Published in 2025 • Editor-in-chief: Robin Marshall • Editorial content by real estate editor Gary J. Morrell • Contributors: Annamária Bálint, Bernadette Oláh, Erika Törsök, Mihály Kovács • Lists: BBJ Research (research@bbj.hu) • News and press releases: Should be submitted in English to news@bbj.hu • Layout: Zsolt Pataki • Cover photo: bwagner99 / Shutterstock.com • Publisher: Tamás Botka, Business Publishing Services Kft. • Address: Madách Trade Center, 1075 Budapest, Madách Imre út 13-14. • Telephone +36 (1) 398-0344 • Advertising: AMS Services Kft. • CEO: Balázs Román •
Few Speculative Office Developments Being Undertaken
Speculative office projects in Budapest are becoming increasingly rare as developers exercise caution in their strategies. While there are some ongoing schemes, new projects are not being initiated in the uncertain geopolitical, economic, and financial environment, with questions over long-term office demand.
The Academia offices in Pest’s District V is an example of an older office building given a major overhaul and market repositioning.
Industrial Development Extending to Provincial Hubs
The industrial and logistics market in Hungary and Central and Eastern Europe is booming, with both specialist regional industrial park developers and operators and Hungarian players active. Interest is growing on the back of increasing logistics demand alongside the need for space to meet the significant foreign direct investment, notably in the electric vehicle and EV-related industries.
By Gary J. Morrell
In Hungary, this growth has led to the development of industrial and logistics centers in provincial hubs outside of the capital, a trend that has long been evident in Central European markets. The sector is seen as attractive in the longer term despite concerns over moderating demand, notably in the logistics segment. All industrial developers at the higher end of the market are building in line with increasingly complex tenant demands for more highly specified and sustainable spaces, as well as to meet regulations that comply with EU taxonomy.
“Industrial and logistics development remains fundamentally attractive, but recent market dynamics have prompted a more measured approach,” comments Ferenc Furulyás, CEO of iO Partners Hungary. “Vacancy rates have been gradually increasing and currently stand just above 10%, leading to a noticeable slowdown in speculative
development in the Greater Budapest area. At the same time, regional locations are gaining prominence. Countryside hubs, especially those benefitting from the heightened FDI influx from Asia, are increasingly in focus,” he adds.
Last year saw close to 500,000 sqm of industrial completions in Hungary, according to CBRE. New construction is slowing, although there is a forecast pipeline of 314,000 sqm in the provinces and 144,000 sqm for Greater Budapest for 2025. There is 5.7 million sqm of modern logistics and industrial space across Hungary, with 3.8 million sqm in the Greater Budapest area and 1.9 million sqm in other centers, according to the Budapest Research Forum (consisting of CBRE, Colliers, Cushman & Wakefield, Eston International, iO Partners and Robertson Hungary).
Cushman & Wakefield have traced a pipeline of 495,000 sqm under construction and scheduled to deliver in 2025-2026. The rate of 38% suggests continued market confidence despite rising vacancies. From this, 100,000 sqm of space was delivered in the first quarter of the year.
Around 70% of modern industrial and logistics facilities are concentrated in Greater Budapest, predominantly along the M0 orbital motorway. Vacancy has risen to 10.5% here, compared to 8.6% for the countryside. This results in an overall vacancy rate of approximately 10%.
COUNTRYSIDE GROWTH
Hungary’s countryside regions are becoming increasingly valuable due to the significant inflow of FDI so far, with factories being built and set to come online relatively soon by BMW and CATL in Debrecen in the east and BYD in Szeged in the south, as well as anticipated future investments. This is likely to increase demand for both warehousing and manufacturing space, says Colliers. However, Greater Budapest continues to attract developers as the largest I&L hub in Hungary.
Zoomlion has signed a 10-year contract with CTP to relocate its operations to an existing warehouse, TBN5, at CTPark Tatabánya.
Redevelopment and Repositioning Order of the Day for Retail
Shopping center development in Hungary remains constrained against the backdrop of concerns over the economic environment, the spending power of Hungarian shoppers, and the growing use of e-commerce. No major Budapest mall projects are in the pipeline, and none have been delivered for several years.
By Gary J. Morrell
Center owners are primarily concerned with redeveloping and upgrading existing retail, leisure, and service offerings to meet increasingly sophisticated consumer demands and more stringent ESG and EU taxonomy requirements. Perceived consumer (and therefore tenant) demands include an improved
food and beverage offering, a more varied tenant mix and a more imaginatively designed retail offer that provides an enhanced retail or leisure experience.
Retail demand has been under pressure due to the impact of e-commerce and high inflation, which erodes wages and savings and affects potential spending power. Rising operational costs continue to pose challenges for retailers as center owners pass on increased energy prices to their tenants.
Duna Plaza, one of the first modern malls in Central and Eastern Europe when it opened in 1996, is to be demolished and rebuilt.
Photo by A great shot of / Shutterstock.com
Developers and Investors Looking to Hotel Sector
The hotel sector has become an increasingly popular development and investment option, with Budapest and the wider Hungary attracting rising numbers of visitors. Budapest Ferenc Liszt International Airport recorded its highest passenger traffic to date at 17.6 million in 2024. Despite the perceived complexities of hotel development, maintenance, management and investment, hotel and hospitality is successfully attracting leading developers and investors.
By Gary J. Morrell
In a reflection of the popularity of the sector, developers and investors are concluding long-term 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 investors to asset manage a project. In this way, despite the complexities of development, the need to maintain long-term guest demand, and the rising costs of capital and operations, there is a significant hotel pipeline for Budapest, with international brands entering the market. Several high-end redevelopment
The interior of the Kimpton BEM Budapest Hotel.
Concerns Over Affordability Gap, but Living Sector has Real Attractions
Low residential supply combined with growing demand has resulted in rising prices, and the residential (also known as the living) sector is attracting developers and investors. There are, however, concerns over a growing affordability gap, a common theme across major cities in Europe.
By Gary J. Morrell
The living sector represents a significant proportion of the real estate market in Hungary (and, indeed, the wider Central and Eastern European region) as urbanization and demand from younger workers have resulted in an increased need for quality housing. The private rental sector, often regarded as a promising sub-sector for investment, is also experiencing growth. In this way, established developers and investors can utilize residential properties as a vehicle to diversify returns and the types of housing on offer.
Biggeorge Property reports robust demand entering 2025, driven by improved macroeconomic conditions, government bond payments, lower inflation, and more favorable borrowing terms. The company has observed strong presales and heightened buyer confidence. BGP’s sales in 2024 exceeded expectations, and reservations for upcoming projects indicate continued strong demand through 2025 and into 2026. The group’s outlook is optimistic, with forecasts of increasing transaction volumes and prices across the residential sector. However, despite strong demand, Hungary is currently far from the government’s target of 25,000 new apartments per year.
“Only around 13,000 new apartments were completed in 2024, a 29% decline from the previous year, and the number of building permits also fell, although there are signs of a modest upturn in permits and new project launches for 2025. Most analysts agree that barring a significant acceleration in construction activity, reaching the 25,000-unit annual target in the near future is unlikely,” says Petra Demetrovits, sales director at BGP. Biggeorge currently has around 1,600 units under construction and land for a further 2,500-plus apartments. Looking ahead, the company’s project pipeline is set to expand further, with new launches scheduled into 2026 and 2027, reflecting the sustained market momentum, she adds.
The first phase of the Le Jardin residential park by Living (the residential unit of Wing) has received its final use permit, and the handover of 165 apartments with an “A+” energy rating has started.
The housing market is experiencing a rise in demand, while the supply of available newly built residential developments is currently stagnating. On the other hand, investor activity has been revitalized, and new government measures are stimulating a significant pipeline of ongoing construction, in the view of Géza Germán, deputy CEO at the leading architect and project management service provider Óbuda Group.
PRESSURE ON PRICES
Consultancy Duna House expects a 10-20% rise in residential prices and transaction volumes for the year. It views the outlook for the sector as encouraging due to macroeconomic factors, market conditions, and governmental measures and their likely favorable impact on the housing market. However, the widening
Investment Upturn Expected for Hungary and Across CEE
Analysts are looking for an upturn in the market this year as international investors are already returning to many parts of the CEE region. Meanwhile, developers and asset owners must incorporate increasingly more ESG features and processes into their assets to attract investors, as this has become a basic requirement for a potential exit strategy. From a development perspective, there is a strong pipeline in the industrial, hotel and residential sectors, although speculative development in the office and retail sectors remains constrained.
By Gary J. Morrell
“In daily negotiations, we already feel a warmer breeze, but the real upswing still lies ahead of us, most likely from mid-2025 onward,” comments Máté Szoboszlay, business development and investment director at the Hungarian Faedra Group. “Two pre-conditions must align. First, the cost of debt has to retreat into the mid-single-digit range; once senior loans price there, the numbers for both buyers and developers fall back into place. Secondly, investors need predictable regulation and macro-policy. Clear, stable rules on taxation, zoning and incentives give long-term capital the confidence to step off the sidelines. Give the market a year of cheaper money and consistent policy, and activity will pick up markedly,” he argues.
Ákos Kiss, managing director of Property Market, anticipates a noticeable upturn in Hungary’s investment market by late 2025, with stronger, more sustained growth likely in 2026, especially once the so-far anemic GDP growth gains traction. “That said, several conditions must fall into place. First, geopolitical stability will be critical. Investors remain cautious in the face of regional uncertainty, and long-term commitments, especially in capital-intensive sectors like real estate, require a stable environment,” he says. “Secondly, the financing climate needs to improve. Lower interest rates and easier access to credit are essential to reactivate both foreign and domestic investors.
This isn’t just about capital availability; it’s about creating an operating environment where projects can scale without disproportionate financial friction,” Kiss adds.
CBRE experts expect EUR 700 million-800 million of real estate investment in Hungary for this year, representing a significant rise from 2024. Benjamin Perez-Ellischewitz, principal at Avison Young Hungary, has a similar ballpark, expecting around EUR 700 mln of investment activity or EUR 800 mln if developments and redevelopments are included. “The trend is positive; liquidity is up as sellers
Atenor has sold the first phase of its BakerStreet project to an international developer. The complex comprises 16,000 sqm of class “A” office space and 2,000 sqm of retail.
ESG Elements Central to Real Estate Development
ESG compliance with EU regulations is now the norm in higher-end real estate projects, both a basic requirement from developers, investors, lenders, and tenants and a regulatory expectation from the EU and national governments. This applies throughout a project process from planning, permitting and financing through to construction, leasing, PM and FM, and an exit strategy.
By Gary J. Morrell
Essentially, the real estate industry and related fields, such as construction, architecture, investment, banks and property and facility management, face the need to develop and adapt their fundamental procedures following sustainability demands and the EU taxonomy. ESG features are already established as a central element of class “A” offices and industrial and logistics buildings. They are also becoming more evident at the up-scale end of the hotel, retail and residential market sectors.
“Overall, the evolution of ESG will likely be driven by a combination of market forces, regulatory developments, and societal expectations for corporate responsibility and
sustainability,” says Zsombor Barta, founding partner at Greenbors. “Companies and investors that can adapt to these changes and demonstrate genuine commitment to ESG principles are likely to be better positioned for long-term success.”
A forerunner to ESG is the concept of “sustainability.” This is generally seen as a broad principle that guides a company’s business practices, while ESG is a more detailed framework that measures the firm’s performance. In terms of third-party green certification, BREEAM is the most popular accreditation option for the office and industrial sectors, followed by LEED. When it comes to interior, office management and design issues, WELL and Access4You are increasingly the schemes of choice.
HelloParks now has a total of 352,000 sqm of warehouses certified BREEAM New Construction “Outstanding” or “Excellent.” Pictured is its HelloParks Fót megapark in what it calls Budapest North, about 25 km northeast of the center of the capital.
