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Market Research - Hungary

Hungary : Budapest office market - March 2018

- New development boom
- A high volume of net take-up is encouraging construction
- Office investment into its 2nd year of good results

A high volume of net take-up is encouraging construction

Office take-up reached 278,500 m² in 2017 indicating a stable, strong demand on the occupier side. There were 14 lease agreements over 3,000 m² signed, and pre-lease agreements still dominated the market. The most active tenants were the banks and financial companies, which represented 22% of the transactions. The vacancy rate for Grade A and B offices continued to follow a downward trend, and stood at 7.5% at the end of 2017, representing the lowest rate ever recorded. The availability of prime office space continued to drastically reduce in key office submarkets such as the CBD, Central Buda and South Buda.

A high volume of new developments is, however, expected for completion in 2018 and 2019. Approximately 450,000 m2 of Grade A office area is going to be available in Budapest in the next few years, and although most of the new schemes are already pre-let, the new supply is going to put pressure on rents.

Office investment into its 2nd year of good results

The commercial real estate investment market continued to show strong activity in 2017. The annual investment volume reached the record level registered in 2016 with office properties accounting for 43% of the total investment volume. Local as well as foreign investors showed great interest. Foreign investors created 56% of the total volume and new players entered the market. The average transaction size has increased indicating a growing investor appetite for prime properties. Prime office yields dropped to 6.50% and are expected to stay low.

hungary EOM 2018
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