‘Positive outlook’ for Hungary in 2019

Hungary is unique in CEE because there is rental growth in all three sectors, offices, retail and industrial, and Budapest has a significant yield premium.

Transaction volumes are healthy and prospects for Hungary’s property market are bright despite end-of-cycle fears, panellists agreed at Real Asset Media’s CEE Outlook Investment Briefing, which took place in Budapest last week.

‘We are very positive on the outlook for 2019,’ said Noah Steinberg, CEO& Chairman, Wing. ‘Our view is that the fundamentals of the local real estate market are very sound, in terms of the occupier markets, the ability to finance our projects and investment demand’.

Hungary is unique in CEE because there is rental growth in all three sectors, offices, retail and industrial, and Budapest has a significant yield premium. ‘Hungary presents the most bullish picture in CEE and it has not reached its peak yet,’ said Mark Robinson, CEE Research Specialist, Colliers International. 

Outlook 2019 CEE panel, Bucharest, February 2019

There is a feeling that the good times have lasted a long time and may be coming to an end, Steinberg said, but ‘in my view we will keep climbing at altitude, not going up steeply but not going down either’.

Banks are keeping the faith and financing is widely available, said Gábor Pető, Head of Real Estate Finance, UniCredit: ‘There are 4-5 banks active in Budapest and they are open to financing good products. They may be more cautious than before the crisis, but there is no lack of capital for good projects’. 

There is unlikely to be a drop but we are on course for a stabilisation of the market, said Árpád Török, Chief Executive Officer, TriGranit Corporation: ‘The fact is that other countries have multiple cities, but 90% of activity in Hungary when it comes to commercial real estate is focused on Budapest. The capital IS the market, but it has its limits in terms of size and stock, so there could be a slowdown’.

The other issue to be mindful of is that Hungary and the entire CEE region cannot be cut off from what is happening next door, he said: ‘Sentiment is very positive and GDP growth is good but we cannot be an island in a troubled sea. If you think of US-China trade wars, of Brexit, and above all of the slowdown in the German economy, then it is clear that all that affects the global economy will hit us as well’.

The upshot will be that ‘some projects will be delayed, others will not happen at all, but that is not necessarily a bad thing,’ Török said. ‘The market will be more stable but investors will not be able to make the returns they expected from CEE a couple of years ago. Yield compression cannot totally counterbalance the increase in construction costs and delays in delivery’. 

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