olympiaoffices.eu Atenor iroda: +36 1 785 5208, info@atenor.hu