Professional Documents
Culture Documents
OVERVIEW HUNGARY
YEAR-END 2014
JANUARY 2015
OFFICE
MARKET
OVERVIEW 2014
2012
-1.5
-1.9
-1.4
-4.2
10.4
5.7
289.3
225.1
7.0
7.9
2013
1.6
-0.1
1.4
5.2
9.8
1.7
297.0
223.7
4.3
5.9
2014F
3.2
1.5
7.8
14.9
7.6
-0.2
308.4
231.8
2.4
4.8
2015F
2.5
3.1
3.7
3.5
7.3
0.7
308.6
249.9
1.9
3.9
2015F
2.6
2.9
3.4
3.0
7.2
2.6
304.1
251.9
3.2
5.0
MARKET
OUTLOOK
GDP GROWTH
INFLATION
INTEREST RATE
EMPLOYMENT
aided by accommodative monetary policy, low inflation and rising consumer spending. Consumer
confidence is now at levels last seen in 2006, helped by the robust recovery in the labor market, which
has seen the unemployment rate falling.
OFFICE
MARKET
OVERVIEW 2014
FORECAST
growth of 3.2% is now expected for 2014 (the best performance since 2006) followed by 2.5% in 2015.
CONSUMER SPENDING
3.2
1.5
2.3
1.4
3.4
3.1
CONSUMER
SECTOR GAINS
MOMENTUM
Consumer prices are falling on the
back of a plunge in global oil prices,
sharp falls seen in unemployment and
low interest rates continue to boost
households disposable incomes.
Private consumption is estimated to
have grown by 1.5% in 2014 and is set
to accelerate to 3.1% in 2015.
OFFICE
MARKET
OVERVIEW 2014
COUNTRY OVERVIEW
DEMOGRAPHICS
TRANSPORT
COUNTRY DATA
Population
Top Cities
Budapest
Debrecen
Miskolc
Szeged
Gyr
Currency
VAT - Standard Rate
OFFICE
MARKET
OVERVIEW 2014
9,00%
Yield - Prime
20,0%
10,0%
7,00%
5,0%
6,00%
0,0%
-5,0%
5,00%
-10,0%
4,00%
15,0%
8,00%
PRIME YIELD
MARKET
OUTLOOK
-15,0%
3,00%
-20,0%
dec..04
dec..06
dec..08
dec..10
dec..12
dec..14
The outlook for the retail sector is generally stable, albeit there are some concerns over the
potential impact of increased state intervention in recent months.
A new law was passed in December, which forces non-family owned retail stores that are larger than
200 sq m GLA to shut on Sundays, which may dampen investors appetite and cause some
international occupiers to re-consider expansion plans in the country. This is in addition to an already
approved levy of up to 6% on retail activities and a rule that will revoke a trading license if there are
two consecutive years of trading losses.
PRIME RENTS
PRIME YIELDS
SUPPLY
DEMAND
OFFICE
MARKET
OVERVIEW 2014
SQ.M/MTH SQ.M/YR
95
1,140
40
480
SQ.M/MTH SQ.M/YR
7.50
90
7.00
84
US$
SQ.FT/YR
128
54
US$
SQ.FT/YR
10.1
9.4
GROWTH %
1YR
5YR CAGR
0.0
-1.0
0.0
-7.8
GROWTH %
1YR
5YR CAGR
7.1
-3.6
0.0
-4.9
Budapest (Andrssy t)
RETAIL PARKS
(FIGURES ARE GROSS, %)
Budapest
Budars
SHOPPING CENTRES
(FIGURES ARE GROSS, %)
Hungary
OCCUPIER FOCUS
MARKET
OUTLOOK
CURRENT
QUARTER
6.75
LAST
QUARTER
6.75
LAST
YEAR
7.00
7.00
7.00
7.25
CURRENT
QUARTER
8.50
8.50
CURRENT
QUARTER
7.25
LAST
QUARTER
8.50
8.50
LAST
QUARTER
7.25
LAST
YEAR
8.50
8.50
LAST
YEAR
7.25
10 YEAR
HIGH
LOW
8.50
5.50
11.00
6.00
10 YEAR
HIGH
LOW
8.50
6.25
8.50
6.00
10 YEAR
HIGH
LOW
7.50
5.00
With respect to the yield data provided, in light of the lack of recent comparable market evidence in many areas of Europe and the changing nature of the market and the costs
implicit in any transaction, such as financing, these are very much a guide only to indicate the approximate trend and direction of prime initial yield levels and should not be used
as a comparable for any particular property or transaction without regard to the specifics of the property.
INVESTMENT FOCUS
Highstreet
Retail
OFFICE
MARKET
OVERVIEW 2014
HIGHSTREET RETAIL
The Main Streets Across the World 2014/2015 Cushman & Wakefield Research Publication identified 31
high street locations in the CEE region. Budapest Vci utca is the third most expensive retail location in
the region, just after Prague downtown areas but outstrips Warsaw and Bratislava high streets.
Source: Main Streets across the World, A Cushman & Wakefield Research Publication http://www.cushmanwakefield.com/en/research-and-insight/
RANK COUNTRY
22.
Bulgaria
RENT
RENT
EURO/SQ.M
Sept 2014
/YR
CITY
LOCATION
RANK
COUNTRY
CITY
LOCATION
Burgas
Alexandrovska
25
300
6.
Poland
Warsaw
ul. Chmielna
25
300
11.
Poland
RENT
RENT Sept
EURO/SQ.M
2014
/YR
70
840
47
564
22.
Bulgaria
Plovdiv
Alexander
Batenberg
13.
Bulgaria
Sofia
Vitosha Blvd
44
528
7.
Poland
Warsaw
ul.
Marszalkowska
60
720
18.
Bulgaria
Varna
Kniaz Boris I.
30
360
4.
Poland
Warsaw
85
1 020
6.
Czech
Republic
70
840
14.
Poland
Wroclaw
ul. Swidnicka
40
480
1.
Czech
Republic
185
2 220
14.
Romania
Brasov
Strada Republicii
40
480
2.
Czech
Republic
Ceska Street /
Svobody Square
Na Prikope /
Prague
Wenceslas
Square
Bulevardul
Magheru
50
600
14.
Hungary
45
540
37
444
20
240
20
240
Brno
Prague
Parizska Street
180
2 160
10.
Romania
Bucharest
Budapest
Andrssy t
40
480
12.
Romania
3.
Hungary
Budapest
19.
Poland
9.
Poland
Katowice
Vci utca
95
1 140
15.
Romania
29
348
23.
Romania
ul. 3 Maja
53
636
23.
Romania
Memorandumul
Cluj
ui, Napoca,
Eroilor
Stefan cel Mare,
Constanta Rascoala din
1907
Stefan cel Mare,
Iasi
Cuza Voda
5.
Poland
Krakow
ul. Florianska
75
900
16.
Romania
Timisoara
Victoriei
35
420
21.
Poland
Lodz
ul. Piotrkowska
26
312
14.
Slovakia
Bratislava
Downtown
40
480
8.
Poland
Poznan
660
8.
Slovenia
Ljubljana
Copova
55
660
Poland
Szczecin
ul. Polwiejska
Al.
Niepodleglosci
55
17.
33
396
20.
Slovenia
Ljubljana
Slovenska ulica
27
324
8.
Poland
55
660
MOST
EXPENSIVE
LOCATIONS
IN CEE
SQM
/M
PRIME
YIELDS
CURREN
T VALUES
185
5.00%
PARISKA
STREET
180
5.00%
VCI
UTCA
95
6.75%
UL.
NOWY
SWIAT
85
7.50%
NA
PRIKOPE &
WENCELA
S SQUARE
OFFICE
MARKET
OVERVIEW 2014
BUDAPEST
FASHION STREET is another shopping destination targetted by middle to highend retailers with current tenants Hugo Boss, Furla, Lacoste, Lloyd, Massimo Dutti,
Starbucks, Zara Home and Oysho. This is located in the vicinity of Vci utca, forming an
L shape shopping area. Footfall is in the range of circa 15-18,000 people per day.
LOOKING AHEAD,
ANDRSSY T (Andrssy Avenue) has become the main destination for luxury
ANDRSSY T
Petfi Sndor Street, running parallel Vci utca is an emerging high street destination since
the street was partially pedestrianised. International retailers are not yet concentrating on
this location.
retailers since the opening of Louis Vuitton. The avenue is part of the National Heritage
site, and has excellent potentials. Retailers, such as LV, Burberry, Gucci, Max Mara,
Nespresso, Boggi, and Hublot have already opened their flagship stores, and others are
investigating. Footfall at Andrssy Avenue is in the range of 8.000 10.000 people / day.
While there are a select number of luxury brands considering expansion in Hungary,
jewellery and fashion segment were the most active in recent years. Newest openings
include Il Bacio di Stile department store and Breitling on Andrssy t; Oysho, Intimissimi,
Subway, and Zara Home on Fashion Street and Desigual, Pylones, Deichmann in Vci utca.
OFFICE
MARKET
OVERVIEW 2014
Shopping
Centre
Market
OFFICE
MARKET
OVERVIEW 2014
The first modern, first generation shopping centres opened in the second half of the 1990s.
Typical examples include Duna Plaza, Plus Center and Mammut1.
The second wave of the evolution happened in the early 2000s when schemes having an
excellent strategic location came on the market. Examples are Westend City Center, Mammut II,
MOM Park, and rkd Budapest; all of them producing outstanding footfall and turnover figures
since then.
The third wave of the evolution started in November 2007 with the opening of Arna Plaza, a
scheme of 65,000 sq m GLA. Its retail concept and unique tenant mix fundamentally changed the
dynamics of the Hungarian market. INGs Allee Shopping Centre, opened in November 2009, is
another prime example where best of class international anchor tenants are present. In Q3 2011,
the locally developed KKI Terminal opened with 55,000 sq m GLA, but is currently in
bankruptcy. The second phase of the rkd Center opened in Q1 2013 (20,000 sq m), and thus
rkd has become the largest scheme of the country.
BUDAPEST IS ONE
OF THE LARGEST
MARKETS IN CEE
SHARE OF MODERN SHOPPING CENTRE SPACE IN
CAPITAL CITIES VS REGIONAL CITIES
Poland / Warsaw
Romania / Bucharest
Czech Rep. / Prague
Hungary / Budapest
Bulgaria / Sofia
0%
20%
40%
60%
80%
100%
In a CEE context, modern retail stock is far the largest in Poland with 9.0 million sq m GLA,
well above the CEE market average of 3.3 million square metres.
Hungary is one of the smallest markets by country comparison with 1.9 million square metres
GLA, but one of the largest markets by capital comparison with 778,000 square metres. Almost
60% of the Hungarian stock is concentrated in Budapest, which is the highest share in the region.
The highest saturation in the region can be found in Prague and Warsaw, followed by Budapest.
100
200
300
400
500
600
700
11
OFFICE
MARKET
OVERVIEW 2014
GENERAL
REPAIRS
INSURANCE
SERVICE CHARGES Typically covers all operating expenses including management fee, security and cleaning costs, maintenance of
purpose defined in the lease. Any change will require the landlords
prior consent.
LEASE TERMS
DURATION OF LEASE 5-10 years
BREAK OPTIONS Negotiable, albeit generally implies penalty which
amounts to the total gross rent for the remaining lease term.
common areas, elevators, water / electricity / heating / air conditioning systems, snow clearance, property tax and property insurance.
TAXATION
LOCAL TAXES
Tenant Local Business Tax - the maximum rate is 2% of gross
sales revenue less cost of goods acquired .
RENTAL PAYMENTS
RENT PAYMENT AND FREQUENCY Euro per square metre
per month, due monthly or quarterly in advance. In most cases payable
in HUF.
MEASURING CODE
MEASUREMENT PRACTICE
Gross Internal Area
LEGISLATION
LEGISLATION IN RELATION TO LEASE CONTRACTS Hungarian Civil Code.
PROSOPECTIVE CHANGES TO LEGISLATION None.
DISPOSAL OF LEASES
ASSIGNMENT AND SUB-LETTING Leases generally do not allow sub-leasing or assignment, but it is negotiable and subject to
the landlords written consent. The majority of the office leases allow sub-letting or assignment to an affiliate company.
retail only.
EARLY TERMINATION Not allowed if the lease is concluded for definite term.
TENANT LIABILITY The tenant is generally responsible for reinstating the premises to their previous state, with the exception of
12
OFFICE
MARKET
OVERVIEW 2014
13
OFFICE
MARKET
OVERVIEW 2014
Most retailers
believe that these
measures will not
last the ICSC is
14
www.cushmanwakefield.com
ORSOLYA HEGEDS MRICS
RICS Registered Valuer
Head of Research Hungary
Associate Valuation and Advisory
orsolya.hegedus@eur.cushwake.com