The Greater Budapest area is well supplied with modern logistics and industrial space of various types of facilities. Other regions in Hungary have poor availability and are more focused on built-to-suit developments – with the exception of the Northern counties.
The market in and around the capital has been favorable for tenants for three years already as vacancy stuck at a relatively high level. Countryside markets show a mixed picture with increasing availability in the Miskolc region but still short supply in key cities like Györ and Kecskemét.
Development process is very quick and effective and many landlords own plots with building permit in place in the most developed areas.
Labour availability highly varies across the country from 6% in the more industrialized Györ region to 16% in Miskolc region.
2012 office statistics reflect weaker economic fundamentals than in 2011
With 48,100 sq m take-up in Q4, annual level totalled to 174,100 sq m, showing a 28% decline on the 2011 figures.
Supply growth significantly slowed in Budapest in 2012 with only 23,000 sq m annual completion, showing a remarkable decline from 174,600 sq m completed in 2011.
Vacancy rate slightly decreased in Q4 but increased year-on-year and stood at 21.0% at the end of December 2012, up from 19.5% a year ago. Vacant stock increased to over 670,000 sq m.
Current headline rents are typically in the range of EUR 11-13 per sq m p.m. for average ‘A’ category properties.
Following a relatively strong 2011, investment turnover declined sharply in 2012 in Hungary as investment appetite declined in Central Europe as a whole.
The investment market is split in two with core and core plus investors searching for best-in-class assets and opportunistic investors being active at the other end of the investment spectrum
Prime yields moved out during 2012. A change of 25 bps was registered for offices in Q2 and now the prime end stands at 7.50%. Prime industrial yield decompressed in two steps by 50 bps in total.
Investment volumes are forecast to be low in 2013; as one or two larger deals could impact the market stats. Overall annual volume shall be in
Office demand decreased by double-digit rate and pushed net absorption into negative. This makes vacancy increase above the 21% line despite lack of new completions.
Industrial demand jumped to historical high in Q3 which helped vacancy decline to under 20%. Year-to-date net absorption increased on last year.
After a depressed completion volume this year, retail pipeline is building up in Budapest and across regional cities. Best high-street locations mark increasing interest and hence potential rental increase.
Investment volume is unchanged on Q2 with EUR 84 million since there hasn’t been a new transactions recorded since early this year. Prime logistics yield moved out by 25 bps for the second time this year.
Hungary Labour & Warehouse Availability MarketView Spring 2013
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Hungary
