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News Release

Budapest

2010 – Further Signs of Recovery

Jones Lang LaSalle issues CEE City Reports for Q1 2010


Budapest, 18th May 2010 - Jones Lang LaSalle presents its latest edition of quarterly market reports - CEE City Reports Q1 2010. The CEE City Reports cover the main trends in the economy and demand and supply in the investment, office, retail, industrial and residential markets. The new edition highlights the continued stabilization and recovery of both the occupier and investment markets.

Ferenc Furulyás, Managing Director of Jones Lang LaSalle Budapest said: „The improving investor sentiment, which started at the end of 2009, has strengthened further in Q1 2010. This is the result of the continued economic improvement although a protracted recovery is expected. The credit markets are loosening but the return of pre-crisis levels of lending or debt pricing is not expected for the time being.  In Q1 2010 there were two significant investment transactions in Hungary. One of them was the sale of the 50% ownership of the new Allee shopping centre. The transaction gained high importance in the regional investment activity. The other deal was the purchase of the latest WING development, K3 by Allianz Insurance Hungary. Allianz will move into the building in July 2010 and occupy it exclusively as headquarters.”

The occupier markets are still sensitive in Hungary. Although a slow recovery has started, the office market is still under pressure due to the high oversupply and increasing vacancy rate. There is still new office supply under construction and being delivered in 2010 but the volume is falling and by the end of the year the new supply levels will be extremely limited. Office rental stabilisation may start in the first quarters of 2011 as soon as the high oversupply begins to be absorbed. The prime office rent in the CBD is 20 EUR/m2/month but asking rents vary on a wide range in the city’s submarkets. Generous rental incentives are offered to tenants therefore the effective rents are still under pressure and significantly lower than before the crisis.         

John Duckworth, Managing Director of Jones Lang LaSalle in CEE comments: “There are signs of a sustained recovery in the global economy with increasing evidence that the recovery in the business environment is filtering through to the real estate sector in CEE. Occupier demand appears to be either stabilising or is recovering in a number of markets, as the effects of the crisis start to slowly dissipate.  The CEE investment market (Czech Republic, Poland, Hungary, Romania and Slovakia) has recorded approximately €700 million of transactions to date, which represents an increase of ca. 169% year-on-year. We expect the remainder of 2010 to continue gradually improving across the CEE region.”