The View 7th edition

28

Forecast

Delivered Forecast Jan. 2018 Forecast Jan. 2019

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Annual New Supply and Pipeline Forecasts

Source: CBRE Research

in residential development following the reinstating of the 27% VAT rate for newly obtained permits could release more labour to the commercial sector and thereby alleviate this to some extent. RECORD STRONG APPETITE FOR OFFICE SPACE While the second half of the year saw somewhat weaker demand than the corresponding period in 2017, the consistently robust volume throughout 2018 produced higher annual results. In H2 2018, total leasing activity amounted to 283,000 sq m (-9% y-o-y), while take-up clocked in at 217,300 sq m (-2% y-o-y). Take-up was largely driven by the 180 new leases registered across the existing office stock, totalling 116,300 sq m (+29% y-o-y), which was further boosted by 20 pre-leases in ongoing

developments, totalling 63,200 sq m (+36% y-o-y). On an annual basis, 2018 saw ca. 680 lease transactions producing total leasing activity of 535,700 sq m (+13% y-o-y), which was effectively in line with the previous record level from 2015. Annual take-up comprised of 506 transactions totalling 391,200 sq m (+16% y-o-y), marking a record level for new demand in Budapest. Throughout the year, new leases in the existing stock showed the most dynamic upswing to 230,900 sq m (+46% y-o-y), while pre-leases in ongoing developments amounted to 74,500 sq m (+4% y-o-y). There were 58 take-up transactions sized above 1,500 sq m throughout the year, up from 41 in 2017, and the average size of all take-up transactions in 2018 increased to 775 sq m (+18% y-o-y).

Six of the year’s ten largest leases in the existing stock were signed by public sector tenants, while

sq m

60%

50%

BTS

New lease + expansion

40%

Owner occupied

Pre-leases Renewals

30%

Share of renewals (rhs) Share of pre-leases from take-up (rhs)

20%

10%

0

0%

2012

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2014

2015

2016

2017

2018

Structure of Total Leasing Activity by Deal Type

Source: CBRE Research