Retail may be in investors’ bad books in many markets, but in Hungary the sector is thriving, experts agreed at Real Asset Media’s CEE Outlook Briefing, which took place in Budapest last week.
This is partly because strong economic fundamentals support consumer confidence and partly because e-commerce is still lagging behind other European countries and people still like traditional shopping.
‘Retail in Hungary looks good,’ said Bence Vecsey, Director, Head of Investment, Hungary, Colliers International. ‘Occupancy rates in the major shopping centres have been constant at 100% and there is massive rental growth. So far the data show that e-commerce hasn’t really affected consumer behaviour’.
Online shopping hasn’t made its mark yet, said Noah Steinberg, CEO& Chairman, Wing: ‘Retail is not dead in Hungary, it remains an entertainment and leisure option as well as a shopping destination. We have seen steady year-on-year sales and rental growth in the shopping centres we own in the same stores’.
While other markets may struggle with overcapacity, in Hungary there is plenty of room for growth, as retail penetration is significantly lower than in other markets, said Vecsey: ‘Budapest has the lowest retail space per capita and very low stock, even compared to regional peers’.
Part of the reason for the resistance to e-commerce is that ‘consumers are sceptical,’ said Steinberg. ‘People just don’t believe that if they order something online it will actually be delivered. The other reason is that the delivery infrastructure is not present in the same way as in Western Europe’.
However, habits may change fast in Hungary as they have done elsewhere as soon as the infrastructure is in place. At present logistics assets are scarce and fiercely fought over.
‘Now there is no stock available and development hasn’t really started in this field,’ said Vecsey. ‘There is no denying that e-commerce is coming, it is just a matter of time.’
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