Hungary : Budapest office market2015 overview
- The office market in Budapest is running out of large prime office space
Record high volume of office take-up
In 2015, the leasing activity rose to almost 340,000 m², reaching its highest figure over the past six years. The market was boosted by several large deals: 13 lease agreements over 3,000 m² were signed and most of which were pre-let agreements.
IT and telecom companies as well as SSC/BSC (Shared & Business Service Centres) and financial companies were the most active players in the Budapest property market.
The vacancy rate for grade A and B offices continued its downward trend in 2015. The lack of new supply and the record volume of take-up helped to reduce the vacancy rate to 12.1%, the lowest vacancy rate since 2007.
The availability of prime office space continued to drastically reduce in the key office submarkets: CBD, Central Pest, Central Buda, South Buda. Rental values varied ac-cording to the location and the quality of premises but remained overall stable over the year. Due to the strong leasing activity and the low volume of new supply, positive rental growth is forecast for 2016.
Office properties still the main focus of investors
The investment market continued to increase in 2015 and by the end of the year investment volumes rose by 73% compared to 2014.
In line with 2013 and 2014, office properties were the main focus of purchasers. Primary local property funds were the most active players in the acquisition of office space in 2015, although foreign investors also started to show interest.
Prime office yields remained stable at 7.25% and with strong investment activity forecast for 2016, pressure in yields is likely to remain.