Hungary : Budapest office marketYear 2016
- New developments on the way in the office market
- High volume of office take-up
- Record high investment volume
High volume of office take-up
In 2016, leasing activity rose to almost 285,000 m², recording the second highest figure over the past 5 years, albeit a 16% decrease compared to 2015 which was a record high volume.
The market was boosted by several large deals. Indeed 21 lease agreements over 3,000 m² were signed in 2016, most of which were pre-lease agreements.
The vacancy rate for Grade A and B offices continued to follow a downward trend in 2016. The lack of new supply and the strong occupier activity helped to reduce the vacancy rate to 9.5%, the lowest level since 2007. This represented a 260 basis points decrease compared to the previous year.
The availability of prime office spaces continued to drastically reduce in key office submarkets such as the CBD, Central Pest, Central Buda and South Buda.
Record high investment volume
The commercial real estate investment market continued to increase in 2016 and by the end of the year investments rose by 72% compared to 2015 to reach the second highest volume since the crisis. In line with previous years, office properties were the main focus of purchasers with a share of 62% of total commercial real estate.
Prime office yields decreased to 6.75% and with strong investment activity for 2017, pressure on yields is likely to remain.