10 Top
Predictions for Hungary in 2024 January 2024
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Offices Demand for ESG-compliant office buildings will remain stable According to our expectations, demand for prime locations and modern, green, energyefficient, and ESG-compliant office buildings will remain stable, leading to higher vacancy rates in older office spaces. Additionally, there is a greater emphasis on employee needs in today's business environment, prompting more companies to choose central, easily accessible locations with a wider range of services, rather than the outskirts or suburban areas.
Economics We expect a revival in domestic consumption, which could support economic dynamics In 2024, with lower interest rates and a decrease in inflation, we expect a revival in domestic consumption, which could support economic dynamics. However, it is not expected to significantly exceed the 3% threshold. The influx of EU funds can greatly contribute to growth. In this regard, a positive development occurred in December 2023, as a portion of the cohesion funds was released, making 10.2 billion euros available for Hungary.
A tenant-driven office market is expected for 2024 Overall, the office market will continue to be tenant-driven in 2024, with flexibility in contracts remaining of fundamental importance. We do not anticipate a significant turnaround in vacancy rates, particularly in the case of high-quality properties and prime locations, during 2024.
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Residential Some consolidation is evident at residential sector The year 2023 was primarily characterized by high financing costs, making it a year with a very low base. A significant turnaround could only occur concurrently with a substantial reduction in interest rates. The latest family support program in the state does not anticipate bringing about a significant change in demand. High yields in the government bond market have also restrained investor interest. While some consolidation is evident, overall, we do not expect a significant expansion in demand in 2024.
Industrial Strong demand for industrial/logistics properties We expect strong demand for industrial/logistics properties than for other types of real estate, however the market will be more tenant driven compared to previous years, but also anticipate increasing vacancy due to expected significant new deliveries. There is a growing focus on green warehouses, driven by increasing investor and tenant demand for longterm sustainable operations and energy-efficient functioning.
Increasing demand from Asia There is an increasing emphasis on the countryside market, driven primarily by continued strong demand from Asia and the growth in car production and manufacturing of electric fixtures (e.g., battery production). Developments are supported by the moderation in general construction industry demand, which may slow the growth rate of construction costs that was prevalent in previous years.
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Investment Increasing importance of fulfilling ESG criteria is evident for investments In 2024, the transaction volume will likely remain lower compared to period before 2022. The most sought-after asset classes are expected to include industrial and logistics properties, certain smaller retail assets, as well as core office spaces. Increasing importance of fulfilling ESG criteria is evident at investments, even for investors who may not have prioritized this aspect previously, and this will likely be reflected in pricing.
Retail The dynamics of retail sales accelerate Starting from 2024, with the slowdown in inflation and the increase in purchasing power, the dynamics of retail sales may accelerate. Modern, repositioned shopping centers that emphasize communal spaces can gain an advantage, reinforcing impulse purchases and the time spent in malls.
The role of retail parks will remain strong The role of retail parks will remain strong, especially for consumer segments where targeted shopping is more prevalent due to lower real incomes.
Turnaround in capital market tendencies in the second half of 2024 It is crucial for ECB reference rates to stabilize, or decrease in the second half of next year, which can support the volume of investment. Beside all of these, we expect turnaround in capital market tendencies in the second half of 2024 and in the year of 2025.
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Contact Kristóf Tóth
Associate Director, Head of Research | Hungary +36 20 859 0214 kristof.toth@colliers.com
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