Budapest Business Journal

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Budapest Business Journal

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〉PAGE 11-26

VOL. 18, NUMBER 09

I MAY 7, 2010 – MAY 20, 2010

5.25% the new, record low base rate of Hungary's central bank 〉PAGE 8

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

A CHANGE IN POWER

9 771216 730005

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What you need to know about the in-coming government. See pages 4-7 and editorial on page 31

BUSINESS Ashes rain down on growth

BUSINESS Crisis improves financial habits

TRENDS Mobile growth now only in 3G

Growth is a sensitive issue everywhere at the moment, but it is especially so in Hungary, where the several day halt in air traffic caused billions of expected revenue to disappear. Airlines and hotels are, however, hopeful that they will be able to recoup the losses, provided that nothing else happens. 〉PAGE 10

Many Hungarians now have personal experience with the risks of foreign currency mortgages in times of financial turmoil, and it seems many of them have learned their lesson. Household investment into safer funds has risen while one of the leading providers of expensive consumer credit is withdrawing from the country. 〉PAGE 9

Now that mobile voice services have come to the end of their decade-long growth spurt, operators are reaching for new engines of growth. Fortunately for them, demand for mobile internet services is picking up, with subscriptions growing by almost 80% in the past year. 〉PAGE 8

LIFE

POLITICS

Hungary set to read ebooks Hungarian book publishers have decided to make 2010 the year of the ebook. Many big players are rolling out ebooks and ebookstores. Now they are placing their wagers regarding what platform will be successful – some have bet on the iPad while others are developing their own devices. 〉PAGE 27

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2 NEWS

Budapest Business Journal | May  – May 

Hungary had a €373 million trade surplus

NEWS in brief

in February 2010, up from a January surplus of €290 million and a €296 million surplus a year earlier, and down a slight €1 million from the first reading.

FUEL PRICES REACH NEW PEAK The price of gasoline and diesel hit a record high. Wholesale petrol and diesel prices were raised

by HUF 4 and HUF 8 per liter, respectively, to about HUF 341/l for petrol and HUF 321/l for diesel.

The historic high marks the latest peak in a trend that started in January. Over the course of the past five months, gasoline and diesel prices have risen HUF 24/l and HUF 27/l, respectively.

ECONOMY

Number of new cars plunges The number of new cars put on the road in Hungary plunged 44% Simor seeks reconciliation to 4,260 in March from the same National Bank of Hungary (MNB) month a year earlier, data compiled governor András Simor has of- by the Hungarian vehicle importers fered cooperation with Hungary’s association, MGE, and DataHouse incoming Fidesz government. This shows. The number of new cars has been seen as a peace offering put on the road in January-March after he was harshly criticized by slipped 55% to 10,210, MGE said top Fidesz officials for once own- earlier. Part of the reason for the big ing a company in Cyprus. Party drop was a high base, MGE said. In chief Viktor Orbán said the central the first third of 2009, dealers ofbank should not be a “shelter for fered buyers big discounts to reduce offshore knights,” and deputy party stocks. MGE sees new car sales startpresident Zoltán Pokorni said Si- ing to rise again from June. mor should resign.

Compensation for power firms New deficit target 4.5%–6.5% The European Commission (EC) apHungary’s general government proved aid scheme by the Hungarian deficit could be between 4.5% state to compensate power companies and 6.5% of GDP this year, Györ- for “certain costs” resulting from the gy Matolcsy, the economy min- termination of long-term power purister elect said. Matolcsy added chase agreements. In June 2008, the that some taxes could be cut this EC issued a directive that ended longyear. A review of the economy by term power purchase agreements in a fact-finding commission led by Hungary. But the EC said last week Mihály Varga will be presented that the companies could be compenin mid-June, and a more precise sated for “stranded costs,” that is costs action plan could be established that cannot be recouped from investthen, he said. ments in assets that have become uneconomical because of the termination Consumers take forint-loans of the long-term agreements.

The value of new forint-based consumer loans signed by Hungarian Property index falls further banks in March reached the highest The Budapest Property Market Index, level since before the crisis, a National compiled by economic think tank GKI Bank of Hungary report shows. The and trade journal Ingatlan és Befektetés, value of new HUF-based consumer fell to -32.2 points in April from -29.2 loans reached HUF 20.8 billion in points in January, GKI head László March, up from HUF 17.2 billion in Akar said. The index measures supply the previous month and HUF 14.4 and demand on the market, as well as billion 12 months earlier. The aver- market players’ plans and expectations. age rate on the loans, weighted for the It remains, however, above the hissize of contract, was 16.26% in March, torical low of -33.4 points, measured down from 17.32% in February and in July 2009. The index peaked at -10 points in July 2008.

20.98% one year earlier.

NUMBERS

in the news HUF

25

bln

the amount Budapest will spend this year to repave roads and refurbish bridges and overpasses.

825,000 debtors listed on the blacklist of Hungarian banks (BAR) at the end of March, up a staggering 170,000 (26%) from a year ago.

POLITICS

WORLD

Slota sees armed conflict Slovak radical politician Jan Slota has called Viktor Orbán a neo-fascist, and the head of the Jobbik party, Gábor Vona, a neo-Nazi. The head of the SNS party, known for his strong anti-Hungarian rhetoric, said that although Hungary’s economy is in ruins, its population and its political elite still dream about revising national borders. Slota recently envisioned that, within months, an armed conflict could develop between the two countries as bilateral tensions escalate.

Greece to get record bailout European finance ministers triggered a record €110 billion ($147 billion) bailout for debt-stricken Greece after Athens committed itself to years of painful austerity. In exchange for what is by far the largest bailout ever assembled for a country, Prime Minister George Papandreou announced further spending cuts and tax increases totaling €30 billion over three years, on top of tough measures already taken.

New Civil Code delayed Parts of the new Civil Code will not come into effect on May 1 following a Constitutional Court decision, news site Index.hu reported. The Court found the preparation time – when jurists and courts would be able to get acquainted with the new regulations – to be “extremely short.”

The code would have been implemented in two steps: on May 1, 2010 and then on January 1, 2011.

Socialists want free BKV Socialist party MSzP wants to make public transport in Budapest free by 2013 to people who have been residents of the capital for at least four years, as well as for those studying in the city, the party’s candidate for mayor, Csaba Horváth, said at a May 1 celebration in Budapest. The scheme could be financed with revenue from parking fees and by creating “green zones” in the city for which motorists would have to pay a congestion charge to use, generating HUF 50 billion (€186.89 million), Horváth added.

Ukraine gets IMF-backed budget Ukraine’s parliament has approved the 2010 state budget with a deficit of 5.3% of GDP, opening the way for the next payment of the country’s IMF loan.

“This budget will allow us to move forward on our way to reforms,” Finance Minister Fedir Yaroshenko told a smoke-filled parliament after opposition and government members fought, hurled eggs at each other and tossed smoke bombs over a law that ratified an agreement allowing Russia to keep its Black Sea Fleet in the port of Sevastopol until at least 2042.

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NEWS 3

Budapest Business Journal | May  – May 

COMPANY news

OTP CEO Sándor Csányi plans to build a new meat processing plant in Szeged for more than HUF 10 billion, as part of a greenfield investment. Csányi, also owner of Pick Szeged and Bonafarm, among others, hopes that the new investment will consolidate the market position of his companies.

Low-cost airline Ryanair is to discontinue its flights from Budapest’s Ferihegy in- FGSz Földgázszállító, the gas delivery unit of Hungary’s MOL, will start daily ternational airport from October, after failing to reach agreement with Budapest trade in gas and delivery capacity together with clearinghouse Keler, on July 1. The Airport on a reduction of airport fees. Budapest Airport says it is not concerned, trade will take place on a platform called the Daily Gas and Capacity Trade Market asserting that the vacancy left by Ryanair will soon be filled by competitors.

(NFKP). Keler was picked to clear the trades in a public procurement procedure.

VODAFONE COUNTS SZIGET MINUTES

Mobile telecom firm Vodafone Magyarország has signed a sponsorship agreement with Hungary's biggest summer festival, Sziget, alongside Dreher beer. Vodafone will contribute a range of mobilebased services including minutebased tickets paid via mobile phone and a selection of innovations that can be tested on the Sziget audience. News portal Index reported the agreement is for three years, but the sum agreed upon was not disclosed.

EST Media Group Asset Management (EMG) has sold radiocafe Kft to an unknown new company, KV Barat Asset Management. The deal aims to eliminate an illegal conflict of interest with NeoFM, also majority-owned by the company. (KV is coffee in Hungarian slang, while Barat could easily be transcribed as barát, possibly meaning “a friend of Café”.)

Alternative energy company PannErgy said its unit, Szentlőrinci Geotermia, will receive a HUF 442 million (€1.64 million) grant from the National Development Agency. The listed company started signing contracts with local councils in 2007 to establish joint ventures to explore and harness geothermal energy possibilities.

Richter Gedeon Nyrt has raised its stake in OAO Protek, a Russian drug wholesaler and retailer to 5%. Hungary’s leading drug maker snapped up 7.5 million of its strategic partner’s shares in a private offering for $26.5 million, boosting its share in the company by 1%. The deal was part of an initial public offering (IPO) that raised Protek $400 million, Russia’s largest IPO since 2007.

Hungarian regional development and urbanistics nonprofit company VÁTI is building a HUF 567 million model cooperative farm powered by alternative energy resources. The model is being supported by funding from the European Economic Area and the Norwegian Financing Mechanism. The project is expected to be completed in April 2011.

Infocenter.hu has acquired a significant new stake in Hungarian tv-channel RTL-Klub. It bought IKO Media Holding, which has a 31% share of MRTL, the company operating the channel. Infocenter.hu also bought 50% stakes in program producers IKO Műsorgyártó and Videovox Production Műsorgyártó, as well as 50% of IKO Sales House. Infocenter was owned by development minister-to-be Tamás Fellegi up unti a day before the transactions, three days before the second round in the elections. Infocenter also owns the publisher of Heti Válasz.

Asseco Central Europe, the Slovakian unit of multinational software company Asseco Group, has purchased a 60% stake in Hungarian healthcare IT company GlobeNet for €7.8 million, one of the largest value buyouts in the Hungarian tech sector in the recent years.

Israeli drug maker TEVA has inaugurated a HUF 3 billion tablet plant at its base in the Hungarian city of Debrecen. Construction of the factory was supported with a HUF 460 million grant from the state and the European Union. The plant, which will also deal with R&D, can turn out two billion tablets annually.

German engineering giant Robert Bosch will begin transferring production of alternators for luxury cars from Wales to the company’s plants in Hungary’s competition office GVH has fined mobile telecommunications compaMiskolc and Hatvan from August, business daily Napi Gazdaság reported. ny Vodafone Magyarország HUF 40 million for unfair business practices. GVH Bosch expects to complete the transfer of production from the company’s said Vodafone had advertised a game in which clients could win summer trips or a summer home on Lake Balaton in text messages. But the company failed to tell plant in Cardiff by August 2011. clients they had to register to have any chance of winning.

Tokaji wine will be available in Costco after state-owned wine trader Tokaj Kereskedőház signed a ten-year agreement with the large US membership Hungary’s HBW Express Bank has transformed into a community savings bank warehouse chain to sell Hungary’s famous dessert wine. Under the agreement, called MagNet Hungarian Civic Bank. The bank will lend with an interest margin of three percentage points and it will pay 10% of its annual profits to a Costco will buy 250,000 bottles a year. foundation or civil organization to be decided by its depositors. Spanish peer Caja Hungary’s top bank has acquired another printing business: OTP Nyrt bought Navarra, a pioneer in “civic banking,” owns 30% of MagNet. the remaining 89.9% of printing company Monopost Kft, which it already held a minority stake in. OTP did not disclose the purchase price. This is the German-owned Beurer-Hungaria has inaugurated a new 650 square meter exsecond investment it has made into the ailing printing/paper industry after pansion of its plant in Veszprém, completed at a cost of HUF 75 million (€278,000).

The plant, which makes heating pads and electric blankets, will now also produce buying Monorent Kft last year. the heating elements for its products.

Hungarian national carrier Malév will get a HUF 2.16 billion loan from its owners to ease liquidity problems, under a decision by the national asset Industrial ventilation company Weger Hungária is expanding the metal-workmanagement council NVT, the national asset management company MNV ing unit at its base in Jászárokszállás with a HUF 252 million European Unionsaid. The aim of the loan is to ensure sufficient funds for the airline in the supported investment. Weger has won a HUF 99 million grant from EU regional short term, MNV stressed. development funding for the investment.

Envirochem Kft has opened its first fully automatic filling station in Du- Hungarian construction company Szeviép has filed for bankruptcy pronaújváros. The company already has 11 discount filling stations through tection, the regional daily Délmagyarország reported. The procedure will a long-term contract signed with the Metro hypermarket chain. Enviro- give Szeviép, which is involved as a consortium member in the expansion chem plans to build 50–100 filling stations in the next five-ten years, the of the tram system in Szeged and the construction of the M43 motorway, business daily Világgazdaság wrote.

90 days to consolidate its finances.

WINEMAKER ISSUES WINE BONDS Gál Pincészet in Hungary’s famous Eger wine-growing region is issuing “wine bonds” with a face value of HUF 100,000 apiece that allow bearers to buy up to HUF 150,000 of product, vintner Tibor Gál Jr told MTI. The winery needs money to get through the current period and do not want to take out bank loans or bring in venture capital. Gál Pincészet faced financial difficulties after the death of founder Tibor Gál in 2005, and after unsuccessfully trying to consolidate the firm for five years, the family’s share in Gálbor-Gia Kft, the company owning the cellars, was handed over to creditors. The new owners of Gálbor-GIA blocked the family’s cellars, thus making operation impossible, Gál Jr said. Now the family is seeking means of independent operation, with the local notary ordering the unfreezing of part of the family’s assets.

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4 POLITICS

Budapest Business Journal | May  – May 

Voters give Fidesz full control

MEET THE 11 KEY MEMBERS OF THE NEW CABINET

INDEPENDENT

263

59

47

16

1 Distribution of seats in Parliament

Fidesz lived up to expectations and made a clean sweep of the second election round. The first statements of the conservative goverment-in-waiting signify large changes to come.

BBJ GERGŐ RÁCZ

The two rounds of the 2010 elections could not have been any more different. On April 11, politicians and voters still had a sense of anticipation. The day was made especially memorable by the questionable level of competence displayed by the national election committee in handling the matter of those voting away from their homes. On April 25, turnout was low, the results were known almost immediately and the whole thing was over by about 9 p.m.

The first round’s overwhelming Fidesz victory focused all attention in the run-off on the very few districts, three, exactly, where the party’s individual candidate could be defeated. In the end, József Tóth and Tibor Szanyi of the outgoing socialist MSzP were the only ones in their party to retain their individual mandates, while an independent candidate, Oszkár Molnár won in Edelény, receiving support from the radical Jobbik. The green LMP, the surprise of the first round, was unable to win any further mandates, even though MSzP candidates withdrew from the second round in their favor in four constituencies. Jobbik also fell short of what the party’s management was hoping for, and failed to overcome Fidesz in any contested districts.

Speaking to his followers after it was evident that Fidesz had secured two-thirds of House seats, Orbán said that a “revolution took place in the polling booths.” In the speech, worded far more strongly than his address delivered two weeks before, he said “there is no such thing as changing the system, the only way is to tear it down and build anew.”

TIME TO REINVENT Now, MSzP will have to deal with the magnitude of the defeat that it suffered and start over from scratch. Party chairwoman Ildikó Lendvai stepped down from her post and the entire executive of the party tendered their resignation. Shortly after, prime ministerial candidate Attila Mesterházy was named the caucus leader. The move is a testimonial that in reinventing itself, MSzP would hand over its affairs to a new generation.

A makeover, which could involve renaming, has become inevitable since even the party’s members seem to relate to the MSzP brand as a mark

of shame. Szanyi ran his campaign for the second round making as little reference as possible to his party affiliation. The same applies for Csaba Molnár, the socialist nominee for Budapest mayor at the municipal elections in the autumn. Political experts also pointed out that even politicians who were popular in their own right lost seats because of their party’s reputation.

In the meantime, LMP has the far more pleasant but no less challenging task of establishing itself as a force in Parliament and finding its place on the national political map by clarifying its goals and solidifying its voter base. The party greatly owes its success to protest votes from a mostly urban voter-base that rejected both the MSzP and Fidesz, and a large group of liberals who had nobody else to vote for with SzDSz paralyzed by infighting.

The radical Jobbik party seemed to be greatly disappointed that it failed to meet its goal of outperforming the socialists. Nonetheless, the party – viewed with concern from abroad as a dangerous nationalist element – will still be the third biggest actor in the next parliamentary cycle. After the second round, chairman Gábor Vona said Jobbik would take every action to secure the realization of its political program, in and out of Parliament.

TIME TO RESTRUCTURE Shortly after the final results, Viktor Orbán introduced his government lineup to the press, showing that significant changes are coming in the operation of the state, but one that clearly reflects the operating principles of Fidesz. (For the list of ministers, see article to the right.)

Orbán made it very clear that, while being a “big picture” leader, the authoritarian control he has of his party will also very much apply to his government. The handling of day-to-day affairs and the coordination of government activities will fall to Tibor Navracsics, who is to become a deputy prime minister. The other deputy prime minister post will go to Zsolt Semjén of KDNP, Fidesz’s running mate from the start of the election campaign. The establishment of this new post in the government is a clear sign that Fidesz is not reluctant to make changes that are only possible with a two-thirds majority, as this is one such change.

President László Sólyom said he would summon the inaugural session of the new Parliament for the earliest date possible, May 14, at which time he would recommend Orbán be appointed prime minister. And that may well prove Sólyom’s last memorable act in office, seeing that Parliament will be required to appoint a new president by July 6, and insiders say that Fidesz has no intention of renewing the incumbent’s mandate. ■

TAMÁS FELLEGI

GYÖRGY MATOLCSY

JÁNOS MARTONYI

VIKTOR ORBÁN PRIME MINISTER

first got into Parliament in 1994. Between 1995 and 1997, he was deputy caucus leader, Regarded as a “charismatic” leader, Orbán then, with the dissolving of the KDNP cauhas been known for his firebrand rheto- cus, he continued as an independent MP for ric for the last two decades. He didn’t hes- a while, before joining the MDF caucus. itate to lead the crowds out into the streets every once in a while in opposition, but he TIBOR NAVRACSICS also seems capable of catering to moderates. DEPUTY PRIME MINISTER IN CHARGE OF Of course, as he demonstrated in his election PUBLIC ADMINISTRATION AND JUSTICE campaign, sometimes keeping mum is the In the new set-up, Navracsics’s role is conbest way to do it. sidered similar to a managing director’s.

Orbán, 47, was among the founders of Upon his appointment, he said his job the Alliance of Young Democrats (Fidesz) would be to “separate the civil service from in March 1988. He has been a Member politics, reintroducing high quality proof Parliament since April 1990. Between fessional service to state administration”.

1993 and 2000, he was president of Fidesz, He said that Hungary needs an “effective, and took back the leadership role again in cheap and disciplined state”.

2003 after his government stepped down. Navracsics, 44, has been chief of staff to the He led the first Fidesz government from Fidesz president since 2003, and has led the 1998 until 2002. Orbán has been vice pres- party caucus since 2006. He will head the new ident of the European People’s Party since Ministry of Public Administration and Jus2000 and also vice president of the Centrist tice, which will combine the functions of the Democrat International. old Prime Minister’s Office, Justice Ministry and Local Government Ministry. In addition, ZSOLT SEMJÉN Navracsics will also be deputy prime minisGENERAL DEPUTY PRIME MINISTER ter. Orbán told reporters that Navracsics will Semjén, considered a political advocate be given new leadership powers, for which for the Catholic church, said that one of modifications to Hungary’s constitution will his main goals will be granting dual citi- be required. zenship to ethnic Hungarians living in the MIHÁLY VARGA neighboring countries.

Semjén, 48, has been the president of the STATE SECRETARY TO HEAD THE PRIME Christian Democratic People’s Party (KDNP) MINISTER’S OFFICE since 2003 and head of the party’s parliamen- Varga, currently leading an investigative tary caucus since 2006. He was deputy state committee aimed at revealing the true state secretary at the Ministry of National Cultural of the budget and the economy, will lead the Heritage in the first Fidesz-government. He new institution replacing the current Prime

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POLITICS 5

Budapest Business Journal | May  – May 

ZSOLT SEMJÉN

MIKLÓS RÉTHELYI SÁNDOR FAZEKAS

VIKTOR ORBÁN TIBOR NAVRACSICS

CSABA HENDE SÁNDOR PINTÉR

Photo: Csaba Pelsőczy / Fidesz.hu

MIHÁLY VARGA

Minister’s Office which, according to Orbán, will operate with 50% fewer staff.

Varga, 45, held the post of finance minister for one and a half years in the previous Fidesz government. Before his appointment back then, he was political state secretary in the Finance Ministry. He was vice president of Fidesz between 1994 and 2003, and was named vice president in charge of economic policy in 2005. He has been a Member of the Parliament since 1990.

SÁNDOR PINTÉR INTERIOR MINISTER Pintér, 62, headed the Ministry of the Interior during the first Fidesz government between 1998 and 2002. Orbán explained his current appointment by saying that he needs someone who “is experienced and knows how the police department operates inside-out.” Indeed, Pintér was named chief of the Budapest police in 1991, and later, chief of the national police, a position that he held for five years. He entered politics after retiring from this position. Pintér has had interests in various security firms since 2002. He has been the owner and chairman of Civil Biztonsági Szolgálat since 2003.

He also teamed up with former Budapest chief of police Péter Gergényi in a travel agency.

Because of this, and after the Eclipse case was brought to light (Pintér’s daughter, project leader at IT company Eclipse, was named in connection with the firm’s tax fraud and money laundering case), it became uncertain whether Orbán would give Pintér a post in the new government. Before his current appointment, Pintér sold his security firm.

JÁNOS MARTONYI FOREIGN MINISTER “We have to win back our inner strength and we will be more able of representing our interests credibly abroad,” said Martonyi after his name was announced as Hungary’s next foreign minister.

Martonyi, 66, served in the same role during the first Fidesz era, but his political career goes back further than that. Before the change of regime in Hungary, he was named chief department head in the Ministry of Trade in 1985, and was deputy minister in the cabinet of Miklós Németh in 1989, later to be named government commissioner in charge of privatization. He also became a member of the Hungarian Socialist Workers’ Party in the very same year. Between 1991 and 1994, he was state secretary at the Foreign Ministry. He became a member of the Fidesz party in 2003.

GYÖRGY MATOLCSY ECONOMY MINISTER In the previous Fidesz cabinet, Matolcsy was the architect of the Széchenyi Plan, a major state subsidy program to boost growth mainly in the construction and tourism sectors, and to help small businesses. He is also known as co-author of both the 1998 and the 2010 Fidesz economic programs.

Matolcsy, 55, succeeded Attila Chikán in the position of economy minister in 1999, prior to which he was economic advisor to the Fidesz government. He was state secretary in the Antall government in 1990, and also served as chief advisor to PM József Antall.

In 2002, after Fidesz lost the elections to the MSzP, Matolcsy was named director of the Növekedéskutató Intézet research institute,

and also became an MP in the same year. He joined Fidesz in 2003.

Heti Válasz and radio station Lánchíd. Fellegi recently sold his stake in Infocenter.hu.

MIKLÓS RÉTHELYI NATIONAL RESOURCES MINISTER

CSABA HENDE DEFENSE MINISTER

Réthelyi, 71, will head the new ministry which will combine healthcare, education, cultural and sports affairs. His main task will be “saving the Hungarian healthcare system and rebuilding social security,” said Orbán upon announcing his appointment. Réthelyi is internationally known in academic circles for his cerebrospinal research. He was the Rector Magnificus at Semmelweis University between 1991 and 1995. He is director of the Szentágothai János Neuroscience Postgraduate School at Semmelweis University, and Chairman of the Foundation for Hungarian Higher Education and Research. Réthelyi has worked and taught in Ukraine, Paris and the US. He was department head at the Ministry of Health in 1990 and at the Education Ministry in 1998–1999.

Hende’s name is mainly associated with the “civic circles” of Fidesz: Orbán asked him to lead the work of the circles in 2002. This time around, his task as defense minister includes making sure that members of the armed forces are not “constant characters in criminal chronicles.”

Hende, 50, spent more than three years at the Ministry of Defense in the Antall government as a cabinet secretary. He joined the Hungarian Democratic Forum (MDF) party in 1988. He also served as a political state secretary at the Justice Ministry from 1998 until 2002. In 2001, he participated in the preparation of the Fidesz-MDF election alliance. He left MDF in 2004 and a few months later joined the Szombathely organization of Fidesz. He has been a member of parliament’s national security committee since April 2009.

TAMÁS FELLEGI NATIONAL DEVELOPMENT MINISTER Fellegi, 54, has been given the task of “protecting public assets from the oligarchs,” Orbán said. His ties to the next PM go back to 1993, when Fellegi was Orbán’s political advisor. Later he was managing director of communications and political advisory company Euroatlantic Kft. He also worked as deputy CEO responsible for government relations at Matáv, the legal predecessor of Magyar Telekom. In 2009, together with Danish DEFAP Enterprises, he founded a media investment company Infocenter.hu, which is the 100% owner of the publisher of

SÁNDOR FAZEKAS AGRICULTURE MINISTER The new agriculture minister is assigned with “getting rural Hungary back on its feet.” Fazekas, 46, a lawyer by profession, has been mayor of Karcag for the past 20 years, was a Member of Parliament between 1998 and 2002, and returned to the legislature in 2006. He joined Fidesz in 1989. He was elected co-president of the Hungarian Alliance of Local Governments in 2009. He has been a member of parliament’s committee of human rights, minorities, civil and religious matters. PF

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6 POLITICS

Budapest Business Journal | May  – May 

New roles in Cabinet In preparing to take office, the Fidesz government has said little more about its plans than was already common knowledge through the press. It seems that the public will have to wait until the new cabinet is formed to learn the full picture.

appointed state secretary in charge of the Chancellery. Its findings are expected to be released by mid-June.

TAXING ISSUES

Perhaps the biggest expectation of the general public in electing Fidesz is whether it would be capable of making good on its promise of reducing burdens. To that end, future Economy Minister György Matolcsy said the new government would introBBJ PATRICIA FISCHER duce family taxation as soon as next year, which would reduce the expenses of famiThe mantra of the past eight years of “imme- lies with children. Matolcsy also stated that, diate and radical tax cuts” was quickly hopefully, certain taxes could be reduced stripped of its adjectives as the elections within the year. As a long-term target, he approached and only the promise of tax cuts wants families with at least three children remains, though neither the timing, nor the to receive tax exemption, citing positive extent has been clearly communicated by the examples from France.

Businesses and employees alike were anxsoon-to-be governing party.

Between the two rounds of the elections, ious before the elections about the future Fidesz MP László Kövér claimed that the of simplified or special taxes for certain new government would not reduce taxes and trades, such as EVA and ekho. As reassursocial contributions this year. But just as the ance, Orbán said that – rather than scrapBudapest Business Journal was going to print, ping these special flat-rate taxes – the new future PM Viktor Orbán announced tax cuts government would extend their scope. The from July 1, without disclosing details. aim is to create a simple and easy system of As predicted by several experts and taxation for private entrepreneurs with litobservers, Orbán told reporters that the tle turnover, he said. new cabinet must first become fully aware In direct relation to the planned optimiof the true state of the economy, which he zation measures, Matolcsy, who assumes repeatedly claimed was manipulated by the office with a job no smaller than to “get Hunoutgoing socialist government. To this end, gary back on its feet”, also emphasized the Fidesz will commence its reign by setting necessity of reducing red tape, and improvup an investigative committee trusted with ing employment rates. As for the latter, he compiling a thorough report on the state of stressed the importance of part-time- and the budget and the economy. The panel is telework, as well as the increasing role of to be headed by Mihály Varga, who will be public work programs.

KEY PLANS OF THE SECOND ORBÁN GOVERNMENT ■ Gradual tax cuts starting in 2010 ■ Complete revision of the civil service

and the launch of “super ministries” ■ Granting ethnic Hungarians dual citizenship ■ Introducing family-based taxation ■ Investigating corruption cases and the events of 2006

CONCENTRATING AUTHORITY

foreign interests. He claimed to have a plan for settling the takeover battle between MOL and Orbán has made it clear that he wants to see Russia’s Surgutneftegaz, but divulged no further structural changes in the civil service sector. He details. Answering a question on whether the reportedly plans to submit a proposal to change Hungarian state would be willing to buy out the the Constitution to reduce the size of Parlia- Russian company’s contested state in MOL, he ment, effective 2014. said the new government will strive to protect Immediate changes to be made to the Hungary’s strategically important companies structure of government include the creation and will hold talks with the Russians soon in of so-called “super ministries,” eight of them order to resolve the unfortunate situation. in total. (See more about the new Cabinet on page 4.) One of them will be the Human SETTLING THE SCORE Resources Ministry, which will pull in issues previously assigned to separate institutions.

Amongst his earliest statements in office, Healthcare, education, culture, sport and Orbán highlighted an issue that has long been social affairs are to be focused in one hand – on the top of the Fidesz voter-base’s agenda: or rather in the hands of the several state sec- the thorough investigation of events on Octoretaries in the new ministry. ber 23, 2006. On Hungary’s national holiday Orbán is also eliminating the post of finance that year, a group of hostile anti-government minister: financial and budgetary issues will protesters clashed with riot police, who purbelong to one of the state secretariats of the sued them to the venue of the Fidesz comnew National Economy Ministry, headed by memoration rally. Peaceful protesters and riotMatolcsy. The new minister intends to better ers mingled and were in many cases treated utilize EU funds. He aims to boost the subsidy with equal degrees of violence. share of small- and medium-size enterprises to Fidesz decried the response at the time more than 50% from the current 20%. Matol- as an outrageous example of police brucsy also wants to reinstate the Széchenyi Plan tality, directly ordered by the government. introduced by the previous Fidesz-adminis- “Everyone who had a role in this affair will tration. He wants to boost research and devel- have to answer for their actions,” Orbán opment activity and innovation thus improv- said. He promised to establish a committee ing Hungary’s overall competitiveness. He also to explore the details of the police response said that economic development programs and the panel is to be led by former justice should receive special attention in strategic minister István Balsai. areas such as health and green sectors.

The retribution would not be limited to the Having the two-thirds power to modify Hun- law enforcement measures of a single day, but gary’s current nationality laws, the next govern- also to the outgoing governing party’s alleged ment has the issue of dual citizenship high on tampering with the working of the economy its agenda. Orbán said earlier that granting eas- and their corruption scandals. Orbán stressed ier access to citizenship to ethnic Hungarians that MSzP will be called upon to bear political beyond the borders would be among the first and – if the investigations justify it – criminal measures of the new government. responsibility for them. ■ For the time being, ethnic Hungarians can only obtain citizenship if they fulfill a set of legal criteria and pass certain tests. Refuting GREAT EXPECTATIONS concerns, future foreign minister János Martonyi said he believed granting easier access to Nearly two-thirds of Hungarians are minority Hungarians should not lead to tenhappy with the election results, says sions with Hungary’s neighbors. a recent poll conducted by Nézőpont Intézet. Unsurprisingly, Fidesz voters Martonyi said that the planned pertinent are the most satisfied: 93% of them legislation would not entail that ethnic Hunexpressed their satisfaction a week garians living in the neighboring countries after the elections, but only 19% of would automatically receive citizenship, every socialist voters said the same. More application would be evaluated on a case-bythan 50% of those queried said that case basis. He added that granting these new they expect the new government to citizens the right to vote was also a possibility, improve the country’s economic sitbut stressed it is a separate issue that is not an uation, but 40% said things will not immediate concern. change. Nearly 6% of the respondents SENSITIVE MATTERS As opposed to initial rumors, the merging of Hungary’s financial watchdog PSzÁF and the National Bank of Hungary (MNB) is not on the agenda. “It would make no sense just to resolve a personal issue,” Orbán said in a television interview. He reflected about earlier sharp criticism targeted at MNB governor András Simor for his monetary policies and his ownership of a Cyprus-based offshore company. It was speculated earlier that merging the two institutions would be the simplest way for the new government to oust Simor, who said he is determined to serve the three years left of his mandate, regardless of government pressures to resign.

Orbán also took a strong stance in another controversial matter: the protection of strategically important companies such as MOL against

think the Orbán-government will make things worse.

Major analyst houses expect the Fidesz government to pursue a stringent fiscal policy. “The two-thirds majority of parliamentary seats gained by center-right opposition party Fidesz should enable the new government to implement far-reaching administrative and fiscal reforms that require a constitutional change.

Should the government choose to implement such potentially unpopular reforms, such as reforming the municipality system and reducing the over provisioning of public services, we believe this would eventually contribute to strengthening Hungary’s public finances, and could support rating improvements over the medium term,” Standard & Poor’s said in a note.

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ECONOMY 7

Budapest Business Journal | May  – May 

Budget will see big deficit again BBJ BBJ ANALYSIS

The state of the Hungarian state budget has not been an enviable one in recent years. A runaway deficit threatened that punitative action would have to be taken by the EU. By the autumn of 2008, Hungary’s state finances were at the brink of collapse, with only a €20 billion bailout by the IMF, the EU and the World Bank saving the country from bankruptcy.

Since then, Hungary has progressed from being the “sick man” of Europe to a much more fiscally responsible country. While the real economy suffered the effects of the crisis, with GDP contracting by 6.3% last year, the budget deficit actually narrowed to 4% of GDP. 2010 could have been the first year in the black, if the incoming government were to stick to the deficit target set by the outgoing one. At the moment, Fidesz leaders complain that they cannot yet see into the “black box” that is the budget — which is strange, since the box is really an orange one. As outgoing finance minister Péter Oszkó puts it, the biggest risk in this year’s budget is the kind of economic policy the new government will follow.

For the current year, the outgoing government had set a deficit target of 3.8%, although there are

some doubts as to whether this could have been achieved. By the end of the first quarter, the deficit had reached HUF 610 billion, or 2.3% of GDP. Moreover, the shortfall is set to grow further in the first half, the period in which expenditure is proportionally higher, while revenues, which depend in great part on the economic recovery, are likely to flow into the treasury in the second half only.

Had the Bajnai government remained in office, it would have likely tried to stick to the original target, for the sake of credibility, with some further belt-tightening. However, all it would have had to show for its efforts would have been one of the lowest deficits in the EU — while its economy showed one of the largest declines.

CONSOLIDATION The in-coming Fidesz government will not have a separate finance minister, with fiscal policy to be overseen by György Matolcsy, who will head an expanded economy ministry. The minister-tobe said that the deficit could reach 4.5%–6.5% of GDP this year, and then decline gradually. Informal talks with the IMF are already underway, but naming a date for the introduction of the euro is promised only by the end of 2011, which implies a target date of 2015–2016.

The new government will likely also start its work by consolidating the budget, as is usual in Hungary after a change of government: in 2002, after the departure of the first Orbán government, the Hungarian Development Bank had to be consolidated, as the outgoing cabinet neglected to pay the bills for budget-financed developments. Four years ago, as the incumbent MSzP-SzDSz coali-

tion won the elections, leaving the dirty work for the new government was not an option, which also led to a huge deficit that year. In the last days of this year, too, most likely after the municipal elections (and with the 2011 budget already in the bag), the consolidation of state and local government-owned companies will take place, which could exceed HUF 300 billion. The debt stock of railways MÁV and Budapest transport firm BKV alone matches this sum, while a good many, Fidesz-led local governments could also submit requests for consolidation.

Incoming prime minister Viktor Orbán indicated at his first press conference following the election that he will not let local governments go bankrupt, as this would also mean the collapse of the healthcare and education institutions they own. Thus the budget deficit could reach 6%–6.5% of GDP this year, well above the original target, but not at all unique in Europe.

The Hungarian situation could be helped somewhat by the fact that the consolidation would not generate additional credit demand — as it is “just” debt assumption —, which could make the market more understanding of Hungary’s umpteenth deficit target.

A NEW DEAL The first task of the new government will have to be the renegotiation of the €20 billion IMF-EU rescue package this summer, as the current agreement expires in the autumn. Hungary needs the IMF agreement, not necessarily because of the money, but as a kind of safety net in case the air around the Hungarian economy freezes again. An IMF agreement would also reassure the market: if Brussels and Washington believe that things are going well in Hungary, many will buy Hungarian bonds, since both the IMF and the EU review the operations of the Hungarian budget quarterly down to the last cent. The market could not ask for tighter scrutiny in light of the Greek debacle.

The question is no longer the extent of the deficit this year, but what kind of economic path the country will settle on in the next four years. The 80% debt-to-GDP ratio is excessively high compared with the region, and has to be reduced, for which a balanced budget is needed. This could eventually lead the country to euro adoption — provided there still is a Eurozone in 2016. ■

Source: KSH, MNB, Finance Ministry

The new government is likely to clean the slate in terms of budget policy this year. This could halt Hungary’s convergence process, but set it on the path to the euro.

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8 TRENDS

Budapest Business Journal | May  – May 

MONETARY POLICY

TOURISM

EMPLOYMENT

TELECOM

Dwindling interest

Rock of ages

Difficult start

Upward mobility

The central bank continues pushing interest rates to a historical low.

Sziget organizers are targeting a new demographic — your parents.

Young graduates are hitting the job market, boosting unemployment.

As mobile market saturates, internet emerges as new growth engine.

5.25% 5,000 26.2% 79.3% Hungarian base rate from April 27

years of music experience at new Stargarden festival

unemployment among 20–24-year-olds

y/y growth in mobile internet subscriptions

The National Bank of Hungary (MNB) cut the base rate by another 25 basis points to a new low of 5.25% at its meeting in late April.

Experts believe that a similar cut could come in May, in order to prevent the Hungarian currency from strengthening too much.

Several analysts and market players believe that the new government will put pressure on the central bank to cut the base rate even further to stimulate the lagging economy. The members of the Monetary Council of the MNB, which decides on the base rate, might be susceptible to this argument, as some of them favored a larger, 50 basis point cut in April, the governor of the central bank noted after announcing the decision. The MNB also indicated that it might intervene directly on the market in order to limit the strengthening of the forint.

As far as further rate cuts are concerned, experts pointed out that this mostly depends on how the market reacts to the new government’s fiscal policy plans, and if this will affect the country’s high debt and slow growth. The most sensitive issue might be inflation, which is rather high at the moment, fueled by double-digit rises in gas and other government- or local governmentregulated utility and transportation prices.

However, the Monetary Council said that it expects inflation to decrease as demanddriven inflationary pressure is lagging.

Ferenc Karvalits, deputy governor of the MNB, indicated it is difficult to predict when the rate-cutting cycle will end. Experts say that there is some risk, however, that the central bank will go further than market expectations, and that 4.75% could be the lower limit for the base rate. The possibility of external shocks might also affect the future steps of global central banks.

The biggest current threat seems to be the financial crisis in Greece, which could be repeated in Portugal, or even in much larger Spain, and which might take away the risk appetite of investors. KT

The organizers of the Sziget festival, Hungary’s biggest entertainment and tourism event, are looking to branch out this year, targeting not just the usual crowd of 20-to40-somethings, but their parents as well.

Following up on the success of the Day of Hungarian Rock last year, which featured classic Hungarian bands from 1970s and 80s, the baby-boomer generation will get a separate music festival called Stargarden with domestic and international headliners.

Hungarian stars such as Omega, Skorpio and Karthago will compete with Kool & the Gang, the Animals and Deep Purple at the two-day festival on June 4–5. The performers will have a combined 5,000 years of experience in music, and their combined age is estimated to be more than 6,000. While the average age of Stargarden visitors is as yet unknown, they are expected to spend more than Sziget visitors, and will be able to buy tickets for seats, as opposed to standing on the usual dusty grass of the island. Tickets will be €55 per day, less than the €75–80 a performer would charge for each concert.

Of Sziget visitors, 45% are between 18 and 22, and 37% are between 23 and 39, with university graduates being overrepresented, according to a study by organizer Sziget Iroda and consulting firm KPMG. They are also better off than most of their generation. Sziget founder Károly Gerendai said they try to keep ticket prices at a level that is still affordable for Hungarians, with last year’s daily prices of €40–45, still below the €75 international festivals usually charge. Organizers also made the event shorter last year, to bring it in line with European standards of around 4–5 days as opposed to the earlier week, and to help retain the event’s profitability.

Meanwhile, Sziget Iroda will maintain focus on the prime target group of the younger generation, with summer festivals such as the Sopron-based VOLT, and the highly successful Balaton Sound. These will hold you until Sziget opens its gates on August 11. KT

With businesses still squeezed by the economic crisis, unemployment in Hungary continued to rise in the first quarter of 2010, approaching the half-million mark. The unemployment rate averaged 11.8% in January–March, compared to 9.7% a year earlier. But layoffs are only one half of the story — data show the ranks of the unemployed are also swelled by fresh graduates unable to land their first job.

Figures by Hungary’s Central Statistical Office (KSH) reveal that the number of employed persons in Hungary fell by 45,000 to 3.72 million over the past year, its lowest level since Q3 1998. At the same time, the number of unemployed increased by 95,000.

The difference is explained by 50,000 persons added to the labor force over the past year — basically, new graduates minus retirees.

Obviously, not all graduates start their carreers on the dole. But the young are the worst hit by the shrinking job market. Of the 95,000 increase in the number of jobless persons in the past 12 months, 28,000 are in the 25–29 age bracket. It is also among this group where the unemployment rate increased the most, by 4.9 percentage points to 16.2%. Unemployment was even higher, at 26.2%, among fresh high school or bachelor-level college graduates.

Statistics also show that young men have more difficulty finding jobs — or are laid off more frequently — than their female counterparts. While unemployment rates among 20-somethings showed little difference along gender lines a year ago, in Q1 this year male unemployment among 20–24-yearolds jumped to 28.8%, while female unemployment remained below 23%.

There are also large regional differences in unemployment. Of the 95,000 new unemployed persons, the Central Hungary region (which includes Budapest) contributed 46,000. Being a young college-educated man in Budapest once guaranteed success — alas, it may no longer do so. BSz

History may not always repeat itself, but Hungary’s telecom history certainly appears to be doing so. Just as fixed-line telephony peaked in the late 1990s and the internet — first dial-up, then ADSL — became its main growth area, mobile telephone subscriptions now also appear to have reached a plateau, and mobile internet is where operators are experiencing the fastest growth.

According to data from the National Communications Authority (NHH), there were 11.88 million mobile subscriptions in Hungary at the end of March. While this translates into an impressive penetration rate of 118.7% (that is 1.187 mobile phones for each Hungarian), the number of subscriptions has actually fallen. Mobile penetration peaked at 121.8% at end-2008, and has been slipping since.

The market shares of Hungary’s three mobile operators have also long been solidified. Focus has clearly shifted to the mobile internet market, where there were 972,000 subscriptions at end-March, up 1.3% since February but rising almost 80% over the past year. Growth is likely to continue, especially as investments in mobile broadband networks make the service increasingly available to all. Second-generation GPRS networks (which guarantee download speeds of 22–30 kbps) now cover more than 95% of the country, but 3G networks (with guaranteed download speeds of 120–150 kbps) are still accessible to only 61%–65% of the population, and cover just 36%–45% of Hungary’s surface area, suggesting more growth potential.

Interestingly, the mobile internet market is already showing signs of maturity.

Market shares have remained remarkably stable over the past year (49%–50% for T-Mobile and 24%–26% for Pannon and Vodafone), while average data traffic per user has stabilized at 1.5 GB per month — no doubt influenced by popular subscription packages limiting fully functional use at 2 GB per month. BSz

AIM LOW

Hungary’s base rate Source: MNB

YOUNG AGAIN

Age of Sziget visitors in 2009 Source: Sziget Iroda Kft

ENTRY LEVEL

Unemployed persons by age group (thousand), Q1 2010 Source: KSH

A NEW BATTLE

Total mobile and mobile internet market shares, March Source: NHH

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BUSINESS 9

Budapest Business Journal | May  – May 

Educating Hungary in finance If there is one positive outcome of the current financial crisis, it is that the development of financial awareness can no longer be ignored. Hungarians lack knowledge about the increasingly complex financial products available and have only a sketchy understanding of risks, although they are becoming a little more cautious in the wake of the crisis.

BBJ GABRIELLA LOVAS

Financial awareness is much more than simply a knowledge of financial definitions, facts and figures. It is primarily an attitude by individuals to take charge of their personal finances and to live within their means. This includes the ability to keep household budgets, start savings plans, manage debt and make investment decisions for retirement and their children’s education. Most households are now facing serious financial difficulties caused by a decline in real wages, rising unemployment and indebtedness, primarily in foreign currencies. As a result, consumers of financial products are becoming more cautious with their finances, although that is still a far cry from being truly financially aware.

SAVINGS PLANS Ilona, a 54-year-old engineer, has accounts at several banks and has been keeping an eye on the conditions available for bank deposits for many years. When her deposits mature at one bank, she transfers all her savings online to the bank that happens to be offering the most favorable interest on deposits at the time. Sometimes, she makes deposits through the accounts of her partner or daughter. Her typical deposit period is two to three months. She has never invested in any other type of savings instrument before, but now, with interest rates freefalling in Hungary, she is weighing other options, such as government securities. Being highly risk averse, she would never consider investing in riskier assets.

Banks paid an average 5.39% interest on fixed deposits in March, down from 5.73% in February and well below the 9.55% rate paid a year earlier. Due to the less attractive interest rates caused by the declining base rate, forint-denominated bank deposits continued to decrease in the first quarter of 2010, the central bank MNB told the Budapest Business Journal.

On the other hand, confidence in investment funds is soaring, driven by earlier market gains and the introduction of new fund types combined with long-term investment accounts. In March, total assets of investment funds increased by another 5.8% to HUF 3.34 trillion. Investors, mostly households, poured HUF 102 billion into investment funds last month, and recorded an additional HUF 82 billion in price gains.

Other savings instruments are not doing so well, as the crisis has resulted in a decrease in both the ability and the willingness to save due to a drop in household incomes, the MNB pointed out. Pre-crisis savings have also gone through a meltdown.

CRUNCH TIME Banks and households have both become more cautious regarding loans, the MNB said. The volume of consumer loans provided by Hungarian banks fell by 1.2% in 2009 due to unfavorable developments in both supply and demand. The MNB welcomed the tightening of retail loan conditions, such as the increase in the value of loan collaterals demanded.

Household consumption dropped significantly due to lower incomes and the uncertain economic outlook. This primarily affected purchases of durables, especially cars. The debt-to-consumption ratio turned negative at the second half of 2009, meaning that consumption is being financed only from household income and savings rather than debt.

Banks virtually stopped lending in Swiss francs and switched to euro-based loans with higher interest rates, the MNB noted.

Forint-based loan products became more popular, with their proportion reaching 56% of all new outlays in March. The value of new HUF-based consumer loans reached HUF 20.8 billion in March, the highest monthly level since July 2008. The amount was up from HUF 17.2 billion in the previous month and HUF 14.4 billion 12 months earlier.

Mortgage-based loans still comprise the majority of new contracts. A new development in this segment was the introduction of low-priced forint-based mortgages at the end of last year.

IMPROVING AWARENESS Improving financial literacy is a challenge for every country, requiring the contribution of the government, public authorities and the private sector. In Hungary, the MNB plays a leading role in raising public awareness and explaining the responsibility of individuals in managing their finances.

The MNB, together with the Banking Association and the Student Loan Center, set up a Foundation for Financial Awareness in 2008. Strategic partners of the foundation include the competition authority GVH, financial watchdog PSzÁF and the Budapest Stock Exchange.

PSzÁF has a section on its website dedicated to assisting consumers of financial products. Besides a description of available products, PSzÁF provides programs to help make informed choices, a household budget calculator, lists of financial market players and other useful information.

Commercial banks are making extra efforts as well, besides providing customers with the description of their products and services. Last June, Budapest Bank launched a campaign called MOST! to provide financial information not only to its customers, but to the general public as well. The bank has also set up a foundation to support financial education in Hungary. Its latest program, which is called “Banking on Women,” aims to increase financial awareness among the fairer sex. K&H Bank, in turn, is focusing on the financial education of young people by distributing a DVD of its own financial cartoon for kids, as well as other educational material at schools. ■

CONSUMER LOAN MARKET GIANT WITHDRAWS Credigen Bank, the consumer finance unit of France’s Sofinco, a member of the Crédit Agricole Consumer Finance group, announced that it will gradually exit the Hungarian market due to its unsatisfactory profit-making ability. Crédit Agricole is a leader in France’s banking market and the fourth largest bank in the world.

Credigen was ranked second in Hungary’s consumer loan market, following market leader Magyar Cetelem Bank, a member of the BNP Paribas group. Other major players in this market are Hungary’s biggest bank OTP — which is reportedly interested in buying Credigen — and GE’s Budapest Bank (BB). Credigen, which had contracts with retail chains such as Tesco, Media Markt and Saturn, has registered capital of HUF 2,411 billion.

CEO Csaba Fekete, who was appointed in March 2008, stepped down due to a disagreement with the bank’s owners over strategic issues, and former CFO Katalin Deák was appointed acting CEO. PSzÁF has not yet been officially notified of Credigen’s exit from the market.

The market is still stagnating, as customers are much more cautious with loans, OTP told the BBJ. A permanent increase in retail sales is a precondition of an upturn in this segment, the bank noted.

“We have experienced a slight decrease, but our customers can still enjoy our ’free loan’ promotion,” BB said. Clients are willing to take out loans in order to be able to acquire consumer electronic goods or furniture sooner than their current income level would allow, the bank added.

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10 BUSINESS

Budapest Business Journal | May  – May 

Volcano spews ashes on growth The volcanic eruption in Iceland and the subsequent ash cloud caused unexpected troubles for the Hungarian economy. Industries such as transport and manufacturing apparently suffered more losses than air travel, while others were even able to reap some profits on the event.

BBJ ANIKÓ JÓRI-MOLNÁR

The eruption of one small volcano called Eyjafjallajökull caused widespread chaos outside of its homeland, puffing massive amounts of ash across European airspace. Surprisingly, its effect on the Hungarian economy has not been so significant — at least not in the industries you would think of first.

as a 24-hour airspace closure eventually lasted four days, with some flight restrictions remainTIME TRAVEL ing in place even longer. Altogether, there were more than 1,500 flights cancelled and tens of Of course, when ash is present in the airspace in thousands of passengers had to be dealt with, large quantities, it means bad news for the airlines according to Budapest Airport Zrt. Travelers and airports first. Air travel literally stopped on didn’t have to wait around for long though, as April 16 when the product of the volcanic erup- the airlines promptly re-booked their tickets tion was picked up by the wind, threatening to or reimbursed their money. In exceptional cirstall the engines of any aircraft that might try to fly cumstances such as this, however, passengers through it, even as far from Iceland as Budapest. are not entitled to the additional financial comBudapest Airport reacted quickly by clos- pensation that would be the case when delays ing Ferihegy, but what was initially planned or cancellations are the fault of the airline.

[ PARTNER CONTENT ]

B

PRE-SEASON TROUBLE

Following a dismal year in 2009 thanks to the economic crisis, the situation of domestic tourism is not too rosy, to say the least. Business travel has dropped about 8%, with many conferences being cancelled, hitting tourism revenue plans significantly. Individual travel habits have also been changing, with decisions on whether to travel being made at the last minute only which, again, is negative for hotels’ bottom lines.

However, the picture is not as bad as some forecasts has feared (which put the contraction as high as 20%), due to the flexible responses of Hungarian enterprises, the Budapest Business Journal learned from CEO Iván Róna of Magyar Turizmus Zrt. The organization believes that the volcano would have caused real trouble only if the eruption had continued. The really important business meetings were held anyway at a later date, and only a few city-breakers refrained from traveling.

As for the other side of the picture, there were hardly any foreign tourists that were unable to return their home countries — it seems that Hunthe school. Students cooked their national gary is easy to leave from. dishes for sale to visitors (with a Sushi corner, “This meant less unexpected extra revenues for a Sweet corner and the like). hotels, which were on the other hand ‘liberated’ of Black Jack and Test Your Strength games around 2% of their total annual revenues — HUF also challenged the kids during the day.

1.3 billion for the no-show guests, plus their spendThe top attraction of the Spring Festival ing, resulting altogether in an amount of HUF 2.6 was the Fashion Show. Students in three categories competed for the “most creative“ billion–HUF 2.7 billion,” János Erdei, chairman of the Hungarian Association of Hotels (HAH) costumes. There were some wonderful told the BBJ. Budapest was most affected, as 85% prizes available for the winners. Many parof the no-show guests would have stayed there. ents also participated in the event, actively The average occupancy rate in the capital’s hotels buying the international food and small dropped by 20% in this period, Erdei added. gifts prepared by kids.

Hotel owners and managers tried to make the best of a bad situation and followed the recommendations of the HAH to automatically refund deposits and to charge guests that were unable to leave the usual amount for prolonging their stay. Although lines of transport have now been restored, people will surely fly less for a while, and business travelers are switching to videoconferencing in ever larger numbers.

Due to it still being the low season, the number of Hungarians marooned in other countries

Spring Festival at Britannica International School

ritannica International School was founded in 1994 by a group of distinguished educationalists. Britannica opened its doors as the first English secondary school in Budapest with full accreditation from the Hungarian Ministry of Education and the UK Qualifications and Curriculum Authority. Since then, student and staff numbers have grown steadily.

Every year in April, Britannica International School organizes its Spring Festival.

On April 24 young and old alike created and played amusing games in the garden of

Still, airlines lost quite a lot of money during those few days in which they were grounded.

At Malév, losses definitely exceeded HUF 1 billion, and could reach as much as HUF 3 billion, communications manager Ádám Hegedüs told the BBJ. But even the airline itself admits that, if all goes well for the rest of the year, it might be able to make up for the negative effects of the volcanic eruption.

was relatively low, a couple dozen mainly in Syria, Tunisia and Marocco, according to the Association of Hungarian Travel Agents and Tour Operators (MUISZ). “Our recent quick survey showed that losses among our members regarding the volcano are not so relevant, meaning a total of about €30,000,” said Gabriella Molnár, president of the association. Altogether ten, agents reported definite losses – one of them said it had two conference cancellations, while another paid to take care of travellers stuck abroad.

Travel agents are not required to reimburse the total losses of their clients, such as extra costs for additional days’ lodgings, only the fees paid. However, these agencies did pay the lodging and transportation costs of their clients.

RESTRUCTURED LOGISTICS The notion that the eruption caused more psychological damage than anything concrete is also applicable to the logistics sector. “It would have been much worse if it lasted for three weeks, because no stocks could last that long,” Hungarian Logistics Association head Zoltán Doór said. More importantly, he added, the eruption has added to the catastrophe of 9/11 and to other unexpected events, which have started a re-evaluation process in the logistics industry as well. There are four areas that have been especially affected.

The first is the connection between the participants of the supply chain: the length of the chain should be shortened to increase effectiveness.

The second is that there is more emphasis on the situation of inventories, as the previous efforts for minimization have started to change slowly. It used to be common for the producers to finance the storage of stocks, but now this is slowly changing, putting the liability on the service provider side.

Nowadays it is not unusual to get a discount for being more flexible: if shipping is required to happen in a wider time frame instead of at a strict date, the prices for the service can be lower. The areas of security, environmental protection and energy are also some of the most discussed topics that are now in a process of transformation.

If there have been any winners amidst the confusion caused by Eyjafjallajökull, they can surely be found among the railway and bus companies and car rental firms. During the period the airspace was closed, MÁV and Volán’s ticket offices worked longer hours and extra vehicles were put into service in order to meet increased demand. However, to date, no information has been confirmed about any profit they made. ■

BBJ OFFICE SPECIAL REPORT

The players on the other office market B-Category office owners

▶ PAGE 14

▶▶ The renaissance of cheaper, older offices ▶▶ Design: at home in the office ▶▶ Developers look ahead ▶▶ Market analysis: Renegotiation still rules ▶▶ Office property leasing news ▶▶ LIST: Largest A category offices in greater Budapest ▶▶ NEW LIST: Largest B category offices in Budapest ▶▶ Developers enter facility management ▶▶ NEW LIST: Facility management companies

〉PAGE 14 〉PAGE 16 〉PAGE 17 〉PAGE 18 〉PAGE 18 〉PAGE 19 〉PAGE 23 〉PAGE 24 〉PAGE 25

PROPERTY Are you looking for a new office to rent? If not, you probably should be: now is the time to take advantage of low prices and high flexibility from landlords. We give you six tips on how to do so. ▶▶ article continues on next page

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12 SPECIAL REPORT

Budapest Business Journal | May  – May 

How to... ...CHOOSE A REAL ESTATE AGENCY

...USE EU FUNDS FOR YOUR OFFICE

While the crisis has hurt developers, it has created a tenants’ market where supply substantially outweighs demand. For the potential office leaser or buyer, there are enough real estate agents and vacant properties to allow shopping around. Many businesses are realizing that, by using more than one agent, they can benchmark one rate against another and get a better offer. There are several international players with a strong presence in Hungary, all experienced in dealing with the legal concerns of foreign buyers. There are many smaller domestic players, quite a few of which claim to have “off-market” properties that are not listed with the big names. As with many other services, it is usually a good idea to choose a partner whose size is about the same as yours, that is, an agency for whom your deal will be big enough to be important, but small enough that it will not overload it. The cheapest is usually not the cheapest in the long run – an agency with ultra-low prices is likely to get you a property which is cheap to get and expensive to maintain. And, of course, don’t hesitate to use two or even three to get the best deal, and don’t hesitate to browse.

Office development as a standalone category is not eligible for EU funding, but there are site development possibilities in every region of the country, which could include the development of service units as well. Within the confines of the New Hungary Development Plan, there is an opening for applications in each of the seven regions, with an end of June deadline for applicants. Small- and mediumsized enterprises are particularly targeted, and companies can receive HUF 10 million–HUF 100 million in subsidies. One level higher, enterprises are also invited to apply for subsidies in R&D, namely for investments in innovation and technology parks. Until the end of the year, projects worth HUF 1 billion–HUF 5 billion in the seven so-called pole cities (Debrecen, Győr, Miskolc, Pécs, Szeged, Székesfehérvár and Veszprém) can also apply for funds. The amount of the subsidy can reach up to 50% of the total budget spent on infrastructure and real estate development for R&D and innovation activities.

…BUY PROPERTY FOR A COMPANY Buying property through the acquisition of the shares of a company which owns it is a little different than buying, for instance, a home. In fact, it might be considered simpler since a company registered in Hungary is a domestic legal entity regardless of the nationality of its owners or managing directors. Starting 2010, the regulations on paying duties after the acquisition of the shares of companies owning real estate assets have changed. The revisions were introduced in an effort to strike down the earlier practice of selling and buying not the assets themselves, but the companies that were the owners, a type of transaction that was previously duty exempt. While this benefit was scrapped to ensure that the state gets its dues, the earlier 10% duty was also significantly reduced. The new rules stipulate that if a buyer acquires a 75% stake of a company that has real estate assets, then it must pay duties on the properties in the portfolio. The new owner must pay 4% of the asset’s value up to a threshold of HUF 1 billion and 2% of the remaining amount. However, the total of payable duties was maximized at HUF 200 million per real estate.

WWW.BBJ.HU

SPECIAL REPORT 13

Budapest Business Journal | May  – May 

[ EXPERT OPINION ] ...RENT SPACES FOR A FEW DESKS For many micro and small businesses, it is not financially viable to own or even rent an office. Many SMEs miss out on being part of an efficient work environment and having a reputable business address simply because of their size. Companies like Regus, FlexiOffice, FirstClients and City Office have sought to give SMEs the opportunity to work within a large office without actually having to lease all of it.

They offer a desk rental service whereby small firms can rent a few desks and share in the communal facilities offered by large commercial office spaces. The benefits are three-fold: no capital investment is required, the space is ‘ready-made’ for immediate work, and extra space is available when required – and the company’s address is thus in a prestigious area. Potential tenants should be aware of the costs before signing a lease agreement because there are few specific ‘desk rental’ agencies on the market and thus little scope for comparison. Where possible, consult other tenants in the building and remember that at this time, the high vacancy rate should favor the tenant.

...KNOW A GOOD CONTRACT Office rental is not only one of the largest expenses that businesses have to face month after month, but also a long-term engagement. Therefore, obtaining an extensive yet flexible rental contract is essential. The assistance of a real estate lawyer is always necessary. Owners are often willing to lower their prices or to offer some extras to win clients, but they do not want to say goodbye to their profits.

This contradiction may lead them to hide some landmines in the contract that will only be noticed by a specialist lawyer. It has become clear in the recent past that the world can turn upside down from one day to another. In such unpredictable times, entering a three-five-year definite term rental contract might not be a wise thing to do. Subsequent difficulties can be avoided if extra points are inserted into the contract, such as extending it for three years, but allowing for the possibility of quitting or reducing office size after a given, shorter period.

How to negotiate a good lease agreement?

A

lthough the end of the crisis is still hard to project, the signs of an upturn and the revival of the leasing market cannot be overlooked. The situation is especially fortunate for tenants looking for new office premises, not only because the prices are low and supply is sufficient, but also due to the fact that the previous “market standards” of the terms and conditions of lease agreements can now be renegotiated.

DR. ANDRÁS CSAPÓ GIDE LOYRETTE NOUEL BUDAPEST

WHAT ARE THE “MARKET STANDARDS” The term “market standards” is very often and successfully used by landlords and their advisors in negotiations with prospective tenants. This magic word was a useful tool in the denial of several requests of the tenants, such as the capping of the service charge, termination rights of the tenant and further “unwanted” requests.

However the reference to market standards was not merely a bluff. In times of limited supply and great demand, the owners of the properties, especially foreign funds, used an incontestable set of standard terms in their lease agreements. These standard terms could only be avoided by tenants leasing large premises in less popular locations.

THE “OLD” STANDARD TERMS

...PAY LESS TAX ON YOUR OFFICE As on most of the goods in Hungary, there is a 25% value added tax (VAT) on the renting of offices, as well as the energy bills that are charged to the tenant. However, these expenses are easy to recover and the rules of reclaiming VAT are surprisingly simple. First of all, the bills must be addressed to the name of the renting company (and not its owner) that is entitled to reclaim VAT, which means that it cannot be a tax-exempt organization. If the rental space is used only for business activity, the value added tax on the rental as well as on the energy bills is completely reclaimable.

In the case that some non-VAT registered activity is also being conducted, the VAT of the energy bills can still be reclaimed, but only to a degree.

The standardized lease agreements were fully based on a “triple net” basis. This means that all costs associated with the ownership and operation of the property (taxes, insurance, maintenance of the entire building, management of the tenants) were distributed amongst and borne exclusively by the tenants of the building.

The standard terms also meant that the rights and obligation of the parties were clearly set in favor of the landlord. For example the tenant’s right for extraordinary termination in the case of a breach by the landlord was limited to the narrowest extent possible. Also, actions to secure the obligations of the landlord in the lease agreement ended very often unsuccessful.

THE TIMES HAVE CHANGED As an unexpected result of the crisis, companies looking to lease new office premises may benefit from the fact that times of limited demand have weakened the dominance of the previous market standards.

Therefore, besides exploiting the depressed rent levels and the wide supply, prospective tenants should also take special care over the other terms of the lease agreements.

www.gide.com

PLANNING AND NEGOTIATING We should state that a mid-size tenant in an average location might not seriously challenge the triple-net nature of the lease agreement. Nevertheless, smart and foresighted negotiation of the nonfinancial terms of the lease agreement could still bear heavy advantages.

The first step before commencing negotiation with the landlord is the thorough consideration of the capabilities, objectives and main characteristics of the tenant’s business.

Being aware of their own needs, potential tenants have a greater chance to negotiate lease terms that fully suits them.

For example, using the usual incentives the landlords operate with, a tenant may negotiate more advantageous financial terms by asking for: (i) lower rent, (ii) a longer rent free period and (iii) a larger fit out contribution. The above incentives will vary in accordance with the financial plans of the tenant, depending on whether it wants to invest more at the commencement of the lease term and to pay less in the future, or vise versa.

Also, if growth of the business is envisaged, an expansion area should be designated. The tenant should request an “option” right or a “right of first refusal” on these premises. Based on the option right, the tenant can rent the expansion area at anytime by its unilateral decision. In the case of the right of first refusal, this possibility may only be exercised if a third party is intending to lease the expansion area. On the other hand, if a shrinking of the business is more likely, a “break option” should be agreed concerning designated parts of the premises.

Following the same principal, other terms of the lease agreement should be negotiated accordingly. Such previous but now renegotiable market standards items are, among others: the limitation of service charge items such as the management fee; the obligations of the landlord and the consequences of their breach; penalties if the premises are not fit for use; and the extraordinary termination rights of the tenant.

OUR ADVICE In summary, our advice to the future tenants is to plan thoroughly and negotiate bravely. But never forget that popular buildings with a good location are still able to push trough the well-proven standards.

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

WWW.BBJ.HU

14 SPECIAL REPORT

Budapest Business Journal | May  – May 

To B or not to B – for many, it is

At first glance, the only appeal that B-category offices have compared to shiny, newlybuilt, centrally located A-category projects, is their price. As a rule, rent is significantly lower in these buildings, which — on a market as price-sensitive as Hungary — is in itself a strong competitive edge. Yet for many clients, B-class offices have other upsides that make them even more attractive.

At the top of the list is flexibility. Tenancy here is much shorter, approximately one year, as opposed to the usual minimum of three years in A-tier offices. Renting an office in a B-block also means fewer compromises, as landlords are more open to tenants’ needs. While in an Aclass building you are obliged to use the same facilities as the rest of the tenants, in a B you don’t have to use air-conditioning if you don’t want to. Likewise, if you have special needs such as an alarm system, you can have it without the consent of the others. “Clients wishing to upgrade

ALFA INGATLANCSOPORT’S CSEPEL OFFICE, KŐBERKI OFFICE AND VICTOR HUGO OFFICE BUILDINGS (LEFT TO RIGHT)

their rental can contract us to do the job. are also permitted as long as the characIn this case, the costs will be included in teristics of the building allow for it. the rent. They can also have it done by any Although rent is definitely more favorable in company they choose,” said Tamás Sellyey, the B segment, it can be more difficult to colsales director of the Indotek Group, the lect; there are many tenants in payment arrears. biggest player on market of B-category “Problematic clients are often given a number of commercial properties. Space alterations payment options. Still, if we have to terminate

the agreement and they need to leave, we have no difficulty in filling the space,” Sellyey said. So much so that they are not forced to attract clients from A-category establishments, as companies that need to downgrade will come to them.

Fluctuation in the B segment is fairly low, at around 10%–15% annually.

[ PROMOTIONAL FEATURE ]

UPC Business for the business UPC, which has established itself as a household name, now aims to become a popular choice for business subscribers as well. The telecom service provider is offering first-class quality to companies that are interested in saving costs, simplicity and integrated telecom services.

C

ommunication for companies is a CUSTOMER CARE “We are a separate unit within UPC, we are basic need nowadays. Every company is communicating every minute, small team, so we can handle our customers’ wishes fast,” Juhász says. Which is a big one way or another. Instant messagadvantage for someone who knows that ing is the norm. Wasting messages information systems work steadfastly until or delaying their arrival can cost opportunities, they at one point, which usually comes as and thus money. Communication is as imporabruptly as a volcanic eruption, mysteriously tant inside the office as it is among the combreak down. When smooth operations at pany and its partners. your company come to an abrupt halt, you UPC is on the spot. It is present in most of need a firm hand. Juhász promises that UPC the office buildings in Budapest. It uses an Business team can provide this helping hand. optical fiber network that is the ultimate “it” “Every customer we have has a key accounthing in telecommunications. Optical fiber is tant,“ Juhász explains their approach to custhe most advanced form available in commutomers. nication networks. It speeds up the process of data flow and enhances network capacIP-BASED CALLING ity. It eliminates bottleneck effects, which is the weakness of popular services. It is a nightUPC is introducing its internet-based promare if you are in an office building that has tocol system for business customers this year. many data-starved companies, who suffocate you with their huge demand for bits and bytes, IP-based systems can synchronize all of the communication systems a company uses. The limiting your possibilities for fast communiOutlook system in workers’ laptops and comcation. In the world of optical fiber, you can puters, and the Post-It notes used by the recepsay goodbye to these situations, as here your tionists recording incoming calls can all be choice of bandwidth depends on your needs, directed into a common system that stores, disnot on your provider’s capabilities. tributes and makes the information available “We have a 120 megabit per second (Mbps) service,” says László Juhász, manager of UPC Business, instantly to everyone. With portable gadgets, they are reducing the time a message takes adding that just a few years ago, 5 Mbps was the to reach its recipient, buying time for faster or norm. “With the quality of our networks, we are more competent decision making. on top in Hungary,” says Juhász proudly.

IP-based systems do not require additional investments, says Juhász. They can easily be added to existing networks and facilities. One system can connect 12 analog telephone lines, with their distribution among the workforce freely variable. It represents the end of pre-fixed, hierarchical, rigid services. This system also replaces certain server functions. Its storage capacity is able to record an office’s information-based activities, thus saving the money spent on another server.

THINKING SMALL For HUF 8,000 or HUF 12,000, you can get 30, 60, or even 120 Mbps services, explains Juhász in answer to the question of whether the company also considers the needs of micro and small enterprises. For HUF 12,000, companies can buy trendy services for trendy hand-held gadgets from other service providers. Managing your office information flow for such a small amount is attractive, with the added services, such as email address, domain name registry and two telephone lines as extras.

Do you need a fax machine? The answer to this question breaks down among generation lines. If you need it, you were raised

Photo: Alfa Ingatlancsoport

An up to now silent, but significant tier of the office market is gaining attention in the recession. The B-category segment may well be lacking the impressive features of modern buildings, but it is living proof that price is still key when making a business decision.

in an earlier period. If you don’t, you could have problems meeting with older representatives of another, bygone period, who still use fax machines. UPC closes the gap between these two worlds by providing a service that produces fax messages without a separate fax machine.

UPC Business aims to be a player in business communications. It certainly has plenty of services to share.

WWW.BBJ.HU

SPECIAL REPORT 15

Budapest Business Journal | May  – May 

The major players on the other side of the office market

no question HIGH AND DRY

HERE TO STAY

Landlords of B-category offices thus have been relatively calm even at the peak of the crisis, and with good reason: they had little to complain about. Their tenant base was already paying less, and now it is not uncommon for companies that are more troubled by the reigning market conditions to give up their A-category offices and settle for lowergrade accommodation.

“We have not seen any major lapse in our Bcategory offices caused by the crisis. In fact, we have houses that are performing extremely well,” said Csaba Tóth, CEO of property developer BIF. Though the majority of A office tenants are typically reported to stay in that segment, the B-category office and warehousing market is set to undergo a considerable expansion. Indotek Group expects segment growth to reach 5% this year, but 2011 may well see a boom of more than 10%.

But reaching these results requires more work than before, even in the case of B-category offices. Though they reside in a lowervalue segment of the office market, tenants here are also raising their expectations. “It is very important to have regular upgrades,” Tóth said. Residents in high occupancy buildings need to be kept satisfied, while other locations can ususally benefit from the extra appeal.

“When it comes to negotiations, it always helps if the landlord can promise the prospective tenants in advance that the building is set to undergo a serious refurbishment,” he noted.

Small improvements also count. “We are installing separate meters for every office, which allows tenants to pay for the utility services that they use. They like this much better than paying a lump sum,” Tóth said.

The B segment of the market is generally accepted as being inferior in quality, but experts agree that there will always be demand for this. “Many businesses are still run from apartments, and for them, the natural step up is into a B-category office,” Tóth said. He also noted that although modern office developers are now more flexible when it comes to arranging office space to meet the needs of tenants with smaller space requirements, there are architectural limitations that exclude small businesses that may only need a few square meters.

And there will probably be plenty of future supply, despite the fact that new buildings usually fall into the A category. “There is no such thing as building a B-category office complex, just as there is no such thing as making a used car,” Sellyey said. Instead, buildings become B category over time, due in part to location and, as Tóth noted, a lack of rennovation or upgrades.

In some cases, however, a building may be in such a poor state that even improvements will not help. “There are several buildings that would be better off torn down to free up the space for a better investment,” said Géza Gyetvai, CEO of Gyetvai Fivérek Zrt. Indotek for example has acquired some buildings with the aim of demolishing them and building a new office.

However, regulations sometimes do not allow this. “There are of course success stories, but it is also common for heavily dilapidated buildings to be standing empty and unused because they were declared protected assets and nothing can be done with them,” Gyetvai said. ZsV-GR

LIST: Largest B category office buildings ▶ PAGE 23

What makes a building B Although there is no generally accepted formula to define B-category offices, there are some general features that make categorization simpler.

Office buildings on the market that were built between 1970 and 1995 usually qualify as B. These facilities are typically fitted with somewhat outdated technical infrastructure and there is also a size restraint: B office buildings are usually no bigger than 10,000 square meters.

Both major property analyst groups operating on the market, the Budapest Research Forum (BRF) and the Real Estate Research Association (RERA) have devised categorization methods of their own.

The BRF system defines B category as buildings that meet “some” of the soft and hard criteria. BRF’s hard criteria list includes, among others, modern air handling, ample dedicated

For years, the B-category market was mostly ignored by the property profession. It was considered a fragmented market with little profitability. However, some companies have been quietly accumulating stakes in older office buildings and have become formidable actors.

Indotek Group The company was founded as Kevin & Thorn Rt in 1997 to manage the assets of Colorado’s Bohemian Group of Companies along with other private investment funds and risk capital investors. Over the years, the company developed into a holding and now encompasses all aspects of the real estate market in its activities, ranging from development to management. Indotek currently controls 1.3 million square meters of B-category commercial property, which is roughly 50% of the segment’s total. Of this, 30% is office and 70% is storage space. The firm’s portfolio is divided into 80% B, 10% C and 10% A-category offices. Being the dominant player of the market, Indotek said it plans to capitalize on the financing troubles TAMÁS SELLYEY, sales director faced by its competitors, and is aiming to realize a significant portfolio expansion, looking to boost the volume of its assets by up to 50%. In particular, the company is targeting areas of Budapest where it currently has fewer interests, such as the Buda side of the city, and the Soroksári út logistics area.

Budapesti Ingatlan Budapesti Ingatlan Nyrt’s legal predecessor, Budapesti Ingatlanhasznosítási és Fejlesztési Kft began operations in 1994, after which it gradually acquired a portfolio of 13 assets.

Currently, the company owns 18 buildings, the majority of which are located in Budapest. The biggest part of the portfolio is offices, but BIF also owns parking garages, luxury residential assets and a castle hotel.

BIF has the declared ambition of running a long-term profitable business through renting out its assets, an activity that it performs in-house. It also controls a number of assets that are slated to accommodate new developments in the future.

The company’s shares are traded on the Budapest Stock Exchange.

CSABA TÓTH, CEO

Alfa Ingatlancsoport

The Austria-based property group started its Hungarian operations in 1999. Since then it has established a portfolio spanning some 91,000 square meters distributed among 11 parking and security services, while soft criteria buildings. Alfa is particularly proud of owning the Hotel Fiesta, a classicist building that include elevators, the availability of a reception is protected as a historic monument. service and a specific ceiling height.

The company is actively buying and selling assets on the market and points out that its The RERA system on the other hand stipu- operation is not driven by speculative goals but a determination to become a major player lates that a B office has to meet at least five of on the Hungarian market and stay here for the long term. Alfa’s Hungarian activities mirthe primary criteria, plus reach a minimum of ror those pursued in Austria, the Czech Republic, Slovakia and Germany, where the firm four points in the secondary criteria. Among is also targeting and upgrading B-category hubs. the primary requirements, RERA lists being In an effort to rally new tenants, the company regularly runs teaser campaigns. In the newest, which built or totally refurbished after 2000, flexible lasts until the end of May, it is offering the fifth floor of its office building in Victor Hugo utca, a partitioning and raised floors or suspended ceil- total of 400 square meters, for a bargain price of €4 per square meter. It also has a loyalty program ings. Among the secondary indicators, it high- under which tenants can save as much as an entire month’s rent. lights good visibility, openable windows, and services in the building or in the direct vicinIRENE OFFICE BLDG. ity. RERA also distinguishes based on the location of the house.

ADDRESS 1013 Budapest, Krisztina krt. 32.

According to BRF, there is presently a stock of AVAILABLE SPACE 2000 sqm 480,000 square meters of B category offices on CONTACT DTZ the market. RERA has yet to release its first stawww.ireneoffices.hu tistics for the field. ■ +36 1 269 6999 +36 30 699 0074 zsuzsanna.gyugyi@dtz.com

KEY FIGURES OF THE BUDAPEST OFFICE MARKET (Q1, 2010) A

B

Total stock (square meters) 3,024,888 Average rent (€ per square meter) 10 - 14 Vacancy 21.9%

480,000 6 - 10 30% (estimate)

Source: Budapest Research Forum, ABLON Group, Indotek

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R1E KING FO

U RO*

The modern class ‘A’ office building was built in an elegant area of Central Buda, near the Chain Bridge and Déli Railway Station. The building offers an ideal location for companies with smaller and middle sized office requirement for a reasonable price. *please contact us for further details

16 SPECIAL REPORT

WWW.BBJ.HU

Budapest Business Journal | May  – May 

Design: at home in the office As residences in Hungary increasingly give room to home offices, offices are hoping to look more like your home.

Finishing a long day at the office without a backache is the privilege of the few who are lucky enough to have a carefully designed chair worth a small fortune. The majority are confined to some ergonomically impossible sitting device. Some designers are try-

ing to heal the pain by creating adjustable and affordable office furniture.

One such example is “Balance,” a synchronous-mechanical office chair from designer István Józsa of Józsa Design. In traditional chairs, a complicated spring-system provides flexibility, while in Balance, bodyweight supports the seatback. The pressure of the seatback can be adjusted to suit the activity the user is engaged in. (In a forwardleaning position, such as when writing by hand, higher backpressure is more favorable.) Józsa thought of teleworkers too; the body remains in balance even when nearly in a horizontal position, which is mostly the luxury of those working from home.

Even though “Balance” is not commercially available yet, it is a great example in small of what 21st-century offices are expected to provide: flexibility.

Swift changes in workflow and working methods require quick adjustments. In the 1960s-80s, people did not change workplaces so often. Offices were designed for the long-term. Office space was provided according to rank: the higher the position, the bigger and brighter the office. As the concepts of workload and responsibility evolved, so did the use of office space.

In the last 15 years, open-plan offices have prevailed, facilitating teamwork. Bosses share the office with their employees.

In the 21st century, new forms of working such as teleworking or job-sharing have made even this system outdated. “During the crisis, it was not uncommon for firms to dismiss 20–30 people from an office.

Designers have to be prepared to cope with such possibilities when planning the space,” explained Balázs Lenkei, a designer at Sinus Design. Furniture also has to keep up with these changes. If the number of your meeting partners constantly changes, it is better to have a table range that works both as a single table and a configuration. To save space, use a folding workstation that you can close up like a suitcase when you’re done.

“In today’s offices, space should be organized based on the pace, frequency, and type of activities performed,” said Zita Unger, a former design manager at Kinnarps. “It is important that workers of closely linked work phases be close to each other, while the printer should be at an equal distance from everyone.”

Today, function is given full priority, and form only complements it. A place for quick informal meetings, according to Wilkhahn, a leading company in home and office furniture, includes a round table with an interactive display. It should also invite people to sit down and chat.

Interior concepts are further enhanced by colors and textures. With their material and color choice, companies convey important messages. “A large corporation wishing to radiate stability is supposed to use lasting, quality materials,” Lenkei noted. Instead of a neutral, industrial style, a friendly and homey ambience is the vogue these days. Or anything that can make you forget that you are actually working.

Google’s offices in Zurich meet this condition beautifully. The office, furnished with igloos and snowcat workstations (with penguins and a blanket of snow added for authenticity) and a meeting room in the garden with patio furniture, probably boasts the lowest number of absentees in Europe. ZsV

WWW.BBJ.HU

Budapest Business Journal | May  – May 

SPECIAL REPORT 17

Developers look ahead At long last, there is some positive news on the Hungarian property market: several projects under way have reached key stages, and new investments have been announced.

BBJ GERGŐ RÁCZ

The economic crisis severely wounded Budapest’s office market: projects were canceled or postponed left and right. Though this trend will surely not console developers as they look at their empty office buildings or suspended ventures, the scare of the past year and a half has, in fact, started a recovery on the market.

Most analyzes found that the first quarter of 2010 saw a vacancy rate on the modern office market of around 20%. But the combination of slumping supply coupled with the anxiously awaited rebound of the economy is still widely hoped to help normalize the situ- 47% of the available offices have currently ation, even if it does not happen overnight. been let, and figures are set to improve.

“We will soon complete a road section DELIVERED ON TIME connecting TóPark to the nearby motorway, which we expect will significantly boost The few investments that were not post- interest in the project in the summer months,” poned or canceled have reached key stages in WWIG chief operating officer Erzsébet Szikszay told the BBJ. Following the €138 million their realization, right on schedule.

Raiffeisen Evolution has inaugurated the first phase, the developer is currently undeREsidence office buildings in the second cided about the timing of further investdistrict of Budapest, adding 18,000 square ments. “Given the current market conditions, meters of new space to the market. By the the second stage could be launched in 2011 at time of the grand opening, 2,600 square the earliest,” Szikszay added. meters of the total was already leased out to Epamedia and Aegis Media. “These are genu- GREEN PLANS inely new tenants on the market and not just movers from another office location, which Providing the biggest news on the office is rare under the current market conditions,” market for the year so far, Swedish develsaid Rudolf Riedl, managing director of the oper Skanska has announced it is launchcompany. He added that RE also has further ing a new investment at the end of the year, ventures on its agenda. an office project in the 13th district. Skanska decided not to continue its ScandinaPHASE TWO FROM 2011-2012 via Garden project, which was to be built right next to its Népliget Center. Instead, Walker and Williams Investment Group it announced a brand new project. The (WWIG) held the topping off ceremony of Green House is to accommodate 17,500 the first stage of its giant TóPark investment square meters of space and is set to boast in Törökbálint. In the initial stage of the ven- a range of environmental features targetture, the developer is to build 200,000 square ing LEED and EU GreenBuilding certificameters, 93,000 square meters of which is net tion. Skanska said it is in a comparatively leasable office and retail space. WWIG said good position because it does not rely on

banks for financing. “We do all our financing in-house, and we are more than happy to invest if we see a business opportunity,” managing director Andreas Lindelöf said.

He underlined that the reason Skanska chose to launch a new investment now is that its independence from banks allows it to work against the cycle. “We can buy cheap and will have a new building to add to the market at exactly the time when vacancy begins to drop and tenant demand returns,” Lindelöf said. The executive told the BBJ that Skanska has acquired the plot for the investment at what he deemed “market price.”

If Skanska’s expectations come true, it means that the 13th district could further improve its reputation on the market in general. “The location of the Green House is part of the extended Váci corridor, which will be very attractive when conditions on the market are better,” added Nikoletta Ispánki, the firm’s leasing manager.

more flexible and are no longer automatically rejecting all project financing propositions.

However, when it comes to new offices, they still pose conditions that are practically impossible to meet.

The only way a developer can get financing is if it is able to present the bank with a very high pre-lease figure, which means the house has to be around 50% let before it is even built. On the current market, this is practically impossible, since prospective tenants have a broad range of high-quality vacant offices to choose from at very attractive prices. The only option for raising the needed pre-lease indicator is if a developer is able to conclude an agreement on building a fully built-to-suit house for a single client. A perfect example is the new HQ building of K&H Bank currently being developed

by TriGranit in its Millennium City Center project, which the bank first pre-leased, then pre-purchased.

Both RE and WWIG noted that the only reaMONEY STILL TIGHT son they were able to continue with their projects was because the financing was concluded As previously said, Skanska is in a very before the crisis erupted. As it stands, both precomfortable position compared to its peers dicted that 2012 was the earliest that a larger volwhen it comes to financing, since it is able to ume of new developments could be launched. rely solely on its own resources. As the gen- By then, the market will have absorbed the cureral state of the Hungarian economy is seen rently vacant office space and it will once again to be recovering, banks are also becoming make business sense to start building. ■

WWW.BBJ.HU

18 SPECIAL REPORT

Budapest Business Journal | May  – May 

Renegotiation still rules in the office market Overall vacancy is still high in Acategory office buildings, business is far from good, but tenants are more than happy with the tempting offers they are receiving, leading to a number of contract renewals and even expansions in the first months of the year.

drive in the Danish office services provider’s strategy, which already has a center operating in Capital Square.

Kálvin Center has welcomed Alpiq Energia Magyarország Kft and Alpiq Csepel Kft as newcomers, renting out an aggregate 806 square meters. GVA Robertson, the agency commissioned by the tenants, said the deal underlined that the old market wisdom of the significance of location is still true.

But agents are pressed to go further than just picking the right spot. “In the strugBBJ MARKET ANALYSIS gle to rally tenants, only those developers and office projects that satisfy the current general demands of tenants to have their expenses reduced can be successful,” GVA head Róbert Tilki said.

Put these two things together, add the fact that prices are way down, and the result is that the time to move is now. According to real estate agency Colliers InternaChange in total office space of tional, lease rates dropped by 10%-30% last listed A-category buildings in 2009 year. Available stock increased but so did vacancy. “In light of this we can continue In March alone, there were new tenants to expect meager market activity, although moving into Allee Corner, Kálvin Center, we expect slight growth in the second half Oktogon House and the Irene Office Build- of 2010,” said Miklós Saly, director of the ing, among others. FirstClients has agreed to firm’s office leasing team. lease an entire floor of the Allee commercial Meager though the activity may be, complex office block, boosting tenancy to there are companies willing to take advan50%. The contract marks a notable expansion tage of the opportunities. HR firm Kelly

+27%

Services Hungary is one of them. It has not only renewed its lease contract from 2004 in Oktogon House for another five years, it has rented more space than before.

AVOIDING THE HASSLE Despite the fact that prices have probably gone as low as they can, it is still anything but common for a company to move to a new location. The reason is simple: nobody wants to deal with the difficulties of moving unless absolutely necessary. This is particularly true of bigger companies that cannot allow everyday business to be slowed by the inevitable hang-ups that come with moving shop.

As a perfect example, a major IT services provider is currently on the market for a new office. However, because the relocation would require it to move its infrastructure, it would entail shutting down highly valuable servers that may never be restarted again, causing material damages as well as breaks in service.

It is for this reason that smaller firms are often far more willing to take the plunge.

Colliers’s statistics reveal that tenants looking for leases of 200 to 1,500 square meters are much more mobile, an observation supported by the deals made public in 2010 so far. Telecoms service provider Metacom Zrt has signed a lease contract for 230 square meters in Mosaic Property’s Office Building, software developer Molaris signed a lease agreement for 300 square meters in the BSR Center A located in the Váci corridor, and regional bus company Orangeways leased out 350 square meters in Skanska’s Népliget Center.

WHERE TO GO? The Budapest market has plenty of quality options for companies looking to rent offices. Experts say that projects like Hochtief ’s Capital Square, ConvergenCE’s Eiffel, TriGranit’s Millennium or Futureal’s Corvin are the obvious top choices for any newcomer or major business seeking a new location. These are the projects that have perhaps the best hope of capitalizing on the anxious air of improvement that characterizes the market.

“Today, occupants are more optimistic, confidence has increased,” said James Berry, head of transactions at property advisor Jones Lang LaSalle. At the same time, he noted that though the grim mood has brightened, prospective tenants are much slower to reach a decision, and are considerably more cautious in other respects, too.

In summary, larger tenants wary of having their businesses disrupted by relocation still have the option of hammering out terms that suit them far better, at beneficial prices and without having to budge.

Unsurprisingly, landlords would be overjoyed to facilitate such demands and be able to hold on to their clientele. “For 2010, I would recommend large tenants to secure pre-leases for built-to-suit buildings rather than moving office to existing space, while for owners I recommend a short-term ‘many a little makes a mickle’ leasing strategy,” Colliers’s Saly said. GR

MARKET NEWS King Sturge has completed the lease renewal of the Hungarian branch office of Tata Consultancy Services Limited for 5,900 square meters of offices for seven years. The tenant has 700 employees working in the 30,000square-meter Science Park office building, which is owned by the Aviva Investors Central European Fund.

MTG Metro Gratis Kft, the publisher of the Metropol newspaper, has signed a lease agreement for 640 square meters of office space in the first phase of the Madarász office park.

The project, which is a development of Proform Zrt, is being built on Váci út, on a three-hectare area bordered

by Madarász, Szekszárdi and Tomori streets, next to Duna Plaza.

South Buda Business Park received another tenant with Uponor Épületgépészeti Kft moving into a 350square-meter office space. Uponor signed a three-year lease for the space in the building, with the assistance of Colliers International Hungary, exclusive leasing agent of the South Buda Business Park.

British American Tobacco has leased 1,300 square meters of office and storage space in Wincanton Magyarország’s depot site, near the Megyeri Bridge. Eston International, the representative of the tenant, said that the deal underlines that the northern Pest area will become a crucial part of the market, particularly from a logistics perspective.

Financial and tax advisor Ernst & Young has extended its office lease in the WestEnd Business Center until 2017. Currently, the company resides in 5,800 square meters spread across the two buildings of the project.

From June, the company will rearrange its activities to be situated in the first phase of the project, meaning Ernst & Young will occupy almost the entire building.

Pharmaceutical company AstraZeneca has signed a lease contract for 1,500 square meters of office space in the Dorottya Udvar complex. The company was advised by CB Richard Ellis, which recommended the location following a multi-phase selection process.

Celanese Corporation has expanded its 2,800-square-meter space in the Váci 33 office building with a further 1,500 square meters. Following the agreement, the building is 100% leased and Celanese Corporation has become by far the largest tenant in the building.

WWW.BBJ.HU

SPECIAL REPORT 19

Budapest Business Journal | May  – May 

LARGEST A CATEGORY OFFICE BUILDINGS IN GREATER BUDAPEST

The BBJ’s Book of Lists contains 100+ sector-specific listings of leading companies. The Book of Lists comes free with a BBJ subscription, or can be ordered separately by e-mailing Eva.Bercesi@bbj.hu

www.hallergardens.hu

5

Capital Square

6

Bank Center

7

Duna Tower

8

Science Park

9

IP West

10

Dorottya Udvar

11

Spirál

12

BSR Center

13

Roosevelt 7/8

13

South Buda Business Park

www.capitalsquare.hu

www.bankcenter.hu

www.dunatower.hu

www.sciencepark.hu

www.europolis.com

www.dorottya.net

www.spiral.hu

www.bsr-center.hu

www.roosevelt.hu

www.sbbp.hu

15

Népliget Center

16

Arena Corner

17

Alkotás Point

18

City Gate

19

East-West Business Center

20

River Estates

www.nepligetcenter.hu

www.arenacorner.hu

www.alkotaspoint.hu

www.europolis.com

www.ewbc.hu

–

Invitel, BAT, CIBA, Roche, Johnson Diversey, Égáz-Dégáz

12–16 4.10

Magyar Posta, BNP Paribas, UCB, AON, Orange

¸

¸

¸

–

–

–

Adidas, Omron, Hostlogic, ÁAK NIF, ESZA, Strabag PFS

¸

¸

¸

¸

¸

–

Underground garage

Car wash

Other

4

Haller Gardens

www.atriumpark.hu

Ÿ Ÿ

Post office

Átrium Park

1-2/office 1,435

Bank

3

www.gatewaybc.hu

3–5

Café

2

Gateway Office Park

www.terrapark.hu

Current major tenants

Restaurant

Terrapark office park A, B, C, D Blocks

No. of elevators No. of parking spaces

Card entry system

1

Minimum lease terms (years)

Services Security service

Company Website

Net office Average size space (sqm) of floors (sqm) Total gross Currently size of the office building (sqm) leasable space (sqm) No. of levels

Monthly rent in September 2009 (Euro sqm) Monthly service charge in September 2009 (Euro sqm)

Rank

Ranked by net office space

¸

¸

¸

¸

¸

–

¸

–

–

68,700 70,600 3 and 4

200–2000 9,400

36,300 50,800 9

1,300 –

5

10 422

33,185 61,400 9

4,340 5,184

5

25 733

12.50–14 3.80

Ÿ Ÿ

3

15 603

12

Ÿ

Ÿ

¸

¸

¸

¸

–

–

¸

4,500 22,813

3

18 640

12.50–13.95 3.95

UnicreditBank, Elmű, First Clients, Ferrero, AAM

¸

¸

¸

¸

¸

–

3

16 475

19–25 1,304 HUF

US Embassy, Irish Embassy, Citibank, Emfesz, Regus

¸

¸

¸

¸

¸

–

14–18 3.50

Aviva Insurance, Cashline Securities, GE Holdings, IBM Hungary, InBev, MSCI

¸

¸

¸

¸

¸

–

32,000

Ÿ 8

30,200 32,500 9

30,000 32,000 11

1,400

Ÿ

Leasing agent, phone

Ownership (%) Hungarian NonHungarian

Address Phone Fax Email

–

– (100)

2040 Budaörs, Puskás Tivadar utca 4.

(23) 423-323 (23) 423-324 info@terrapark.hu 1138 Budapest, Dunavirág utca 2.

(1) 225-6600 (1) 225-6601 ablon@ablon.hu

¸

¸

Fitness room, food store

–

– Ablon Group (100)

¸

–

–

Eston, (1) 877-1000; Jones Lang LaSalle, (1) 489-0202

– Immoeast AG (100)

1134 Budapest, Váci út 45.

(1) 451-4280 (1) 451-4269 sales@wing.hu

–

–

EHL Real Estate Hungary, (1) 451-8040

– Immoeast AG (100)

1096 Budapest, Soroksári út 32–34.

– – –

¸

¸

Pharmacy

Cushman & Wakefield, (1) 268-1288; Jones Lang LaSalle, (1) 489-0202

– (100)

1133 Budapest, Váci út 76.

– – –

¸

¸

Fitness room, conference center

–

– (100)

1054 Budapest, Szabadság tér 7.

(1) 302-9010 (1) 302-9020 anett.eles@bankcenter.hu

¸

–

Pharmacy, office equipment, travel agency, beauty salon

Real Management, (1) 439-2770

Duna Tower Kft. (100) –

1138 Budapest, Népfürdő utca 22.

(1) 439-2770 (1) 439-2778 office@dunatower.hu

–

¸

¸

–

King Sturge, (1) 451-1010

Ÿ Ÿ

1117 Budapest, Irinyi József utca 4–20.

(30) 351-2417 – –

¸

¸

–

–

Europolis, (1) 455-5065

– Europolis (100)

1117 Budapest, Budafoki út 91–93.

(1) 455-5065 (1) 299-7099 budapest@europolis.com

– (100)

1113 Budapest, Bocskai út 134–146.

– – –

29,700 46,000 16

790 1,300

5

10 385

28,659 32,000 9

1,200 –

3

10 400

11–15 4.50

Ericsson, TATA, HBO

¸

¸

¸

¸

–

27,200 31,600 8

3,400 1,500

3

6 338

12–13 3.20

Heineken, Whirlpool, British Telecom, Dalkia, Hankook, GusGus

¸

¸

¸

¸

¸

26,700 28,500 4

4,400 6,300

5

8 600

10.50-11 4.09

Convergys, LeasePlan, Merck, PPD, Viva TV, Greenergy

¸

¸

¸

¸

–

–

¸

¸

–

CB Richard Ellis, (1) 374-3040

26,351 34,000 7

4,000 19,840

5

Ÿ

12.50–13.5 3.80

National Tax Office, Hochtief Facility Management

¸

¸

¸

–

–

–

¸

–

–

Jones Lang LaSalle, (1) 489-0202

Ÿ Ÿ

1134 Budapest, Dózsa György út 128–130.

– – –

25,000 28,864 8

3,800 8,469

3

12 360 garage+100 street

12.80–14.5 3.50

AXA-Ella, Blue Business Interior, Raiffeisen Bank, Budapest Distance Heating, CMA CGM

¸

¸

¸

¸

¸

–

¸

–

–

DTZ, (1) 269-6999; GVA Robertson, (1) 327-2050

– Accession Fund (100)

1138 Budapest, Váci út 135–139.

(1) 350-4010 (1) 350-4011 info@bsr.hu

24,500 27,000 9

3,250 900

5

8 220

20–25 3.50

Dr. Rose, BNP Paribas Bank, Squire Sanders and Dempsey Law Firm

¸

¸

¸

¸

¸

–

¸

–

–

–

– (100)

1051 Budapest, Roosevelt tér 7–8.

(1) 801-0155 – m.hajos@roosevelt.hu

24,500 25,743 7

4,000 22,346

3

9 431

9–10 900 HUF

Astron, OKD Doprava, VGK Hönnun

¸

¸

–

–

–

–

¸

–

–

Colliers International, (1) 336-4200

Ÿ Ÿ

1117 Budapest, Budafoki út 56.

– – –

23,300 26,000 (Building A: 9200, Building B: 8200, Building C: 8400) 8–9

900–1100 21,000

3

4 450

13 3.80

Co-op Hungary, Hessyn, MAI Insurance Group, AIM Insurance

¸

¸

¸

¸

–

–

¸

¸

–

Jones Lang LaSalle, (1) 489-0202

– (100)

1097 Budapest, Könyves Kálmán körút 11.

(1) 382-9100 (1) 382-9129 agnes.kelemen@skanska.hu

23,000 30,500 8

4,000 4,974

3

12 370

Ÿ

– Endurance Fund (100)

1088 Budapest, Hungária körút 40–44.

– – info@arenacorner.hu

22,183 25,240 7

800–1200 2,200

3

21,900 24,200 9

2,800 150

20,892 20,892 9

19,487 39,347 10

431

3.50

Citibank, Raiffeisen Bank, Vodafone

¸

¸

¸

¸

¸

–

¸

–

–

Colliers International, (1) 336-4200

9 394

12.50–16.5 5.50

Concorde, Bayer, Euronet

¸

¸

¸

¸

¸

–

¸

¸

ATM

King Sturge, (1) 451-1010

Ÿ Ÿ

1123 Budapest, Alkotás utca 50.

(1) 325-3000 (1) 325-3011 –

2

8 407

13–14.25 3.80

Nokia Siemens Networks, IBM, Europolis, BVA, Computerlinks

¸

¸

¸

¸

¸

–

¸

¸

–

Europolis, (1) 455-5065

– Europolis (100)

1092 Budapest, Köztelek utca 6.

(1) 455-5065 (1) 299-7099 budapest@europolis.com

2,500 4,533

5

7 200

16–18 1,580 HUF

Banco Popolare, Volksbank

¸

¸

¸

¸

¸

¸

¸

¸

Travel agency

Cushman & Wakefield, (1) 268-1288

– AIB Polonia Property (100)

1088 Budapest, Rákóczi út 1–3.

– – –

2,000 689

3

11 352

13 4.20

Citibank, Procter&Gamble, Digi Kft., Gilda Max, OKI Systems

¸

¸

¸

¸

¸

–

¸

–

–

–

– Sparkassen Immobilien AG (100)

1134 Budapest, Váci út 35.

(1) 429-5050 (1) 429-5055 barbara.barath@ immorent-dom.hu

WWW.BBJ.HU

22

www.margitpalace.hu

Infopark D www.infopark.hu

22

Millenium Tower III

24

Buda Square

25

Krisztina Palace

26

Eiffel

27

Infopark E

27

29

www.milleniumtowers.hu

www.budasquare.hu

www.krisztinapalace.hu

www.eiffelter.hu

www.infopark.hu

K3 www.k3irodahaz.hu

Millenium Tower II www.milleniumtower.hu

No. of elevators No. of parking spaces

Current major tenants

5

8 254

Ÿ Ÿ

Getronics, Budapest City Court, Magyar Követeléskezelő, AVIS, Cetelem Bank, Oberbank

2,500 890

3

7 349

14

Ÿ

Ÿ

¸

¸

¸

–

–

–

¸

–

18,500 18,500 10

2,459 2,150

5

8 800

14.50–25 3.60

Morgan Stanley

¸

¸

¸

¸

¸

–

¸

17,670 33,100 6

3,200 3,343

3

6 365

11.50–12.5 4.20

Shell, Reckitt, Benckiser, Geoholding, IT Cinema, NEC Hungary, OC

¸

–

¸

¸

–

–

¸

17,600 18,700 6

3,000 15,347

3

7 399

15.50–17 3.50

Ÿ

17,175 23,663 7

3,150 17,175

5

9 365

Ÿ Ÿ

Costa Coffee, Inmedio Arbat, AES Tisza Power Plant, Bi-Med

¸

¸

¸

¸

¸

¸

2,000 6,350

3

6 271

14–16

Ÿ

Ÿ

¸

¸

¸

¸

–

2,300 17,000

5

10 360

13.50–15.5 800 HUF

–

¸

¸

¸

¸

¸

5

6 291

14.50–20 3.90

Nestlé, K&H, Sun Microsystems

19,307

Ÿ 5

18,500

Ÿ 7

17,000

Ÿ 7

17,000

Ÿ 8

16,600 16,600 9

300–3000 460

2,350 3,782

¸

¸

¸

¸

¸

¸

¸

¸

¸

¸

¸

¸

¸

¸

¸

Underground garage

Address Phone Fax Email

–

– JP Morgan (100)

1027 Budapest, Henger utca 2.

(23) 423-323 (23) 423-324 –

–

IVG, (1) 382-7560

– IVG Development GmbH (100)

1117 Budapest, Gábor Dénes utca 2.

(1) 382-7560 (1) 382-7570 office@ivg.hu

¸

Fitness room

Cushman & Wakefield, (1) 268-1288; CB Richard Ellis, (1) 374-3040

Ÿ Ÿ

1096 Budapest, Lechner Ödön sétány 7–8.

– – –

¸

–

GVA Robertson, (1) 327-2050

(100) –

1036 Budapest, Lajos utca 48–66.

(1) 250-8300 (1) 250-8301 info@budasquare.hu

–

Roof Garden

Cushman & Wakefield, (1) 268-1288; Jones Lang LaSalle, (1) 489-0202

– (100)

1123 Budapest, Nagyenyed utca 8–14.

– – –

¸

¸

4800 m2 cultural park, restaurants, café, newsstand, supermarket, pharmacy, greengrocer

ConvergenCE, (1) 225-0912

– Europa Fund II (100)

1062 Budapest, Teréz körút 53–57.

(1) 225–0912 (1) 375–0445 office@convergen-ce.com

–

¸

–

–

IVG, (1) 382-7560

– IVG Development GmbH (100)

1117 Budapest, Neumann János utca 1/E (1) 382-7560 (1) 382-7570 office@ivg.hu

–

¸

¸

–

DTZ, (1) 269-6999

WING Zrt. (100) –

1087 Budapest, Könyves Kálmán körút 48–52.

(1) – (1) – –

Fitness room

Cushman & Wakefield, (1) 268-1288; CB Richard Ellis, (1) 374–3040

Ÿ Ÿ

1093 Budapest, Lechner Ödön utca 7–8.

– – –

–

–

–

¸

¸

¸

–

¸

Other

Ownership (%) Hungarian NonHungarian

Car wash

Leasing agent, phone

Post office

Bank

Café

Restaurant

Services Card entry system

21

Margit Palace

Minimum lease terms (years)

Net office Average size space (sqm) of floors (sqm) Total gross Currently size of the office building (sqm) leasable space (sqm) No. of levels

Security service

Company website

Budapest Business Journal | May  – May  Monthly rent in September 2009 (euro/sqm) Monthly service charge in September 2009 (euro/sqm)

Rank

20 SPECIAL REPORT

–

WWW.BBJ.HU

SPECIAL REPORT 21

35

Váci 33

36

Office Garden I

37

Greenpoint 7

–

www.officegarden1.hu

–

38

Pannon

39

Bartók House

40

BudaWest

40

OTC

42

Europolis Park BUDAPEST AEROZONE

43

Business Center 30

44

Óbuda Gate

45

EMKE

46

REsidence 1

47

Infopark A

48

Viziváros Office Center

49

Studium

50

Montevideo utca 9

51

RiverPark

www.gvarobertson.hu

www.casaproperty.hu

www.budawest.net

www.irodahaz.info/otc

www.europolispark.com

www.bc30.hu

www.obudagate.hu

www.emke-budapest.com

www.residenceirodahaz.hu

www.europolis.com

www.casaproperty.hu

www.studiumirodahaz.hu

www.proform.hu

www.riverpark.hu

Other

–

Car wash

34

Globe13

www.lombbc.hu

Underground garage

33

Lomb Business Center

www.proform.hu

Post office

31

Madarász Office Park No. 1

www.ablon-group.com

Bank

Business Center 99

Café

31

www.casaproperty.hu

Restaurant

R70

No. of elevators No. of parking spaces

Card entry system

30

Minimum lease terms (years)

Services Security service

Company Website

Net office Average size space (sqm) of floors (sqm) Total gross Currently size of the office building (sqm) leasable space (sqm) No. of levels

Monthly rent in September 2009 (euro/sqm) Monthly service charge in September 2009 (euro/sqm)

Rank

Budapest Business Journal | May  – May 

Aberdeen Asset Management, DAS, Develor, Mazars, ERC, Puma

¸

¸

¸

¸

–

¸

¸

–

–

Eston, (1) 877-1000

Casa Property Kft (100) –

1074 Budapest, Rákóczi út 70–72.

(1) 501-2800 (1) 501-2801 –

KPMG, Viasat, UniCreditBank, Fundamenta

¸

¸

¸

–

¸

–

¸

–

–

–

– ABLON Group (100)

1139 Budapest, Váci út 99.

(1) 225-6600 (1) 225-6601 ablon@ablon.hu

–

Ÿ Ÿ

1132 Budapest, Madarász Viktor utca 47–49.

(1) 250-4290 (1) 250-4285 toth.csaba@proform.hu

–

–

– ABLON Group (100)

1139 Budapest, Váci út 99.

(1) 225-6600 (1) 225-6601 ablon@ablon.hu

–

–

EHL Real Estate Hungary (1) 451-8040

– Immoeast AG (100)

1135 Budapest, Teve utca 1/A–C – – –

–

–

Colliers International, (1) 336-4200

Ÿ Ÿ

1134 Budapest, Váci út 33.

– – –

¸

–

GVA Robertson, (1) 327-2050

– Heitman (100)

1117 Budapest, Alíz utca 1.

– – office@gvarobertson.com

¸

–

–

EHL Real Estate Hungary (1) 451-8040

– Immoeast Austria (100)

1075 Budapest, Kéthly Anna tér 1.

– – –

–

¸

¸

–

GVA Robertson, (1) 327-2050

Ÿ Ÿ

2040 Budaörs, Baross utca 168.

(1) 327-2050 (1) 327-2055 office@gvarobertson.hu

–

¸

–

–

–

– (100)

1114 Budapest, Bartók Béla út 43–47.

(1) 501-2800 (1) 501-2801 –

¸

–

Szilvia Tarnóczay, (70) 319–7319

Contactual Property Ÿ ( ), other Ÿ ( ) –

1118 Budapest, Rétköz utca 5.

(70) 319-7319 (1) 487-0384 office@budawest.net

–

Garden

Coteba Kft, (1) 479-6020

– SEB GmbH (100)

1075 Budapest, Wesselényi utca 16.

(1) 479-6020 (1) 479-6029 petra.moritz@hu.coteba.com

–

–

Europolis, (1) 455-5065

– Europolis (100)

2220 Vecsés, Lőrinci út 59–61.

(1) 455–5065 (1) 299–7099 budapest@europolis.com

¸

–

Internal yard

–

– ABLON Group (100)

1132 Budapest, Váci út 30.

(1) 225-6600 (1) 225-6601 ablon@ablon.hu

–

¸

–

Deli shop

Cushman & Wakefield, (1) 268-1288

– (100)

1023 Budapest, Árpád fejedelem útja 26–28.

– – –

¸

¸

¸

–

Conference room, dry cleaner's

DTZ, (1) 269-6999; GVA Robertson, (1) 327-2050

Bristol Kft (100) –

1072 Budapest, Rákóczi út 42.

– – office@gvarobertson.com

¸

–

–

¸

–

–

GVA Robertson, (1) 327-2050

RE project development Kft (100) –

1027 Budapest, Kacsa utca 15–23.

– – –

¸

¸

¸

¸

¸

–

–

Cushman & Wakefield, (1) 268 1288

– Europolis (100)

1117 Budapest, Neumann János utca 1.

(1) 455–5065 (1) 299-7099 budapest@europolis.com

¸

¸

–

–

¸

–

–

–

– (100)

1027 Budapest, Kapás utca 6–12.

(1) 501-2800 (1) 501-2801 –

–

DTZ, (1) 269-6999; Eston, (1) 877-1000

Wingprojekt 6 Kft (100) –

1095 Budapest, Czuczor utca 2–10.

(1) 451–4280 (1) 451–4269 sales@wing.hu 1037 Budapest, Montevideo utca 9.

(1) 250-4290 (1) 250-4285 toth.csaba@proform.hu 1093 Budapest, Közraktár utca 30–32.

(1) 382-7560 (1) 382-7570 office@ivg.hu

Current major tenants

16,370 39,600 9

1,600 4,682

3

9 480

HUF 1,200

16,000 17,550 11+4

1,500 2,000

3

3+2 313

10–13.5 3.75–3.95

16,000 20,000 9

1,800 15,000

3

6 365

11.80 2.50

15,700 28,685 8

2,000 15,700

5

4+2 440

13.50–16 3.95

Ÿ

Ÿ Ÿ

3

6 153

Ÿ Ÿ

KMREP, AAI Pharma, Abbott

¸

¸

¸

–

–

–

¸

15,100 17,381 10

2,000 1,300

3

5 381

12.50 3.20

Celanese, Hewitt, Bunge, Process Solution, Friesland Hungária

¸

¸

¸

¸

¸

–

¸

15,000 26,000 8

2,040 5,500

5

6 350

12.30–13.2 3.30

Philips Hungary, Hewlett-Packard, Magyar Telekom, Genzyme, Virusbuster, A-net

¸

¸

¸

¸

–

–

¸

Ÿ Ÿ

3

6 256

12.80 3.50

DBR Metro, Accor, NetAcademia

¸

¸

¸

–

–

–

14,400 16,000 4

3,000 13,300

2.50

7 287

6–9 3

Ÿ

¸

¸

¸

¸

–

14,306 30,000 8

2,200 831

3

5 406

13

Ÿ

EDS, GNLD, Novartis Hungary, Novartis Vaccines

¸

¸

¸

¸

¸

14,000 27,000 6

2,700 12,500

3

6 300

11–13 3.25

UnicreditBank, OTP Bank, TechTalk

¸

¸

¸

¸

¸

¸

¸

14,000 15,000 9

300 400 1000 by buildings separately 2,800

3

9 200

7–15 4.50

PricewaterhouseCoopers, ASUS, TMF, Kossuth Holding, National Philharmonics

¸

¸

¸

¸

–

–

¸

13,860 65,000 4

500 620

2

6 237

10–13 3.50

DHL, FedEx, Masped Schenker, UTI, BMW, Lufthansa

¸

¸

¸

¸

¸

–

–

13,000 19,800 9

1,770 3,130

3

4+2 221

13 3.95

Quaestor, BASF, MKB Bank, Erste Bank

¸

¸

–

¸

¸

–

12,800 13,942 7

2,050 2,792

5

5 265

13–15 HUF 1,394

Sony, L'Oréal, UCB, Regus

¸

¸

¸

¸

–

12,690 17,140 11

1,300 1,977

3

5 135

12 4.50

Duna House, GroupamaGarancia, Manpower, Levis, Regus, Bene

¸

¸

¸

¸

12,230 21,281 6

2,000 13,278

3

5 177

15–16 3.80

Ÿ

¸

–

¸

12,200 13,690 5

2,700 6,000

2

6 375

11.500–12.50 3.80

IBM, Panasonic, IGN, Invitel

¸

¸

11,654 23,500 6

2,200 308

3

6 233

13

Ÿ

Agfa, Allianz Hungária Pension Fund, Cemex, IKB, Leitner+Leitner, Santander

¸

¸

11,070 12,620 8

1,855 1,140

3

6 408

11.50 3.80

Nokia, ESSCA, Iron Mountain, OTKA, Plazmaszolgálat

10,900 22,000 6

1,800 1,200

3

3 335

12.50 2.50

3

4 135

15–18

15,340

Ÿ 9

14,870

Ÿ 8

9,862

Ÿ 8

1,300 2,280

Ÿ

Ÿ

Ÿ

Sanoma

Ÿ

¸

¸

¸

¸

¸

–

¸

¸

¸

¸

¸

¸

¸

¸

¸

¸

–

¸

¸

¸

–

–

–

–

–

–

–

–

–

–

¸

¸

¸

¸

¸

¸

–

–

–

Leasing agent, phone

Ownership (%) Hungarian NonHungarian

Address Phone Fax Email

–

–

–

(100) –

–

Roof gardens, exclusive interior garden

Eston, (1) 877-1000; IVG, (1) 382-7560

IVG Development Hungary Kft (100) –

WWW.BBJ.HU

57

–

Andrássy Palace –

58

Kálvin Center

59

Central Business Center

www.kalvin-center.hu

–

60

Montevideo utca 16

61

Ybl Palace Building

62

M3 Business Center phase B

63

Office Campus Budapest

64

City Center

65

Atrinova

66

Margit House

67

Millenáris Classic

68

Királyhágó

www.proform.hu

www.yblpalota.hu

www.m3bc.hu

www.officecampus.hu

–

www.deka-immobilien.com

–

www.millenarisirodahazak.hu

–

69

Videoton

70

Bajor

71

Xenter 13

NR

Ÿ=

www.videoton.irodahaz.info

www.wing.hu

–

Irene –

Other

56

Szépvölgyi Business Park

http://devaicenter.iroda.hu

Car wash

Dévai

Underground garage

55

www.becsicorner.hu

Post office

Bécsi Corner

Bank

54

www.vaciutcacenter.hu

Café

52

Váci Utca Center

www.m3bc.hu

Restaurant

M3 Business Center phase A

Card entry system

52

Current major tenants

Security service

Company website

Net office Average size space (sqm) of floors (sqm) Total gross Currently size of the office building (sqm) leasable space (sqm) No. of levels

Budapest Business Journal | May  – May  Monthly rent in September 2009 (euro/sqm) Monthly service charge in September 2009 (euro/sqm)

Rank

22 SPECIAL REPORT

12.30–13 3.95

Samas, Sumitumo, Brother, Straumann

¸

¸

¸

–

–

–

¸

–

–

Minimum lease terms (years)

No. of elevators No. of parking spaces

3

2 132

12.50 4.95

9,600 10,000 9

1,000 8,275

9,600 21,000 10

Ÿ Ÿ

3

6 166

9,370 10,500 6

1,200 8,420

3

5 131

10–14

9,336 9,800 9

1,000 870

3

9,300

Ÿ 5

9,200

Ÿ 5

9,170 15,000 10

9,070

Ÿ

Services Leasing agent, phone

Ownership (%) Hungarian NonHungarian

Address Phone Fax Email

–

– ABLON Group (100)

1146 Budapest, Hungária körút 179–187.

(1) 225-6600 (1) 225-6601 ablon@ablon.hu 1056 Budapest, Váci utca 81.

(1) 411-0442 (1) 235-0007 vaciutca@vaciutcacenter.hu

Ÿ

¸

¸

–

¸

–

–

¸

–

–

–

Váci Utca Center Kft (100) –

Ÿ

Vapiano, DM, Chefparade, Hunaudit, VGD

¸

¸

¸

¸

¸

–

¸

–

ATM

Cushman & Wakefield, (1) 268-1288

(100) –

1031 Budapest, Lajos utca – – –

3 70

10.50 900 HUF

Ÿ

¸

¸

–

–

–

–

¸

–

–

Eston, (1) 877-1000

Raiffeisen Real Estate Kft (100) –

1134 Budapest, Dévai utca 26–28.

– – info@eston.hu

Ÿ

Ÿ Ÿ

Xerox, B-Net, Westline

¸

¸

¸

–

–

–

¸

–

–

EHL Real Estate Hungary, (1) 451–8040

– Immoeast Austria (100)

1037 Budapest, Szépvölgyi út 35–37.

– – –

–

¸

–

¸

–

–

–

–

–

DTZ, (1) 269-6999; CB Richard Ellis, (1) 374-3040

– ING Real Estate (100)

1061 Budapest, Andrássy út 9.

– – –

– Premiumred Investkredit Volksbank Group (100)

1085 Budapest, Kálvin tér 12–13.

– – –

Ÿ Ÿ

3

500–600 1,758

5

4 160 (in a separate building)

13.50–15 4.30

Emporio Armani, Grey Worldwide, Kaiser Schmidt, ING Real Estate

5

4 120

14.50–17.5 3.95

Aegon Insurance, OTP Bank, Wolf Theiss, GVA Robertson

¸

¸

–

¸

¸

–

¸

–

–

GVA Robertson, (1) 327-2050

3

4 156

13.50 4.42

VPOP, Whitestone Investment, Bázis Office Center, Salzgitter Mannesmann

¸

¸

¸

–

–

–

¸

–

–

EHL Real Estate Hungary, (1) 451–8040

– Immoeast Austria (100)

1027 Budapest, Horvát utca 14–24.

– – –

12.50 2.50

Ÿ

¸

–

¸

¸

–

–

¸

¸

–

–

(100) –

1037 Budapest, Montevideo utca 16.

(1) 250-4290 (1) 250-4285 toth.csaba@proform.hu

¸

¸

¸

¸

–

–

¸

–

Event halls

Y.B.L. Lindner, (1) 411–0434

Y.B.L. Lindner Kft (100) –

1053 Budapest, Károlyi Mihály utca 12.

(1) 411-0434 (1) 411-0436 szvass@t-online.hu

–

– ABLON Group (100)

1146 Budapest, Hungária körút 179–187.

(1) 225-6600 (1) 225-6601 ablon@ablon.hu

GVA Robertson, (1) 327-2050; EHL Real Estate Hungary, (1) 451-8045

Ÿ Ÿ

1097 Budapest, Gubacsi út 6.

(1) 476-6050 (1) 476-6059 office@officecampus.hu 1051 Budapest, Bajcsy-Zsilinszky út 12.

(1) 429-5050 (1) 429-5055 barbara.barath@ immorent-dom.hu

1,000 3,170

Ÿ

240

9

711

9,000 12,000 4

3,000 400

3

6 227

8,677 12,000 5

1,700 290

3

4 56

12–25 4

CMS Cameron McKenna LLP, Oppenheim Law Firm, Pesti Lámpás Restaurant, Statlogics, Grafton Recruitment

8,400 12,000 7

1,200 6,144

5

3 214

12.75–14 3.95

Öko Pannon, Creditexpress

¸

¸

¸

–

–

–

¸

–

Mobile filling station

8,300 15,000 3

1,600 4,615

3

6 240

10–10.50 3

Legrand Hungary, Johnson Controls, Advanced MP, Herbalife, Aldes, DHL

¸

¸

–

–

–

–

–

–

–

8,163 12,400 7

1,200 1,160

2

4 100

13.50–15 4.80

Net Travel Services, Randstad Hungary, Itochu Hungary, Miracle Hungária, Sopron Bank, Belgian Embassy Vallon Region

¸

–

¸

¸

¸

–

¸

¸

–

–

– Sparkassen Immobilien AG (100)

8,105 8,900 7

1,358 1,533

3

3 110

13.50–14 4.75

KDB Bank, Provident Finance

¸

¸

¸

¸

¸

¸

¸

¸

Access for disabled

Cushman & Wakefield, (1) 268-1288

– (100)

1054 Budapest, Bajcsy-Zsilinszky út 42–46.

– – –

7,953 10,112 4

2,500 3,466

3

3 144

10.50 3.90

Cetelem Bank, Raiffeisen Evolution

¸

¸

–

¸

–

–

¸

¸

–

B&V Group (1) 471-5160; EHL Hungary (1) 451-8040

– The Guardian New Europe Emerging Cities Fund (100)

1027 Budapest, Tölgyfa utca 1–3.

– – –

7,666 8,400 5

1,700 400

3

5 110

15.50 3.85

KKK, BMS ProfiPower Kft., Eston

¸

¸

–

–

–

–

¸

–

–

–

Millenáris Irodaház Kft (100) –

1024 Budapest, Lövőház utca 39.

(1) 451-4280 (1) 451-4269 sales@wing.hu

700–800 413

5

3 74

13.50 1,225 HUF

Bosch-Siemens, Australian Embassy, Raiffeisen Bank, Antalis, INC, Research, VTG Austria GmbH

–

–

–

–

¸

–

–

–

–

DTZ, (1) 269-6999

– Mosaic Property LLP (100)

1126 Budapest, Királyhágó tér 8–9.

– – –

7,200 6 1,200 sqm office buildings 4

200–500 800

1

– 125

Ÿ Ÿ

Pannon, PannonJob, UIP Dunafilm, Warner Music Hungary, Golder Associates

¸

¸

¸

¸

–

¸

–

–

Fitness club, stationery shop

–

Videoton Holding Zrt (100) –

1021 Budapest, Hűvösvölgyi út 54.

(1) 392-1220 (1) 392-1229 bpirodahazak@videoton.hu

7,163 8,595 8

460 –

2

3 160

Ÿ 3.60

Wallis Motor Duna (BMW)

¸

¸

–

–

–

–

¸

–

–

–

Polár Center Kft (100) –

1097 Budapest, Könyves Kálmán körút 5.

(1) 451–4280 (1) 451–4269 sales@wing.hu

3

3 147

12.80 4.50

Intrum Justitia, FSZK, MAPI, Indesit

¸

¸

¸

–

–

–

¸

–

–

EHL Real Estate Hungary, (1) 451–8040

– Immoeast (100)

1139 Budapest, Pap Károly utca 4–6.

– – –

3

2+1 51

Ÿ Ÿ

Ÿ

¸

¸

–

–

–

–

¸

–

Internal garden, opening windows

DTZ, (1) 269-6999, (30) 699-0074

– (100)

1013 Budapest, Krisztina körút 32.

– – –

7,250

Ÿ 6

7,100

Ÿ 8

2,500

Ÿ 7

would not disclose, NR = not ranked, NA = not applicable

Ÿ Ÿ

Ÿ 2,000

This list was compiled by researcher Mihály Kovács from responses to questionnaires received by May 3, 2010. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1022 Budapest, Alsó Törökvész út 9., or faxed to 398-0345.

Mihály Kovács can be contacted at mihaly.kovacs@bbj.hu.

WWW.BBJ.HU

SPECIAL REPORT 23

Budapest Business Journal | May  – May 

LARGEST B CATEGORY OFFICE BUILDINGS IN BUDAPEST

The BBJ’s Book of Lists contains 100+ sector-specific listings of leading companies. The Book of Lists comes free with a BBJ subscription, or can be ordered separately by e-mailing Eva.Bercesi@bbj.hu

9

Victor Hugo

10

Arcadia

Other

Hungária

Car wash

8

Underground garage

Temesvár

Parking lot

7

Lift

6

Alfa Csepel Office

www.in-management.hu

Café

Maglódi 6

Restaurant

5

www.wing.hu

Card entry system

Angyal

Current major tenants Security service

4

–

Monthly rent in April 2010 (Euro/sqm) Monthly service charge in April 2010 (Euro/sqm)

BFI House

Year reconstructed

3

www.alfagroup.hu

Year constructed

Alfa Airport Logistic

Minimum lease terms (years)

2

www.alfagroup.hu

Currently leasable office space (sqm)

Alfa Kőérberki Office

Average size of floors (sqm)

1

No. of levels

Company Website

Net office space (sqm) Total gross size of building (sqm)

Rank

Ranked by total net office space

13,599 19,289

6

Ÿ

2,840

Ÿ

1960

–

3–4 3.30

ELA Kft, Atloc Hungária Kft, TLI Zrt, Spacecar Kft

–

–

¸

¸

¸

¸

–

–

–

Buses no. 87, 87/A

Alfa Ingatlancsoport, (1) 350-8710

1112 Budapest, Repülőtéri út 2.

(1) 350-8710 (1) 350-8016 sales@alfagroup.hu

11,969 13,654

Ÿ

Ÿ

3,290

Ÿ

1985

Ÿ

3 1.40

Logexpon Kft

–

–

–

–

–

¸

–

–

–

Buses no. 93, 182, 98, 200E; Tram no. 50

Alfa Ingatlancsoport, (1) 350-8710

1183 Budapest, Akadály utca 15.

(1) 350-8710 (1) 350-8016 sales@alfagroup.hu

7,987 8,971

6

1,000

4,420

3

1999

–

9–11 3.70

Osram, Daikin McQuay, Agroinvest, Signal Insurance

¸

¸

¸

–

¸

¸

¸

–

Fire and airing system, 24-hour reception, phone directory, bathroom in each office

Bus no. 3, 14, 114; tram no. 18, 41, 47

Eston International Zrt, (1) 877-1000

1117 Budapest, Fehérvári út 84/A (1) 381-6000 (1) 381-6006 –

7,100 7,800

8

870

240

1

1989

–

7–9 3.80

Ÿ

¸

¸

¸

–

¸

¸

¸

–

–

Tram no. 2, 2A, 4, 6, 21, 21/A; bus no. 23, 23E, 54, 55, 15, 115, 212

Wing Zrt, (1) 451-4280

1095 Budapest, Angyal utca 1–3.

(1) 451-4280 (1) 451-4289 sales@wing.hu

7,000 8,000

5

1,600

3,900

1

1970

2003

6 3

Ÿ

¸

¸

–

–

¸

¸

–

–

–

Tram no. 28

Indotek Zrt, (1) 688-1786

1106 Budapest, Maglódi út 6.

(1) 688-1781 (1) 688-1701 info@in-management.hu

Ÿ

–

–

–

¸

¸

¸

–

–

–

Bus no. 38, 138, 179

Alfa Ingatlancsoport, (1) 350-8710

1211 Budapest, Varrógépgyár utca 8–10.

(1) 350-8710 (1) 350-8016 sales@alfagroup.hu

¸

–

¸

¸

–

–

–

Tram no. 18, 41, 47

Indotek Zrt, (1) 688-1781

1116 Budapest, Temesvár utca 20.

(1) 688-1781 (1) 688-1701 info@in-management.hu

–

Tram no. 1, buses 5, 7 173

B&V Group, (1) 471-5174

1146 Budapest, Hungária körút 140–144.

(1) 471-5174 (1) 471-5158 info@bvgroup.hu

Services

Public transportation access

Leasing agency or agent, phone

Address Phone Fax Email

5,956 9,450

Ÿ

Ÿ

Ÿ

Ÿ

1974

Ÿ

2–.5 2.60

5,432 7,925

5

1,585

1,400

1

1974

–

7 3.50

Ÿ

¸

–

4,500 6,500

6

900

4,800

2

1992

2005

7.50 3.70

B&V Group, CBA, Volksbank, Generali, OTP Létesítményüzemeltető

¸

–

¸

¸

¸

¸

¸

–

4,494 8,289

5

1,657

2,275

Ÿ

1900

–

8 4.20

ATW Internet, APEH, Gála Party Service

–

–

–

¸

¸

¸

–

–

–

Underground no. 3, tram no. 14, bus no. 133, trolleybus no. 76, 79

Alfa Ingatlancsoport, (1) 350-8710

1132 Budapest, Victor Hugo utca 11–15.

(1) 350-8710 (1) 350-8016 sales@alfagroup.hu

www.in-management.hu

3,650 6,457

5

1,291

1,300

1

1960

2007

8 3

Ÿ

¸

¸

–

¸

¸

¸

–

–

Buffet

Underground no. 3, tram no. 12, 14; bus no. 30, 104, 196

Indotek Zrt, (1) 688-1781

1043 Budapest, Aradi utca 16.

(1) 688-1781 (1) 688-1701 info@in-management.hu

11

Bajcsy

3,631

www.bif.hu

Ÿ

4

Ÿ

1,066

Ÿ

1989

–

10 5

Ÿ

¸

–

–

–

¸

¸

–

–

–

Underground no.

3, tram no. 4, 6

BIF Nyrt, (1) 332-2200

1065 Budapest, Bajcsy-Zsilinszky út 57.

(1) 332-2200 – bif@bif.hu

12

Madách

3,623

www.bif.hu

Ÿ

7

Ÿ

2,200

Ÿ

1939

–

10 5

Ÿ

¸

–

–

¸

¸

–

–

–

–

Underground no. 1, 2, 3

BIF Nyrt, (1) 332-2200

1075 Budapest, Madách tér 3–4.

(1) 332-2200 – bif@bif.hu

13

Corner 21 www.in-management.hu

3,513 5,726

4

1,431

2,313

1

1975

–

7 2.80

Ÿ

¸

–

–

–

¸

¸

–

–

–

Tram no. 14, bus no. 105

Indotek Zrt, (1) 688-1781

1135 Budapest, Béke út 21–29.

(1) 688-1781 (1) 688-1701 info@in-management.hu

14

Victor Hugo

3,430

www.bif.hu

Ÿ

6

1,200

391

1

1974

1989

9.50 3

Interware, Szervernet, Deninet

¸

¸

–

–

¸

¸

–

–

Buffet

Underground no. 3

BIF Nyrt, (1) 332-2200

1132 Budapest, Victor Hugo utca 18–22.

(1) 332-2200 (1) 367-2800 info@bif.hu

15

Bajnok Center

3,270 5,100

7

580

3,500

2

1995

–

7 3.70

B&V Group, Mester Kiadó

¸

–

–

–

¸

–

¸

–

–

Underground, trolleybus no. 72, 73, 76

B&V Group, (1) 471-5174

1063 Budapest, Bajnok utca 13.

(1) 471-5174 (1) 471-5158 info@bvgroup.hu

16

Alfa Vahot Office

3,262 5,470

3

1,823

1,052

Ÿ

1975

–

6 5

City Taxi, Codra Kft

–

–

¸

¸

–

¸

–

–

–

Buses no. 7, 173E, 103, 114; trams no. 41, 47

Alfa Ingatlancsoport, (1) 350-8710

1119 Budapest, Vahot utca 6.

(1) 350-8710 (1) 350-8016 sales@alfagroup.hu

17

Sas Center

3,000 5,000

1+4; 1+3

380

800 (approx.)

1

1850 (approx.)

1999

13-15 5.20

Roland Berger Kft, Carlson Wagonlit Travel, Capitol Consulting

¸

–

¸

¸

¸

–

¸

–

–

Underground no. 1, 2, 3

–

1051 Budapest, Sas utca 10–12.

(1) 301-8702 (1) 312-2026 info@sascenter-irodahaz.hu

18

Sínai www.in-management.hu

2,575 3,764

5

752

1,260

1

1980

–

6 4.20

Ÿ

¸

¸

¸

¸

¸

¸

–

–

–

Tram no. 3, 62; bus no. 32

Indotek Zrt, (1) 688-1781

1148 Budapest, Angol utca 38.

(1) 688-1781 (1) 688-1701 info@in-management.hu

Interoffice

2,131

7

227

1,548

3

1991

2010

7.50 - 9.5 5

Pénztárak Garancia Alapja, SDL Hungary Kft, Donau Brennstoffkontor Kft

¸

–

–

–

¸

–

¸

–

–

Trolleybus no. 78

Coteba Kft, (1) 479-6022

1075 Budapest, Wesselényi utca 28.

(1) 479-6022 (1) 479-6029 marcell.mihalyfi@hu.coteba.com

–

3 3.60

–

Trams no. 2, 24, 21; buses no. 23, 54, 55

Alfa Ingatlancsoport, (1) 350-8710

1096 Budapest, Haller utca 11–13.

(1) 350-8710 (1) 350-8016 sales@alfagroup.hu

19

20

www.alfagroup.hu

www.in-management.hu

www.bvgroup.hu

www.alfagroup.hu

www.bvgroup.hu

www.alfagroup.hu

–

www.irodahaz.info/kiadoiroda/Interoffice/Budapest/184/?

Alfa Haller www.alfagroup.hu

Ÿ

1,710 2,890

5

578

140

Ÿ

1978

–

–

¸

¸

¸

¸

–

–

WWW.BBJ.HU

24 SPECIAL REPORT

Budapest Business Journal | May  – May 

Property management companies joined by new competition Property managers are no different from other players on the real estate market in that they too have to make adjustments if they want to stay afloat. As times are changing, it’s the little things that begin to count.

BBJ GERGŐ RÁCZ

When you walk into a prime office building, you expect to be politely greeted by the receptionist. You expect everything to be top-of-theline and all service to run smoothly.

Once these small things were only considered of fundamental importance in high-end offices, but they are now determining whether a management firm can hold onto its business in less prestigeous locations, too.

“Previously, property management was considered unimportant and in many cases, the menial things falling under its scope were performed by tenants,” said Zoltán Petrik, head of property management at real estate consultants Eston International. “Now, when every penny matters, property management is the piece of the picture that can prove the decisive factor.”

Realizing that becoming cost-efficient is vital, players within the industry are trying to expand the scope of their activities and deliver an all-inone package. To this end, Eston has introduced an auditing service with the goal of exploring whether a building could be operated more efficiently.

Petrik said it is common for auditors to reveal significant possible savings.

“For landlords, tenant satisfaction and the resulting cash flow is allimportant. For them, even confirmation of the fact that the house is being run as cheaply as possible is valuable information,” he said.

have little else to do nowadays when it comes to building something new.

They are using it to stay afloat until the upswing. Accordingly, majors like IVG or TriGranit have announced they will be focusing more of their efforts on property management.

IVG started off managing its own buildings but is now looking for further contracts in its established international client base. TriGranit CEO Árpád Török said the Hungarian developer would be very interested in securing outside contracts.

Though there is a flood of new players, the incumbents are not particularly concerned, arguing that any newcomer is at a considerable disadvantage if it is looking to compete with them.

Adrienn Lovro, country manager of CEE-focused property developer ABLON, highlighted the lack of highly-trained professionals, without whom a viable management business is unimaginable. This in turn has started a wave of recruitment on the market, putting pressure on established players to hold onto the grey matter they have on stock.

“This new trend seems to me like seeking an escape route,” Lovro said, a notion shared by several experts on the market. If a developer tries its hand at property management solely as a temporary fix to keep its people working, it will probably be unable to reach the quality of service that has become the benchmark.

THE TENANT IS KING

Property managers typically sign contracts for one-year terms. The reason for the seemingly brief duration is simple: it allows landlords to get rid of them more easily. “When a change happens in the ownership of a building, it almost invariably leads to a change in management of the property, since the new owner obviously has its own preference for a manager and does not DEVELOPERS JOIN IN want to bother with getting accustomed to an unfamiliar partner,” Because of its growing impor- Eston’s Petrik said. tance, property management has also Changes in the ownership of offices raised the interest of developers, who are not common these days, but a

THANK YOU

manager also has an important role to play in achieving the most crucial goal in the current business environment, namely holding onto clients. And if a tenant, especially a bigger one, is dissatisfied with the services it is receiving, the landlord will not think twice about dumping its property manager and enlisting a new one.

“Having good cash flow means everything right now and you can’t get that if you’re losing tenants,” Petrik said. The pressure on landlords is all the more acute because banks financing projects are naturally keeping an even closer eye on their investments. “As opposed

how a manager is able to address any problems that may arise.

It is important that the person repairing the equipment make a good impression, by being presentable and appealing on a personal level. It is also THE LITTLE THINGS MATTER crucial for the manager to be flexible and accessible to assure tenant satisfacTenants hardly ever come into con- tion. “It is all about showing the tenants tact with the manager of the property, how important they are and that the unless there is something wrong. “You manager is there to provide for their take it as a given that when you flick needs, and this marks a significant a switch the light comes on, or if you change in the industry. For instance, plug your computer into the socket opposed to earlier times, it is now comyou have a working internet connec- pletely unacceptable for a manager tion,” Petrik said. And the selection to be unreachable in case something process on the market comes down to comes up,” Petrik added. n to earlier practices, banks are now demanding monthly tenancy reports, and under such circumstances landlords simply cannot afford cancelled lease contracts.”

THE BUDAPEST BUSINESS JOURNAL WOULD LIKE TO EXPRESS ITS THANKS TO THE EXPERTS WHO ALSO CONTRIBUTED TO THIS SPECIAL REPORT (IN RANDOM ORDER):

TAMÁS SELLYEY sales director ▶ Indotek Group

CSABA TÓTH CEO ▶ Budapesti Ingatlan

ZOLTÁN PETRIK head of property management ▶ Eston International

GÉZA GYETVAI CEO ▶ Gyetvai Fivérek

ZOLTÁN KALMÁR managing director ▶ Iroda.hu

GÁBOR BORBÉLY senior analyst ▶ CB Richard Ellis/BRF

NÓRA TELEKI office research associate ▶ Colliers International/ RERA

BALÁZS VILCZEK attorney-at-law ▶ Machács & Társai Law Office

OSZKÁR LEVENTE SZABÓ attorney-at-law

BALÁZS LENKEI designer ▶ Sinus Design

▶ Machács & Társai Law Office

WWW.BBJ.HU

SPECIAL REPORT 25

Budapest Business Journal | May  – May 

FACILITY MANAGEMENT COMPANIES

The BBJ’s Book of Lists contains 100+ sector-specific listings of leading companies. The Book of Lists comes free with a BBJ subscription, or can be ordered separately by e-mailing Eva.Bercesi@bbj.hu

Ranked by total net revenue

Major clients in 2009

19,550

2,100

1,880

30

15

55

–

–

–

¸

¸

–

Gastroyal Holding Kft, Magyar Posta, Pannon, Xerox Hungary, ING Insurance, Axa

10,418

10,000

10,418

35

50

15

¸

¸

¸

¸

–

–

Magyar Telekom, MOL, TVK, National Bank of Hungary, WING, T-Mobile

–

Budapesti Erőmű, ERSTE Bank, Vodafone, Szeged University, OBVI Szombathely, Pannon

www.strabag-pfs.hu

3

Future FM Facility Management Zrt

6,690

1,570

1,708

Ÿ

Ÿ

Ÿ

¸

¸

¸

¸

¸

www.future-fm.hu

4

BIF Nyrt

5

Kész Ingatlan Kft

6

REIWAG Kaiser & Schmidt Kft

7

Arex FM Kft

8

REM Real Estate Zrt

9

Corten Kft

10

OPUS Kft

11

Millenia Zrt

12

www.bif.hu

www.kesz-ingatlan.hu

www.kaiser-schmidt.hu

www.arexfm.hu

www.rem.co.hu

www.corten.hu

www.opus-kft.hu

www.millenia.eu

Coteba Kft www.coteba.hu

1,459

1,258

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

25

Ÿ

28

Ÿ

47

¸

¸

¸

¸

¸

¸

¸

¸

¸

¸

No. of full-time employees on April 1, 2010

Ownership (%) Hungarian Non-Hungarian

Top local executive Finance director Marketing director

Address Phone Fax Email

Ÿ

Dániel Jellinek Ÿ ( ) BRITEX International LLC Ÿ ( ) ( ), Indotek UK. LLC Ÿ

Dániel Jellinek – –

1148 Budapest, Kerepesi út 52.

(1) 688-1700 (1) 688-1701 indotek@indotek.hu

455

WING Zrt (49) STRABAG Property and Facility Services GmbH (51)

László Vágó Gyula Jászai Gábor Landi

1134 Budapest, Váci út 45.

(1) 325-1802 (1) 325-1805 info@strabag-pfs.hu

Ÿ

(100) –

Ferenc Batári Attila Szabó –

1148 Budapest, Fogarasi út 5.

(1) 468-4080 (1) 468-4088 mail@future-fm.hu

Csaba Tóth Krisztina Czifra Rudolf Nemes

1065 Budapest, Bajcsy Zsilinszky út 57.

(1) 332-2200 (1) 367-2800 info@bif.hu

Other

Real estate development

Maintenance

Business management

Infrastructural services

Technical control

Services Logsitics and trade facilities (%)

STRABAG Property and Facility Services Zrt

Industrial facilities (%)

2

www.indotek.hu

Portfolio

Office Buildings (%)

1

Indotek Zrt

Total net revenue in 2008 (HUF mln)

2008

Company Website

2009

Rank

Net revenue from facility management (HUF mln)

–

Ÿ

Ÿ

DonaDöme Kft (29.80), PIÓ 21 Kft (24.62), Budapest Real Estate Holding Asset Management Zrt (25), AEGON Hungary Investment Fund Management Zrt (5.16), free float (15.42) –

Rental

Praktiker, Kinnarps, BVOP, Kiskunfélegyháza Municipality, Univeristy of West Hungary

54

Kész Holding Zrt (100) –

Ildikó Laskai Csilla Keresztes Nagy –

1095 Budapest, Mester utca 87.

(1) 476-6904 (76) 801-505 laskaii@kesz.hu

Günther Schmidt Margit Szász –

1114 Budapest, Bartók Béla út 47.

(1) 381-6000 (1) 381-6019 office@kaiser-schmidt.hu

1,087

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

¸

¸

¸

¸

¸

–

Ÿ

60

– Günther Schmidt Ÿ ( ), Reiwag GmbH Ÿ ( )

778

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

¸

¸

¸

¸

¸

Ÿ

Ÿ

29

BÁV Zrt Ÿ ( ), VIREX Kft Ÿ ( ) –

Ádám Nagy – –

1027 Budapest, Csalogány utca 23.

(1) 325-2640 (1) 325-2644 arexfm@arexfm.hu

József Takács András Gömböcz –

1052 Budapest, Váci utca 9–21.

(1) 486-3340 (1) 484-3344 info@rem.co.hu

774

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

¸

¸

¸

¸

¸

–

Ÿ

35

REM International Zrt (100) –

670

370

430

40

10

50

¸

¸

–

¸

–

Construction

AIG, Europolis, Auchan, T-Mobile, Hochtief

35

– Corten Wordwide Ltd (100)

Krisztina Holánszky Árpád Székely –

1117 Budapest, Budafoki út 183.

(1) 481-9513 (1) 481-9512 corten@corten.hu

Béla Misnyovszki Ibolya Wagner –

1144 Budapest, Rátót utca 18–20.

(1) 383-4651 (1) 363-6838 office@opus-kft.hu

607

602

530

Ÿ

300

Ÿ

Ÿ

602

Ÿ

Ÿ

50

80

Ÿ

–

–

Ÿ

50

20

¸

¸

¸

¸

¸

¸

¸

¸

¸

¸

¸

¸

¸

–

Ÿ

Ÿ

Gyula Babos (100) –

¸

Energy consulting and quality management

Ÿ

70

Tibor Balogh (100) –

Tibor Balogh György Osváth Pavek Noémi

1118 Budapest, Budaörsi út 31/C (1) 248-3800 (1) 248-3809 center@millenia.eu

–

SEB Immobilien Investment GmbH, Déli Büro Center Zrt, Interbüro Kft, Interoffice Irodaépület Kft, Tulipan Park A Kft

– Coteba (Österreich) GmbH (100)

Hubert Mühringer Péter Radó Marcell Mihályfi

1075 Budapest, Wesselényi utca 16.

(1) 479-6020 (1) 479-6029 international.hungary@ coteba.com

¸

17

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BBJ LIFE LIFE & PEOPLE

Who's News

Better know a CEO

Publishers’ other big hope

People on the move

Anders Jensen

▶ PAGE 29

▶ PAGE 30

▶ PAGE 30

eBooks

Printing your own book

For many years publishers have lamented decreasing sales and pulp-fiction stealing the show. Now, companies coming from publishing, distribution, software and hardware development have realized that there may be a digital solution in Hungary, too. ▶▶ article continues on next page

WWW.BBJ.HU

28 LIFE eBOOKS ▶ continued from previous page At the recent International Book Festival in Budapest, the topic everyone was talking about was how the Hungarian market is now joining the global ebook movement.

Ebooks are not completely without precedent in Hungary. Last year saw the arrival of some small, pioneering publishers with solutions that were not yet suited to fully meet mainstream demand.

Fapadoskönyv.hu tried to eliminate printing and marketing costs by offering electronic versions of its books. But it simply deferred printing costs onto the consumer: the books had to be printed out at home. Later on, Könyvkolónia entered with its ekönyv store, offering books in its own format and on its own reader software.

A SOURCE OF GROWTH

Now, however, the big Hungarian players are also entering the fray. If the solutions they deliver are secure and easy to reach, ebook sales could rocket the way they have in the US. On the other side of the “pond”, ebook sales recorded by the Association of American Publishers soared 176.6% in 2009 to $169.5 million.

Goldman Sachs’ latest report puts the increase of ebook sales to 400% by 2015, while print book sales will probably fall 4.9% by then. This new source of growth is especially important as the Hungarian book market entered decline in 2009. For the first time in 13 years, the

Budapest Business Journal | May  – May 

been involved in digital publishing for four years. eKönyv Kft also plans to distribute the eReader developed by Txtr.

An advantage of the Txtr platform is that TRYING TO REMAIN LOCAL books can be purchased not only from the webpage of eKönyv Magyarország, but also To pioneer the segment before Ama- through applications such as smartphones zon or Google could claim it, a joint ven- or tablet PCs and documents can be read ture by Líra and Bookline, eKönyv Kft, on all devices with Adobe support. The started the beta version of an ebook store webshop currently features only a limited in April. Meanwhile, Kossuth Kiadó is number of titles from Hungarian authors, scheduled the start its own webstore on while the number of English-language May 17 and Sanoma is said to start filling books exceeds 2,000. the virtual shelves of its online bookstore polc.hu in the summer.

200 NEW HUNGARIAN EBOOKS The aim of eKönyv Magyarország is to provide readers with Hungarian books Kossuth Kiadó will merge seven online in a digital form. They intend to help businesses into one called Multimediaplaza domestic publishers learn the market starting June 1. The plaza will sell and gain technological insight. Copy- Hungary’s first ebooks besides its usual prevention is of vital importance, and portfolio of audio books, music and films. eKönyv will use Adobe’s technology, They have spent six months on preparing which is the most widely-used in the the 200 new ebooks for the launch, all of world. The reason behind the choice is them already published on paper. “We that all better e-readers are Adobe-com- decided to start our own independent patible, so buyers can use a variety of webstore because Kossuth has always been devices including iPhones and iPads. an innovative publisher that is not afraid eKönyv Kft has adopted its business of the risk,” the Budapest Business Journal model and technology from a system in was told by László Földes. use in Germany. “We chose this system Kossuth plans to gradually expand for its reliability; Germany has a highly- its portfolio of ebooks in volume and developed publishing culture. A major also in quality as they aim to include partner of ours is Hanseatische Gesell- more color ebooks, along with many schaft für Verlagsservice (HGV), a huge nonfiction books. Low pricing is also IT company whose main profile is pub- part of the strategy. Volumes will be lishing support,” managing director Ákos on sale at around €4 or HUF 990, well Starcz said. HGV also deals with logistics below the $10 and €10 usually charged and all technical arrangements such as the for English and German publications, production of ebooks and encryption. and Kossuth is offering free content eKönyv’s other German partner is (books with expired copyright) under Txtr, a start-up from Berlin. Txtr has the Creative Commons license. amount of money spent on books (HUF 64 billion) decreased by about 10%. It is high time for some innovation.

HUNGARIAN IPADS? Markets are likely to be driven by the development and expansion of ebook reader devices. If it has a comfortable interface, a piece of hardware can become popular regardless of its network connection capability. Kossuth Kiadó has decided to offer its own device on the distribution channel for the ebooks and eKönyv has partnered with a hardware manufacturer to supply readers in a similar model to Amazon’s Kindle.

The iPad will surely fuel the sales of ebooks in Hungary, once the gadget is finally available (probably sometime in the autumn). But this could only happen if the software allows readers to read in their native language, and to have an additional selection of useful features.

This is exactly the niche Kulcs-Soft recognized when, after more than a year of software development for iPhones, it decided to meet this demand. “Hardware and software are just as important in this line of business as content – we’re committed to iPad as a device and the development of new applications for the platform,” said Samu Hapák, manager of Kulcs-Soft’s ebook business, about the development of the KS reader.

Kulcs-Soft has also been working on an agreement with Kossuth and is open to discussions with publishers to complement their range of services with iPad-compatible ones. The company is also planning to launch other, more targeted readers in the near future. “We don’t think this market will mature in the next three years, but we must be wellprepared for when the real revolution of reading begins,” said Hapák. AJM-ZsV

WWW.BBJ.HU

LIFE 29

Budapest Business Journal | May  – May 

Print your own book events UPCOMING

MAY 17–19

Finding classics or book titles that are not on the latest bestseller list could prove quite a challenge. Now, a novel technology offers an answer, though not yet to Hungarians.

If you have ever tried to buy a specific book for a friend or relative as a gift, you have probably had trouble with getting books that are not brand new, which become out of stock very fast due to ever decreasing copy numbers. However, thanks to a new technology, you may print whatever book you need when you need it.

Personal printing on demand is made possible by a series of new book-store machines such as the Espresso Book Machine (in photo), which was named Invention of the Year in 2009 by Time. It looks like a photocopier, but it prints and binds books, spitting out a volume exactly like the one sitting on your bookshelf. It was originally created with the purpose of printing small quantities of books that could not have been produced profitably in the standard publishing model. In addition to niche literature, though, out-of-print titles are also much in demand.

Publishers hope that such machines will bring new business advantages, too. The new distribution system is very cost-effective: they only have to print as much as will be bought, and there are thus no storage costs. At the moment, such machines are only installed in bookstores in the US, Can-

Photo: On Demand Books

BBJ ZSÓFIA VÉGH, ANIKÓ JÓRI-MOLNÁR

ada and Australia, but the first machine in Europe was bought by Blackwell in Britain in 2009. As it spat out book after book at the last book festival, it was hailed by many as the most important thing that has happened to printing since Gutenberg.

Digital printing could offer other attractions, too. The most important of these is that you can customize your book. Why buy gift cards for special occasions when they can be replaced with a good book with a personal note printed in it? The cover and the content can both be tailor-made. Even characters’

names could be changed, allowing kids to be the stars of their favorite fairy tales, and the contents of books published earlier can be brought up to date.

The BBJ contacted the three largest Hungarian bookstore-and-publishing house chains, Alexandra, Libri and Líra & Lant, but while all of them have heard something about this new trend, none of them are planning on entering this market at the moment, taking a wait-and-see approach.

Of course, the exorbitant price of the machine – $175,000 – might also have something to do with it. ■

Quality control at the BBJ

THE BBJ’S PUBLISHER, ABSOLUT MEDIA KFT HAS RECEIVED ISO 9001:2008 AND THE ISO 14001:2005 QUALITY CERTIFICATES FOR ITS ENVIRONMENTAL AND QUALITY CONTROL SYSTEMS. ON THE PHOTO (FROM LEFT TO RIGHT): MIKLÓS PÁL HAJNAL, CEO OF ADWARE Q1 DEVELOPMENT AND CONSULTING KFT, TAMÁS BOTKA, CEO OF ABSOLUT MEDIA KFT AND SÁNDOR BÖDŐ HEAD OF TÜV NORD MAGYARORSZÁG KFT’S CERTIFICATION LOCATION.

▶ Training: Professional Power-

Point presentation LOCATION Trainex Kft IT education hall, Dist. 13, Váci út 39 TIME 1:30 p.m.–5 p.m.

FEE HUF 36,000 + VAT ORGANIZER Trainex Kft CONTACT Phone: 320-4198, fax: 320-9454, email: trainex@trainex.hu, internet: www.trainex.hu MAY 19 ▶ BCCH Annual General Meeting LOCATION Restaurant Gundel, Dist. 14, Állatkerti út 2 TIME 5 p.m.

CONTACT BCCH, phone: 302-5200, fax: 302-3069, email: bcch@bcch.com, internet: www.bcch.com MAY 26 ▶ Training: Recent accounting changes LOCATION Best Western Hotel Hungaria, Dist. 7, Rákóczi út 90 TIME 10 a.m.–3 p.m.

FEE HUF 22,900 + VAT SPEAKER Zsuzsanna Verebélyi Böröczky ORGANIZER Sämling Kft CONTACT Phone: 212-4412, fax: 212-5071, email: info@samling.hu, internet: www.samling.hu MAY 27–29 ▶ Renexpo Central Europe: International Renewable Energy and Energy Efficiency Fair LOCATION Hungexpo Budapest Fair Center, Dist.

10, Albertirsai út 10 TIME 10 a.m.–6 p.m.

ORGANIZER REECO Hungary Kft CONTACT Gabriella Zsótér, phone: 225-2141, fax: 225-2145, e-mail: zsoter@reeco.hu, internet: www.renexpo-budapest.com MAY 28 ▶ KPMG-BME Academy: Financial modeling LOCATION KPMG Conference Center, Dist. 13, TIME 9 a.m.–5 p.m.

FEE HUF 120,000 + VAT ORGANIZER KBA Education Kft CONTACT Phone: 887-7114, fax: 887-6531, email: academy@kpmg.hu, internet: www.kpmg-bme-akademia.hu MAY 31–JUN 2 ▶ Training: Windows Server 2008 Active Directory, Network and Application Infrastructure Design LOCATION NetAcademia, Dist. 7, Kéthly Anna tér 1 FEE HUF 219,000 + VAT ORGANIZER NetAcademia Education Center Kft CONTACT Phone: 472-1214, fax: 472-1215, email: info@netacademia.net, internet: www.netacademia.net JUNE 1 ▶ All Nations Lions Club DESCRIPTION Meeting the first Tuesday of each month.

LOCATION NH Budapest Hotel, Dist. 13, Vígszínház u. 3.

TIME 7 p.m.

CONTACT Teréz Tál, email: terez.tal@interjob.hu; www.anlcb.hu The Budapest Business Journal is happy to publish news on business, social or charity events in its Calendar section.

Please submit your request at least two weeks in advance of publication date to mihaly.kovacs@bbj.hu For community events visit our partner:

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30 LIFE

Budapest Business Journal | May  – May 

WHO'S NEWS

Name Csaba Mándoki Current company/position Metro Kereskedelmi Kft/ finance director Previous company/position

Mándoki first joined Metro as head of controlling in 1995. He was named head of the finance department at Metro Cash&Carry International Holding in 2003. Three years later, he continued his career at Metro AG’s planning and controlling division, then was named to head the central program office of Metro AG Shape 2012. His predecessor, Tanya Kopps, continues her career as finance director of Makro Cash&Carry in Spain.

Metro AG/head of controlling

Name András Csapó Current company/position Gide Loyrette Nouel Budapest office/head of real estate Previous company/position Kinstellar Budapest/managing associate

András Csapó, a specialist in real estate development and investment matters, has been appointed to head Gide Loyrette Nouel’s real estate department. Previously, he worked with several law offices including Kinstellar Budapest, Linklaters Budapest and Dezső & Partners. He graduated from the law faculty of the Eötvös Loránd University in 2001. He has been a member of the Budapest Bar since 2005. Apart from Hungarian, he speaks English and German.

[ BETTER KNOW A CEO ]

Do you know someone on the move?

Send information to whoiswho@bbj.hu

Name Jenny Winter Current company/position AstraZeneca Hungary/managing director Previous company/position AstraZeneca Group/deputy director in charge of public affairs

Name Erika Gaál Current company/position Strabag Property and Facility Services Zrt/property manager Previous company/position Alfa Group Facility Management/property manager

Winter succeeds James Greenhalgh in the position, who had been managing director of AstraZeneca for the past two years, and will continue his career at the company’s headquarters in Brussels.

Winter joined AstraZeneca in 2007.

Previously, she worked at a charity organization and held marketing and managing director positions at various healthcare companies both in Australia and Ireland. She graduated from the University of Southampton.

Before joining Strabag, Gaál spent two years with Alfa Group Facility Management. Earlier, she was office manager at SBI Real Estate for a year, and also spent a year in Dublin. She graduated from the Budapest Business School in 2008. In addition to her native Hungarian, she speaks fluent English, intermediate Spanish and basic German.

Name Helena Huszta Current company/position Indotek Group/head of marketing Previous company/position Megatrend Zrt/head of international relations

Name Csaba Kátai Current company/position Canon Hungária Kft/marketing director Previous company/position Panasonic South-East Europe Kft/regional marketing director

Over the past two years, Huszta had been head of international relations at Megatrend Zrt. Before that, she spent five years with Reax Invest Zrt as project and marketing manager. Earlier, she was project manager of international business relations at Budapest Airport Zrt. Huszta graduated from the Zsigmond Király College in 2005. In addition to Hungarian, she speaks Russian, English, and German.

Kátai was the regional marketing director of Panasonic for the past three years. Before that, he worked with companies such as Xerox, Mars and British American Tobacco, in the fields of direct marketing, market research, brand management and marketing. He graduated from the Budapest University of Technology and Economics in 1992.

▶ What kind of job did ▶ What is your favorite ▶ What is your favorite

you dream of when you were a child?

Hungarian word?

Hungarian dish?

Mosoly.

Lecsó with eggs.

Médecins Sans Frontières is a very good example.

▶ What is your favorite place in Budapest?

My four fantastic kids.

▶ What is your most marked characteristic?

▶ What is your greatest regret?

I would love to be able to fly (an airplane that is).

It’s like Frank sang: “I’ve had a few, but then again, too few too mention.”

Doctor, pop star, cowboy, the list goes on..

▶ What is your greatest achievement?

ANDERS JENSEN CEO, PANNON

Jensen has been CEO of Pannon since April 2009. Prior to that, he had served as CEO of Grameenphone from 2007, a subsidiary of Telenor and the largest mobile operator in Bangladesh. Starting in 2005, he worked as the chief marketing officer and head of consumer market at Telenor Sweden. He has almost ten years of experience in the internet and telecommunications industry with Europolitan, Vodafone and Telenor, in addition to several years of experience working with fast moving consumer goods. A Swedish national, Jensen is married and has four children.

▶ Which talent would you most like to have?

Sing like Elvis and dance like Astaire.

▶ What is the trait you most disapprove of in others?

▶ What is your greatest fear?

Most of my fears are related to anything happening to my kids.

Envy.

▶ Where would you like to live?

▶ Which living person do you most admire?

Here and now is just fine. At some point when it is time to settle down, my preference is by a blue ocean under a warm sun.

I admire people who do great things without getting a lot of attention and still keep going.

▶ Who is your favorite hero in fiction?

That would have to be Bond, James Bond.

▶ Who are your heroes in real life?

My heroes are people with integrity and a genuine ability to do the right thing.

Many places. As in most cosmopolitan cities I really enjoy a cup of coffee or a glass of wine on a streetside café and watching life go by.

▶ What was the weirdest thing you experienced in Hungary?

Nothing really weird, yet.

▶ Have you traveled around in Hungary outside of Budapest? If so, where?

I have traveled in the countryside a bit, mostly on business. I look forward to visiting the wine districts and Lake Balaton this summer.

▶ What is your hobby?

▶ Which Hungarian habit did you get accustomed to most easily?

Food and wine, and tennis to balance the first hobby.

I can really enjoy a big, long lunch, but not every day.

▶ What is the one thing without which you cannot imagine your life in Hungary?

▶ What is your motto?

My family.

No specific motto, but I try to live by “Make the PF most of today, you only get one chance.”

WWW.BBJ.HU

LIFE 31

Budapest Business Journal | May  – May 

GREAT

QUOTES

〉WE’D LIKE TO WARN YOU ABOUT THE HUGE RESPONSIBILITY OF YOUR POWER – A POWER THAT IS PRACTICALLY UNLIMITED

said László Kövér of Fidesz in July, 1994, after MSzP and SzDSz gained two-thirds majority in Parliament

〉

I DON’T THINK THAT (FORMER BUDAPEST POLICE CHIEF) PÉTER GERGÉNYI’S ACTIONS WERE UNLAWFUL, BUT IT WILL BE THE TASK OF THE PROSECUTOR’S OFFICE TO INVESTIGATE

said future interior minister Sándor Pintér after the announcement of his appointment, commenting on the police encroachment in the fall of 2006

〉NEXT TIME WHEN SOMEONE KNOCKS BRINGING HELP LIKE THIS, WE WILL SLAM THE DOOR

said OTP head Sándor Csányi at the company’s AGM criticizing the terms of the €200-million subordinated loan OTP received from the European Bank for Reconstruction and Development in 2009

[ ESSAY ]

Who needs expats?

KLEMENS WERSONIG TARGET EXECUTIVE SEARCH

w

hen the Iron Curtain was lifted some 20 years ago, foreign companies started to move into Hungary and they also sent in their first wave of expatriate managers (expats). Ever since, then there has been a seemingly endless inflow of expats, with several thousands of them in the country today. And they are all in top management positions, usually as general managers, or chief financial officers (CFOs), plus they also can be found in high-level expert roles. A major part of the real business power in Hungary is in foreign hands. Why is that so?

Why do we need foreign managers?

Are Hungarian managers not good enough? First of all: expats are a normal phenomenon in every country. Why do companies send expats at all? Everybody talks about cost-cutting, while expats are typically much more expensive than locals. And why do expats need to be “spoiled and pampered” with free housing, free private schooling for their kids, free flights home? This makes no sense, if you look at it from the Hungarian point of view.

However, it makes a lot of sense if you look at it from the other side. A foreign firm that wants to enter and conquer the Hungarian market will choose one of its own trusted managers, because he/she knows the company culture and the company values inside out. This future expat also knows the bosses at the headquarters well, thus he has a direct line to them and will get the necessary decisions fast. This is often vital in new markets.

Also, expats guarantee that business is done in the new country the same way as back home. A typical Hungarian counter-argument is that “Things are different here, companies must adjust.”Yes, and most foreign companies also know this and are willing to adjust — but only as little as possible. And this an expat will guarantee.

Simple example: imagine if McDonald’s could not have its yellow arch in Hungary, because there is a law

saying that no private company sign can be yellow, as that is reserved for public institutions. An expat would not just accept this and report home that “Hungary is different!” He would try to challenge the law or lobby to change it, because yellow is so much a part of the McDonald’s culture. If he is unable to change the law, he might try to set up a joint venture with the state to qualify as a public institution. And only if all else fails might he settle for orange, a color that resembles yellow.

The point is that expats are here to guarantee the same quality and standards as back home. In the above example, this was the color yellow, but in reality these are production quality, packaging standards, reporting deadlines, zero corruption tolerance, etc.

When Hungarian companies expand abroad, like MOL or OTP going into Romania, Slovakia, or even Austria, who is their first manager there? A Hungarian expat! Naturally, and for exactly the same reasons. So the issue of expat or local manager is not a nationality issue. What counts is having lived the parent company culture and knowing and fighting for its values against all local obstacles.

Regarding the salary topic, again it matters from which side you look at it. Let’s say you are a young, ambitious Hungarian manager working for a prospering Hungarian company and you now earn HUF 1 million gross per month. Your boss wants to expand into Kazakhstan, and has offered you the job of country manager. Your family is onboard, now comes the salary question.

Why pay so much? Let’s say you ask your boss for a modest 30% more, or 1.3 million. Imagine your boss says, “Well, you know, life in Kazakhstan is really cheap, so if you get 700,000 there, you are already earning a lot.”Would you go? Would you take a more challenging job, move with your family to an unknown country, for a lower salary? Of course not, because your reference point is your home country. You have your flat here, you have to pay your mortgage here, you have to support your parents here.

An expat is simply paid somewhat more than back home, although compared to local salaries, there could be huge differences. But this is not because the expat is so greedy, simply because the difference between the price and salary levels in the two countries is so big.

The author came to Hungary in 1988. In 1994, he founded his own executive search company, which now has branches across CEE.

[ EDITORIAL ]

Back to the future ungarians might have thought that the general elections of 2010 would bring “the change”, but it seems we’re back to the old ways right from the beginning.

The opposition (now the ousted socialists) is proposing crowd-pleasing measures that are impossible to finance. Apparently, an MSzP mayor – if elected at the municipal elections in the autumn – would take BKV, a textbook example of a badly managed and corrupt socialist-era company, and make it free for Budapest residents.

An opposition is of course expected to make promises that are detached from reality since they don’t have to do anything about them. It is far more disturbing that the new government does not show many signs of change either.

It is of course softening its promises as “drastic” tax reductions are now incremental, immediate tax cuts are now “hopefully sometime in 2010 but probably later”. And, also naturally, it is laying down the groundwork for overspending this year’s budget deficit targets and blaming their socialist predecessors for it.

All this is, in our view, normal.

We worry about two things. One is that the government-to-be has still not given details on what policies it will pursue to right the economy. They have known that they would probably win for half a year now. They have known that they will have a strong majority for almost a month. Surely they have had time to prepare their strategy in advance and are not piecing it together now?

The other thing is that what is known about Fidesz’s plans seems so 2000. Széchenyi terv, state subsidized credit to entrepreneurs, a rigid control of inflation-producing energy prices, restructuring local municipalities. We have heard all this before from György Matolcsy. This is not a bad thing in itself, it shows a coherent philosophy of economic stimulus. But since then, Hungary and its business climate has moved into another universe. Surely some things should be changed to show adaptation?

Not, it seems, Hungarian politics.

H

BBJ-PARTNERS

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