by Property Forum | Report

Hungary’s property investment volume is expected to expand dynamically in 2021, since a significant amount of capital is looking for its place in the market. Offices with high levels of occupancy and logistics assets will be in the focus of investors. Hungarian advisory firm Eston, an official associate of Savills, has published its market reports for H2 2020.


“Last year, in 2020, in line with international trends, Hungary’s total office rental transactions decreased. By the end of the year, however, it became apparent that along the positive change affecting the market, the reorganization could start in 2021, albeit in a much more nuanced way than predicted by many market participants in the first half of the year. After the initial difficulty, tenants appear to be settling their office operations, and with the advent of hybrid office use, they will settle into this form of operation in the longer run, too. However, it is essential to note where more emphasis is placed on communal areas and meeting rooms, the proportions of office space will not decrease because a denser seating plan will be considered. We are facing a year of change, as taking into account our employees’ needs will largely depend on how flexible the company allowed working from home during the past year. We see that after the epidemic, a more extended test period will begin, where employers will decide for decades whether flexible working is an excellent alternative to keep the employer’s interest and sustain working efficiency,” says Tamás Pál MRICS, Head of Office Agency, Tenant Representation at Eston.

According to Eston’s estimates, in 2021, developers’ activity will be moderate and office market demand will take up from the middle of the year which will probably lead to a more stable vacancy rate. The South-Buda submarket will remain the focus of developers. In addition, Eston expects new handovers in the central- and non-central Pest submarkets. Demand continues to be strong in the market of development lots, however, some projects will probably be repositioned maybe with a complete change of function. In 2021 Eston expects rising rental fees and decreasing office market yields – with further lessening dynamics. Property investors’ activity is probably going to increase since a big volume of capital is looking for its place in the market.

Industrial and logistics

“The recent period’s uncertainty has not been able to shake up the industrial and logistics real estate market, but on the contrary, more intense competition has begun, where e-commerce actors have experienced explosive growth. Record low vacancy and high stabilizing rents characterize the entire sector. We expect the expansion of demand and tight supply caused by changing consumer habits to keep this segment in focus for developers and investors in the coming years. We can already see those already launched investments, which are larger than ever before, will not necessarily satisfy all the needs, so no stagnation or decrease in rents is expected,” comments Ernő Kiss, Associate Director, Head of Investment and Industrial at Eston.

As a result of the strengthening and expanding demand, the low vacancy rate, the barriers set by the building industry’s capacity and the increase of implementation costs the continuing increase of rental fees can be predicted. According to Eston’s estimates, demand will remain strong in 2021 too, whereas the vacancy rate is going to increase as a result of the ongoing constructions. In the logistics market, Eston forecasts the stabilization of investment yields.


“With the persistence of travel restrictions, a market favourable to domestic investors with strong purchasing power may emerge. Hungarian players’ success with a market share of almost 50% so far may depend on the price sensitivity of the sellers, which is not a negligible aspect in the light of the current and expected economic outlook. Simultaneously, the border closure did not act as a barrier to international acquisitions: for domestic players to have a more diversified and saturated portfolio, the business for them continued at a breathtaking pace in Poland, Romania, Bulgaria, Greece, Spain, and Malta. In listed countries, they can realize higher returns, so spectators and players will likely witness exciting events in the next period,” adds Attila Balogh, who’s responsible for investment and asset management at Eston.

Although the year 2020 slowed down investors’ activity everywhere, it did not derive from financing difficulties, rather the insecurity of business planning. When the virus situation is successfully controlled, investment volume is expected to expand dynamically in 2021, since a significant amount of capital is looking for its place in the market. The ongoing constructions in the domestic office- and logistic property market ensure the expansion of high-quality supply, therefore at top category properties, the decrease of yields will start again. Eston expects the biggest turnover in the segment of offices with high levels of occupancy, at the same time investments in the logistics property market can also take up. The hotel sector will probably not get back on track in 2021, but a wave of forced sales is not very probable.