The View 9

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The geographic split of new supply remained unusually skewed towards Central-Hungary, which received 44% of the 2019 total new supply outside the monitored stock in the capital, while West- and East-Hungary saw 29% and 28% of the volume, respectively. If including the developer-led supply of Greater Budapest, the share of Central-Hungary stood even higher at 52%. As such, last year brought a shift away from long dominant East-Hungary, although this was largely due to some schemes that were to be handed over here delaying into 2020, as well as the completion of the sizeable Rehau Automotive plant in Újhartyán in Central-Hungary. The largest new completion in East- Hungary was Krones’ new plant in Debrecen, while West-Hungary saw the handover of NHK Spring’s new facilities in Tata. Looking ahead, the development pipeline in the countryside has contracted slightly as there is ca. 505,000 sq m under construction, but if including the new developer-led projects in Greater Budapest, the countrywide total amounts to ca. 687,000 sq m that is largely in line with the ongoing volume six months ago.

Practically all of this is scheduled for completion in 2020, although the risk of delays still persists, as proven by the shifted projects from late last year. The ongoing pipeline across the country is ca. 75% made up of proprietary developments for owner- occupation, of which by far the largest is Pepco’s distribution centre in Gyál, followed by facilities for SRF Group in Jászfényszaru, B. Braun Medical in Gyöngyös, Infineon in Cegléd etc. Only the remaining 25% of the total volume is being undertaken by developers for leasing purposes, most of which concentrates in Greater Budapest – other cities seeing some developer-led activity are Pécs, Székesfehérvár and Szolnok. Kecskemét is still an area of interest for the foreseeable future, as some developers have continued amassing land and properties here. In other less industrially established regions such as Nyíregyháza and Zalaegerszeg, NIPÜF, the state-owned business park developer, has moved ahead with permitting for developments, albeit with no known commitment to actually start works. Generally, there are still signs of developers taking a more cautious stand outside Greater Budapest, particularly in light of headwinds in the automotive industry and the strained development cost picture.