The View 7th edition

33

30

25

20

Rental Range

15

Average Rent

10

Budapest Pipeline Rent

EUR / sq m / month

5

0

CB CBD CP

NB NCP

P

SB VC

Range and Average Level of Asking Rents by Office Submarket

Source: CBRE Research

HQ building in the speculative stock, while South Buda was hit the hardest by relocations that nearly quadrupled its average vacancy from the lowest in the city to 12.6%. At a more granular level, the city’s most saturated micromarkets at year end were Lipótváros, Ring Road North, Újlipótváros and Víziváros, all with average vacancy rates below 3%. Persistently tight availability of space combined with shortages of skilled construction labour and building materials paved the way for continued rental growth in H2 2018. The average asking rent across Budapest stood at 12.2 EUR / sq m / month at year end, up by 7% y-o-y. The average amongst ‘A’ category buildings reached 14.8 EUR / sq m / month (+5.4% y-o-y), whereas mid- category ‘B+’ assets advanced to 12.4 EUR / sq m /

month (+6.2% y-o-y). Rents are the highest in the CBD and Central Buda submarkets with average headline rents at EUR 15.8 / sq m / month and EUR 13.3 / sq m / month, respectively. While Central Pest was on a rapidly converging trajectory until mid-2018, the second half of the year saw its rent levels stagnate – still, the submarket appreciated by 7%y-o-y by year end. The lowest average rent of 8.4 EUR / sq m / month can still be found in the Periphery submarket and evidence remains to be seen how high the newly delivered Tópark Offices can achieve. Average rental incentives have not changed considerably, as landlords tend to offer between half to one rent free month per committed year, counterbalanced by generous fitout allowances due to construction cost inflation, with ca. 500 EUR / net sq m typical for shell-and-core space.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

6%

6%

8%

16% 17%

9% 13%

15%

8%

10%

10%

16%

Financial Services

Public Sector

12%

9%

16%

16%

7%

14%

Other, Unknown

Manufacturing Industrial & Energy ICT

13%

12% 7%

16%

7%

13%

10% 16%

B2B

15%

19%

B2C

24% 17%

39%

30%

23%

16% 17%

2014 2015 2016 2017 2018

Split of Take-up by Occupier Profile

Source: CBRE Research