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rt 3Special Repo

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ent Real Estate Developm Market Talk: How will the

market develop in 2017?

 14

Risk-averse buyers are

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Activity returning to Budapest

REAL ESTATE DEVELOPMENT

BUSINESS JOURNAL BUDAPEST

VOL. 24. NUMBER 19

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OCTOBER 14, 2016 – OCTOBER 27, 2016

HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU

SPECIAL REPORT

Office development in the pipeline The robust occupier market has continued into 2016, motivating developers to break ground on a series of new projects, which will be completed over the next couple of years, analysts say. 18

NEWS

Fall blows in good economic numbers After declining for three consecutive months, industrial production finally picked up in August, and inflation finally made a comeback. The adjusted data isn’t as rosy as the raw, but it is still welcome news. 3

SOCIALITE

Olaszrizling puts on its game face Krisztina Ilosfai and Maxine Adams have cut out a niche for themselves by establishing their own high-end event planning company that they say is unique, organizing everything from Mission Impossible teambuilding across the capital to an Alice in Wonderland-themed wedding. 5 SOCIALITE

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SPECIAL REPORT

Olaszrizling’s position as Hungary’s number one white wine grape may be under threat from the more refined and fashionable Furmint but on its day, it can hold its own with the best. 30-31

BUSINESS

Yoga in Budapest for the English speaker

Limited supply to meet rising retail demand

How to be a Budapest tour guide

Luckily for yogis and people who want to take up the practice, Budapest has a selection of world-class studios offering all the major styles. 28-29

Last year was the second in a row that retail sales for Hungary grew by more than 5% year-on-year, but there are still no new shopping centers under construction in Budapest. Yet. 12

To be a successful guide, you need so much more than the ability to stand in front of one of Budapest’s classical tourist sites and give a simple lesson in art history.

8-9

2016. 10. 12. 20:48

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Budapest Business Journal | October 14 – October 27, 2016

SPECIAL REPORT:

3Special Report

BBJ

Real Estate Development Market Talk: How will the

market develop in 2017?

 14

Risk-averse buyers are

back

 16

Activity returning to Budapest

REAL ESTATE DEVELOPMENT

BUSINESS JOURNAL BUDAPEST

VOL. 24. NUMBER 19

HUF 1,250 | €5 | $6 | £3.5

Access all areas

OCTOBER 14, 2016 – OCTOBER 27, 2016

HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU

SPECIAL REPORT

Office development in the pipeline The robust occupier market has continued into 2016, motivating developers to break ground on a series of new projects, which will be completed over the next couple of years, analysts say. 18

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Call +36 1 398-0344, or email circulation@bbj.hu Budapest Business Journal 1 year HUF 27,500+VAT 6 months HUF 13,750+VAT 3 months HUF 6,875+VAT

NEWS

Fall blows in good economic numbers After declining for three consecutive months, industrial production finally picked up in August, and inflation finally made a comeback. The adjusted data isn’t as rosy as the raw, but it is still welcome news. 3

SOCIALITE

Olaszrizling puts on its game face Krisztina Ilosfai and Maxine Adams have cut out a niche for themselves by establishing their own high-end event planning company that they say is unique, organizing everything from Mission Impossible teambuilding across the capital to an Alice in Wonderland-themed wedding. 5 SOCIALITE

SPECIAL REPORT

Olaszrizling’s position as Hungary’s number one white wine grape may be under threat from the more refined and fashionable Furmint but on its day, it can hold its own with the best. 30-31

BUSINESS

Yoga in Budapest for the English speaker

Limited supply to meet rising retail demand

How to be a Budapest tour guide

Luckily for yogis and people who want to take up the practice, Budapest has a selection of world-class studios offering all the major styles. 28-29

Last year was the second in a row that retail sales for Hungary grew by more than 5% year-on-year, but there are still no new shopping centers under construction in Budapest. Yet. 12

To be a successful guide, you need so much more than the ability to stand in front of one of Budapest’s classical tourist sites and give a simple lesson in art history. 8-9

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THE EDITOR SAYS

Something in the air For a while now there has been a certain, hard to define feeling in the air in Budapest. Talk to business people and it is clear they face a raft of challenges and obstacles, but then, they always do. It is also clear, however, that there is a feeling of some optimism about their businesses. Put crudely, people are buying stuff again.

Businesses are buying services and products from each other. The household consumption of ordinary Hungarians is rising (up 5.1% in Q2 2016 from Q2 2015, according to the Central Statistical Office). People are even buying more adverts in newspapers!

But there is also positive movement right across the real estate market, as this issue’s special report makes clear. Only retail is really lagging, held back partly by the law limiting the size of malls. Here, too, though, there is finally progress, with the Futureal Group announcing it is in negotiations with a number of anchor tenants for its Etele Plaza mall, near the Budapest One business park at the Metro 4 terminus, and hopes to confirm brands by the end of Q1 2017. Even so, the likely completion date for the shopping center will only be 2018-19.

All other sectors are showing greater signs of activity, and more importantly, the more risk-averse institutional investors are back buying in the Budapest market. The asset manager, Corpus Sireo, based in Germany has purchased the iconic 25,500 sqm Park Atrium office center in Budapest. Although the purchase price was not revealed, market analysts believe the deal to be worth more than EUR 50 million. Many people may not recognize the building by that name, but it is a landmark structure opposite Városliget City Park and the carparks behind the

Műcsarnok (the Kunsthalle or Palace of Arts), sometimes called the Deloitte building or the ING building after two companies that have their Hungarian operations headquartered there.

For now, we are in a landlords’ market. Vacancy rates are hovering around the 10% mark for offices, an all-time low (admittedly, record keeping only goes back to the 1990s and the start of a market economy in Hungary, but impressive even so).

They will likely go lower before new supply arrives, and much of that new supply will be pre-let. The advice to businesses today is to plan ahead, possibly even using a 24-month horizon, when it comes to assessing their future office space needs. But the good news is that, finally, there is new supply coming. That hard to define feeling is taking on concrete form.

You would not expect us to ignore the one big story that has dominated Hungary’s headlines these past few days: the sudden shuttering of the country’s largest circulation newspaper, Népszabadság. There is not much new anyone can say at this stage, even for a story as fast moving as this.

We have followed events on our website, bbj.hu, and the background is well-known, having been given a thorough international airing. As a newspaper operation ourselves, we clearly have some fellow feeling, even if our markets were quite different; they a Hungarian language political daily, we an English language business biweekly. But its closure is to be mourned because with it goes a voice, and whether you agree with that voice or not (and to judge by its falling circulation figures, increasingly few did), none of us have a monopoly on wisdom, and in a plurality of voices there is strength, not weakness.

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At left, Móricz Zsigmond körtér in 1956 with a building in the background damaged during the uprising against the government of the Hungarian People’s Republic and its Sovietimposed policies. Hungary commemorates the revolution, and also the creation of the Republic of Hungary in 1989, on October 23, which is a national holiday. Below, Móricz Zsigmond körtér today is an important transport junction, with the latest metro line 4 having a stop here.

What We Stand For: The Budapest Business Journal aspires to be the most trusted newspaper in Hungary. We believe that managers should work on behalf of their shareholders. We believe that among the most important contributions a government can make to society is improving the business and investment climate so that its citizens may realize their full potential.

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2016. 10. 12. 20:49

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Fall to bring good news in industrial production After declining for three consecutive months, industrial production finally picked up in August.

Although the new trend is not yet overly convincing, analysts expect to see an upturn in the autumn. In the meantime, inflation is back in positive territory again.

ZSÓFIA CZIFRA

Although raw data shows a two-digit rise in Hungary’s industrial production on a year-on-year basis, when looking at working day-adjusted figures output grew only 3.5% in August. The raw data, a 11.1% increase, is high because this August we saw three more working days than in 2015. Month-on-month data showed a 1.6% increase, which follows a three-month decline. The improvement in August’s industrial figures is mainly due to a livening in the automotive sector, which showed a 16.6% increase from last year, and of the 13 sub-sectors of the manufacturing sector, 12 picked up in the last month of the summer. The machinery and pharmaceutical sectors also performed outstandingly well in August.

Fall usually brings good news for the industrial sector, and both the Hungarian purchasing manager index (which rose to 57 in September from 51.7 in August) and German manufacturing sector data suggest that we will see the positive tendency in industrial performance continue and even further pick up in the upcoming months. Total new orders in the manufacturing sector grew by 15.4% in August on a yearly basis, of which domestic orders grew by 21.9%, and export orders were up by 14.3%. This again indicates that the performance of Hungary’s industry will further improve in the fall.

The latest foreign trade data showed a mixed picture: exports grew by 13% year-on-year in euro terms, and imports grew by 11%. The growth rates both for imports and exports have accelerated.

Exports were up 3% and imports rose by 1.4% in January-August. Having three more working days this August compared to 2015 also had a positive impact on the figures. However, when looking at seasonally-adjusted data of the past five

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Total new orders in the manufacturing sector grew by 15.4% in August on a yearly basis, of which domestic orders grew by 21.9%, and export orders were up by 14.3%. This again indicates that the performance of Hungary’s industry will further improve in the fall. months, it turns out that exports did not rise significantly during that period.

Eurostat published August industrial production data for the European Union recently, showing that Hungary performed above average both when it comes to month-on-month and year-onyear data. The EU28 countries produced 1.4% month-on-month growth on average, while the average increase from the same period of last year was 1.8% in the EU28. That compares to Hungary’s figures of 1.6% and 3.5%, respectively.

In the EU28, the increase of 1.8% is due to production of durable consumer goods rising by 4.6%, capital goods by 3.3%, intermediate goods by 1.9%, energy by 0.2% and non-durable consumer goods by 0.1%. The highest increases in industrial production were registered in Czech Republic (+7.7%), Slovenia (+5.9%) and Poland (+5.1%), and the largest decreases in Ireland (-8.5%), Sweden (-6.2%) and Malta (-3.9%).

The other much-awaited figure of the past two weeks was the consumer price index (CPI) for September. Central Statistical Office (KSH) data showed that inflation swung back in to positive territory in the first month of the fall, and rose 0.6% on a year-on-year basis, up from -0.1% in August. Alcoholic beverages and tobacco products saw the highest rise in prices. One of the reasons for the jump in CPI is the base effect, as oil prices nosedived in AugustSeptember last year, and this has dropped out from the index now. Oil prices started to increase this September, and the latest inflation figure reflects this rise. Inflation was also fueled slightly by a rise in the prices of food and services.

No significant pressure Analysts still do not see significant inflationary pressure, although some say the data suggests a strong build-up. In September, core inflation rose to 1.4% on a year-on-year basis from 1.2% in August.

“While this is still way below the central bank’s 3% medium-term target, our short-based indicator is already close to 2%,” Hungary’s business portal portfolio. hu wrote.

More good news came from the Ministry for National Economy (NGM) recently: Hungary posted a HUF 271.6 billion general government surplus in September, on a cash flow basis and excluding local governments. It is not unknown for the budget to post a surplus in September, but such a high figure usually occurs only in the last few months of the year. The NGM said the reason for

this September’s extraordinary data is that last year, the state paid the European Union funds to tender winners, but the EU has only now made the actual transfers to the Hungarian state. As a result, the accumulated deficit of the central subsector of the state budget fell to a record low level of HUF 2.4 bln in September.

This figure has been unprecedented for some 15 years, the NGM wrote in a note.

The full-year ESA deficit is set to be better than formerly anticipated; therefore, the government officially announced that it has modified its fiscal target from 2% to 1.7 % of GDP. This means an elbow-room of approximately HUF 100 bln in the budget; the question is, how will the government use it in the last three months of the year?

NUMBERS TO WATCH IN THE COMING WEEKS

We’ll find out on October 17 whether the numerous government measures introduced lately – such as the subsidized home loans for families – have finally had a positive effect on the construction industry. Earnings for the January-August period will come out on October 19, and we’ll hopefully learn on October 25 that the 38-month increase in Hungary’s retail sector is still continuing.

Employment and unemployment figures for the July-September period will be released on October 27.

2016. 10. 12. 20:49

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04 News

Budapest Business Journal | October 14 – October 27, 2016

Dream schools and dream careers The American Chamber of Commerce in Hungary and the Hungarian Investment Promotion Agency held their second annual summit on competitive education this week, inviting high school students to share their vision of how they imagine the future of education and workplaces.

LEVENTE HÖRÖMPÖLI-TÓTH

An important pillar of AmChamʼs 19-point strategic working plan that aims to improve Hungaryʼs competitiveness concerns the fully-fledged reform of education. To that end, a nationwide competition called titled “#YouCanDoBetter” (“#TudszJobbat” in Hungarian) was launched as part of a joint initiative with HIPA, under which students were asked to send in presentations about their dream school or workplace. The contest was staged for the second time this

Dream workplace winners, Waking Dreams Co. from Bálint Márton Elementary and Secondary School. (Photo: Lázár Todorof ) year, and a total of 66 applications were filed in the two categories.

At the summit, which in part honored the award winners, AmCham president Ferenc Pongrácz welcomed the crowd by pointing out that the barrier of entry has disappeared in many industrial segments. “Youngsters have access to the same platforms as celebrities, which holds the promise of vast opportunities for self-expression,” he said. “AmCham prides itself on gathering the coolest companies from the country, and students participating in the contest have the chance to meet their representatives in order to gain key information about them,” he added, referring to the fact that after the ceremony several firms could be contacted on the spot at stands in the hall.

István Papp, the vice president of HIPA, co-host of the event, explained to

the audience that HIPA is dedicated to bringing as many quality jobs to Hungary as possible. “Competitiveness depends mostly on how great the education is and, finally, students are now engaged in shaping theprocess, which cannot work without them,” he said.

As for the dream workplace contest, two general approaches were embraced by applicant teams. One was an overall description of how an organizaton is supposed to work. The other method was to demonstrate the ideal set-up by introducing a particular, privately-owned imaginary firm like a café or a beauty shop.

“Entrepreneurship is highly valued by AmCham, and accordingly, we provided the teams with a book called ʼItʼs fun to run an enterpriseʼ,” said Andrea Juhos, an AmCham board member. “Following this spirit, the winner was a team that

chose to go down this path.” The award went to Waking Dreams Co. from Bálint Márton Elementary and Secondary School, because its application put the emphasis on the clear assignment of tasks, social inclusion, and performancedriven assessment.

The dream school category saw similarly inspiring applications; methodology as well as creativity were among the most appreciated factors by the jurors. The winner, Kosztolányi Dezső Secondary School, presented its work called “The Future is Ours”, which featured social sensitivity and a logic for progressive change to be achieved by small steps.

The awards ceremony was followed by a roundtable discussion where students, teachers, industrial experts and government representatives exchanged their thoughts. “Two- thirds of current students will have jobs that are not even around yet; take the example of body part designers or garbage designers,” said state secretary Dr. László Palkovics.

“Therefore, a valid question is how do you get students ready for something that doesnʼt exist. The clear purpose of education cannot be anything less than making them able to apply knowledge and to acquire the ability to learn.”

On the basis of the input from participants, a package of recommendations will be put together with the hope they will be implemented in the future.

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Behind the scenes with the event planners

Walking through Budapest you see so many beautiful places. Some, unfortunately, are closed to the general public, but there are two women who can seemingly enter anywhere. So if you are looking for a particular event, or want to organize something very special, in an unique location, you had better contact Miss Planner Budapest.

CLAUDIA PATRICOLO

With ten years’ worth of collective experience, Maxine Adams and Krisztina Ilosfai have cut out a niche in the market this year by establishing their own high-end event planning company. But while many people choose to specialize in one sector, this pair does everything.

Currently they are based in a co-working space, as they are still searching for the appropriate office. But who needs an office when you can stay out in the city all day, maybe in some beautiful and historical building? They started off the business to fill a gap that they saw existed in the Hungarian market. Miss Planner Budapest organizes all kinds of events: weddings, birthday parties, marriage proposals, themed parties, workshops, weekend getaways, unique city tours; indeed, pretty much anything that you can dream up. “You imagine it, we make it happen,” says Ilosfai, quoting the company motto.

“Working with a variety of suppliers and discovering new locations enables us to create unique, unforgettable moments while meeting new people and hearing amazing stories, making the experience even more enjoyable,” she explains.

It is too early to talk at this stage about profits and margins because they are waiting for the end of the year to draw up their annual financial statement, but thus far they have not had any dead periods and they say business is booming. Preparation for some events can be a long process; an Alice in Wonderland-themed wedding that Miss Planner designed and managed took seven months of planning, for example.

“We can’t compare the Hungarian event sector with the British one as the market here is currently developing. People have only began to grasp the concept of paying for professional event planning services when wanting something more than

BBJ_2419_biz.indd 5

Maxine Adams (left) and Krisztina Ilosfai. the average,” says Adams. “We aim to manage everything to a high standard, focusing our attention on the individual, creating a tailor-made offering. It can be challenging at times to run a company with just two members; when you are the only ones responsible for controlling everything, it can prove slightly stressful at times. But in the end, looking at the results, it is more than worth it.”

Someone to be So what does it take to be an event planner? “Many people think it is a hobby: it looks glamorous and they like the idea of it. But an event planner is not just the person who embodies this role. It is a lifestyle – one has to stay culturally curious and up-to-date with the current events and trends. It is not something to do, but rather someone to be,” says Ilosfai.

“First of all, an event planner needs to have a clear concept of their strengths and choose a sector accordingly. If you have an entrepreneurial spirit, it’s good to start with a business plan. Personality and experience is the key; it is not necessarily your degree that determines how well you will perform,” adds Adams.

The two women are fully engaged in – and love – what they are doing, as they are not just managing events, but investing time and attention into each and every detail, making it a fun and creative process.

Who hires Miss Planner Budapest?

The majority of clients are foreign professionals, private clients or diplomats; clients who want something unique and bespoke, not just another cruise on the Danube with goulash and gipsy dances. “It is exciting to stay behind the scenes because we can discover a lot of places that otherwise we would never see,” says Adams.

“A typical day for us starts with prioritizing our daily tasks, followed by meetings with clients or suppliers,

Table with a view at the National Gallery. followed by creating bespoke offers, resulting in long office hours. However, sometimes the day can also end with us testing a supplier’s unique new offering, such as a helicopter tour, a boat ride or sampling a new restaurant. When we start the planning process, we ask a list of questions from our clients in order to be able to create a personal presentation focusing on their needs,” she says.

“We don’t offer fixed packages. The reason for this is that the industry is ever changing, and we like to hand-select our suppliers suited to the profile of the client on each occasion. Previously, people were interested in having the basic elements covered, they are now focused ever more on the details, such as specific flowers, color concept, out-of-the box décor

elements, personalized stationery etc.,” Adams adds.

In order to keep on top of everything, the business partners use a variety of software such as Evernote, WorkFlowy, 3D rendering tools and a program that hosts cloud services. “It is useful to use today’s technology to stay organized and well prepared,” comments Ilosfai.

Organizing events requires Miss Planner Budapest to stay creative and innovative, always coming up with unique ideas and experiences, such as Mission Impossible teambuilding across Budapest, a Red Carpet make-up workshop, themed weddings, or a private dinner on the terrace of the National Gallery. To quote from that motto again: “You imagine it, we make it happen.”

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2016. 10. 12. 20:49

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Telling signs of dedication

Baker & McKenzie Hungary reveals new partner

Defense Management Authority, Zala is joining the company in the wake of increasing demand for the protection and appropriate handling of big data, an area now targeted by cyber criminals, the press release said. Globally, EY works together with 2,000 cyber security professionals.

With its continuously expanding Budapest office, the firm is planning to create a Central European center for cyber security, serving domestic, regional and global partners, the company said.

MVM deputy CEO named head of state-owned utility ENKSZ

For some weeks now, it has been mentorship time for the selected few under the Telenor Accelerate startup program. Apparently the mentees are fascinated by the sheer amount of useful information, so much that they would not even spare the time to enjoy their own welcome party scheduled after the first workshop. Instead of mingling, they chose to apply the freshly acquired knowledge to their own product right away; surely a telling sign of dedication.

When Telenor Magyarország started to promote its corporate startup program, Telenor Accelerate, few had counted on the massive interest the initiative would generate; no less than 143 applications were filed. The unexpectedly large number of candidates could easily have formed a bottleneck, since there was not much time to handle the selection procedure. The rescue came in the form of a disruptive recruitment platform by Budapest-based startup Indivizo, which allows effective and fast filtering of applications.

“It was the ideal way to do the selection, because Indivizoʼs video interview feature ensured immense flexibility for the jurors,” says Zoltán Takács, vice president for innovation “We could work in parallel or on the go, and by watching applicants responding to preset and surprise questions, we gained a personal impression of the participants.” In the end, 12 teams were invited to pitch before the selection panel, although one of them decided to drop out at this stage of the contest.

“Everything was in English, from the selection to pitching. Our target is the global market, so it couldn’t have gone down any differently,” explains the VP. After the presentations, separate rankings were put together by Telenor experts and the mentors, and, to the relief of both groups, the rankings were in nearly perfect harmony. Understandably, the mentors retained the right to pick

BBJ_2419_biz.indd 6

their own startup, since the chemistry could not be built without the necessary personal touch.

“Telenor is dedicated to seeing each of the five young firms succeed, not least because we have invested in them. As for their profiles, they all have something to offer that we can closely relate to,” Takács says. “Moowʼs bike lock would look great as an accessory on the shelves of our shops. Mobile payment can be linked to the services of Tickething, an online resale marketplace for event tickets, or eSports Horizon, which sells training kits for professional e-sports pros.”

The remaining two startups hold similar promise. Zyntern, connecting firms with trainee applicants, could easily be integrated into Telenor’s global strategy, whereas KODA, which makes learning music theory fun through interactive apps, could conceivably become a new Telenor ambassador in the firm’s digital education program.

KODA was unusual in that its team was partly made up by older members. “This is a new and joyful development; that experience is combined with youthful dynamism,” Takács notes. “Age diversity is just as important as gender diversity.

Experienced professionals have the insight to identify problems in a given industry, and now they are tending to team up with the young with the purpose of allowing them to find 21st century solutions. We welcome and support this phenomenon very much.”

Dr. Márton Horányi has joined law firm Kajtár Takács Hegymegi-Barakonyi Baker & McKenzie, as an addition to the firm’s team specializing in competition law, government funds, commercial practices and consumer protection, as well as European Union law, according to a press release issued on October 4. With more than a decade of experience in the field of Hungarian and EU competition law, Horányi has represented domestic and multinational clients in cases such as cartel issues and fusion control before the Hungarian Competition Authority (GVH), the European Commission, Hungarian and EU courts. He has also gained experience in the field of distribution of government subsidies, along with consumer protection and unfair commercial practices. Between 2007 and 2015, Horányi worked in the Budapest and Düsseldorf offices of Baker & McKenzie. Afterwards he served as a partner of a CEE office chain, worked as leader of a Budapest-based competition law group, and led the competition law group of a major accounting firm, the press statement said. “Competition law is a field of growing risk and elevated importance for our clients, therefore it has great significance that we can welcome a professional in the person of Dr. Márton Horányi who has international experience,” said Zoltán Hegymegi-Barakonyi, the leader of the Budapest office.

EY welcomes new cyber security chief

Mihály Zala has been appointed head of the cyber security advisory arm of professional services firm EY Hungary, effective from August, according to a press release. The press release notes that cybercrime is growing into the most significant type of criminal activity, causing companies an estimated annual USD 1 trillion in damages globally. Zala joins EY Hungary from the Hungarian State Treasury, where he worked as a ministerial commissioner responsible for overseeing the organization’s IT systems. With decades of experience in the field, including involvement in the establishment of the country’s Cyber

György Kóbor, deputy CEO of stateowned Hungarian electricity works MVM, has been appointed by the Minister of National Development as chairman-CEO of state-owned utilities company First National Public Utility Ltd. (ENKSZ) as of October 10, the company told Hungarian news agency MTI. Kóbor will replace Péter János Horváth, who had been head of ENKSZ since its establishment in 2015. ENKSZ announced last week that Horváth had left by mutual agreement as of October 1. Kóbor, earlier deputy CEO of E.ONʼs Hungarian energy trading unit, served as deputy CEO of MVM from 2010 to 2012, when he took over as CEO of MET Power Hungary, the local unit of the MET Group, an international energy trader established in Hungary in 2007, and 40% owned by Hungarian oil and gas company MOL. Kóbor returned to MVM as deputy CEO in 2013.

Online travel platform Wizz Tours appoints new CEO

István Csanálosi has been named CEO of Wizz Tours, the online travel service provider of Hungarian low-fare airline Wizz Air, according to a press release.

With more than a decade of experience, Csanálosi joins Wizz Tours from Bostonbased Vantage Deluxe World Travel, where he led the firm’s regional offices.

He spent almost a decade in the United Kingdom, working with Groupon Getaways, among many others.

“Traveling habits have changed a lot in the past year here, but I think we have a lot to learn from Western European trends and experiences,” the newly appointed CEO said.

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Budapest Business Journal | September 30 – October 13, 2016

2 Business

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BBJ EXPERT PARTNER

Mastercard: Doing well by doing good

Rose Beaumont, senior vice president, communications, Europe at Mastercard, was in Budapest recently for a major innovation forum.

She sat down with Claudia Patricolo of the Budapest Business Journal to talk about the importance of new technologies, not least in achieving “gender balance” and helping women bridge the career gap with men.

“What I define as gender balance has many faces. We must create a pipeline of women in leadership positions. We must push women everywhere to use technologies and digital financial systems.” done before, they wonʼt apply at all.

They need more self-confidence and belief about what they can do, even coding. Just thinking about the fact that a woman’s brain is actually better suited to coding than a man’s could help many women decide to try this profession too.

What brings you to Budapest?

I am here as moderator for the Do you think companies going out Mastercard Innovation Forum, a of their way to employ more women huge conference on innovation and is just window dressing, a PR game technology that draws 500 guests for enterprises, or are we now including Mastercard partners, reaching a global trend? banks, and clients. That means the If you find a job you should be happy representatives of some 50 countries that you have succeeded at it because discussing and sharing ideas in order you are great, and not because you to make our life easier, like a robotare a woman. Of course, it is always waiter who can take your orders, or a good thing when a company hires a payment services made with rings, well-educated woman. watches and other accessories.

Beside that, Mastercard has an office Do you think women are more or in Budapest so I have also come here less productive than men? at other times, and I have noticed that Rose Beaumont, senior vice president, communications, Europe at Mastercard.

It comes down to the individuals. innovation is growing and there are Women are usually harder workers more investors. That is something since in many places a woman needs a get partnership, as we already have in because, historically, they didn’t have exciting. the same opportunities as men, but it man’s permission to get an ID. Women Asia. But it would be awesome. really depends on the personality. could control 82% of our economy Having a woman covering a senior and we must make them sure of that. What’s your story: Was your mentor role such as yours is usual at They can make more money and a man or a woman?

There is still a pay and career Mastercard? save money for the next generation, It is impossible to say I had just gender gap. Is it more visible once Absolutely, yes! There are significant something that men are not able to do. one static mentor. Of course, I was a career is taking off? numbers of women working as We call them “Generation today, for inspired by women of my life, first Yes, there is still a gap. The majority executive managers or covering chief generation tomorrow.” of all my sister, who is a successful of successful women are aggressive roles. woman. Sometimes I prefer working in seeking promotion. We should How is the role of women in Eastern with women because I can ask them educate both sexes about seeking the Mastercard’s website has a European workplaces, compared to for advice, I can respect and emulate same opportunities. Women should special section on “women’s countries you have worked in such them, but I can relate with men as well. not have to choose between career empowerment”. What is the main as the United States? and motherhood. Nowadays this is purpose behind creating this page? We must encourage women. It is Are there more women in general part of societal evolution.

What I define as gender balance has something that has to increase work positions or in management? many faces. We must create a pipeline here a lot. “To do well, we have to I think we have finally reached a good As senior vice president of of women in leadership positions. We do good,” is what we are trying to mix. But how do we encourage, inspire communications for Mastercard must push women everywhere to teach them, following UN goals. The and challenge women? As written in Europe, Beaumont leads Mastercard’s use technologies and digital financial Eastern European region has fewer an article I have read, there is still a internal and external communications systems. I totally agree with the World infrastructure and less education difference between men and women throughout Europe – focusing on Bank report that says, “Digital financial systems, but it is a developing market. applying for a job. Even if men don’t delivering integrated communications services have tremendous potential to So far we have been focusing on the know how to do what is written in the solutions that drive Mastercard’s be a silver bullet for women’s financial Asian regions, but we would like to job description they will say, “I can do business performance, enhance its inclusion.” Among real barriers still do similar projects in Europe. It is just it!” For women, on the other hand, if reputation and drive engagement and existing is the access to identification, difficult to do it as fast as possible and there is something that they never have understanding across all audiences.

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2 Business

Budapest Business Journal | October 14 – October 27, 2016

Up close and personal with the Budapest t

To be a successful guide, you need so much more than an ability to stand in front of one of Budapestʼs classical tourist sites and give a simple lesson in art history.

CLAUDIA PATRICOLO

What does it mean to be a tour guide? It is not just walking the streets of wonderful cities, pointing at various monuments, explaining the architectural features of buildings to a group of tourists. That is what a tour guide does. But to be a tour guide, you need more. A real guide has to enchant people, to know all the strangest stories, to be patient with the youngest and the oldest guests alike.

Tour guiding is an all-encompassing profession that is so much more than a simple lesson in art history.

To understand more deeply what is really entailed, the Budapest Business Journal spoke with travel agencies, the government tourism department and a number of those men, women, students, retirees, and part-time workers who spend their days learning and discovering the history and the beauty of such a splendid setting as Budapest.

“I decided to become a tour guide because my cultural background is strongly linked to the Hungarian history and culture,” says Áron Coceancig, an Italian-Hungarian tour guide who created his own company, Sfumature di Budapest (or Shades of Budapest), after getting his license in May. “I recently completed a PhD in the history of Eastern Europe, and I always had a passion for Hungary, and Budapest in particular, a beautiful city that never stops amazing me. So it was an obvious choice, especially because the tourism business is increasing now and it offers different possibilities.”

Deep history What is he hoping to achieve through his chosen career? “There are two main goals that I would like to achieve with this job,” he tells the BBJ. “Firstly, an economic profit; the tourism market is more rewarding than a research worker’s salary. But it was not just an economic motivation to push myself into this business. I know Hungary and Budapest very well and I know how often tourists are just shown the classics sights. I like to help them discover new places, events and less known characters, to be able to tell them the deep and troubled Hungarian history. This way, tourists can better understand the culture and mentality of this remarkable and peculiar country.”

So, what are the challenges of operating in a small company? “One of the biggest challenges that I set for myself is to be able to match the tourism and commercial side with the cultural and historical

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Italian-Hungarian tour guide Áron Coceancig (also below), and a group of satified tourists. and receptive to these different types of tourism is part of the skill and adaptability of the guide.”

“I know Hungary and Budapest very well and I know how often tourists are just shown the classics Safe and secure option this is his first full year as sights. I like to help them discover Although a guide, Coceancig says he does have some feel for how 2016 has compared new places, events and less with previous years. “Talking with known characters, to be able to colleagues and clients, I have the feeling that tourism increased this year and the tell them the deep and troubled positive trend is not over. Causes are different, such as a better development Hungarian history. This way, of touristic infrastructures, more low tourists can better understand cost flights to the city, Budapestʼs the great number of hotels the culture and mentality of this cheapness, and cultural/music events. I would remarkable and peculiar country!” underline that most tourists chose one,” says Coceancig. “To reach this I need to have a great familiarity with the language that I use during guided tours, and fortunately I am Italian native speaker, which surely is an advantage.

But I must also be able to tell them the history and culture of the country in an innovative, simple and interesting way.

The second challenge I set for myself is to do educational projects involving students. Last year, for example, I did lots of projects covering the steps of the World War 1. In the near future I would like to do more tours and projects about 20th century history and the importance of overcoming prejudices.”

The peak times for guiding are from June until September, along with Christmas and Easter, says Coceancig.

“Tourists are travelling the whole year, just there are different kind of tourists.

In fall and spring, for example, there are lots of school trips, educational projects and tourism linked to conferences and international events. So we always have work to do even if at a different intensity. The capacity to be available

Budapest because they are really taking into consideration risks and security; in Hungary they feel more secure.”

Take a walk in the city center and you will find many guides (mostly young students) with badges in various colors.

They are offering free walking tours, and have become part of the local tourism market only recently, although they have been having huge success all over Europe.

A free walking tour is a good way to familiarize yourself with the city, to learn about the history and at the same time to discover something about modern life. In Budapest you can find lots of tours running everyday and covering the most famous attractions.

Most of the tourists that choose these guided tours are young people, interested in socializing with other

HOW TO BECOME A TOUR GUIDE

So what are the basic requirements to become a tour guide? The Hungarian regulations are under the control of the Tourism Department of MEKH, the Hungarian Trade Authority. The department licenses, registers and monitors established tour guides. Tamás Békési, head of the department, explains that, first, would-be guides must attend a year-long course at a professional school, at the end of which they take exams in Hungarian and in at least one other foreign language, although the government will also validate a license from abroad.

“For this reason, a lot of Chinese people are doing guided tours in their mother tongue,” Békési says.

Currently there are 13,337 guides registered in Budapest, but the actual number is probably higher. “A company does not have to be registered, because the license is just for individuals, but if there is no business and no salary – in other words a free tour is offered – registration is not required.”

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Budapest Business Journal | October 14 – October 27, 2016

09

t tour guides “The main aim of the pub crawl is to socialize and meet up with other travelers, and to explore the nightlife scene of Budapest.

During the summer months there is an average of 60 people per night; during the off season an average of 20-30 people, depending on the given month.” travelers and not wanting to spend too much money. There is no obligation to pay; if the tourists enjoy the tour they are, of course, welcome to tip their guide.

Local nightlife And if you are the type of tourist that enjoys a pub-crawl, there is now a perfect way to discover some of Budapest’s best ruin pubs and clubs and experience the local nightlife. Kristóf Balogh, city manager of Original Budapest Tours, the Hungarian business of walking tour company Original Europe Tours, explains the

Taking in the Budapest views on a walking tour. attraction. “The main aim of the pub crawl is to socialize and meet up with other travelers, and to explore the nightlife scene of Budapest. During the summer months there is an average of 60 people per night; during the off season an average of 20-30 people, depending on the given month.” A guide takes groups around the city from one bar to the next one, providing

free drinks for guests and organizing drinking games.

“The feedback we have received from our guests is very good so far, and we are getting good reviews on the web as well. Tourists enjoy our pub crawls because we take them to Budapestʼs unique ruin bars, which are not common in other cities. We also provide an open bar for one hour and a VIP entry to

the last club,” comments Balogh. “Pub crawls during the summer seemed more popular than last year, although there are fewer British tourists overall, at least on the pub crawls. According to some hostel managers, and Iʼm noticing this as well, this summer the season is dying down quicker than usual, but Budapest seems to attract more tourists each year.”

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2016. 10. 12. 20:49

3Special Report BBJ

Real Estate Development

Market Talk: How will the market develop in 2017?

 14

Risk-averse buyers are back

 16

Activity returning to Budapest

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Budapest Business Journal | October 14 – October 27, 2016

Asset management as an alternative to development

Against a background of rising demand and limited immediate office supply, investors/ developers are seeking to reposition earlier generation assets in their portfolios to meet the changing demands of tenants.

Although Budapest provides a number of opportunities for the use of earlier generation buildings, owners face the challenge of bringing interiors up to the current requirements of companies, as these can change fundamentally over a five-year period. This includes up grading older buildings to meet the requirements for bicycle racks, recycling and garage facilities. A notable problem with centrally located historic buildings is parking.

GARY J. MORRELL

On the demand side, companies are increasingly targeting earlier generation landmark buildings in order to secure high quality, well located office spaces, as there is a limited availability in the Budapest office market. For tenants, the priorities are for buildings that are environmentally sound, with all the benefits that this brings, including health, comfort, efficiency and cost savings. Asset management practices aim at monitoring, maintaining and increasing the value of the property, through a systematic process of deploying, operating, maintaining, upgrading, and disposing of assets cost-effectively.

Obviously, very different approaches are required to building management and possible upgrades, depending on the age and quality of an asset and it letting status.

Although Budapest provides a number of opportunities for the use of earlier generation buildings, owners face the challenge of bringing interiors up to the current requirements of companies, as these can change fundamentally over a five-year period. This includes up grading older buildings to meet the requirements for bicycle racks, recycling and garage facilities. A notable problem with centrally located historic buildings is parking.

“The ‘older’ office buildings, approximately five years after their handover, face different challenges compared to newly built ones,” said János Seifert, head of property management at Cushman & Wakefield.

“Usually these buildings are more than 90% leased, and their tenants have running lease contracts. The owners of such buildings mostly think pro-actively in 3-5 year terms. The main mid-term objectives with regard to these buildings are to keep the high quality and service standards, as well as the reliable tenants.

In this life-cycle, the marketing focuses more on existing tenants’ satisfaction.

They invest less in leasing marketing, focusing more on client entertainment, client satisfaction surveys, and a fast response to tenant’s demands.”

Erste Real Estate is undertaking the refurbishment of its landmark 21,000 sqm East-West Business Center, described by developers Skanska as “the first modern office building in Budapest, opened in 1991”. In the past five years, around 100,000 sqm of office space has been renovated in Budapest according to CBRE. “The responsibly

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East-West Business Center is set for a major refurbishment.

“The responsibly minded owners of the buildings of the late ’90s and early 2000s recognized the new demand, the importance of energy saving technologies and sustainable property management; therefore, they have invested significant capital in order to renovate their assets.” minded owners of the buildings of the late ’90s and early 2000s recognized the new demand, the importance of energy saving technologies and sustainable property management; therefore, they have invested significant capital in order to renovate their assets,” said Judit Varga, head of office agency at CBRE Hungary, exclusive letting agents on the East-West Business Center project. “The 10.1% vacancy rate of the renewed office buildings is less than that of the Budapest office market at 10.3%. The take-up of the renewed spaces peaked in 2015 when 44,000 sqm of office spaces were rented.”

Modernization The Hungarian investor is preparing the modernization of the façade, remodeling the common areas and expanding the green areas (gardens and terraces), and aiming to achieve BREEAM “Very Good” certification with a new property management system and engineering solutions.

An example of a long term developer/ investor that is undertaking both development and upgrades is CPI

Hungary, which has been operating in Hungary for around 20 years and has a commercial property portfolio including 15 office buildings valued at EUR 298 million. The company is currently developing the 15,600 sqm Balance Office Park in the Váci corridor.

Balász Simonyi, leasing manager at CPI Hungary, defines the role of asset management as increasing income, optimizing costs and outgoings, and maintaining and upgrading the quality of offices and services that encourages tenants to renew their leases. “In-house property management can better control the quality of the day-to-day running of an office center and contact with tenants, while facility management involves monitoring the quality of services and out goings at each level,” he said.

The supply of sustainable offices is increasing while, at the same time, investment funds including CA Immo and IMMOFINANZ are now in the process of gaining sustainability certification of their portfolios of existing buildings. Most of the CA Immo portfolio, for example, is LEED “Gold” accredited.

“For IMMOFINANZ, development means not only investing in new projects, but also in existing assets, and this underpins our sustainability policy,” said Nóra Fodor, leasing manager at IMMOFINANZ Hungary.

“At the end of the day, investment in more efficient operations can earn not only BREEAM In-Use certification, but also – due to lower operating and service costs – bring in new tenants.” She said the company places a high priority on the responsible use of resources, the use of climatefriendly technologies, a well-defined strategy of energy consumption, the renovation of suitable older buildings and the construction of new energy efficient buildings. “IMMOFINANZ has BREEAM In-Use certificates for

five of its office buildings in Budapest, including both established and newer assets, and one of the factors helping drive the rental success is the BREEAM certification awarded to Szépvölgyi Business Park, Greenpoint7, the Central Business Center, Haller Gardens, and Atrium Park,” she added.

Sustainability is concerned with both raising the standard of new buildings and upgrading older buildings to meet the requirements for green buildings.

In this way certification organizations offer both new construction or in-use/ existing building accreditations.

Optimizing costs “CPI, having one of the largest and most heterogeneous portfolios within the CEE region is committed to sustainability,” said Simonyi. “On one hand, we are developing certified new schemes and, parallel to this, we use every opportunity to carry out refurbishments on existing schemes, adding value through green and sustainable features. Most of all, the aim is to create real value for the long term, but optimizing operational costs and future capital expenditure is also a key driver. Last but not least, the satisfaction of our customers, the tenants, is also imperative in this respect. The main areas are energy consumption of HVAC systems, selection of lightning equipment and finishing materials, waste collection, water consumption and actual green surfaces e.g. green walls or terraces, but there are many more,” added Simonyi.

Another long term CEE investor/ developer, GTC has purchased the 31,500 sqm Duna Tower for circa EUR 52 mln.

In what is widely seen as a rejuvenated Budapest investment market, GTC said it sees value-add potential in Duna Tower, originally delivered in 2006. The major role of the asset managers is seen as increasing the occupancy level. “We will invest in upgrading the building’s specification and amenities to improve the service and comfort level for new and existing tenants,” said Thomas Kurzmann, CEO of GTC.

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Budapest Business Journal | October 14 – October 27, 2016

EXPERT OPINION

‘NO CONFLICT, NO COMPROMISE, NO HIDDEN AGENDA’ Valter Kalaus Managing Partner VLK CRESA

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

In a market where tenant representation in negotiations with landlords tends to be handled by divisions of the same agencies that also represent those landlords, one company stands out: VLK Cresa.

“To the best of our knowledge, there is no other firm on the Hungarian market that only does tenant representation,” says managing partner Valter Kalaus.

“What is unique is we are client-focused, not deal-focused.”

But what makes tenant representation so important Kalaus has dedicated much of his career to it in the first place. “Our customers are typical end users; most tenants are not real estate professionals, they only deal with such matters every three-to-five years, when their lease comes up for expiry.

Landlords and developers are usually highly skilled real estate professionals, and that is not a good negotiating standpoint from the tenant side.” And that is where VLK Cresa comes in.

“Commercial real estate lacks transparency.

Tenants do not understand that the market is landlord driven.”

With many companies representing tenants one day and the landlords the next, albeit through different teams, there is the obvious potential for conflicts of interest, for “strong compromises and hidden agendas”, says Kalaus. “With us there is no conflict, no compromise, no hidden agenda.”

Supply of quality commercial and especially office space is greatly limited in Budapest, with very few new developments in the past few years.

That finally looks like changing in the next couple of years, but between then and now rents are likely to keep rising, with fewer incentives, such as rent-free months, offered.

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“Typically clients look 9-12 months ahead when it comes to lease renewals.

We are now advising that they look up to 24 months ahead, because new supply will go quickly. It is certainly a landlords’ market today, and I do not see that changing in the next 12 months.”

Kalaus, a Hungarian native, began his career in corporate real estate back in 1996 in Chicago at Equis, and returned to this country in 2001 to open the CEE regional office for the corporate services firm. “I introduced the concept of tenant representation to the Hungarian market,” he says. Equis was eventually bought

by UGL, which set its focus on the U.S. market and closed its European operations. Kalaus saw a continued need on the market, and so opened VLK, his own company, in 2008. “It was not a legal successor, but it was a continuation of the philosophy of independent tenant representation of Equis.”

And then, in 2015, VLK joined the U.S.headquartered Cresa network, meaning it could marry local experience to an international chain, allowing it to tap into a wealth of professional resources, expertise and support. “Cresa has 71 offices globally, 55 in the United States, and 11 in Europe, of which one is here in Budapest. From here we manage the Hungarian market, but also those of Czech Republic, Slovakia, Romania and Austria.”

The approach the company takes is somewhat unusual, the managing partner says. Whereas most agencies look first at the space requirements, Kalaus says that rarely even comes up at the first meeting with VLK Cresa. “Before starting to think about square meters, we try to understand the business and its needs. Once we understand that, we will have a better idea of what is driving the space requirements.”

It is an approach that seemingly works well. Turnover in 2015 was HUF 110 million, and this year looks to be on track to beat that. “It is always difficult to be certain, because 40% of our revenue comes in the last three months.

October, November and December will be very important months for us.” That said, Kalaus says the philosophy of being client-focused rather than dealfocused means there will be no pressure to close the final deals by December 31, if a better deal can be secured for the tenant in January.

Limited supply to meet rising retail demand

An artist’s impression of the Etele Plaza.

Despite positive parameters in the Budapest retail market – 2015 was the second year in a row that retail sales for Hungary grew by more than 5% yearon-year – there are still no new shopping centers under construction in Budapest.

GARY J. MORRELL

Since 2012, less than 50,000 sqm of new retail space has been delivered in Hungary, a historic low. There are two pipeline projects by Futureal and ECE, but questions still remain over their timing. Given the necessary development period, the next mall deliveries will not be until at least 2019.

On the supply side, the Budapest market could be regarded as challenging, to say the least; retailers entering the market require large units in leading shopping centers where there are already waiting lists for tenants. In response to market demand and lack of new supply, mall managers and owners have tended to undertake extensive refurbishments and upgrades of the existing stock.

JLL puts the total shopping center stock in Budapest at around 770,000 sqm in 25 assets. The leading centers are generally considered to be the 68,000 sqm Árkád, the 66,000 sqm Arena Plaza, the 47,000 sqm Allee, the 45,000 sqm WestEnd City Center, the 44,000 sqm Mammut, and the 30,000 sqm MOM center. These all have waiting lists for tenants and are therefore able to command the highest rents. According to CBRE, total modern retail stock across Hungary stands at 3.8 million sqm (including retail warehouses but not high streets).

With regard to those pipeline projects, the 44,000 sqm Etele Plaza by Futureal is

located adjacent to the planned Budapest One business park at a transport hub on the western edge of the city, at the terminus of the Metro 4 underground line and the renovated Kelenföld railway station. This prolific Hungarian developer aims to create a business and leisure hub that will include retail, service and office elements. Futureal already owns the plot and has valid zoning for the development; the scheduled completion date is 20182019 according to Futureal.

The other scheme, by Germany’s ECE, the circa 50,000 sqm ECE Acqincum in the Óbuda area of Budapest (also located at a transport hub), has a scheduled completion date of 2019. ECE operates five malls in Budapest, Győr, Pécs, Debrecen, and Szeged. In Budapest, ECE’s Árkád is the largest shopping center in the country with an average daily footfall of 42,000, according to the operator/owner.

Right direction “We are moving in the right direction for new developments in the next two to three years; the pipeline projects are in good locations and the developers need to source the required number of anchor tenants,” comments Viktória Szabó, head of retail at Cushman & Wakefield Hungary.

According to CBRE, demand for space is reflected in rising rents: prime Budapest high street spaces and shopping centers recorded a 5-15% yearon-year rise for the first half year. “This optimistic trend will continue in 2016, increasing the utilization of space in both shopping centers and high streets, putting an upward pressure on rental levels,” says Anita Csörgő, head of retail at CBRE Hungary.

While the immediate pipeline for new malls is dry, the Budapest high street retail market will, in contrast, see 10,000 sqm of development by 2018 according to CBRE. In the central fifth district, Váci 1 by Horizon Development has delivered 6,200 sqm of retail space fully let to H&M, and the Párizsi Edgar, due to open by the end of 2017, will deliver 2,000 sqm of retail space in addition to a five-star hotel.

2016. 10. 12. 20:49

GRUPPO T.F.M. KFT. 1068 Budapest, Király u. 102.

5TH DISTRICT

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66 SQM – SHOP, ZSOLT STREET

34 SQM – 1 ROOM, RAKTÁR STREET

77 SQM – 3 ROOMS, STEIDL IMRE STREET

76 SQM – 4 ROOMS, SZELLŐRÓZSA STREET

58 SQM – 3 ROOMS, DUNYOV ISTVÁN STREET

61 SQM – 3 ROOMS, RÁKOSPALOTA

On the Nap Hill, close to the MOM Park shopping mall, in a new building, this well divided shop benefits of large windows and 2 entrances.

In a quiet area, this very sunny, garden facing apartment in good condition has private gas heating and parking space in the closed courtyard. Good connection to public transport.

A few steps from the Danube, this completely renovated, very sunny apartment has private gas heating and it is situated within a very nice, renovated, period building.

In a new building, this very sunny, duplex apartment has living room with open kitchen, 3 separate bedrooms, balcony and parking space in the courtyard.

This completely renovated, park facing, high floor apartment has separate rooms and it is situated within a well maintained building with elevator.

In a new building, this street facing apartment has living room with open kitchen, 2 separate bedrooms, big balcony and parking space in the garage of the building.

38.000.000 HUF

14.900.000 HUF

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2ND DISTRICT

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15TH DISTRICT

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15TH DISTRICT

47 SQM – 2 ROOMS, CSALOGÁNY STREET

57 SQM – 3 ROOMS, SARKADI IMRE STREET

200 SQM – 6 ROOMS + HALL, ST. ISTVÁN CIRCUIT

270 SQM – 6 ROOMS, BORSIKA STREET

64 SQM – 3 ROOMS, HOLLÁN ERNŐ STREET

180 SQM – 5 ROOMS, KERTVÁROS

This completely renovated, bright apartment has private gas heating and private garden. It is located very close to the Mammut shopping mall.

This completely renovated, high floor apartment has nice view from the balcony and separate rooms. It is situated within a building in good condition with elevator.

This property in good condition consists of 3 separate apartments at the moment with 3 separate entrances. All of the flats have kitchen and bathroom. It is situated in a period building.

This two storey, new built semi-detached house has 700 sqm of lot, 2 kitchens, 2 bathrooms, terrace, swimming pool and garage. It is located in the garden suburb area.

In a quiet street, this two storey family house in good condition built on 406 sqm of lot, has 2 bathrooms, big terrace and garage.

24.900.000 HUF

16.490.000 HUF

100.000.000 HUF

44.900.000 HUF

Close to the St. István Park, in a renovated, Bauhaus style building with elevator, this completely renovated apartment has separate rooms and 2 balconies.

44.900.000 HUF

46.500.000 HUF

+36.1.201.0403

2ND DISTRICT

+36.1.379.0506

3RD DISTRICT

+36.1.287.67.45

6TH DISTRICT

+36.1.780.8276

11TH DISTRICT

+36.70.701.2348

14TH DISTRICT

+36.70.398.8754

DUNAKESZI

84 SQM – 2 ROOMS, BUDAY LÁSZLÓ STREET

81 SQM – 4 ROOMS, BUDAKALÁSZ STREET

50 SQM – 2 ROOMS, EÖTVÖS STREET

54 SQM – 2 ROOMS, KARCAG STREET

182 SQM – 5 ROOMS, KISZUGLÓ

45 SQM – 2 ROOMS, DUNAKESZI

This completely renovated, street and garden facing, very quiet apartment has separate rooms, private gas heating and it is situated within a building in good condition with elevator.

This well divided, street facing apartment in good condition has separate rooms, kitchen with window and balcony. It is located close to the Danube.

This apartment is in good shape and situated within a nice period building, very close to Oktogon Square and the tree-lined Andrássy Boulevard.

In a quiet area, this renovated, street facing apartment benefits of separate rooms, private gas heating, balcony, private garden and parking space.

In a quiet street, this three storey family house built on 285 sqm of lot, has terrace, balcony, 2 bathrooms and 3 garages.

In the new built Alagliget subdivision, this very bright, garden facing apartment has living room with fully fitted open kitchen, bedroom and parking space in the closed courtyard.

49.700.000 HUF

22.600.000 HUF

25.900.000 HUF

29.900.000 HUF

59.500.000 HUF

16.900.000 HUF

+36.1.336.1706

2ND DISTRICT

+36.1.379.0506

3RD DISTRICT

+36.70.3156.087

6TH DISTRICT

+36.1.720.2433

11TH DISTRICT

+36.1.612.5475

14TH DISTRICT

+36.70.399.0399

DUNAKESZI

240 SQM – 5 ROOMS, MÁRIAREMETEI STREET

57 SQM – 2 ROOMS + HALL, USZÁLY STREET

98 SQM – 3 ROOMS, JÓKAI STREET

752 SQM – 12 ROOMS, KAROLINA STREET

117 SQM – 3 ROOMS, ABONYI STREET

100 SQM - 3 ROOMS, DUNAKESZI, ALAG

This four storey semi-detached house built on 1000 sqm of lot, has 3 bathrooms, 4 balconies and garage. It is located close to the famous Máriaremete Church.

Close to the Danube, in a quiet street, this street facing apartment that needs renovation benefits of separate rooms and private gas heating.

This sunny apartment is situated within a period building. It is a perfect solution for anybody seeking a renovation project.

In an office building, 2 whole storey offices and a mansard office for sale (328 + 298 + 126 sqm) with 10 parking spaces in the closed courtyard.

Close to the City Park, in a very nice period building, this very sunny and spacious apartment in good condition has private gas heating and parking space in the closed courtyard.

This new built family house has 500 sqm of lot, living room with open kitchen, 2 bedrooms, terrace and garage.

59.900.000 HUF

29.900.000 HUF

39.000.000 HUF

128.000.000 HUF

69.000.000 HUF

32.800.000 HUF

+36.1.376.6080

+36.1.430.1403

+36.70.3156.087

+36.1.720.2433

+36.1.612.5475

+36.70.399.0399

WELCOME 2ND DISTRICT

4TH DISTRICT

6TH DISTRICT

12TH DISTRICT

123 SQM – 4 ROOMS, SZÉPVÖLGYI STREET

56 SQM – 2 ROOMS, POZSONYI STREET

92 SQM – 3 ROOMS, SZÓFIA STREET

69 SQM – 3 ROOMS, KRISZTINA CIRCUIT

In a two storey family house that needs renovation this top floor, very spacious, sunny apartment has separate entrance, terrace, balcony, garage and beautiful common garden.

This completely renovated, sunny, high floor apartment has nice view from the windows and it is situated in a building in good condition with elevator.

Nice view over the Hunyadi Square and market, this very spacious and sunny apartment has separate rooms, fully fitted kitchen and it is situated within a very nice period building.

This completely renovated, very bright, well divided apartment has separate rooms, private gas heating and it is situated within a building in good condition with elevator.

16.900.000 HUF

57.000.000 HUF

37.900.000 HUF

62.500.000 HUF

+36.1.376.6080

2 DISTRICT ND

+36.1.782.7275

4 DISTRICT TH

+36.1.351.0446

7 DISTRICT TH

+36.1.789.2846

12 DISTRICT TH

275 SQM – 7 ROOMS, HANKÓCZY JENŐ STR.

190 SQM – 5 ROOMS, JANDA VILMOS STREET

80 SQM – 3 ROOMS, DÓZSA GYÖRGY STREET

80 SQM – 4 ROOMS, KEMPELEN FARKAS STR.

Beautiful panorama over the Buda Hills, this very spacious, well divided apartment has 2 bathrooms, private gas heating, 20 sqm of terrace, 3 parking spaces and 4 car garage.

This two storey family house built on 471 sqm of lot, has 2 bathrooms, terrace, balcony, sauna, fitness room and 2 car garage. It is located in a quiet family house area.

Adjacent to the City Park, this spacious, quiet apartment has sleeping gallery, private gas heating and it is situated within a building with elevator and nice common terrace.

In a building with very nice common garden, this garden facing, sunny, duplex apartment has separate rooms, balcony and parking space.

199.000.000 HUF

49.990.000 HUF

36.500.000 HUF

44.700.000 HUF

+36.1.336.1706

+36.1.782.7275

+36.1.351.0446

+36.1.789.2846

ARE A RE YOU YOU LLOOKING OOKING FOR A FOR APARTMENT? PARTMENT?

WWW.TECNOCASA.HU WWW.TECNOCASA.HU CONTACT US: INFO@TECNOCASA.HU

EACH AGENCY INDEPENDENTLY OWNED AND OPERATED. • THESE OFFERS ARE VALID, TILL THE APARTMENTS ARE SOLD. • THESE INFORMATION DO NOT CONSTITUTE A CONTRACTUAL ELEMENT.

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Market Talk: How will the real estate markets d

We asked a couple of Hungary’s leading real estate experts, Viktor Nagy, Country Manager Operations at IMMOFINANZ and Árpád Török, CEO of TriGranit, to gaze into their crystal balls and give us an insight into their expectations for how 2017 might develop.

BBJ STAFF

Q

Which do you think will be the strongest growth sectors in 2017 and why?

Viktor Nagy: We’re seeing activity in all commercial property areas, with both office and logistic schemes being developed. Also let’s not forget about retail developments – both at a smaller

and larger scale. There’s developing news of shopping centers getting permits, while we are expanding other existing projects, such as those in Veszprém and Gödöllő, where we are making additions to provide a better offering, or providing extra services, such as a new restaurant in Gödöllő.

So which will be the growth sectors in 2017? I have reasons to say: all of them! Árpád Török: The economic environment is predicted to stay stable and positive not only in Hungary, but across the whole region, just as in the past quarters, boosting not only investments but also developments.

The office sector in Budapest is again the most active real estate sector in the country, with several ongoing new developments and large transactions.

Investment volume in the office sector realized a 121% increase in 2016 compared to 2015, and several investment companies are looking for further investment opportunities.

TriGranit’s latest deal, the largest ever office transaction in Hungary, the sale of Millennium Towers to CA Immo, also underlines the increasing potential and appeal of the Hungarian office market. Although 2017 will record a slightly lower new supply (82,700 Viktor Nagy, country manager operations, IMMOFINANZ.

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“Hungary is still very much Budapest-focused, but we’re seeing some signs of development outside Budapest and the greater Budapest area. Kecskemét and Győr are the leaders due to the automotive companies already settled there, but we’re also seeing companies choosing southern cities for their expansion plans.” sqm) based on running projects, this is expected to sharply increase in 2018.

It seems highly likely that the lower development activity in 2017 will be facing a stable net absorption in the range of 140,000-150,000 sqm, which will mean the vacancy rate in the office market declines further.

Although there has been an upward trend in retail sales in the last years (5.1 % in 2014, 5.6% in 2015 on yearon-year basis), the development market looks likely to remain relatively quiet next year as well, partly due to the shopping center ban still in force and to the nearly saturated retail market.

Only three new schemes have been announced for the next couple of years.

We expect rents will increase across the

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board, not only because of the growing retail expenditure, but also due to the limited retail space available overall.

The investment market is expected to grow further in terms of volume and we expect further yield compression for the core office/retail assets during 2017. With the upgrade of the country

by Standard & Poor’s to investment grade level and a healthy yield gap vs. the Czech or Polish markets, we expect more institutional money will find its way to Hungary. The factor most affecting the transaction volume will likely be the lack of institutional grade product – this can limit the growth of the volume, but also increase the pressure on pricing.

Q

Which cities beyond Budapest are likely to see most development in 2017, and can we talk about secondary markets developing in the provinces in Hungary yet?

Viktor Nagy: Hungary is still very much Budapest-focused, but we’re seeing some signs of development outside Budapest and the greater Budapest area. Kecskemét and Győr are the leaders due to the automotive companies already settled there, but we’re also seeing companies choosing southern cities for their expansion plans.

We have ambitious plans for the Hungarian market, with current managed assets worth close to EUR 480 million. Investors are actively looking into new and existing investment possibilities, and in the office market demand is clearly

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EXPERT OPINION

Strategically Important Status: A Potential Tool for Private Developers

Éva Kovács

Ferenc Mátrai

Senior Associate

Senior Associate

WEIL, GOTSHAL & MANGES

Árpád Török, CEO of TriGranit.

“Investment volume in the office sector realized a 121% increase in 2016 compared to 2015, and several investment companies are looking for further investment opportunities.” growing. As to which cities will see the most development in 2017, I could make some informed guesses, but perhaps it’s a little too early to go public on that.

Another factor that is attractive to foreign companies coming into Hungary is the relative cheapness of labor. It’s not just about cost, however, but also the ratio of the workforce’s level of education. In this respect Hungary is still quite competitive. Árpád Török: Hungary is still Budapest focused: the capital is still – and I think it will remain so for the longer-term – the economic, educational, and commercial center of Hungary. Developments are also concentrated in Budapest; speaking about a secondary market is maybe early, but we can see the first office buildings being developed and even sold in secondary cities. We expect university cities with sizeable populations and a regional catchment to be the fore runners of office development outside of Budapest,

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similarly to the much larger Polish secondary cities; although such developments will likely happen only on a BTS basis and on a much smaller scale.

Of course, this might be slightly different as for the industrial and the residential sector, but TriGranit focuses on the office and retail sector.

Q

Are you expecting any legislation to affect the market (positively or negatively)? If no, is there anything you would like to see done to help things.

Viktor Nagy: Any investment in property means a huge amount of money spent that is not a tangible asset, therefore stability and accountability are the most important drivers for most real estate investors.

We are making great inroads with more environmentally sustainable buildings and have gained BREEAM In-Use certification for a number of our assets in Budapest. This is appreciated by clients, but I’m not sure the legislators have caught up yet. When they do it would be good to see more encouragement from them. Árpád Török: An improvement to the legislation of the SZIT (the Hungarian initials for real estate investment trust regulated investment companies) could give a big boost to local capital, which is also looking for stable yielding investments, although of course the current real estate investment funds can serve the needs of the private sector for the time being.

The concept of strategically important projects was introduced in 2006 by way of Act No. LIII of 2006 with the intention of accelerating and simplifying the permitting proceedings of high profile, strategically important projects in Hungary. The Act was approved by the Parliament with the idea that projects financed by EU subsidies could be completed in a shorter period of time, pursuant to a simpler and unified permitting procedure. However, this instrument may also apply to a wide range of other development projects.

The Act is applicable, among others, to projects with a total cost of at least HUF 90 million and where, at a minimum, 15 new jobs will be established.

These criteria may be met by private development projects as well.

The accelerated and simplified permitting procedure enhances the services provided by the relevant authorities, resulting in a shorter completion time of the permitting phase of real estate development projects and may eventually result in increasing the real estate investment appetite in Hungary.

The high-profile “strategic” status is granted by the government in a so called “emerging decree” upon the proposal of the Minister of National Economy. There are no established rules for submissions to obtain strategic status for a project.

Following an informal procedure, it is at the minister’s and the government’s discretion as to whether a project is granted strategic status. With respect to the historical evolution of strategic projects, from the effective date of the Act up until today, a total number of 213 projects have obtained strategic status.

The numbers indicate a cumulative increase over the years. While in 2006 there were only four strategic projects, that number has consistently increased in the following years such that, in 2015 within only one year, 43 projects qualified as strategically important, and in the first three quarters of 2016 a total

of 50 emerging decrees were issued.

In addition, the range of projects also got broader. Originally, infrastructural (M4 metro, airport, highways, railways) and industrial (Mercedes, Audi, KnorrBremse, Lego, Bosch) projects were granted this special status. After 2010 a number of real estate development projects carried out by the state were granted strategic status. Most recently, an increasing number of emerging decrees have been issued with respect to private real estate development projects.

One of the main benefits granted by an emerging decree is the appointment of a government commissioner, who will guide the developer through the permitting process. Another advantage is that, in order to accelerate the procedures of the various authorities, the emerging decrees typically establish a shorter deadline for the expert authorities, as well as for the administrative/ licensing proceedings.

Perhaps the most beneficial feature of a strategic status is that, irrespective of an appeal, the resolution of the building authority (both the building permit and the occupancy permit) becomes immediately enforceable.

Any developer who has already encountered a hostile neighbor or civil organization would no doubt appreciate and set a high value on this provision. Additionally, in strategic projects there is no need to obtain a planning board opinion or complete other similar procedures. A further potentially useful contribution is that, in exceptional cases, an emerging decree may make certain exceptions to, or deviations from, the otherwise applicable provisions of the national building regulations (OTÉK). Finally, the strategically important nature of a project will allow the municipalities to amend zoning plans in a simplified and accelerated process, which otherwise would be the most time consuming part of the preparatory phase of a real estate development project.

The advantages outlined above may make it worthwhile to carry out detailed investigations as to whether a project has the potential for becoming strategically important from the perspective of the national economy.

www.weil.com

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s develop next year?

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Risk-averse buyers back in Budapest

All market sectors are showing positive fundamentals with falling vacancy and rising demand in the office and logistics markets, retail consumption rising and tourist visits on the up.

GARY J. MORRELL

Based on closed deals and pipeline, JLL estimate investment volume for the year at EUR 1.7 billion with office representing 50% of this volume, retail 30%, logistics 15% and hotel and other assets 6%.

“If the WestEnd transaction completes then we would modify these figures to close to EUR 2.2 bln translating into office representing 40% of deals, retail 43%, logistics 11% and hotel and other assets 5%,” said Benjamin Perez-Ellischewitz, head of capital markets at JLL Hungary.

International investors are increasingly reconsidering Hungary; JLL’s figures show that total investment transaction volume for the first half year had reached around EUR 910 million, already more than the full volume for 2015. All assets

The iconic 25,500 sqm Park Atrium office center. classes are attracting investors, although office and retail are leading with regard to volume. All market sectors are recording positive fundamentals as at the same time Hungary provides a yield premium on Central Europe.

Perhaps most notably, the conservative German institutional investors are back, as Ferenc Furulyás, managing director of

JLL Hungary, told the Budapest Business Journal in our last issue. This year’s investment upgrades from two of the three major rating agencies have been important; investors who would consider Poland or Czech Republic are now considering Hungary. “We are seeing increasing competition for limited office investment grade product in the pre-2018

“This is a key transaction in a Central European investment market that continues to gather momentum; international investor appetite is growing strongly in Budapest for wellmanaged, institutional-quality office assets with a proven track record of strong leasing success, and Corpus Sireo’s acquisition of Park Atrium typifies those opportunities now being actively sought by core risk-averse buyers looking to re-enter the Budapest office market.” period, when a number of office projects are set to deliver,” Furulyás commented.

In one of the latest deals by a major European institutional investor, Austria’s CA Immo bought the 70,000 sqm Millennium Towers office complex on the banks of the Danube from TriGranit and Heitman for EUR 175 mln. “What we see at the moment is an extremely positive

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

EXPERT OPINION

EXPO REAL 2016: Horizon Development presents its premium portfolio The 19th International Trade Fair for Property and Investment – held on 4-6 October in Munich – welcomed the longawaited Budapest stand, a joint initiative among the Municipality of Budapest, HIPA (Hungarian Investment Promotion Agency) and the Hungarian Property Developers’ Roundtable Association. Horizon Development, a member of the latter, showcased its prime development projects at the fair. Managing Partner Attila Kovács MRICS shares his impressions and conclusions.

“We have been visiting EXPO REAL in previous years, but this is the first time that we are displaying our portfolio as a co-exhibitor in Munich. As part of a prior collaboration with the same exhibiting partners at MIPIM in Cannes, we already presented our Váci 1, Promenade Gardens and Szervita Square projects to the international real estate audience in Spring 2016. After laying the foundations of our international presence there, we had high hopes that EXPO REAL would also generate the same quality feedback and substantial

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professional interest from the global property industry. We introduced the key features of our sustainable, multifunctional prime buildings (office, high-end retail, luxury residential) as part of an expert roundtable discussion, as well as a project presentation on the Budapest stand. After the 3-day event, we can certainly draw the conclusion that the results not only met, but clearly exceeded our expectations.

We experienced significant investor interest in our projects, and received development management inquiries of various types and scales, from various sectors.

Recent changes and trends we experience on the Hungarian commercial property market definitely give reason to be optimistic about our future as developers. After a relatively long period of dormant projects and low-intensity development activity, commercial developers are now breaking ground in Budapest for new buildings one after the other. We are celebrating the stone laying of our large-scale office development project, Promenade Gardens next week, but the Szervita Square project is also bound to kick-off by Q4 2016.

With increased demand for offices and high-end retail units, and scarce

availability of larger contiguous units, we as developers have a great responsibility to provide ample quality space for tenants seeking new premises with move-in dates in 2018 and 2019. Ever since its establishment ten years ago, our company has focused on the premium segment both in terms of developing projects in the most sought-after downtown Budapest locations, incorporating the most innovative solutions and complex services into its buildings, and involving clients and business partners in the process, thus creating long-term, trust-based relationships. When divesting our mixed-use buildings, the yields we managed to reach were always more attractive than the Budapest market average. Specializing both in heritage protection and modern architecture, and quickly responding to refined and unique demands formulated by market leading companies, the ambitious and visionary leadership of Horizon Development definitely fills a niche on the Hungarian development market.”

www.vaci1.hu www.promenadegardens.hu www.szervita.com

2016. 10. 12. 20:50

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dynamic in the Budapest real estate market, which is one of the core markets for the group,” commented Frank Nickel, CEO of CA Immo.

The investor aims to make 40% of its investment in CEE, stressing that it has staff on the ground and is therefore familiar with the different markets. Yields for prime office in Budapest are put at 7%, compared to 5-5.5% for prime Warsaw office.

Iconic purchase Elsewhere, the Germany-based asset manager, Corpus Sireo has purchased the iconic 25,500 sqm Park Atrium office center in Budapest from the Accession Fund, managed by GLL Real Estate Partners, in a deal reported to be worth more than EUR 50 mln.

An earlier generation center, the building is a landmark structure from an architectural perspective and has LEED Gold Certifications for the interior design of the premises of Deloitte and ING, whose Hungarian operations are both headquartered there. The fully let project, which has 10 year plus leases, was purchased at a reported sub 7% yield. “This is a key transaction in a Central European investment market that continues to gather momentum; international investor appetite is growing strongly in Budapest for well-managed, institutional-quality office assets with a proven track record of strong leasing success, and Corpus Sireo’s acquisition of Park Atrium typifies those opportunities now being actively sought by core risk-averse buyers looking to re-enter the Budapest office market by

acquiring assets offering defensive and long-term income stability,” said Colliers International, who acted for the vendor with CBRE.

Market recovery Following the downturn in investment activity in the wake of the recession, it was local funds that were at the forefront of initiating the market recovery, with Diófa Real Estate Fund and Erste Bank the most active investors. In the office market, the Hungarian Post Office Savings Real Estate Investment Fund, managed by Diófa Fund Management, forward purchased the recently completed 12,700 sqm V17 office building from Wing.

The investment market has subsequently seen the entry of new international investors such as the SEE specialist Zeus Capital Management, which acquired the 21,000 sqm Váci Corner from HB Reavis for EUR 55 mln.

The Germany-based asset and investment manager KGAL has purchased the 23,000 sqm Eiffel Square from Europa Capital and its local partner, ConvergenCE. The complex consists of office space, street front retail and service units, and a park area. “The sale is completed at a time when the Budapest market, having recovered from the global financial crisis, is entering a period of strong growth,” commented Robert Martin, head of Central Europe at Europa Capital.

In the retail market, Lone Star has acquired the Mammut shopping center, one of the leading Budapest retail centers

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and of the few centers not to change hands. Shopping center availability is by its nature limited, as investors tend to hold on to purchased assets.

In the logistics sector, CTP has also been active in building up its Hungarian portfolio with the acquisition of a 34,000 sqm logistics facility at Üllő and the purchase of a logistics facility in Tatabánya for redevelopment of the centers into CTPark Üllő and CTPark Tatabánya.

UniCredit Bank financed the purchases.

As part of a CEE portfolio transaction, Logicor, the logistics platform of Germany’s Blackstone, acquired the IMMOFINANZ logistics platform, with more than 100,000 sqm located in Hungary.

In parallel with the improving market fundamentals, Hungary also provides a significant yield premium on the established Central European countries.

JLL put prime office yields at 7%, falling to 6.5% by the yearend, shopping centers at 6.75%, and industrial at 8.5%. This translates into a 100-125 basis point differentiation between the Czech and Hungarian office markets, and a 175 basis point differentiation between the respective retail markets. However, convergence is anticipated as the Hungary market catches up, and the gap between the countries is regarded as too wide, given the favorable conditions in the Hungarian market.

Improving sentiment Improving sentiment towards Hungary is reflected in the fact that both investment and development finance is now available

International investors are increasingly reconsidering Hungary; JLL’s figures show that total investment transaction volume for the first half year had reached around EUR 910 million, already more than the full volume for 2015. for Hungary at more favorable terms, and there is increasing competition for project financing between lenders. According to CBRE, investment into CEE countries for the first half of 2016 registered a substantial increase of 59% compared to same period of last year, reaching almost EUR 5 bln. Expectations are that fullyear investment volumes will exceed the record volumes of 2015, with all CEE countries expected to perform strongly.

JLL predicts that total CEE investment volume for 2016 could be in excess of EUR 10 bln based on the current pipeline of deals that are in advanced stages of negotiation.

The question now is whether there are enough investment grade products to meet investor demand, and if developers will respond to increased liquidity by going ahead with planned projects that had been placed on hold, given the number of investors now looking to purchase quality projects.

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New wave of office development in the pipeline

The limited supply of office space is regarded as a potential problem for Budapest’s office market. However, with a 10% vacancy rate, the lowest since records began here in the 1990s, the development market has picked up.

“The growing confidence in the Budapest office market and in our projects is reflected in the fact that a number of banks are competing to provide finance for projects.”

GARY J. MORRELL

Overall construction activity in the Hungarian capital grew to 400,000 sqm of space for delivery in 2016-2018 as of the end of September, according to Cushman & Wakefield. However, when some of these will go ahead remains to be seen, with pre-leases and debt finance often required.

With demand outstripping supply and the Budapest office market becoming a landlord-favorable market, there is upward pressure on rents; indeed, prime rents currently stand at EUR 21/sqm/ month. The market situation is regarded as becoming critical by some analysts,

The 12,000 sqm V17 office center. given that large contiguous units of 1,000 sqm plus are difficult to source. Although construction activity is on the up, much of this could be pre-let by delivery. In general companies requiring space in Budapest need to plan in the longer term.

“2015 was a record year in terms of take-up, with several large pre-

lease transactions and a reduction in new supply,” said Cushman & Wakefield. “The robust occupier market has continued into 2016, which has motivated developers to break ground on a series of new projects, which will be completed over the next two years or so. However occupiers are now required

to think 1-2 years ahead to secure the suitable space for their relocation, mostly via pre-commitment.”

The vacancy rate stood at 10.3% as of the end of June and is expected to fall further. “This not only represents a lower rate than before the recession: such a low vacancy rate had not been registered since the 1990s, when vacancy rate registration began,” Cushman & Wakefield added.

The latest completion is the 12,000 sqm V17 office center in Váci út by Wing. An 8,500 sqm pre-lease with E-On has been concluded on the project, which was financed by K&H Bank.

The next significant delivery will be the two-phased 26,200 sqm, LEED Gold accredited Nordic Light by Skanska, in the ever popular Váci út business

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office building on the Buda bank of the Danube, and will deliver a 32,000 sqm office complex. “The growing confidence in the Budapest office market and in our projects is reflected in the fact that a number of banks are competing to provide finance for projects,” said Zoltán Radnóty, CEO of HB Reavis Hungary.

The company is also planning the first 30,000 sqm phase of the 136,000 sqm Agora office project in the Váci út business corridor, a speculative project with a proposed completion date of 2018. The size of the development is an indication of the confidence of HB Reavis and the continued popularity of the Váci corridor business district.

Elsewhere, GTC is developing the 22,000 sqm White House on Váci út around a former factory building: it is due to be completed by the end of 2017.

“With the purchase of Duna Tower and the development of White House, we are strengthening our position in the Budapest office market,” commented Bori Gedai, commercial director of GTC Hungary.

Another CEE developer/investor, CPI Hungary (part of the CPI Property Group active in CEE and Germany) is developing the 15,600 sqm Balance Office Park in the Váci corridor.

Research & Development Park located on the Buda side of the Rákóczi Bridge.

The 24,000 sqm LEED Gold accredited complex has been designed by Wing’s in-house architects, Aspectus. The HUF 20 billion project has been financed by a consortium of banks consisting of UniCredit Bank Hungary, UniCredit Bank Austria and K&H Bank. According to Noah Steinberg, CEO & chairman of Wing, the project will be delivered at the end of 2017, with a further second phase of around 20,000 sqm planned. As with V17, he emphasizes the importance of a substantial pre-lease as part of Wing’s development strategy.

In another built-to-suit (BTS) project in the neighboring ninth district, Wing is developing the 57,000 sqm Magyar Telekom headquarters, located at a metro and road network hub. The project is designed by TIBA Építész Stúdió and due to be completed in the second half of 2018.

Other developers are opting for the BTS option. In a further development due to be finished this year, Futureal is constructing the 25,000 sqm Nokia Tower IT and telecommunications R&D center at the Corvin Promenade urban regeneration project. The tower is adjacent to the 15,000 sqm Corvin Technology & Science Park that will form the fifth speculative office phase at Corvin Promenade, which is due to be completed in 2018. Futureal is also developing the speculative 11,000 sqm Advance Tower in Váci út, due to be delivered in 2018.

Budapest Business Journal | October 14 – October 27, 2016

“The robust occupier market has continued into 2016, which has motivated developers to break ground on a series of new projects, which will be completed over the next two years or so.

However, occupiers are now required to think 1-2 years ahead to secure the suitable space for their relocation, mostly via precommitment.” corridor. The complex is now more than 50% pre-let. Skanska is also continuing to develop the speculative 38,000 sqm Mill Park, due to be completed in 2018.

Atenor has gone ahead with construction of the fourth phase of Váci Greens (the 15,400 sqm Building D) this year, and has let 23% of the building, which is due to be delivered next year.

Olivier Ralet, CEO at Atenor, has previously emphasized that the company undertook the project when Budapest was still perceived to be a very difficult development market. However, demand for quality projects now outweighs supply several times over.

Also in 2017, the Hungarian GRT Group is planning the third speculative

The Váci 1 building.

18,000 sqm phase of Office Gardens in the 11th district. In a rare office development in the central fifth district, Horizon Development has completed 5,700 sqm of office space in Vörösmarty tér at Váci 1, a classical Central European building dating back to 1911 and a UNESCO world heritage listed building. The company is now developing the speculative 25,000 sqm Promenade Gardens on Váci út, scheduled to complete in 2018.

Growing confidence Having sold Váci Corner, HB Reavis is redeveloping the classic Bem Palace

Research and Design In its latest construction project, Wing has commenced construction of the Ericsson research and design headquarters at the Nobel Prize Winners

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2016. 10. 12. 20:50

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Budapest Business Journal | October 14 – October 27, 2016

Industrial development needed to meet rising d

Limited speculative industrial development has returned to Hungary against a background of increasing demand and falling vacancy.

Industrial developers are now considering the speculative development option, given increased optimism such projects will be quickly let.

Modern industrial stock in Hungary has reached 7.7 million sqm, of which only 34% is considered to be built-to-let or developer-led space; the majority consists of BTO schemes.

However, developer-led construction activity is clearly on the rise: whilst this represented 10% of total new completions in 2015, CBRE expects it to rise to 45% for 2016.

GARY J. MORRELL

For now, built-to-suit (BTS) remains the preferred option in Hungary, as developers essentially require a major pre-let before they consider committing to the Hungarian market. Take-up is outperforming development, with a resulting fall in vacancy, as developers land bank as they strive to keep up with demand. In recent years, companies have 252x158_ad_nordic_light.pdf 1 2016.10.05. 15:12:10 resorted to developing built-to-own

Prologis Park Budapest-Sziget.

(BTO) logistics and industrial facilities, although the proportion of developer-led building is increasing. However, market activity is far below Poland and Czech Republic.

Cushman & Wakefield figures indicate that 22,000 sqm of industrial and logistics space has been delivered thus far this year in the Budapest area, with a further 44,000 sqm in progress. This compares to

an estimated 1.1 million sqm that is due to be delivered this year in Poland, and an estimated 530,000 sqm of new space in Czech Republic.

According to CBRE, modern industrial stock in Hungary has reached 7.7 million sqm, of which only 34% is considered to be built-to-let or developer-led space; the majority consists of BTO schemes.

However, developer-led construction activity is clearly on the rise: whilst this represented 10% of total new completions in 2015, CBRE expects it to rise to 45% for 2016.

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2016. 10. 12. 20:50

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Total CEE Industrial Stock 2015 Warsaw

2.9 million sqm

Prague

2.3 million sqm

Budapest

1.9 million sqm

Bucharest

1 million sqm

Bratislava

0.9 million sqm

Source: Cushman & Wakefield

Industrial vacancy for Hungary is continuing to fall from a high of more than 20%. The Budapest Research Forum (consisting of CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL, and Robertson Hungary) put industrial vacancy for logistics parks and city logistics centers in the Budapest area at 9.7%.

Prologis is the biggest owner of industrial stock in Hungary, followed

by Logicor (the logistics platform of the German investor, Blackstone), Wing, Goodman, CTP and OTP. “Prologis and Goodman are still the most active in terms of BTS/ spec and semi-spec with one project in development each,” says Gábor Halász-Csatári, head of industrial at Cushman & Wakefield in Hungary.

“Market entrants such as CTP are very keen to undertake new projects beside their recently acquired facilities in Üllő and the countryside. As the southern Budapest region is very active, we expect land transactions to occur in the near- to mid-term future. Prologis and Goodman will be looking for plots with good locations and access. Other market players have yet to set foot in the market, and we are confident that a BTS project would boost their appetite for Hungary.”

In a recent deal, Prologis has signed a 4,800 sqm letting with Inter Cars Hungária, the largest passenger and truck parts dealer in CEE, at the 21,000 sqm speculative facility under construction at Prologis Park Budapest-Sziget. This is the first speculative logistics project in the Hungarian market since 2008. The park comprises six buildings totaling 128,000 sqm of industrial and logistics space with the capacity for 15,000 sqm of additional development located in the industrial zone at Szigetszentmiklós.

“The demand for modern logistics properties has been increasing recently, giving us the confidence to carry out this speculative development,” commented László Kemenes, country manager at Prologis Hungary.

In another transaction the European industrial developer, Goodman, has concluded a letting of around 5,000 sqm at its 22,000 sqm speculative development the Goodman Gyál Logistics Center, located at the junction of the M0 and M5 highways, 15 km from the Budapest’s Liszt Ferenc International Airport. The area around the airport is developing into a major Budapest logistics hub.

CTP has signed a 25,000 sqm letting at CTPark Tatabánya, having extended its logistics park network into both the Hungarian and Romanian markets.

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EXPERT OPINION

“The portfolio continues to grow, primarily through new construction and acquisitions in the new markets of Hungary and Romania,” said CTP. “While we continue to pursue acquisitions which fit our portfolio and investment goals, we plan to focus on growing mainly through new construction.”

Demand is also on the rise. “One can clearly state that the Hungarian e-commerce segment (also known as online commerce) is experiencing a buzz, even though this tendency has been going on in Western Europe for some time,” commented Cushman & Wakefield.

“Furthermore, in 2015 the total domestic e-commerce volume topped HUF 319 billion, which is 4.1% of the overall commercial activity. The significant beneficiaries of the above-mentioned trend are companies who provide so-called ‘CEP’ services (Currier-Express-Parcel), from which many international firms are already represented in Hungary. To put this into context, 42% of the total delivery of e-commerce purchases in Hungary were delivered by parcel (CEP) companies in 2015.” DPD Hungary, one of the major CEP providers in the country, has expanded its logistics base with the addition of an operations hub in south Buda.

DHL Express has announced a cooperation with Budapest’s international airport in order to develop a 13,000 sqm logistics center. In another development, UPS Hungary will begin operations of a newly developed 5,200 sqm logistics facility in the proximity of the airport.

Jost Lammers, CEO of Budapest Airport, the operator of Liszt Ferenc, sees logistics development as part of a wider upgrade of the passenger facilities and services at the airport.

Regional hubs One concern with regard to market development is the lack of development in regional cities; while in Poland there are regional hubs in, for example, Krakow and Wroclaw, and in Czech Republic there are clusters around Brno and Plzen, in Hungary 90% of logistics is located in Budapest with sporadic schemes only in the regions. Although Hungary has a very good road network, with one the highest highway densities in Europe, the country is very capital-centric.

Cushman & Wakefield forecasts further momentum in the e-commerce sector, escalating competition between CEP providers and increasing the value of industrial/logistics centers.

“The positive market sentiment, stable demand, and the aim of businesses to expand their activities and the efforts of existing tenants to gain new businesses, all project further speculative and BTS developments. Alongside the existing and stable developer scene, the last 12-18 months saw the appearance of new international market players, now also in possession of significant property portfolios. This creates a highly competitive environment on the landlord side, while also offering alternatives to prospective tenants. The growth of the Budapest stock boosted by the speculative and BTS developments over the mid- and long-term is clearly shifting developer demand towards greenfield; this is causing an increase in land transactions and a moderate but steady rise of land prices,” concluded Halász-Csatári.

Legal terms still need taking care of, even in a landlord’s market Sándor HABÓCZKY Partner SCHOENHERR HETÉNYI ATTORNEYS AT LAW In an improving Budapest real estate market, landlords of quality commercial assets are in a favorable position.

Nevertheless, the legal terms of commercial leases still require scrutiny, especially when it comes to a postacquisition clearance or upgrade of inherited tenant portfolios.

This is mainly because Hungary’s current leasing regulations (most of the Civil Code and outdated Act on the Leases of Commercial and Residential Premises) still generally reflect a tenant friendly approach, with some mandatory terms, and although they are often disputed, it is still difficult to deviate from them.

There are particular issues to be handled by landlords, such as when a tenant whose lease has been terminated with payment arrears does not evacuate the leased property, and thus delays the conclusion of a new rental agreement. These days, well located commercial premises in a good condition are relatively easily let to a new tenant. However, our laws still protect those in actual possession of the property. As – in the absence of a voluntary move by the old tenant – the lawful eviction of the property would require a court order and subsequent judicial execution process, landlords often require lease agreements to be signed in front of a notary public, putting the agreement in a directly executable form from inception. Either these lease agreements contain provisions prescribing that the tenant move out and return the premises once the lease relationship has been terminated, or a separate undertaking from the tenant is required (an eviction statement is included in the same notary deed form).

Given that eviction by way of judicial enforcement may take months, even when tenant undertakings are included in executable deeds, landlords have become inventive in warning tenants in advance by including complete inventories of collaterals and sanctions in lease agreements. For example, popular clauses included in leases are the contractual right to change locks to restrict the tenant’s entry into the premises or prevent the further use and possession of the premises, or the landlord’s ability to remove items belonging to the tenant from the

leased premises. These arbitrary acts are usually unlawful, and thus could establish tenant claims delaying the conclusion of a new lease.

A harsh, but similarly popular landlord measure is to suspend the tenant’s supply of public utilities. Although restricting access to public utilities could be tricky from a legal perspective, it may not be useless as long as it serves as a consequence of nonpayment of utility costs by the tenant, and is not a mere sanction for nonpayment of rent.

No doubt, a threatening, extensive list of sanctions may have a strong preventive or psychological effect.

However, even if tenants expressly waive their rights in terms of the above arbitrary measures, said sanctions, as well as the respective waiver of protection/objection by the tenant, could be held to be unlawful by a court.

Commercial risks are also faced by landlords, but they can be well avoided or mitigated through various legitimate channels (bank guarantee, deposit, parent company or shareholder suretyship etc.) One of the most important is the landlord’s statutory lien over the assets of the tenant, not only securing the rent, but also costs in relation to the lease. Assuming the tenant’s assets represent a greater value, this collateral may well function when a tenant is in arrears or if the tenant wants to vacate the premises early in violation of the contract term.

The landlord should also be reasonably protected against an early, unlawful exit in case the premises were improved by the landlord in accordance with the special needs of the tenant. These improvements are often borne by the landlord – at least partially – and the risk is that a unique property equipped for a special business (e.g. a spa or a salon) may remain unrented as a result of its specificity. To cover these risks, landlords may also consider concluding a purchase option (available again as fiduciary collateral since 1 July 2016), over the tenant’s assets, which could make it easier for the landlord to keep the developed function of the property and find a new tenant to take over the premises from the same business field as the previous tenant.

Such fiduciary collateral may also provide useful alternatives to secure potential pecuniary claims (i.e. claims for compensating arrears or damages) against non-performing tenants.

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NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

g demand

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Budapest Business Journal | October 14 – October 27, 2016

CEU BUSINESS SCHOOL

How technology is changing Moment of truth close at hand for over priced older the real estate game apartments

Felix Gugel CEU BUSINESS SCHOOL

Real estate: bricks and stones, small single family and apartment houses, office buildings and big malls. Driven by ever developing capital markets and the rise of real estate private equity, the business has become more global, although local players still dominate.

Real estate is a multi facetted industry, but digital, it is certainly not.

Or so it would seem, but take a look at the following number. During the first half of 2016, real estate technology companies were able to raise more than USD 1.8 billion globally. Compare that to the USD 222 million that real estate tech companies raised in the whole of 2012 and you get an idea of how rapidly the industry has developed over the last few years (or, depending on were you stand, how big the tech bubble has become). Anyway, the fact is that many investors are betting big on real estate tech and for good reason, as we will see.

However, large parts of the industry are still blind to this development – or simply ignorant.

Still, according to the gospel, real estate is about location, location, location and – surprisingly – location is local, so why should anyone care about what some start up in Silicon Valley is doing? The reason for that thinking lies in a fundamentally flawed understanding of how digital technologies are changing industries.

The key concept one needs to understand is the difference between digitization and digitalization.

Digitization simply means translating analogous information into digital information. From letters and pictures to zeros and ones, so to say. So, for instance, digitization means taking the advertisement for an apartment out of a newspaper and putting it online. More transparency? Certainly.

A big disruption for the real estate industry? Rather not, as it seems that brokers are still alive and kicking, ready to take their cut by using those platforms. Digitalization, however, is where things get exciting, or, if you are in the wrong part of the industry (and who knows nowadays where that is), scary. Digitalization happens when this now digitized information can be used to create something entirely new. It happens when all kinds of digital information, like time data, location data, price data etc. are brought together by advanced algorithms to create an entirely new insight from which a new service or product might emerge. To stay in our example, digitization means bringing an apartment advertisement online,

BBJ_2419_spec_report.indd 22

In the future, players of the real estate game will face competition from unexpected places. House listing websites might not only threaten brokers, but also providers of market intelligence (because house listing websites have access to so much more real time data).

but digitalization means using all kinds of information to give a real time price estimation of your apartment or forecast how the area in which you live will develop socio-economically.

Unexpected competition Why is this important? Because it means that in the future players of the real estate game will face competition from unexpected places. House listing websites might not only threaten brokers, but also providers of market intelligence (because house listing websites have access to so much more real time data). Consumer electronic companies like Apple or Google might develop operating systems for buildings that make facility managers obsolete. And what about the powerful owners of big commercial real estate?

Well, have you ever thought what it might mean if the rental contract of the future was to be cancellable on a monthly basis (because businesses like WeWork will establish this as the new industry standard), which means you borrow long-term and finance short-term?

But where there is disruption, there is also opportunity. Understanding and managing technology provides a way even for regional players to influence real estate markets worldwide. Who knows, with its growing startup scene and smart developers, Budapest might be the place where the next real estate mogul will come from, only this time he or she will be a digital one.

Felix Gugel is a triple degree student at CEU Business School, Budapest and EBS Universität für Wirtschaft und Recht, Wiesbaden. He interned at international real estate private equity companies and has received the outstanding academic achievement award at CEU. Currently he is writing his Master thesis on Real Estate Technology.

This column is part of a continuing series of opinion pieces from experts at the CEU Business School in Budapest.

The opinions stated here do not necessarily reflect those of the Budapest Business Journal.

There seems to be no rest in sight on the overheated Budapest real estate market, but experts suspect that certain used properties should be facing a downward price adjustment as soon as new developments come to completion.

GARY J. MORRELL

Hungarian business media headlines are dominated by the explosive price hikes of the property market with reason.

The most telling data in this regard is laid down by the review of the Central Statistical Office (KSH) dealing with Q1 and Q2 of 2016, according to which the prices of residential properties have now surpassed their pre-recession peak. At the end of Q1, apartments sold for 29% more than in late 2013, which marked an absolute low at the time.

What experts are now pondering is how long this can be maintained and whether prices have not got out of control already, especially in certain segments of the used property market. As Anikó Lantos, director of training at real estate agency Buda City Cartel, explains to the Budapest Business Journal, a truly hot topic at the recent Budapest real estate fair was what impact current building projects would have on the market; a large number of new properties will emerge onto the market in next one or two years.

“Some 250 projects are under way, and once they hit the market, they will have a significant effect on the price of used apartments. These new places are constructed in a modern fashion, are in high demand and sell extremely well and extremely quickly,” she says.

Caught by surprise Imre Legény, founder of alberlet.hu, the biggest property rental website in the country, has always considered new homes as one of the top hits of the past ten years. What caught him by surprise is that there are many out there who could have bought something two years ago, but are only now showing up on the market.

“Some feared the state would default and they took their money to Austria, only to realize that yields there would not exceed 1.5-2%, whereas here they can still easily make an annual profit of 4-5%,” he says.

The intensity of the property hunt may prevail, but pundits predict that the owners of a lot of overpriced properties had better prepare themselves for a price drop. “It cannot be that for apartments that are located in dodgy areas and in

Anikó Lantos, Buda City Cartel.

Imre Legény, alberlet.hu.

heavy need of renovation you ask HUF 500,000 per sqm. Nothing can justify this, and this is where investors must seriously consider how much they are willing to pay for a worn-down place that requires additional spending amounting to millions of forints,” says Lantos.

She believes that buyers will ultimately turn their attention to newly-built investments, or newish places that offer better money for value. “In particular, the emergence of new developments scheduled for next year and later must alter the used apartment landscape substantially. It is high time for an adjustment,” she notes.

Dictating the terms That moment of truth may be delayed by one crucial bottleneck, the hottest buzz phrase of the Hungarian economy right now, “labor shortage”. “Workers can ask as much as they want. They are dictating the terms and firms must fulfill them, otherwise the housing projects won’t be finished on time or at all,” Lantos explains.

Contractors are adapting accordingly.

Since they are aware of the danger that there might not be enough hands available to complete the work on time, they make sure they are legally protected against such risks. “Demand is surging for new places and there won’t be enough of them. Apartments are sold from the drawing table. But buyers must accept clauses they would not normally have to,” Lantos says. Instead of facing heavy penalties for delay, construction firms increasingly manage to insert terms into purchase agreements that leave them free to carry out any unfinished business up to 12 or even 24 months after the original date of completion.

On the other hand, developers are dangling ever better financing conditions before would-be investors. As Legény explains, half a year ago the typical down payment amounted to 20-30% of the purchase price. “Now there are 10-11 ongoing projects where 10% down will do.” With the supply side becoming busy, these so-called 10/90 financing schemes will ultimately become the norm for those wishing to keep pace with fellow competitors in the development arena.

Legény believes that the supremacy of downtown is not endangered, though.

There are still many future AirBnb investors and ever more foreign students come to live here who would not want to be on the outskirts. “Downtown will remain popular, so ultimately prices are expected to remain high there in general.”

2016. 10. 12. 20:50

www.bbj.hu

Budapest Business Journal | October 14 – October 27, 2016

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PROMOTION

From successful franchise to regional multi brand Duna House Group has been improving continuously for the past 13 years.

There is no room to stop, new ideas keep coming, such as new real estate services and expansion abroad.

“Our start took place by chance, but afterwards, nothing happened accidentally,” remember Guy and Doron Dymschiz, the two owners of Duna House Holding Nyrt. The German brothers arrived in Budapest in 1998, when the Hungarian residential real estate market was picking up, and aided foreign clients in finding investment possibilities.

After international interest in the market declined around the millennium, the Dymschiz brothers were faced with a difficult decision, but finally stayed here, as they believed that a strong agent network was missing from the Hungarian market, and they started building their franchise here. Officially, Duna House was launched in 2003, and a gradual building up has taken place ever since. They launched one single office in the beginning, which was later expanded to three, before insiders were allowed to open their own franchise offices. Later, outsiders joined, expanding in Budapest, and finally around the whole country.

Guy Dymschiz and Doron Dymschiz owners of Duna House Holding Nyrt.

Expansion in terms of the geographical area was soon followed by the expansion of services on offer, such was strengthened. Yet, there is plenty the recent half year’s figures also got investment section. For this, in a joint as real estate management for foreign to do in Poland, where Guy Dymschiz stronger, so it is foreseen that the IPO venture with Izraeli Eldar Investment investors, the selling financial products spends the majority of his time. could be introduced at higher prices with a 50-50 share, MyCity Group was (mortgages), putting out energy than was planned a year ago. How was established, which currently plans the certificates and evaluation. Therefore, The network is still not short on it done? Obviously, the boom in the real building of 430 homes. Construction the portfolio has expanded. plans, though. Duna House Nyrt. was estate market helped, as parallel to the has already begun of part of these. planning to enter the Budapest Stock growth of prices, the value of homes “We are not planning to restructure the Although, following the 2008 crisis, the Exchange back in 2015, but the on sale increased by double digits. The company as a real estate investor,” the importance of mortgages was reduced, regulatory environment changed a lot growth was reflected in sold mortgages, owners say, however, the lowered 5% growth remained stable. The notion while the IPO being processed. The as well as in the rise of commissions. VAT and CSOK program have created of expanding abroad soon emerged. Hungarian government adopted a On the dynamically growing market, a beneficial environment.

The first international addition to the 2% debt agent cap, which limited the agents who were negatively affected network was a single office in Prague, income possibilities of one of the most by the cap were able to gather more The group has also launched Impact followed by a much bigger and more important segments. Nevertheless, the customers. At the same time, reactions Alapkezelő Zrt., which manages the distant step. This April, the network company did not give up, and finally, were seen to the cap. On the one hand, first Hungarian home fund. The low announced it had purchased 100% of this segment could turn out to be home savings and financial contracts yield environment can only help the its biggest peer in Poland, Metrohouse. profitable as well. was given a bigger emphasis, while, on currently HUF 600 billion worth of the other hand, the commission system the domestic expansion of the fund “The Polish network has faced the The leaders of Duna House signaled was restructured. market. “This is a type of financial same problems that we have been just few days after the IPO was product that can excellently substitute able to solve here in Hungary, therefore canceled that the decision was strictly At the moment no further international real investment,” say the Dymschiz we are expecting serious results a suspension, and commitment to expansion is being planned, but there brothers, who speak good Hungarian, from our recently purchased Polish the capital market had not changed, are many improvement targets ahead. and can be called Hungarian network,” the Dymschiz brothers ensuring that, as soon as the The newest Smart Real Estate brand businessmen. “We have lived here said. The commission system was environment is more appropriate, the currently counts 32 offices, but, at the since 2000, Budapest is the center of soon restructured there, the unstable IPO would be resumed. Less than a same time, a growth engine could be our lives, our wives are Hungarian, our financial situation ceased to exist and year later, the Budapest bourse was the own office segment as well. The children were born here; do we have the section selling financial products aimed at once again. Additionally, company has also created a real estate to explain our ties any further?

BBJ_2419_spec_report.indd 23

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www.bbj.hu

Budapest Business Journal | October 14 – October 27, 2016

Asset management companies total value oF pRopeRty managed in HungaRy (HuF mln)

main pRopeRties managed in H1, 2016

2,708 2,655

99,540

Balance Loft, Balance Building, Gateway, Arena Corner, BC30, Airport City Logistic Park

180,000

MOM Park, WEBC, Corvinus Egyetem Közgáz Campus and Studium office building, Millenáris office buildings, Honvéd Center, Máriássy Ház, Hegyvidék Shopping center, Agria Park, East Gate Business Park, Dél-pesti Business Park

Ÿ

Duna Tower, Laurus Offices

Ÿ

Bartók Ház, Capital Square, City Gate, IP West, R70 Office Complex, Víziváros Office Center, Infopark building A, Canada Square, Europolis Park Budapest Aerozone logistics park, Dunacenter Győr shopping center

Ÿ

Central Udvar Office building, Eximház, Ausztria Ház, Üllő Airport Logistics Centre, Goodman Kecskeméti Logisztikai Központ





–

15

11

63

11

–

100

–

  



Controlling, rental, operation

17

46

37

–

–

100

–

Wingholding Zrt. (99.90), other (0.10) –



  

–

Disposal management, investment consultancy

–

–

100

–

–

–

100

Individuals (100) –

Csaba széll Anita Molnár-Széll Zoltán Balla

1138 Budapest, Népfürdő utca 22.

(1) 785-4985 (1) 799-8879 info@celand.hu



  



–

10

10

80

–

–

Ÿ

Ÿ

– CA Immobilien Anlagen AG (100)

ede gulyás – –

1074 Budapest, Rákóczi út 70–72.

(1) 501-2800 (1) 501-2801 office@caimmo.hu

100

AddVal Group Kft. (100) –

Hubert mühringer Péter Radó Bereniké Csépke

1077 Budapest, Wesselényi utca 16.

(1) 479-6020 (1) 479-6029 office@ addvalgroup.com

alan a. vincent – –

1134 Budapest, Váci út 37.

(1) 225-0912 (1) 375-0445 csaba.zeley@ convergen-ce.com

pRojeCt management

–

tenant management

oWned by Clients

1095 Budapest, Máriássy utca 7.

(1) 451-4760 (1) 451-4289 info@wing.hu

oWn pRopeRty

noah m. steinberg – –

ConstRuCtion site

1132 Budapest, Váci út 30.

(1) 225-6600 (1) 225-6601 hungary@cpipg.com

Hotel

mátyás gereben Kristóf Skwarek Bea Déri

oFFiCe

– CPI Property Group (100)

industRial

addRess pHone Fax email

Retail

top loCal exeCutive CFo maRketing diReCtoR

otHeR

oWneRsHip (%) HungaRian nonHungaRian

aCCounting seRviCes, ContRolling

ReCeivables management

poRtFolio, pRopeRty and Real estate management

seRviCes oFFeRed in asset management

poRtFolio diveRsiFiCation aCCoRding to type oF pRopeRty managed (%)

poRtFolio diveRsiFiCation aCCoRding to oWneRsHip stRuCtuRe (%)

net Revenue FRom asset management in 2015 (HuF mln)

Company Website

total net Revenue in 2015 (HuF mln)

Rank

Ranked by total net revenue

Cpi HungaRy kFt. www.cpigroup.hu 1

2

Wing ZRt.

www.wing.hu

756

Ÿ





  

Ce land Holding kFt. www.celand.hu

647

3

4

Ca immo HungaRy kFt. www.caimmo.com

436

Ÿ

Ÿ

addval kFt.

www.addvalgroup.com 331

5

Ÿ

Ÿ

Ÿ

100,000

Eiffel Square Office Building, CityZen Offices, Kálvin Square Office Building, B52 Office Building, Margit Palace Office Building, Terrapark Next A&B Office Building

Ÿ

Ÿ

Ÿ

Infopark D, RiverPark, Andrássy 93, K6, Art’otel

Ÿ

Árpád Center, Átrium Park, Central Business Center, Globe 3, Globe 13, Xenter 13, Optima A, Greenpoint 7, Haller Gardens, Office Campus, Szépvölgyi Business Park, 12 STOP SHOPs in Hungary

ConveRgenCe NR

www.convergen-ce.com

gamma

NR pRopeRties kFt. www.gamma-am.hu

immoFinanZ seRviCes HungaRy kFt. NR

www.immofinanz.com

Ÿ

Ÿ







–

  



Business planning, leasing concept and leasing, tenant relationship management, green building policies,

–

–

100

  

Ÿ

Rental, business and finance management, due dilligence

–

–

80.5 19.5



–



  



–

Rental, contact keeping 50 with tenants

40

–

60

50

–

–

–

–

–

–

–

100

– Alan A. Vincent (100)

–

–

100

Individuals (100) –

tibor gasser – –

1093 Budapest, Közraktár utca 30.

(1) 382-7560 (1) 382-7570 office@gamma-am.hu

–

– Immofinanz AG (100)

viktor nagy Ottó Vörös Gergely Koó

1134 Budapest, Váci út 45.

(1) 236-0435 (1) 236-0436 offices_hu@ immofinanz.com

–

100

immofinanz.com

BBJ_2419_spec_report.indd 24 Asset management companies 1

2016. 10. 12. 20:50 2016. 10. 12. 14:04

www.bbj.hu

Ÿ

Ÿ

Ÿ

Millennium Towers I., II., III., K&H Headquarters, Budapest (2006-2011)

tRigRanit NR

www.trigranit.com

–



  

–

–

7

–

58

35





–

–

–

33

–

67

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tenant management



poRtFolio, pRopeRty and Real estate management







addRess pHone Fax email

poRtFolio diveRsiFiCation aCCoRding to oWneRsHip stRuCtuRe (%) oWned by Clients

Ÿ

otHeR

Ÿ

aCCounting seRviCes, ContRolling

NR

pRojeCt management

Ÿ

Office buildings: Blue Cube, Buda Center, City Center, Maros Utca Business Center, Pódium, River Estates, Twin Office Center, Hotel: Hotel Marriott Budapest

www.simmoag.hu

ReCeivables management

s immo apm HungaRy kFt.

–



top loCal exeCutive CFo maRketing diReCtoR

oWn pRopeRty

Ÿ

oWneRsHip (%) HungaRian nonHungaRian

ConstRuCtion site

Ÿ

Ÿ Ÿ Ÿ Ÿ Ÿ

Ÿ

Ÿ

–

100

–

– CEE PropertyInvestment Immobilien GmbH (100)

katalin sermer Tímea Földi –

1051 Budapest, Bajcsy-Zsilinszky út 12.

(1) 429-5050 (1) 429-5055 office@simmoag.hu

–

100

–

– TPG Real Estate (100)

Árpád török Agnieszka Turowska Dániel Pazsitzky

1132 Budapest, Váci út 30.

(1) 456-6200 (1) 456-6201 info@trigranit.com

Hotel

Ÿ

oFFiCe

Ÿ

industRial

total value oF pRopeRty managed in HungaRy (HuF mln)

main pRopeRties managed in H1, 2016

seRviCes oFFeRed in asset management

poRtFolio diveRsiFiCation aCCoRding to type oF pRopeRty managed (%)

Retail

net Revenue FRom asset management in 2015 (HuF mln)

m7 Real estate

NR HungaRy kFt. www.m7re.eu

total net Revenue in 2015 (HuF mln)

Rank

Company Website

25

3

Budapest Business Journal | October 14 – October 27, 2016

– balázs magyar M7 Real Estate – Europe Limited – (100)

1146 Budapest, Hermina út 17.

(1) 848-0673 – info@m7re.cz

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26 3

www.bbj.hu

Budapest Business Journal | October 14 – October 27, 2016

Real estate developers

1

ECE PROJEKTMANAGEMENT BUDAPEST KFT.

5,204

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

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–

–

–

Ÿ



–



–

–



–

–



ASSET MANAGEMENT

REAL ESTATE BROKERAGE

CONDOMINIUM OPERATION

BUILT-TO-SUIT DEVELOPMENT

REAL ESTATE UTILIZATION

REAL ESTATE INVESTMENT

CONSTRUCTION

PROJECT MANAGEMENT

PORTFOLIO MANAGEMENT

ACTIVITIES AND SERVICES

FACILITY MANAGEMENT

PUBLIC BUILDING

INDUSTRIAL

INFRASTRUCTURAL

RESIDENTIAL

COMMERCIAL

OFFICE

COMPANY WEBSITE

TOTAL NET REVENUE IN 2015 (HUF MLN)

RANK

TYPES OF INVESTMENT

ONGOING PROJECTS IN HUNGARY (INVESTED VALUE IN HUF, EXPECTED YEAR OF COMPLETION

Ranked by total net revenue

–

www.ece.com

CPI HUNGARY KFT.

2,708

3

4

WING ZRT.

www.wing.hu

SKANSKA MAGYARORSZÁG INGATLAN KFT. www.skanska.hu

5

RE PROJECT DEVELOPMENT KFT.

6

ATENOR GROUP HUNGARY KFT.

www.residenceirodahaz.hu

www.vacigreens.hu

756

678

382

221

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–

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–

–

–

–

–

–

–

Balance Loft, 2017

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V17 office building (HUF 10 bln, 2016) Magyar Nobel díjasok K+F Park I. ütem (NA, 2017)

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–

–

Nordic Light 2016

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K27 Kerepesi Business Center

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Váci Greens Building "D" 2017 Q4

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–

–

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–

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–

–

–

–

–

NR

GOODMAN NR HUNGARY KFT.

www.goodman.com/hu

Ÿ

Ÿ

–

Ÿ

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22,200 m2 Goodman Gyál Logistics Centre, opening 2016

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Promenade Gardens, 2018, Szervita Square, 2019

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–

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HORIZON DEVELOPMENT KFT.

www.horizondevelopment.hu NR

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Ÿ

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NR

Ÿ

WHITE STAR REAL NR ESTATE KFT.

www.whitestar-realestate.hu

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–

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–

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Alan A. Vincent – –

1134 Budapest, Váci út 37.

(1) 225-0912 (1) 375-0445 csaba.zeley@ convergen-ce.com

Ÿ

– Goodman Europe (Lux) S.A. (96.67), Goodman Belgium N.V (3.33)

István Kerekes – –

1123 Budapest, Alkotás utca 53.

(1) 336-2270 (1) 336-2289 info-hu@goodman.com

Ÿ

Individuals (100) –

Attila Kovács – Ildikó Rézműves

1052 Budapest, Türr István utca 8.

(1) 473-1209 (1) 473-1210 info@ horizondevelopment.hu

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Prologis Park Budapest-Sziget DC6 build-to suit (2015), DC7 Speculative (2016), Prologis Park Hegyeshalom DC1 extension

Ÿ

– Real estate funds (100)

László Kemenes Karolina Gorgiel Marta Tesiorowska

1095 Budapest, Lechner Ödön fasor 7.

(1) 577-7700 (1) 577-7701 info-hu@prologis.com



Millennium Tower I., II., III. Budapest, Bonarka City Center (BCC), Kraków, Poland, Bonarka for Business (B4B), Kraków, Poland

Heitman, IPR Group, ING, Aareal Bank

– TPG Real Estate (100)

Árpád Török Agnieszka Turowska Dániel Pazsitzky

1132 Budapest, Váci út 30.

(1) 456-6200 (1) 456-6201 info@trigranit.com

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IP West office building (2009), The Quadrum office building (2008), Haller Kert office building (2008)

Heitman, GLL Real Estate Partners, Immofinanz AG, CA Immo, DEKA Immobilien, Patrizia Immobilien AG

– White Star Real Estate LLC (100)

János Gárdai Krisztián Barabás Edina Magó

1117 Budapest, Budafoki út 91–93.

(1) 382-5100 (1) 382-5101 info@ whitestar-realestate.hu

Goodman Üllő Airport Logistics Centre

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Ÿ

Ÿ

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1027 Budapest, Ganz utca 16.

(1) 346-6400 (1) 346-6448 julianna.marta@ raiffeisenevolution.com

– Alan A. Vincent (100)

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–

Rudolf Riedl – –

–

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

TRIGRANIT

www.trigranit.com

1134 Budapest, Kassák Lajos utca 19–25.

(1) 382-9100 (1) 382-9129 property@skanska.hu

1138 Budapest, Váci út 117–119.

(1) 785-5208 – info@atenor.hu

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Marcin Łapiński – –

Zoltán Borbély – –

–

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– Skanska Commercial Development Europe AB (97.50), Skanska Komersiell Utveckling Norden AB (2.50)

– Atenor Group S.A. (100)

–

–

1095 Budapest, Máriássy utca 7.

(1) 451-4760 (1) 451-4289 info@wing.hu

GE Hungary, GE Infrastructure, Enterprise Communication, Cafe Frei, IT Services Hungary, SYKES

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Noah M. Steinberg – –

Váci Greens Building "B", 2016 Q1, Váci Greens Building "C", 2015, Váci Greens Building "A", 2013

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–

Ÿ

Wingholding Zrt. (99.90), other (0.10) –

Ÿ

–

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1132 Budapest, Váci út 30.

(1) 225-6600 (1) 225-6601 hungary@cpipg.com

–

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 

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Mátyás Gereben Kristóf Skwarek Bea Déri

– Raiffeisen evolution project development GmbH (100)

–



– CPI Property Group (100)

Amfi Apartmanház, Budapest - 2003, Rumbach Center office building, Budapest - 2008, Uniqa HQ, Budapest - 2009, Residence 1&2 office building, Budapest - 2010

www.prologiscee.com

 

CITI, Vodafone, GM, Magyar Posta, Starschema, Brendon

–



PROLOGIS HUNGARY NR

1106 Budapest, Örs vezér tere 25/A (1) 434-8200 (1) 434-8207 info@ece.hu

Green House 2012, Népliget Center 2010, Light Corner 2006, Science Park 2004, West End Business Center 2001, East West Business Center 1991

  

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Christoph Augustin, Dr. Nóra Kismarci, Gergely László, Hanna Szilvásy Katrin Teschner Hanna Szilvásy –

 

–

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– ECE Projektmanagement GmbH & Co. KG (100)

East Gate Business Park F csarnok (2014), Hegyvidék Bevásárlóközpont (2012), Dél-pesti Üzleti Park F csarnok (2012)

  



ADDRESS PHONE FAX EMAIL

Árkád 1. Budapest, Örs vezér tere, 2002, Árkád Pécs, 2004, Árkád Interspar, Media Győr, 2006, Debrecen Markt, Gap, Fórum, 2009, Árkád Zara, H&M, C&A Szeged, 2011, Árkád 2. Budapest, Örs vezér tere, 2012

Eiffel tér office building (2010), City Point 9 Városi Logisztikai Központ (2010), Park One office building, Bratislava (2007)

 

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

 

CONVERGENCE

www.convergen-ce.com

OWNERSHIP (%) HUNGARIAN NONHUNGARIAN

MAJOR CLIENTS IN 2015

Balance Building (2015), Quadrio (Prague, 2014), Europeum (2011), Courtyard by Marriott (2010), Gateway (2008), Airport City Logistic Park (2008), BC30 (2007)

www.cpigroup.hu 2

PREVIOUSLY COMPLETED REFERENCE PROJECTS, YEAR OF COMPLETION

–

Eiffel Square office building (2010), Eiffel Palace office building (2014), Váci 1 (2016)

2016. 10. 12. 20:50 2016. 10. 12. 14:06

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Sok almából zamatos gyümölcslé lesz, édes lekvár, sütemény, befőtt, sokan sokféleképpen szeretik. A feldolgozás során azonban vannak olyan részek, melyeket nem használnak fel, hátramarad mint felesleg.

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Vidám színeikkel és mintájukkal viszszaadják mindazt, amit a gyümölcs „láthatottˮ: a természet ébredését, a forró nyári napot, az őszi naplementét.

AZ APPEEL TERMÉKEK M A G YA R O R S Z Á G I FORGALMAZÓJA A CHRONOS KIADÓ

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4 Socialite BBJ

Yoga in Budapest: English spoken here

For those of us who have a regular practice, arriving in a new city is a great opportunity to check out what’s on offer yoga-wise. But finding the right studio can be a matter of trial and error.

Luckily for yogis and people who want to take up the practice, Budapest has a selection of worldclass studios offering all the major styles.

DAVID HOLZER

I’ve been practicing yoga for several years now and I’m absolutely sold on the benefits, especially for those of us who sit at a desk for most of every working day.

Even if you’re pretty fit, you’ll probably find yoga a little challenging at first. But when you get into it, you’ll soon discover that you become more and more flexible. Yoga also builds muscle strength for your whole body.

Improving your flexibility and strength is great for your sitting and standing posture, helping to prevent back pain and arthritis.

A well thought out yoga practice will put your joints through their full range of motion, squeezing all the fluids out of your cartilage and soaking them in fresh nutrients. Yoga poses like downward dog also improve your bone health because you’re supporting your own weight in a relaxed posture.

Other physical health benefits can include better circulation, a stronger immune system and reduced blood pressure. Yoga may also improve balance, which is connected to our sense of well being. But what got me hooked on yoga was the effect it had on my mind.

As a writer, I’m always looking for ideas, for inspiration. From the moment I started practicing I discovered that, for some reason, the ideas started to come thick and fast. If you do something creative or even if you just want to be more focused and innovative at work, try yoga.

Yoga has been proven to increase the levels of neurotransmitters like serotonin that help us feel happy and good about ourselves. One study, at Boston University Medical School, found that people who did yoga for 60 minutes ended up with 27% more of a neurotransmitter called gamma-

BBJ_2419_socialite.indd 28

“A strong and flexible body, peaceful mind and radiant soul - whichever you’re looking for, yoga can be the answer. Because we know how important it is for students to completely understand instructions when practicing yoga, we’ve introduced classes in English and Spanish.” aminobutyric acid (GABA) that helps us relax. Alcohol and anti-depressants stimulate GABA, which is why they’re so widely abused.

Increasingly, doctors are suggesting patients who suffer from depression practice yoga rather than take medication.

Because practicing yoga makes us feel good, we also naturally feel like changing our diet. I found that I wanted to lose weight so I feel the full benefits of the poses. Yoga has been found to lower blood sugar by reducing cortisol and adrenaline levels, which encourages weight loss. So it can really help people with diabetes.

I could go on but I’d run the risk of being a yoga bore. I would, however, definitely suggest that you dip your toe in the water and take a class at one of Budapest’s many excellent studios.

You’ve got nothing to lose and a world of physical and mental well-being to gain. You’ll probably also become part of a community of like-minded people.

The right yoga for you Today’s wannabe yogis have a smorgasbord of yoga styles to choose from, depending on what you want to get out of the practice. These are the forms of yoga you can do in Budapest.

Hatha yoga is where every style of physical yoga comes from. Because hatha yoga teachers tend to be purist and old school in their approach, it’s one of the best ways to learn the postures correctly and lay the foundations for experiencing other styles. Hatha is also usually taken at a slower pace, which helps you ease into becoming more flexible and stronger.

Ashtanga is a much more physically demanding form of yoga that really does build strength. If you’re already reasonably fit and determined to master yoga, it’s also an excellent place to start. Ashtanga classes consist of repeating essentially the same sequence every time, with slight variations as you

become more adept. For some of us this can be boring, but it definitely enables you to master the postures and avoid getting into bad habits.

Many people who take up yoga often gravitate to vinyasa because it never gets boring. It’s a vigorous practice that emphasizes movement and flow and is both challenging and fun. Vinyasa is often done to music, which makes it feel even more like a structured dance.

Iyengar yoga is all about getting individual poses right and holding them for a few minutes. When you’re serious about yoga – if you’re thinking about becoming a teacher, for instance – iyengar is excellent. But if it’s the only yoga you do, it’s probably a good idea to do some sort of aerobic exercise like running or swimming if you want to stay fit.

Restorative positions Yin yoga is also about holding what are called restorative poses for at least a minute or two, working on connective tissues like ligaments as well as the bones. Yin is deceptively challenging, but fantastically good for your body.

It’s excellent for athletes.

I know people who love hot yoga and Bikram yoga, but they’re definitely not for everyone. Devotees claim that practicing yoga in a room heated to

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29

SEVEN STUDIOS TO CHECK OUT

All these studios that offer classes in English.

Aum Jóga Központ welcomes all expat yogis and offers everything from prenatal to Acroyoga. As Renata, from the center, explains: “A strong and flexible body, peaceful mind and radiant soul - whichever youʼre looking for, yoga can be the answer. Because we know how important it is for students to completely understand instructions when practicing yoga, weʼve introduced classes in English and Spanish.”

Telephone: +36/30 552-3070, email: pest@aumjoga.hu, website: www.pest.aumjoga.hu Budapest Yoga is all about connecting English-speaking yogis, whether visiting or living in the city. Classes range from prenatal to yin yoga.

Telephone: +36/20 257-6151, email: info@jogakozpont.hu, website: www.budapestyoga.com The Atma Center offers Ashtanga and something called Hot Agni Yoga. One of the longest established studios in Budapest, it also provides accredited teacher training.

Telephone: +36/30 951-3107, email: info@atmacenter.hu, website: www.atmacenter.hu YogaHome, near Nyugati railway station, prides itself on offering a warm, welcoming and relaxing environment.

Telephone: +36/20 973-7583, email: info@yogahome.hu, website: www.yogahome.hu 37˚ centigrade warms up your muscles so they’re super-flexible and helps you flush toxins from the skin. Others are not so sure it’s good for you. If you decide to try hot yoga, be prepared for a deeply challenging experience. Make sure you know where the door is.

Kundalini yoga is unlike any other form. It gets its name from the spiritual energy or life force located at the base of the spine, traditionally imagined as a coiled-up serpent. Kundalini yoga

is a blend of Tantric theories, Sikh mantras and yogic poses, held for a few minutes while regulating your breathing. Serious practitioners get to the point where they can be in a posture for as long as 30 minutes. Kundalini devotees wear white and sometimes Sikh-style turbans, which can make the experience of walking into a class for the first time feel a bit strange. But it’s a very powerful form of yoga that leaves you feeling incredibly relaxed.

Ganapati is a yoga studio that focuses on mixing the spiritual benefits of yoga with a wide range of classes. There’s even a class called “Office Yoga” that is designed to be done in your lunchbreak.

Website: www.ganapati.hu Amrita Jógaközpont is a highly regarded specialist Iyengar studio.

Telephone: +36/20 555-4167, email: info@amritajoga.hu, website: www.amritajoga.hu Bikram Yoga Center: be brave!

Telephone: +36/1 328-0774, email: info@bikram.hu, website: www.bikram.hu

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Olaszrizling ups the ante

When I started writing this column for the Budapest Business Journal some 15 years ago, I never would have imagined that the then humbler-thanthee Olaszrizling grape could pull in the kind of crowd that it did at the Olaszrizling Grand Tasting held at the Corinthia Hotel Budapest on October 8.

ROB SMYTH

While it may have appeared a big ask to devote one’s palate to this supposed journeyman of a grape for a whole day, many tasters were up for more when the shutters came crashing down at 10 p.m. on the showpiece event of Olaszrizling ADVERTISEMENT

Celebrating Olaszrizling October in Budapest.

October – a whole month dedicated to Hungary’s most widely planted white wine grape. Olaszrizling’s position as Hungary’s number one white wine grape may be under threat from the

more refined and fashionable Furmint – which is being planted across the land at breakneck speed – but on its day, panCentral European Olaszrizling can hold its own with the best of local talent.

While the grape isn’t planted at all in Furmint’s Tokaj fortress, and Furmint is only finding its way into Olaszrizling’s orbit via the aforementioned frenzy of planting, the tiny but sacred Somló Hill is perhaps the only place where a true comparison of Hungary’s two leading grapes can be made. Olaszrizling is second only to the Juhfark grape from the volcanic basalt of Somló Hill, while Furmint is fourth in line in terms of the quality of the wine, according to Somlói Vandor Pince’s Tamás Kis. “Juhfark delivers the most exciting and true expression of Somló, but Olaszrizling has lots of faces and can produce great wine in good vintages,” he says, adding that although he loves Furmint, Hárslevelű takes third place of the Somló podium.

Somlói Vándor’s 2015 is indeed a wine of two faces – with half of the grapes coming from a north-facing vineyard and the other half from a south-facing one. While you might expect the grapes from the

cooler north-facing plot to reach maturity quicker than their southern siblings, the opposite was in fact true in 2015. In what was a very warm vintage, the grapes from the north-facing slope were picked rather early on September 3, while the extreme heat on the sun-drenched southern slope actually led to the grapes shutting down and temporarily ceasing the ripening process – to be harvested much later on October 4.

Round and layered The resulting wine was fermented in stainless steel but from natural yeasts, and then aged in oak. While it’s still very young, it has everything in the right place, being full-bodied, balanced, round and layered with a rich texture and good acidity, and is indeed anything but two-faced. Overall, 2015 is an excellent vintage in Hungary for dry whites, one in which everything came together and happened at the right time, as opposed to 2014 when everything that could go wrong did go wrong – including lots of fungal infection in the form of powdery mildew. Nevertheless, those winemakers who carefully weeded out the

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Budapest Business Journal | October 14 – October 27, 2016

owned by the Laposa family on three Badacsony basalt mesas (Badacsony, Csobánc and Szent György-hegy) and Somló Hill.

Texture and depth

The crowd enjoying the Olaszrizling Grand Tasting at the Corinthia Hotel Budapest. inferior grapes and took a loss of quantity on the chin succeeded in making some excellent Olaszrizling. Somlói Vándor’s 2014 Olaszrizling has more pointed acidity than 2015, yet it is also creamy and concentrated.

Olaszrizling comes alive in the volcanic soils with which certain Hungarian wine regions are blessed. In these prized soils, so highly sought in the world of wine, the grape can capture the structure-building acidity it often lacks, enabling winemakers to make really complex and quite concentrated wine that strikes an impressive balance between intensity and elegance.

Not only is Olaszrizling particularly expressive in the basalt soils of Somló, it also excels on and around the northern shore of Lake Balaton in the Badacsony and Balaton-felvidék regions, where the moderating influence of Central Europe’s largest lake can bring a soft fruitiness to supplement the salinity (supposedly) originating from the soil that contrasts to Somló’s edgier character. Laposa 4hegy Olaszrizling 2015 actually puts both regions into the bottle to dramatic effect with sublime and fresh peachy fruit delightfully fleshing out the waxy, nutty texture. It hails from Olaszrizling plots

Olaszrizling typically exudes almond, floral (the mignonette or reseda flower), green apple, pear, lemon and vegetal notes – the latter being fine when restrained. Káli Kövek Rezeda 2015 from Balaton-felvidék, which also has some prized limestone to complement the basalt, packs all these notes into the bottle. It comes from grapes from four vineyards: Fekete hegy, Hegyestű, Tagyon hegy and Szent György-hegy, and is made only from the pure free run juice of the grapes pressed under their own weight. It was fermented and aged for eight months in a mix of 225- and 500-liter barrels of various ages, with the oak beautifully integrated and barely detectable, but it does bring welcome texture and depth.

Other excellent north Balaton Olaszrizling comes from the mixed soils of Balatonfüred-Csopak and the 2015 vintage has provided prime conditions to bring single vineyard bottlings to the table. Look out for exciting offerings from Figula, Szent Donát, Jásdi and Homola in the coming months. Note that the wines at the latter are made by Tokaj talent Attila Homonna. Not from a single vineyard but already on the market and drinking deliciously from the region are Béla és Bandi and Gellavilla’s 2015s.

Other hotspots for Olaszrizling in

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Overall, 2015 is an excellent vintage in Hungary for dry whites, one in which everything came together and happened at the right time, as opposed to 2014, when everything that could go wrong did go wrong.

Hungary include Eger and Mátra in the country’s north east with their lightcolored volcanic rhyolite tufa soils. Lajos Gál is a master with the grape and grows his in pristine vineyards in Egerszólát and serves to remind us that Eger is every bit as much a white wine as red wine region. My best buy of the year has got to be Molnár és Fiai Olaszrizling 2015 (Mátra), which costs just HUF 1,000 from the cellar and is from young vines on Sár-hegy. On tasting it earlier this spring, although impressed, I thought it might not burn bright past summer. However, it’s still in great shape.

Made only in tanks with no ageing in oak, this wine has complex floral aromas of orange blossom alongside green apple, lime, a hint of apple cider, orange peel and a hint of a vegetal note. The palate has good body and finishes with a refreshing twist of lime and lime zest on the finish. The 4 g/l of residual sugar provides a soft landing but it stops just short of heading in a sweet direction thanks to the refreshing acidity.

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An elegantly informal culinary journey

Once a secret favorite of the local expat community and well-informed tourists, St. Andrea Wine & Gourmet Bar has become a must-visit eatery in town if you are into a perfectly harmonized, Gault & Milleau-certified culinary journey where wines from the award-winning St. Andrea winery crown the experience.

Your place is relatively new, but it reached full capacity in a matter of months. How did that happen?

In a way this is still a new place, but on the other hand it is old enough that the opening hype alone can’t carry the day. Up to 70% of our guests are from abroad, but that ratio was even higher, up to 90%, when the restaurant opened one-and-a-half

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years ago. Tourists learn about us from TripAdvisor, but the local expat community also discovered the place fast. Of course, social media helps spread the word.

The name of the place stems from the winery in Egerszalók, which was awarded “Winery of the Year” in 2014 and 2015 by Borigo Magazine. So the bar was set high, as the gastronomy had to match the quality of the wine.

The idea was to strengthen the St. Andrea brand by setting up a gourmet wine bar and restaurant. In fact, our selection is made up exclusively of St. Andrea wines. Some people find it a bit unusual, but there have never been complaints about it, partly because we offer more than 50 different kinds to choose from. Furthermore, certain types of St. Andrea wines are available only here.

This implies that you need to know a thing or two about wines,

I learned a lot by having become member of a wine club ten years ago where once a month thematic gatherings take place. This knowledge was also a factor when I was chosen to be chef by owner Attila Kovács.

Speaking of thematic evenings, women are more than welcome at St. Andrea for a monthly special event.

Our program “Women and Wine” is a ladies-only gathering that hosts around 20 guests once a month. It is telling that the event fills up within one or two days. It provides a great opportunity for women to get to know different wines together, while they can enjoy the company of a sommelier and other professionals such styling consultants, psychologists or other renowned specialists of a given field.

According to restaurant guide Gault & Millau, you were the man of the year 2016 in Hungary and your place was

awarded 15 points out of a maximum 20, giving you two toques, which means an “outstandingly good and creative kitchen”. Are you ready for a Michelin star?

We are doing our job; we are always fully booked which means the guests feel great, and that is all that matters at this stage. It is a great pleasure for us if we hear people are spreading the word about how great their culinary experience was with us. Of course, we would be happy with a Michelin star, who wouldn’t? But as long as we don’t have it, we look at the positive aspect; this way I have more freedom to do what I please in terms experimenting.

The pressure to comply with the strict Michelin protocol does not tie my hands.

What are the plans for the mid-term at the St. Andrea Wine & Gourmet Bar? This is a very informal, yet elegant place with live music every evening. We wish to maintain the highest quality, make our current clientele even more committed and engage new guests. Manager Miklós Lizsicsár does a fabulous job in that regard. He believes in the “two hearts, one beat” concept whereby the kitchen and the service team are harmonized to perfection, which guarantees customer satisfaction. His work contributes highly to making our goal come true, which is to be taken into account among the best places in town in the long run.

St. Andrea Wine & Gourmet Bar H-1055 Budapest, Bajcsy-Zsilinszky út 78., Tel: +36 (1) 269 0130, www.standreaborbar.hu

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OVERALL OCCUPANCY RATE OF ABOUT 90%

SUPERB LOCATIONS ON BUDA AND PEST SIDE

Blue Cube River Estates

Maros Utca BC

Twin Office Center Pódium City Center

7 OFFICE BUILDINGS AND HOTEL MARRIOTT BUDAPEST

NEARLY 100,000 m² OF LETTABLE SPACE

THE RIGHT PROPERTY AT THE RIGHT PLACE

Hotel Marriott Budapest Buda Center

S IMMO APM Hungary Kft. 1051 Budapest, Bajcsy-Zsilinszky út 12.

Tel.: (+36 1) 429 50 50 Fax: (+36 1) 429 50 55 office@simmoag.hu

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