The provisional progress for 2016 contains a single-number vacancy rate and an investment revenue of 1 billion euros in the Hungarian capital.
The office market in Budapest saw a significant rise in pre-leases, reaching a number last experienced in 2009 – a total area of 121 000 m2 –, while there were hardly any office spaces left to rent. 2015 was the year that Budapest surpassed its regional competitors, Warsaw and Prague with regards to vacancy rates.
The growing demands on the office market and the low development activity of the past few years led to Budapest’s office market to become overbought, meaning that the amount of empty lots and spaces has fallen to a level last reached in 2008. By the end of 2015, Budapest has surpassed its regional competitors, Warsaw and Prague, in regard to vacancy rates. The oversupply in the Czech capital is preventing the decrease of empty and unused office areas.
Judit Varga, head of CBRE’s office rental team explained that in 2015, three pre-leased office blocks have been inaugurated, seven were still under construction, while nine were in the developing stage. Out of these, 150 000 m2 of office space is situated in the Váci Corridoor, which means that 2015 saw the beginnings of the formation of a new office center.
The 100 000 m2 of additional space set to be inaugurated in 2016 will possibly not put a stop to the decrease in vacancy rates either in Budapest, as approximately 57% of the office buildings and spaces that are currently being constructed has been pre-leased. Vacancy rates have decreased in all of the 20 market segments CBRE has examined, the average rate being 12.1%, 4.1% less than it was a year before.
The growth was also present in the investment market, as the investors spent a total of 750 million euros on estates in the country. Half of these transactions were realised on the office market, while industrial estates also played an integral part.
Compared to 2006-2007, the composition of countries providing the largest amount of capital has greatly changed by 2014-2015: the presence of United States’ capital has strengthened, while Hungarian investors again have become more active, making them responsible for 30% of total investments in this period. However, German capital, which was active and efficient before the recession, has completely disappeared from the market.
Regarding the expectations for 2016, Lóránt Kibédi Varga, CEO of CBRE had the following remarks: “This year we’re expecting a rise in investment liquidity in the case of portfolio transaction costs surpassing 100 million, and also in the case of properties that could cost several million – due to the escalation of bank funding. Even if only a few of these businesses come into fruition, it enables us to cross the one billion barrier”.
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