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In addition to the remarkable increase in new supply seen in 2019, the monitored development pipeline grew even further during the period. Currently, CBRE monitors ca. 3,750 rooms across 32 schemes that are under construction and scheduled for delivery until the end of 2021, more than 60% of which is forecast to enter the market already in 2020. However, a big chunk of this year’s volume is scheduled for the last months of the year, therefore delays are likely and the expected new supply volume is in a fairly healthy condition. Budapest, and particularly the central districts on the Pest side still form the most desired location for developers to proceed, with ca. 2,910 rooms in 24 individual schemes believed to be underway around the capital, predominantly in the 3-4 star category with a handful of premium 5-star projects. Developers continue to move towards larger-size projects, pushing the average scheme size potentially to 200. Development activity outside the capital also evolved significantly over the year, as seven projects with 850 rooms kicked off in recent quarters – Lake Balaton and less visited alternative destinations also came to light. These projects are smaller in size than those in the capital, and the predominantly 4-star developments are firmly focusing on attracting domestic visitors as well as guests from neighbouring countries. At the moment, the total monitored pipeline in Hungary comprises ca. 6,500 rooms across 54 schemes scheduled for handover until the end of 2022 – a gigantic volume that is highly likely to trickle out and come to market in smaller, more digestable waves in the years ahead. OUTLOOK Positive tourism fundamentals keep contributing to the development of the domestic hotel industry, and special events like the EURO2020 championship are likely to have an added positive impact on the market in 2020.

Consistently positive KPIs can be seen across Hungary and Budapest as well, though increasing competition on the local hotel scene can be challenging for schemes with outdated concepts.

After a historic high investment volume seen in 2019, the forecast looks promising for the coming years – given the sizeable development pipeline we expect more transactions to follow.

New supply could break new records in next years, although delays in delivery dates remain likely. The countryside keeps on narrowing the gap to Budapest in most aspects, emerging as a potential opportunity for hotel brands to expand to and later as a new target for investors.