2011 a record year in the Budapest office market (HU)
Monday 30 January 2012
2011 has been a record year in the Budapest office market with take up reaching nearly 400,000 m², the highest level since 2008 when there was still a momentum from a strong market. The latest figures from global property consultant Cushman &Wakefield indicate that the market is moving away from the days when the majority of the transactions were renegotiations and relocations again count for a big part of the transactions.
Out of the nearly 400,000 m² the new/net take up was about 155,000 m² with just over 100,000 m² true net absorption, meaning that 25% of the transactions came into the market from secondary buildings and finally resulted in the vacancy rate dropping from 24.70% at year end in 2010 down to 23.40% by the end of 2011. This might seem like a small decline, but if we take into consideration that last year 71,000 m² new stock came on the market the result is even more promising. Going forward there is only approximately 33,000 m² of projects under construction that can be guaranteed to come on the market in the next 12-24 months.
The above numbers are even more impressive if we look at the Prague Office Market, which is considered to be in a better state. In 2011 in Prague there were more, than 325,000 m² transacted. Warsaw had a record year with nearly 600,000 m² transacted. An interesting comparison between the 3 capitals is that Budapest had the highest amount of space that was for expansion for existing tenants. In Hungary nearly 65,000 m² was in the form of expansion of existing tenants where a sin Prague it was only 18,500 m² and 32,000 for Warsaw. This can be mainly attributed to expansion form multinational organizations and 1 major government expansion. This clearly shows that multinationals are committed to Hungary and are often in growth mode to optimize their operations by bringing jobs to Hungary.
Throughout 2011 the market was very active and the numbers were creating optimism. This was one of the key driving forces behind Heitman, who were represented by Cushman & Wakefield, to invest nearly E€250 million into 6 office buildings in Budapest.
Gergely Pados Partner, Head of Office Agency at Cushman & Wakefield Budapest said: “Obviously the question is what 2012 and 2013 will bring. It is impossible to predict in today’s economic climate, however what we can see is that the fundamentals of the Budapest office market have remained healthy the last 4 years and therefore we believe that the next two years will see a continued activity and take –up remaining healthy which will result in a slow but steady decline of the vacancy rate.”
“All said and done it is still a challenging market but we need to focus on the positive signs and hope that this new surge of activity takes us through 2012 and by the end of this year we will again report declining vacancy rate, strong activity and possibly even saying that rents have stabilized and are showing signs of increase,” added Gergely Pados.