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COMMERCIAL PIPELINES STILL SWELLING The overall commercial real estate pipeline in Hungary has continued to increase across all categories with the exception of retail. As of February 2020, CBRE monitors ca. 1.34 million sq m of space currently under construction across office, industrial and retail sectors, up by 34% y/y. For hotels, the pipeline moved even more significantly from 2,800 to 3,750 rooms, from mid-summer to the end of 2019. The share of developments outside of Budapest is around 25% for retail and hotel while it is over 60% for industrial - driven by owner occupational manufacturing developments across the main industrial parks countrywide. The Budapest office pipeline under construction increased to 576,000 sq m, up by 24% y/y. The share of regional cities on the office development market remains slightly under 8% with an estimated 44,000 sq m being under active development in the main regional cities. Looking beyond the borders, 2020 is likely to bring elevated supply across other Central-European markets as well - indicating that local construction capacities will remain restricted as global demand persists. Office pipeline in the CE capitals is strong and suggests that 2020 delivery volume may increase by 65% compared to actual 2019 completions. We need to add; however, that actual deliveries in 2019 declined by 25% as compared to 2018 figures due to severe delays with a portion of this expected volume shifted into this year.

Change in Commercial Real Estate Pipeline in Hungary

Source: CBRE Research