Budapest, 18 January 2011.
On 18 January 2011, the Hungarian office of Colliers International held its regular press conference about the expectations of 2011 for the commercial real estate market. While looking back to last year’s results, Tim Hulzebos, managing director explained 2010 was a year of Change for Colliers International; 10 new management positions were filled in the CEE region including his position. “2011 will be a year of Growth. We are well positioned to take the challenges of a slowly improving market.” – said Tim Hulzebos.
Concerning the hotel market, Ákos Balla pointed out, that 2010 showed signs of improvement on the Budapest hotel market; the same cannot be said for hotels around Lake Balaton or rural Hungary. “The EU Presidency, a general increase in foreign guests and the new personal income tax law allows for a more optimistic outlook, although the first two will mostly benefit Budapest. Hotel stock in Budapest increased by 1000 rooms in 2010, we expect a lower increase for 2011. Subsidies remain as the main driving force of rural hotel developments.” – summarized Mr. Balla.
Tamás Beck, director of the Industrial Agency said that 2010 has passed in the spirit of the stabilization concerning industrial properties. Beside a significant restraint (63,000 sqm) on new developments, both the volume of new rental contracts (122,000 sqm) and the vacancy (20,7 %) remained stagnant compared to the rates of the previous year and, all these occurrences resulted a 26,000 sqm net absorption in the speculative market segment. The productive and the SME sectors were considerably active, but extraordinarily, logistics companies did not play an active role in the industrial real estate market, (by) entering new contracts only for a small volume. “In the sales market segment, demands mainly appeared for small buildings and plots, while in the case of larger properties, buyer interest can not be observed – in spite of offering them on quite favourable terms. During the year 2011, as the result of the significant decline in developer activity, the absorption of the vacant areas as well as the roughly constant level of demand, a decrease of the vacancy rate will be observable.””. – summarized Tamás Beck.
Miklós Saly, director of the Office Agency emphasized, that 2010 was a moderate, more conscious, and cautious year than 2009. Tenants’ activity has increased, though transaction time has extended due to the stricter control from parent companies. However, being aware of the consequences of 2010, the office market could be optimistic in 2011. The last year put an end to the decrease of rental fees and some office buildings even could consider increasing their rents. “Only a few new buildings are completed this year, therefore vacancy rate will decrease significantly. If banks finally reconsider their financing strategy, more developments would be expected, but every participant of the market should be much more deliberate in that new era.”– said Miklós Saly.
Anita Csörgõ, director of the Retail Agency pointed out, that 2010 saw the end of decreasing retail sales in Hungary with demand stabilizing and 2011 will be the year that retail sales, especially in the non-food sector will turn positive after 5 years of decline. The decreased personal income tax rate will surely boost spending in this sector. Retailers are responding with cautious shop expansion. Retailers have made their operations more efficient, at the cost of „Landlords” as rental levels have been pushed down in most all market sectors with more tenant-friendly conditions present in most retail leases especially those of anchor tenants: turnover rent provisions coupled with a low base rent, break options, shorter fixed lease terms and fit-out allowances. 2011 will see the opening of three smaller unique concept shopping centres such as CET, Váci1 and Europeum”.
Concerning the investment market, Hamish White, director of Investment Services Hungary said that last year was an improved year from Colliers International Hungary Investment Services point of view. Confidence in the Hungarian market place slowly returns with investors quietly scoping the market place mostly for prime investments. “Values have dropped by a minimum of 20% for prime real estate, owners are now realising this. The greatest holdback is not politics or country risk but the lack of finance. We predict around €500m in open market transactions due to growing pipeline of transactions” – said Hamish White.
Source: Colliers International