Budapest Business Journal 19/20

policy comment Phil Marshall, regional chairman-CEO

BBJ

property

for EMEA at GE Lighting, sees uncertainty everywhere. 〉page 3

HUF 1250 | €10 | $15 | £7.5

special report inside

42%

Vol. 19, number 20

Budapest Business Journal

I nov 4, 2011 – nov 17, 2011

of Hungarians are dissatisfied with their job 〉page 4

Hungary’s practical business bi-weekly since 1992 | www.bbj.hu

looking for magic Hungary is on the verge of introducing a property tax that could hammer home-owners.

Can another new tax burden really solve anything at this point? 〉property special report pages 8-17

ENERGY Energy firms eye electric car charging stations

ECONOMY Hungary still in the first line of dominoes

TRENDS Business Sentiment Index: Hopes down

Hungary’s first public vehicle charging station has opened at a downtown hotel. It is, of course, a symbolic step, but e-vehicles could become more competitive as fuel prices rise.

And the government is trying to help the e-mobility movement with tax cuts and free parking. 〉page 7

Fiscal Council chairman Zsigmond Járai believes that the targets of the 2012 budget bill can be achieved, but probably only through the introduction of additional measures, either this year or next. Unfortunately, he did not elaborate what kind of measures are expected. 〉page 6

Results of the sixth edition of Deloitte’s Business Sentiment Index show that executives in Central Europe are pessimistic about the prospects for their country’s economies in 2012. Overall, sentiment has fallen to the same level as one year ago.

The drop follows five consecutive survey-on-survey increases in sentiment in the region. 〉page 4

LIFE

Write less, sell more The circulation of printed newspapers is declining everywhere in the developed world, and Hungary is no exception. To make up for lost readers and revenues, newspapers need to borrow business models from the service sectors. 〉pages 18-19

2 news

News for this page is from the Budapest Business Journal’s daily briefing, Hungary A.M.

NEWS in brief

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Budapest Business Journal | Nov 4 – Nov 17

Government calculations estimate that 10-15% of the borrowers of foreign currency de-

nominated loans will take advantage of the option of early full repayment at a discounted exchange rate, affecting loans worth a combined HUF 500 billion-750 billion, National Economy Minister György Matolcsy said.

Film act amendment to change financing mechanism

Economy Companies net repayers in HUF Hungarian non-financial corporations were net repayers in forints but net borrowers in foreign currency in September, according to the aggregated balance sheet of credit institutions published on Friday by the National Bank of Hungary (MNB). Banks’ stock of forint corporate loans, excluding revaluations and other changes, fell by HUF 39.2 billion, while their foreign currency loans rose by HUF 25.8 billion in September from the previous month. Including the effect of HUF 291.9 billion in revaluations and other changes, forex loan stock reached HUF 4.38 trillion at the end of September.

Hungary speeds up EU money The pace at which European Union funding is paid out in Hungary has picked up, but it must accelerate further if all of the available resources are to be used up, National Development Minister Tamás Fellegi said at a conference. An average HUF 35.1 billion of EU funding is paid out each week at present, up from HUF 5.5 billion earlier, Fellegi said at the conference organized by the National Development Agency, the Hungarian Economic Development Center and the European Commission. The number of contracts signed each week has climbed to 174 from 103, he added. In the past year, 2,697 contracts involving some HUF 93 billion in funding have been signed, Fellegi said.

Proposal for 27% payroll tax Fidesz MP Antal Rogán has submitted a motion for a new 27% payroll tax, in an amendment proposal submitted to

next year’s tax laws. The proposal says the new tax is to replace the health insurance contribution, the labor market contribution and the pension contribution paid by employers. Under a previously submitted amendment proposal to the social security act, it would become possible to establish payment obligations due to the social security funds that do not generate entitlements to social security services, breaking the link between payments in and out of the social insurance system. A second proposal would set the minimum wage as the basis for the pension contribution, and the basis for the health insurance and labor market contribution would be 150% of the minimum wage.

politics Fidesz retains lead The ruling Fidesz-Christian Democratic alliance has maintained its massive lead among voters, while 50% of respondents in a recent poll conducted by pollster Tárki said they could not choose a party or would not disclose their preferences. Tárki said Fidesz and its ally enjoyed 23% support among all respondents (1 percentage point down from September) and 46% among decided voters (4 points down). Support for the opposition Socialist party has remained virtually unchanged: it rose one percentage point to 11% across the whole sample and from 21% to 22% in the decided group. 10% of the whole population and 20% of decided voters voiced preferences for the radical nationalist Jobbik party – the ratios having remained virtually unchanged from September. The green opposition LMP enjoys support from 5% of the whole sample (2 points up) and would

Photo from set of “Üvegtigris 3”

Under a proposal of the government’s draft amendment to Hungary’s cinematography act, four-fifths of the tax revenues of a state lottery would be contributed to Hungary’s Film Fund, which would ensure an effective contribution to the prosperity of Hungarian film.

Special attention would be paid to art cinemas. The proposal also seeks the establishment of a Film Artist of the Nation title to replace the current Master of Hungarian Film.

NUMBERS

in the news

309.48

the HUF/EUR exchange rate after Greek PM George Papandreou announced his country would hold a referendum on a €130 billion ($178 billion) bailout package.

HUF

200-300 billion

the amount Hungarian banks will lose under the law allowing the early repayment of foreign-currency mortgages at below market rates, said György Surányi, the head of Intesa Sanpaolo SpA’s CIB Bank unit in Hungary.

garner 10% of the votes from decided voters (3 points up) if elections were to be held this weekend.

Hungary the loser of the crisis Hungary has lost most in the world economic crisis, while Poland has pulled through quite well, a survey published in the Washington Post and conducted by economists Ignacio Munyo and Ernesto Talvi of the Center for the Study of Economic and Social Affairs showed. The two economists compiled an “economic exuberance index”, based on output, unemployment, domestic demand, bank credit, inflation and the real exchange rate. Hungary has been a loser in all the studied aspects, the survey showed, adding that Argentina, Angola and Brazil have won most from the crisis. Previously, a survey conducted by Germany’s Deka Bank also found that Hungary was the country that lost the most in the crisis when compiling GDP trends, online news portal Index reported.

domestic Hungarians tend to save more About 58% of Hungarians think making savings is “very important” and 25% think it is “important”, a survey by Erste Group shows. The figures are the highest in the survey of five countries in the region: Austria, Czech Republic, Hungary, Slovakia and Ukraine. Although 82% of Hungarians say they save when possible, just 43% put money away regularly, the survey shows. The average monthly savings in Hungary is HUF 14,705. The most popular investments are cash savings and life insurance.

Free zones for businesses Hungary’s government is establishing free zones for businesses in the country’s most disadvantaged areas, National Economy Minister György Matolcsy said in Parliament, presenting the 2012 budget bill. Businesses operating in the free zones would provide work for local residents, Matolcsy added.

Govt to propose new bank bill A bill that aims to establish new regulations for Hungary’s banking system will soon come before Parliament, Prime Minister Viktor Orbán said in a statement after an EU summit. Recent events show that something has gone wrong with the European banking system, Orbán said, in a statement published on his Facebook page. Financial institutions cannot turn to the people of Europe for help every three years, thus the regulatory framework in which they operate must be renewed, he said. This work is ongoing in Hungary, and a bill on banking system regulation will soon be submitted to Parliament, Orbán added.

Gov’t to promote childbirth The Rural Development Ministry will launch a program to lease farmland under favorable conditions to young couples with plans to have children from early next year, Napi Gazdaság wrote. Under the scheme couples committing to raise children and do farming can apply for a 50-yearlong lease of land at the National Land Fund Management Organization (NFA). NFA has so far marked 5,000 hectares of state-owned land to be included in the scheme. Families owning land already could apply to increase its size, if they make a commitment to raising a family.

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News for this page is from the Budapest Business Journal’s daily briefing, Hungary A.M.

COMPANY news

news 3

German automotive company Continental AG has merged Hungarian units Temic Hungary Kft and Continental Teves Magyarország Kft into a single unit called Continental Automotive Hungary Kft . Continental said the aim of the merger was to streamline the company’s operations in Hungary.

POLICY COMMENT

spanish chain opens new fivestar hotel next to bank center

Two renowned Spanish hoteldynasties, the Fluxá and the Masaveu have joined forces to open a five-star hotel and highend restaurant in the Hungarian capital. The 50room hotel is in a 200-year old historic building next to the Bank Center in the 5th district, the financial hub of Hungary.

Unsurprisingly, the Iberostar Grand Hotel Budapest aims to serve business travelers. The HUF 3 billion hotel is part of the Iberostar Grand Hotel chain and is the first of the group’s boutique hotels to be situated in a city center.

Iberostar also plans on starting a project in the 13th district of Budapest.

Phil Marshall,

GE Lighting, regional chairman-CEO for EMEA Q: How do you see the business environment in Hungary?

A: The economic environment is softening, not only in Hungary, but in almost every

other European country too. We see uncertainty everywhere. Our industry is also transforming. There has been a clear shift towards demand for energy efficient, high quality and new technology lighting solutions. But we have the advantage of building on our 130-year heritage of innovation. Hungary is a key global location for us: we have our EMEA regional headquarters and global technology center here, as well as our European manufacturing hub.

Q: How have the economic and budget policy shifts of the past year or so affected your business in Hungary?

A: Of course we are also affected by Hungarian economic policy. Some shifts have been

beneficial, others less so. The income tax changes will likely have a significant impact on our operations, but we’re thinking long-term. We have recently invested in increasing energy efficient lamp production capacities in Hungary. And while we export 98% of our products manufactured in Hungary, we will now ‘import’ something pretty special: as we are bringing our customers from all across Europe & the Middle East to visit our new European Lighting Experience Center in Budapest. PF

About 2.5 million new mobile phone handsets can be expected to be sold on the Hungarian market this year, 40-50% of which will be smartphones, according to the head of the mobile division of Samsung Electronics Hungary Balázs Kunos. The ratio of smart phones is set to reach 60-70% in 2012, Kunos said. Samsung controls about 40% of the Hungarian market for mobile telephones.

Hungarian IT company Synergon is to carry out a major restructuring involving lay-offs by the end of this year in order to focus on profitable operations; recently appointed CEO Zoltán Jutasi hopes to see savings of HUF 1 billion and profits next year. The group expects revenue exceeding HUF 20 billion this year, and fixed costs are expected to be cut by almost HUF 1 billion annually. Jutasi said the company will definitely not have losses in 2012. Synergon will try to compensate for the decline in public sector orders by expanding in the private sector and abroad.

Hungarian paint maker Poli-Farbe is launching a network of independent, Hungarian-owned retailers under the brand Pannon Paint Network . Poli-Farbe expects 30 stores to join the network by the spring of 2012 and 140 by the end of next year. Family-owned businesses generate about 78% of the HUF 33 billion annual worth of Hungary’s paint market. Paint stores or other specialized retailers account for 82% of Poli-Farbe’s HUF 7 billion of annual revenue.

Hungarian meat company Kométa 99 inaugurated a HUF 2 billion salami curing plant and a renovated slaughterhouse at its base in Kaposvár (southwest Hungary). The company had made investments of more than HUF 8 billion in the past ten years. These were supported by almost HUF 1 billion in grant money. The company’s headcount is 600, making it one of the biggest employers in Kaposvár and in Somogy County. Kométa 99 processes about 800,000 hogs a year.

Békési Pálinka, a distiller of pálinka, Hungary’s eau de vie,

expects revenue to reach HUF 500 million this year, up from HUF 427 million in 2010, owner and managing director Zoltán Békési said. Wholesale activities generate about 40% of revenue and pálinka distillation 60%. Békési Pálinka distills about 400,000 liters of pálinka a year. The company has spent several hundred million forints on investments over the past several years, building a HUF 100 million fermentation hall and a HUF 200 million visitors’ center.

Discount retailer Aldi plans to open 10-15 new stores per year in Hungary, increasing the number of units to more than 110 in three years. The company built 75 stores in the past three years, investing hundreds of millions of euros. Aldi plans to open another three stores this year and projects a two-digit increase in turnover. Aldi controlled

1-2% of the Hungarian market last year. The expansion will be based on a combination of greenfield investments and acquisitions.

Danish pump manufacturer Grundfos is to invest HUF 2 billion to expand production capacity at its Hungarian units this year. It plans to begin serial production of new products in 2012. In addition to its two units in Tatabanya, set up in 2000 and 2002, the company established a large-capacity plant in Székesfeheérvár four years ago. The company spent HUF 4 billion on investments in 2009 and HUF 2.5 billion in 2010, expanding production capacity in Tatabánya, among other developments.

Marengo has opened a HUF 191 million SME incubator in Szeged

(southern Hungary). Marengo used HUF 60 million of its own money and a HUF 131 million EU grant to transform a four-story office building into a low-rent space for recently established SMEs. Marengo aims to attract young entrepreneurs from abroad as well as from Szeged, which is close to borders with Romania and Serbia.

OTP Bank’s share of Hungary’s corporate lending market climbed one percentage point to 8.6% in the first half of the year. The bank is not scaling back its corporate lending activities, rather it wants to seek prospective corporate lenders with new products, both its own as well as constructions involving the state-owned Hungarian Development Bank (MFB) and Eximbank. OTP Bank signed corporate loan contracts for HUF 105 billion in H1. The bank has so far taken applications for HUF 43.5 billion from companies in the framework of the OTP Széchenyi 500 program, the bank said.

Spanish private equity company GED Capital said it bought a 100% stake in Hungarian printing company Révai Nyomda from the UK’s Polestar Group. GED Capital did not reveal the price of the transaction. Révai Nyomda is the second printing company GED Capital has purchased in the region. It bought Infopress Group Romania in 2010. The two companies have combined revenue of €80 million a year and employ 500 people. Révai Nyomda is Hungary’s biggest capacity printing company. It employs 250 people at bases in Budapest and Fót, near the capital. The company had turnover of €42 million in 2010, GED Capital said.

German-owned Stefani Hungária inaugurated a more than HUF 200 million capacity expansion at its base in the Győr Industrial Park (northwest Hungary). The company won a HUF 52 million grant for the investment, managing director Alexander Fina said. Stefani Hungária expects revenue to climb 6% in 2011 over last year’s HUF 1.1 billion. The company has several major business partners, including Audi, which has a big plant in the Győr Industrial Park, as well as other members of the Volkswagen group, Lamborghini and Daimler.

4 trends

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Budapest Business Journal | Nov 4 – Nov 17

Business Sentiment

Banks

eu funds

job choices

Hopes down

Time to get tough

Building on efficiency

Money is not enough

Sentiment has returned to levels of a year ago, unfortunately.

Banks are changing their business models to adapt to new challenges.

Efficient buildings could significantly reduce CO2 emissions.

Work-life balance is more important than the salary in itself.

14%

21

HUF

80 bln 42%

of executives expect their sales revenues to decline

banks were loss-making in 2010

granted for energyefficiency in the last year

are dissatisfied with their job

Executives in Central Europe are pessimistic about the prospects for their economies in 2012, the latest Business Sentiment Index published by Deloitte shows, with Hungary no exemption. The composite index in Hungary is now down six points from June 2011 to 102, just two points above the level of the first Index in September 2009.

It seems that Hungary is on the cusp of a second wave of the economic crisis. The results of the first two quarters of 2011 were disappointing, even before signs of a potential double dip began to emerge over the summer. Consumer expenditure, industrial output and foreign direct investment have all slowed considerably in the past six months.

This comes on top of the weak GDP growth over the past four years. As a result, executives have had to postpone any hopes of solid business results and a sustainable economic recovery.

Despite the more negative outlook for the country, 49% of the Hungarian executives in this survey expressed a balanced view about the financial prospects for their company, up from 33% in June 2011. Slightly fewer executives expect a positive outlook for their companies (37% compared to 40% in June 2011) and fewer expect a negative outlook (14% versus 27% in June).

For the first time, a majority (57%) of Hungarian executives feel that revenues from sales will remain unchanged over the next 12 months. Only 29% remain optimistic that revenues will increase, while 14% of those surveyed expect revenues to reduce.

Exports and imports have started to slow in Hungary, with imports falling faster than exports. Although Hungarian executives expect new opportunities to develop in Asia, it is clear that falls in export levels will pose a very severe threat to any economic recovery in 2012. Executives will be watching exports closely as the internal market is not large enough to support growth by itself. PF

Hungarian banks are changing their business models in response to falling revenues, rapidly growing risk costs and a high level of fixed expenses. As profits in the Hungarian banking sector are eroding, they need to adapt to the new challenges.

In response to the unfavorable changes in the business environment, Hungarian banks have no choice but to revise their business models, Raiffeisen Bank Hungary’s deputy CEO Ferenc Szabó said at the bank’s conference for investors. This will be a long and painful process, he noted.

The first step was cutting operating costs, but this had a relatively small impact only. Labor costs were the next target for cuts through layoffs and the scrapping of bonuses. The next and most painful step will be closing branches. But while they are certainly not expanding their networks, banks are still not quite ready for shuttering their branches en masse. Nevertheless, they have already started developing new, cheaper distribution channels, such as internet banking and call centers.

Banks have been reluctant to touch their existing expensive infrastructure so far, as it ensures their market presence, Szabó said.

As most units were built during the economic boom, the number of branches is quite high in Hungary. “Often, there are four or five different bank branches on the main square of small countryside towns with high rates of unemployment,” Szabó pointed out.

On the revenue side, banks will focus on cross selling in order to increase income from banking products other than loans, Szabó said. An important goal is to sell a wider range of financial services to one customer rather than only one single product.

Another consequence of the adaptation process is fiercer competition for good clients through stronger market segmentation.

In addition, banking products will become simpler and more transparent. GL

More than HUF 54 billion in Hungarian and EU grants have been awarded for energy efficiency developments under the New Széchenyi Plan since the government took office last spring, the National Development Ministry has said. According to the ministry, this amount is expected to generate orders worth HUF 93 billion.

Another HUF 23 billion has been made available in the green investment system of the New Széchenyi Plan, generating HUF 45 billion in orders in the construction industry, state secretary in charge of climate issues and energy affairs János Bencsik said at a roundtable discussion at the CEP-Expo Clean Energy & Passivehouse conference in Budapest on October 19.

Of the HUF 54 billion budget, the largest sum (HUF 29 billion) went to upgrading buildings’ energy systems, and HUF 21 billion was for increasing the share of renewable energy resources. The modernization of district heating systems received HUF 3.5 billion, while HUF 0.7 billion went to updating public lighting systems.

The majority of the total amount, HUF 31.7 billion, was allocated to institutions.

Companies received HUF 19 billion and of this, HUF 14 billion was given to SMEs. Under the green investment system (a fund into which money from selling CO2 quotas was transferred), the government has earmarked more than HUF 23 billion for residential energy efficiency programs.

As a result of a recently signed memorandum of understanding on the implementation of the Norwegian Financing Mechanism, HUF 2.3 billion will be available until 2016 for building efficiency renovations, HUF 2.1 billion for investments involving renewable energy resources and raising awareness on the issue, and a further HUF 1.9 billion for programs aimed at adapting to climate change. PF

Economic weekly HVG held its annual career fair in October. Participation is linked to registration: this year approximately 11,000 people registered for the event. Beyond offering nearly 20,000 jobs and career advice, the organizers were interested in the reasons behind job searches and workplace changes. To find out what makes people look for a new job, they conducted a survey involving 1,000 respondents.

Contrary to previous findings, job seekers aged between 20 and 30 with a degree place almost equal emphasis on work-life balance and salary. Requirements such as gaining experience, recognition of professional and personal assets, long-term placement, less commuting time and a thorough knowledge of the working conditions prior to starting the work are rated high.

The majority of respondents are dissatisfied with their work (42%) and their salary (59%). On a more positive note, those not satisfied are willing to take a leap and change. Some 35% are in work but looking for new job openings. The main reasons for switching jobs are career improvement (14.8%) and salary (13.35%).

In terms of job offers, companies are looking for fresh graduates with experience (72%), fresh graduates (62%), a workforce with extensive experience (62%) and workers with leadership experience (30%).

The most sough-after fields are economy and finance (52%), IT (52%), and engineering (50%) while arts (14%), law (4%) and sciences (2%) are at the other end of the scale.

As far as language skills go, 83.83% of respondents speak English, and 37.88% speak German, followed by French (6.59%), Spanish (4.43%), Italian (4.38%), Russian (3.94%) and Romanian (2.45%). ZsV

bad bank balances

opening a window

what i want from work

better and worse

0,7 For energy efficient building renovation

3.5

21

29

For increasing the use of renewables For modernizing district heating systems For modernizing public lighting systems

Question for executives: “Generally speaking, how do you feel about the financial prospects for your company?”

Source: Deloitte

Number of loss-making banks in Hungary Source: MNB

Amounts allocated in the framework of the Environment and Energy Operative Program of the New Széchenyi Plan (total amount: HUF 54.2 billion) Source: National Development Ministry

on a 1-5 scale, 1:least important, 5: most important Source: HVG

ECONOMY 5

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Budapest Business Journal | Nov 4 – Nov 17

Hays chart and policy chat The ratio of children (5-14 year olds) to young workers (15-24 year olds) in 2010

-16,997 Russian Fed -13,037 Japan -8,121 Germany -6,071 Ukraine -3,967 Poland -3,014 Italy -1,667 Romania -675 Hungary -604 Czech Republic population of hungary:

10,000,000

labor force

Eastern Europe

0.7 china

0.8 Western europe

0.9 india

1.06 sub-saharan africa

Source: The Hays /Oxford Economics Global Report

POLICY COMMENT

Mark Brunning

Managing Director, Hays Northern, Central and Eastern Europe Q: If you had to highlight employment issues that you think will be the most relevant in 20 years, what would they be?

A: One of the biggest ones has to be the fact that the East is likely to become the economic superpower of the world.

China, by virtue of its size and expected growth rate, will probably replace the US, which used to be the dominant power driving the global economy. This could mean that our children might be working for organizations owned by the Chinese. I am encouraging my children to learn Mandarin, it could be a big differentiator for them!

Q: What would be your instant remedy for Hungary’s employment situation?

A: Hungary seems to have lost its way a little relative to other CEE countries. After 1990, the country did a good job

of encouraging foreign direct investment, but more recently Czech Republic, Slovakia and Poland appear to have done better. Hungary is a fantastic place to do business, with a very skilled workforce, but I sometimes think your politicians aren’t really doing the economy justice and creating as much opportunity as they could for their people.

From the outside looking in, short term political agendas appear to get in the way of common sense and laying solid foundations for much stronger economic growth in the medium term and a better competitive position within the CEE for attracting foreign direct investment.

Charts and interview by Zsófia Végh.

1.5

Source: The Hays /Oxford Economics Global Report

Countries to experience the sharpest falls in population of working age between 2010-30

6 economy

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Budapest Business Journal | Nov 4 – Nov 17

Járai: Hungary still in trouble Structural reforms are still missing from the 2012 budget bill, warns the current head of the Fiscal Council and former MNB governor, Zsigmond Járai.

Reforms still missing

BBJ gabriella lovas

Hungary is farther away from the center of the crisis than it was in 2008, but it is still in the first line of dominoes, being one of the top ten riskiest countries in Europe, Zsigmond Járai, chairman of Hungary’s Fiscal Council said at an event organized by the Joint Venture Association. “The good news is that at least it is not the first this time, and I do not see a chance of a Europe-wide crisis spreading from here. On the other hand, if a financial crunch starts somewhere else in Europe, which has a 20-30% probability, it could hit Hungary really hard,” he added.

Fortunately, there are large reserves in next year’s budget, at HUF 400 billion, or more than 1.5% of GDP, which could be enough, if used properly, to reach the government’s macroeconomic targets, said Járai. The bill targets a general government deficit of 2.5% of GDP and projects 4.2% annual average inflation along with at least 1.5% GDP growth.

In terms of the central budget, Hungary has always had a bad track record, being the only country that has never met EU budget criteria and has been under the excessive deficit procedure ever since its accession to the EU in 2004, Járai pointed out. Due to this and to the country’s high indebtedness in Swiss francs, the government has no other choice but to submit a restrictive budget.

In times of a global downturn, the government and the central bank (MNB) are supposed to be pumping money into the economy in line with the principles of an anti-cyclical economic policy, Járai said. The Orbán gov-

ernment’s first attempt to launch such a policy in May 2010 failed within a week, resulting in a mini currency crisis, he noted.

Uncertain environment Since then, the international environment has deteriorated further, Járai said. This is reflected by a quick reduction in the MNB’s GDP growth forecast for 2012, from 1.7% to 0.5% within the past month. He attributed this pessimism primarily to the development of the global economic environment. He noted that GDP growth in Germany, Hungary’s main export market, is expected to fall to 1.3% in 2012 from 2.7% this year.

By themselves, the three main macroeconomic indicators show positive developments, with a narrowing budget deficit, decreasing government debt and a positive current account

balance, Járai said. “However, if we take a closer look at how the government has reached its goals, we see that the necessary measures, including the bank levy, the extraordinary taxes and the management of the FX loan problem, have created uncertainties and unpredictability that hurt the positive message of the stable macroeconomic indicators.”

The 2012 budget bill carries serious risks, Járai pointed out. Nobody can predict the growth rate among eurozone members, or what will happen to Greece and other troubled eurozone countries. Another major risk is that the budget is not backed by the necessary legislation yet. Although budget bills are usually submitted sometime in September, the necessary laws are worked out only by the end of December. For instance, the government has calculated 2012 budget revenues from VAT with the new 27% rate, long before the amendment has even been passed.

Referring, among other things, to the planned decrease in health care and education spending, Járai said that the new rules would generate countless conflicts and tension. However, the Fiscal Council believes that the lion’s share of structural reform is missing from the budget. The planned cuts in expenditures could be reached only by speeding up the restructuring of the large state systems.

In Hungary, decreasing state expenditures is a priority, Járai said. While the Hungarian government redistributes 50% of GDP, the figure is only 40% for its competitors.

Next year, the rate will stand at around 48%, which is a step in the right direction, but far from enough to boost the economy.

It is also unclear how the government aims to boost investments and employment. A basic requirement would be a stable and predictable business environment, which will be missing next year. Uncertainties around Swiss franc indebtedness will give another blow to predictability, he noted.

Reducing bureaucracy is a key issue; all the relevant rules should be revised in detail and simplified as soon as possible. “If we cannot support businesses financially, the least we could do is create conditions under which they can simplify their operations,” Járai stressed. The bureaucracy-related burdens of Hungarian entrepreneurs are estimated to be 2-5% higher than those of their European peers.

Hungary pays extremely high interest on its debts, about 150-200 basis points higher than neighboring countries. In 2010, total debt service accounted for more than HUF 1,130 billion, which equals the country’s total annual health expenditures. Reducing risks through predictability, transparency and security is the only way of reaching lower yields on debt, Járai added. n

Early repayment, low prices Some of the government’s recently announced measures do not only challenge Hungary’s bank sector but also have a strong effect on its real estate market. How will the FX mortgage early repayment scheme, relaunched forint loan subsidies and the possibility of an increased real estate tax change the sector?

BBJ ÁGNES VINKOVITS

The early repayment scheme that enables to homeowners to repay their FX mortgage debts in full by the end of February at a fixed currency rate of HUF 180 to the Swiss franc, HUF 250 to the euro and HUF 2 to the Yen (at least 25% below the current market rates), is extremely appealing for those with enough cash available.

Still, selling a property – whether the one under mortgage or another one – might seem an obvious possibility for those not having the required millions in the bank or under their pillows.

180

The Hungarian real estate market, which has been paralyzed by serious over-supply since the outbreak of the crisis, immediately reacted to the announcements with a seasonally high number of transactions in September. According to real estate agency chain Otthon Centrum, further increases in the number of contracts are to come, accompanied by depressed prices as the deadline for early repayment by February 28 makes it urgent to find a buyer. According to Csaba Tóth, Country Sales Manager of the Duna House real estate chain, even a 5-10% price drop is possible in the next few months.

As a resultof the early repayment opportunity, those who get rid of their mortgage strains might decide to buy another property under more predictable loan conditions, Tóth said, adding that, as such, the market might stabilize after March.

The new subsidized forint-denominated home loan program, which the government recently announced it will relaunch from 2012 for the purchase or construction of new homes or purchase or renovation of existing homes, might give a boost on the demand side, too. The program, which still has to be approved by the EU, will cost the state budget HUF 1.3 billion. It is hoped it will reduce forint loan interest by one

HUF/CHF - THE REPAYMENT RATE

third, which might somewhat rebalance the low real estate prices.

A recent government proposal that is still a subject of debate even within the government, but is basically planned to enable the local

municipalities to set the amount of the property tax and so to increase it up to 3% or even above, is an idea that might provoke more complex market reactions. To read more on the plans and predicted effects, see our article in the special report.

business 7

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Energy News

First electric car charging station opens BBJ TRENDSPOTTING Electric cars are not expected to become common on the streets anytime soon, but some firms are quite certain that the future lies in this direction.

They are small. They cannot go faster than about 80 km/h. They need a refill after just a few hours on the road. And then, getting them back on the road again can take up to eight hours at a time.

From this description, electric cars might seem like a huge step back in the development of mobility compared to petrol-guzzling SUVs. Yet at the opening of Hungary’s first public electric vehicle recharging station in the garage of the Hotel Kempinski Corvinus Budapest, the excitement was palpable.

At the station, seven cars can be charged simultaneously. The fastest charger only takes an hour and a half for a complete top-up of an electric car battery. Also, it will be free until the end of next year, Emile Bootsma, the general manager of the hotel promises.

Of course, there will probably not be a lot of traffic as there are currently very few electric vehicles in Hungary.

However, the excitement was probably due to the fact that many see a huge potential in the technology in the future. As fuel prices rise, alternative propulsion becomes more attractive. Especially since running an electric car is not particularly expensive: a kilometer costs about HUF 10, János Winkler, board member of E.ON Hungária Zrt calculates. A charging station can be installed by E.ON for less than HUF 200,000 and the firm is contemplating the introduction of an e-vehicle tariff using electricity in off-peak periods.

As Konrad Kreuzer, head of E.ON Hungária Zrt told the BBJ, the firm does not expect significant revenues from supplying power for the recharging of electric vehicles in the near future. “It is difficult to see what will happen, but we believe in e-mobility very much,” he said.

One of the largest obstacles to e-mobility is the price of the cars: the cheapest of the halfdozen available models costs around HUF 8 million, for which you could, at a pinch, buy up to four small gasoline-fuelled cars. Of course, prices would change if mass production allows manufacturing companies to utilize more efficiencies.

Meanwhile the Hungarian cabinet has joined other European governments in proposing the introduction of tax breaks for e-cars. Accord-

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Hungarian oil and gas company MOL has signed an agreement with Austria’s RoholAufsuchungs (RAG) on joint exploration of and production in the Inke concession in southwest Hungary. MOL-RAG West, a joint venture owned in equal part by MOL and RAG, owns the concession. MOL and RAG are looking for further chances to cooperate in similar ways, MOL said. RAG is involved in exploration and production activities in Austria, Germany, Hungary and Poland.

Hungary is fully committed to the construction of the Nabucco pipeline, but the final cost of the project remains unclear, National Development Minister Tamás Fellegi told journalists in London. The estimated cost has risen from €7 billion at the start to €2426 billion, Fellegi said. The Nabucco pipeline is expected to bring gas from Central Asia to Europe, reducing the region’s energy dependence on Russia.

Konrad Kreuzer (EON), ANTAL ROGÁN(FIDESZ) and Emile Bootsma (Kempinski) try an e-motorbike

The Hungarian section of the South Stream gas pipeline could be transferred to the state-owned Hungarian Electricity Works (MVM) from the state-owned Hungarian Development Bank, business daily Világgazdaság reported. The paper said progress was made on the project at the Moscow talks between Hungarian development minister Tamás Fellegi and chairman of Gazprom’s board of directors Aleksey Miller on September 16, and confirmed at Fellegi’s talks with Russian deputy prime minister Viktor Zubkov in Budapest on October 11. Through its subsidiaries, MVM will control the country’s gas exchange as well as part of the gas trade and transport sector.

A proposed amendment posted on the Hungarian government’s website would require energy performance certificates for all rental homes from the start of next year. Presentation of the certificate would be mandatory when signing any rental contract, under the amendment. The certificates cost between HUF 40,000-120,000 (€133-400).

Hungarian electricity distributor Émász, majority-owned by Germany’s RWE-EnBW, is spending about HUF 800 million (€2.7 million) to modernize a 100-year-old hydroelectric power plant in Felsődobsza, northeast Hungary. The investment will double capacity at the plant to 940 kWh. The plant is expected to go online in 2013.

...and a tesla roadster

ing to Fidesz MP and 5th district mayor Antal Rogán, electric cars would not have to pay the registration tax, vehicle tax, parking fees or fees for changing ownership. (They would still have to pay the company car tax, though.) If a congestion charge is introduced in 2014 as planned, electric vehicles will probably be exempt from that, too, Rogán said.

However, even if the price of the cars falls, there is still another, maybe even larger problem to tackle: electric cars cannot be used in the same way as regular cars. This is partly why E.ON is expecting demand for electric vehicles to be mostly limited to corporations initially. “Interest is already high at large corporations,” Winkler added. BBJ

Hungarian geothermal-energy company PannErgy has sold its plastics unit Pannunion to Pannunity, the company said on the Budapest Stock Exchange website. PannErgy will receive the first HUF 4.76 billion installment on the sale of its 95.22% holding in Pannunion on October 19 and will receive a further HUF 270 million on loans to the unit, also payable on October 19. PannErgy will receive the remaining part of the price, expected to amount to almost HUF 637 million, by January 2012. The transaction has received all competition office approvals.

BBJ Property special report

New real estate tax bill ruffles feathers The ghosts of past attempts to introduce wealth taxes are haunting homeowners.

A new proposal in the government’s recently submitted 2012 tax package to increase both the base and the maximum rate of local real estate taxes has homeowners worried about an egregious tax burden they may have to bear.

Some fear the government is trying to introduce a wealth tax buried deep in the new tax package, although previous attempts to launch such taxes in Hungary have all failed. Others were simply shocked after trying to calculate their expected maximum tax burden from the local property tax. Who could pay an annual HUF 300,000 on a HUF 10 million flat?

The good news is that the wealth tax will not be reintroduced just yet and homeowners will probably not be saddled with higher local property taxes at this time. But given the creativity of this government in inventing new taxes, nothing should be taken for granted.

The main difference between the previously planned wealth tax and the current local real estate tax is the that the wealth tax is mandatory and is levied by the government, while municipalities have the right to impose a local real estate tax and determine the rates within limits set by the Act on

Local Taxes, RSM DTM tax partner Sándor Hegedüs pointed out.

Municipalities have the right to differentiate among the various segments, Hegedüs said. Most of them have not taxed homeowners if they actually live in the property in question. The main taxpayers have been the owners of industrial properties and offices.

Thus, the new legislation could be a negative surprise for them, he added.

Just a week after submitting the 2012 tax package, the Fidesz parliamentary group decided to propose scrapping the 3% cap on the tax altogether. “No restrictions should be placed on the scale and type of taxes that local governments may collect,” Fidesz’s caucus leader János Lázár said. This is basically passing the problems on to municipalities, after planning to take some of their assets and revenues, Hegedüs said.

Floor space or value?

The current local property tax can be based on floor space or on corrected market value, the tax expert says. The limits are either a maximum HUF 900 per square meter per year, or a maximum of 3% of the corrected market value of the building, as determined by the local government.

As of January 2011, the tax was increased in both aspects, to HUF 1,100/sqm/year and to 3.6% of corrected market value, which is 50% of actual market value. Hegedüs noted that in both cases the HUF/sqm rate could be modified by the consumer price index, consequently in 2011 the maximum rate was 1,580 HUF/sqm. Practically, the current amendment means that the previous 1.8% upper limit will be raised to 3%, Hegedüs noted.

▶www ▶ Back .bbj.huto nature – green credentials Budapest Business Journal | June 4 – June 17 ▶▶ MARKET ANALYSIS: Real estate developers ▶▶ LIST: Real estate developers ▶▶ MARKET ANALYSIS: Real estate agencies ▶▶ LIST: Real estate agencies ▶▶ MARKET ANALYSIS: Asset management firms ▶▶ LIST: Asset management firms

〉page 10

special report 9

〉page 12 〉page 13 〉page 14 〉page 15 〉page 16 〉page 17

erty taxes in ways other than based on floor space. He indicated that the motive behind the planned changes is that “there might be municipalities in outer Budapest or in the countryside that could tax large suppliers and shopping centers that have huge parking lots a little more.”

Ghosts of the past At the moment, the government is not likely to try to reintroduce wealth taxes, Hegedüs said, adding that sooner or later, maybe after the next elections, it will have to. However, this would require careful preparation.

As the government’s plan to boost consumption through cutting taxes has failed, it has been left with a choice of increasing either real estate taxes or wealth taxes, Hegedüs said.

Concerning tax revenues, there are several advantages to this, as real estate cannot be moved and the owners can easily be identified and contacted. “Frankly, in many cases, the current owners acquired their properties The big question is to levy the tax based a fraction of the maximum rate. Only a few with hidden income,” Hegedüs added. on floor space or value? Most municipali- local governments apply the corrected marIn 2006, the then government introduced ties opted for floor space, mainly due to dif- ket value for determining the base of the a luxury tax for properties with a value of ficulties in appraising properties, Hegedüs property tax, he added. more than HUF 100 million. Property ownsaid. Because of the uncertainty of the marLeading Fidesz MP Antal Rogán said that ers had to pay a tax of 0.5% for the part of ket value, several municipalities taxed only at there is zero chance of levying local prop- the home’s value exceeding the HUF 100

million threshold to the local municipality. The 2010 tax package amended this by imposing a new tax on high-value property, which included residential and recreational real estate, high-performance cars, watercraft and aircraft. The Constitutional Court, however, repealed provisions on real property in January 2010, while keeping provisions on other types of properties valid.

The new government, in turn, scrapped the wealth tax altogether in July 2010.

The Constitutional Court ruled that the provisions on real estate create legal uncertainty and are therefore unconstitutional.

However, the court found the principle of a property tax as such constitutional. The court said that the market value of real properties as defined by the act is uncertain, and therefore taxpayers will not be able to comply with the requirement to asses the market value of the real properties they own.

In addition, the Court ruled that the act gives the tax authority broad powers to impose penalties, and thus the responsibility for assessing the market value rests entirely with the taxpayers. The court also said the law did not take into consideration the income of taxpayers subject to the tax, which could put some in an impossible situation. GL

[ expert opinion ]

Hardship in the Hungarian Commercial Lease Market and How it is Interpreted by the Courts of Arbitration Ádám Kaplonyi , Dr of Counsel, Kővári Tercsák Salans Attorneys

D

ue to the global economic crisis, there has been a tendency in the Hungarian commercial lease market (warehouses, offices, shops, etc.) for tenants with definite term leases to try to renegotiate their lease agreements, to attempt to force the landlord to ease contractual conditions, or simply to unilaterally discontinue the lease and stop the payments (either in the absence of, or following negotiations). In these cases the tenants usually attempt to rely on the notion of hardship (or clausula rebus sic stantibus), a legal principle enabling the reformulation of long-term contractual relationships subject to specific conditions. Given that landlords are naturally reluctant to accept the terms proposed by the tenants (especially if they propose to end the lease), there have been many legal disputes, mostly playing out before the courts of arbitration, since arbitration clauses are fairly standard in commercial lease agreements.

The majority of these disputes have

concerned the landlord’s claim of indemnification from the tenant for the unlawful early termination of the lease.

The Approach of Courts of Arbitration to Hardship Under Hungarian law, it is a well-established principle that the terms of a contract must be complied with (pacta sunt servanda) and the early termination of a definite term lease is not acceptable in most cases. A breach of contract by the other party is usually required as legal ground for early termination. These principal legal rules are now frequently tested against the concept of hardship: under Hungarian law, changes in circumstances may, in exceptional cases, provide valid grounds for the modification, or even termination of agreements.

It seems, however, that arbitral tribunals have tended to reply that reference to the global economic crisis is not a sufficient legal ground for tenants to be exempted from liabilities under the lease agreements. The global economic crisis may not be relied upon as a legal ground for termination of a lease, as it would constitute a unilateral shift of business risk to the landlord, which may not be justifiable due to the fact that a global economic crisis also affects the landlord’s business. The view that

Arbitral tribunals have tended to reply that reference to the global economic crisis is not a sufficient legal ground for tenants to be exempted from liabilities under the lease agreements changes in economic circumstances may not serve as grounds for terminating obligations is widely held. Although a material change of circumstances specifically and adversely affecting the tenant may, in theory, provide a basis for an amendment (not termination) of the lease, in the absence of the agreement of the parties, the tenant may only enforce such a claim if it initiates a court (arbitration) procedure and is able to prove its case. Otherwise any unilateral action of the tenant aimed at modifying the content of the agreement or terminating it may be ruled unlawful.

Even though the legal basis of claiming indemnification from tenants for early termination may seem to be in place, landlords may face more difficulties when it comes to the amount of damages. Commercial leases typically contain various types of clauses aiming

to (at least partially) recover the rents due for the remaining lease period in the case of an early termination of the lease. On the other hand, an arbitral tribunal will take into consideration other factors as well. Most importantly, the landlord is expected to mitigate losses (e.g. by re-letting the premises) and to make reasonable efforts to this end. The arbitral tribunal will attempt to assert a reasonable judgment in determining the period required for the re-letting of the premises, and it is on the basis of this determination that the tribunal will award damages.

www.salans.com

NOTE: ALL ARTICLES MARKED expert opinion are promotional content for which the Budapest Business Journal does not take responsibility

10 special report

www.bbj.hu

Budapest Business Journal | Nov 4 – Nov 17

Back to nature: green credentials Green credentials may increase a property’s value in the present, but profits are likely be reaped only in the future.

BBJ zsófia végh

In the past four million or so years, humanity has done its best to gain independence from nature.

From rural settings, people moved to urban environments and built houses that had nothing to do with nature. Recently, people have realized they were wrong and are now doing everything they can to reverse the process.

Getting closer to nature is not that simple, though. New buildings have to meet an array of requirements to earn the official title of being green. These range from nickel-and-dime solutions to some really investment-heavy technologies. Green buildings can cost 5%-25% more than traditional ones, experts claim. Still, sustainable building is gaining ground worldwide. To be clear: investors do not invest in such projects out of a pure love for nature, they do so due to the longterm market benefits these houses offer.

“Construction may be more expensive, but it is a one-off expenditure as opposed to maintenance costs, which in the long-run are much lower for green buildings,” Adrienn Lovro, head of Ablon Hungary Kft told the Budapest Business Journal.

With utility prices soaring, lower overheads are a clear benefit for residents. “These buildings are usually equipped with meters which

allow office clients to pay only for what they actually consume, versus a pre-set tariff per square meter calculated after an average consumption,” said Zsolt Gyöngyösi, Head of Environmental Consultancy to DVM group. Even at retail and residential projects, where green aspects are not of primary importance in general, a lower overhead can be a dealmaker.

Exactly how much can be saved depends a great deal on the technologies used. “There are a lot of inexpensive solutions – such as using solar panels to warm running water – which it

makes sense to build in,” said Tibor Tatár, managing director of Futureal Kft. Most developers aim to achieve a basic level of greenness, so as not to lose their competitive edge. But these solutions are only given a “good” or “gold” rating.

To get a better grade on an international rating system, more complex and costly technologies are needed. The cost premium of constructing a top-rated building can be as much as 10%, with over a 10 year return on investment, according to Gyöngyösi. A building with a green certification with a good rating differentiates it from other buildings available on the market and it demonstrates that the building is ahead of the current regulations, according to Codic Hungary, whose V48 office building on Váci ut was the first in the CEE region to have been pre-certified under the 2009 version of BREEAM Europe commercial.

Beyond marketing purposes, having a building rated also helps orientate customers. Office buildings in the downtown area, say, are very much alike. When someone has to choose between two, they are likely to opt for the greener one. But due to the variety of rating systems used, selection is not easy. Creating a uniform system or enforcing an existing one as London or the state of New York does could be the state’s responsibility.

Before doing so, it should be tailored to the country’s needs. Many buildings are downgraded (or not given a high rating) because systems are tailored to the conditions of their home countries. “BREEAM sets standards regarding windows’ and embodied impact based on UK climate conditions,” Gyöngyösi, a licensed BREEAM assessor himself, explained.

“The thermal conductivity of these materials used in new developments is much better in Hungary, but because their lower ratings against the British BREEAM standard they are possibly not given the relating credit.”

Non-uniform rating systems have others flaws.

Different emphasis on the criteria makes a real comparison impossible, Lovro believes. “Watersaving faucets and the use of geothermal energy are given the same points,” she explained.

Not everyone regrets the lack of a uniform rating system. Dániel Barcza, head of the Design Institute at the Moholy-Nagy University of Applied Arts, thinks the sense of global systems is that they help rate buildings worldwide. “Integrating green surfaces into a building is the most costeffective way of increasing the property’s future value. Yet most office developments in the country comply only with a minimum requirement not to decrease useful floor space.” In residential buildings, buyers demand green areas, so it is in the developers’ interest to maximize it.

Although green credentials may increase a property’s value in the future, they offer little advantage in the present. Not only because of higher building costs, but because clients won’t pay more rent for a green building. According to Gergely Pados of Cushman & Wakefield, in today’s market it is hard for developers to achieve a premium in rents for certified buildings due to the high level of competition, which derives from the high vacancy rates.

“Today, green buildings have no marketing value,” Lovro said. “Anyway, developers build for the future, not for today.” n

www.bbj.hu

Budapest Business Journal | Nov 4 – Nov 17

Fine offices

special report 11 A special selection by the

BBJ

Budapest Business Journal

A+ category offices currently available for rent in the most prestigeous areas of the city

kálvin center Palace Andrássy

Víziváros Office Palace Center Andrássy Address 1085 Budapest, Kálvin tér 12. building year 2007 free space 1749 sqm Public transport Metro M2, M3 Bus 9, 112; Tram 47, 49 Contact Boglárka Balogh

Address 1027 Budapest, Kapás utca 6-12. building year 2005 free space 4331 sqm Public transport Tram 4-6, 19, 41 Metro 2, Bus 11, 39, 86, 111 Contact CBRE

Tel: +36 1 327 2050, +36 30 330 0733 bbalogh@gvarobertson.com

Tel: +361374 30 40 www.cbre.hu

Kálvin Center is located in one of the most dynamic hubs of Budapest. Situated next to the National Museum, it is one of the easiest accessible points of the capital both by car and public transportation. The building is located in the business district of Budapest, also offering restaurants, shops and other services.

R70 Office Complex Andrássy Palace

This office building located in the prestigious Kapás utca is just 5 minutes walk from Mammut Shopping Center – one of the largest shopping malls in Buda – and it is easy to reach both by driving and public transport. Built in 2005, the building has a modern external design and offers sophisticated technical features for an optimum office environment. Multiple services and peaceful atmosphere make Víziváros Office Center a friendly, homelike workplace for employees, while the building’s prominent central location and its prestigious image ensure a convenient, stimulating business environment.

City Center Irodaház Address 1074, Rákóczi út 70-72. building year 2001 free space 4700 sqm Public transport Tram 4-6, Metro 2, Bus 5, 7, 173, 178, 239 Contact CBRE

Address 1051 Budapest, Bajcsy-Zs. út 12. building year 1989 free space 3150 sqm Public transport Deak tér metro hub 3 minutes by foot, Bus 9, 16, 105, Tram 47, 49 Contact

+361374 30 40, www.cbre.hu;

Barbara Baráth, Tel: +36 1 429 5050

Eston

+361 877 10 00, www.eston.hu This “A” category office building was built at 70-72 Rákóczi út in 2001. The excellent downtown location makes it easy to reach from both sides of the Danube. R70 Office Complex offers special services such as local post office, restaurant, wellness and fitness facility and conference room.

Buda Center Irodaház

City Center is located in the heart of downtown Budapest, next to St. Stephen’s Basilica, at the intersection of Andrássy út and József Attila utca, 3 minutes from the Deák tér metro hub. Due to its ideal location and characteristic architecture, it is a popular residence of foreign representative offices and news agencies, with many tenants occupying offices here for more than 20 years.

River Estates Irodaház Address 1016 Budapest, Hegyalja út 7-13. building year 1990 free space 1480 sqm Public transport Bus 8, 27, 112 from bus

Address 1134 Budapest, Váci út 35. building year 1998 free space 1300 sqm Public transport 1 minute walk from

stop next to building, Tram on Alkotás utca

Dózsa György út metro station, Bus 4 Trolley 75, 79

Contact

Barbara Baráth, Tel: +36 1 429 5050

Buda Center, a prominent sight on Hegyalja út, is located between Erzsébet Bridge and the BAH junction. In addition to the sunny, panoramic offices, its excellent location also contributes to its popularity: it is close to the residential area of Buda and the M1-M7 motorways. Tenants include Unicredit Leasing, Citibank, Volksbank, DowAgro and other major companies.

Maros utca Business Center

Contact

Barbara Baráth, Tel: +36 1 429 5050

The River Estates office building is located at the beginning of the Váci office corridor, above the metro station at Dózsa György út. Due to its large floor area, it is a popular site for dynamically growing companies. In addition to its convenient access by public transport, an excellent restaurant and a fitness center are also at the disposal of the tenants, which include Citibank, P&G and Digi.

Blue cube irodaház Address 1122 Budapest, Maros u. 19-21. building year 1992 free space 620 sqm Public transport Metro 2

Tram 4-6, 56, 59, 61, bus 16, 39, 128 Contact

Barbara Baráth, Tel: +36 1 429 5050

Maros Utca Business Center is located in a pleasant street in Inner Buda, next to the Városmajor park and close to the traffic hub at Széll Kálmán tér. A cosy inner garden is enclosed by the two blocks comprising the office building. The newly opened “Nemsüti” snack bar serves healthy food to tenants. There are several restaurants, shopping centers, a vegetable market and numerous leisure opportunities in the vicinity.

Address 1138 Bp., Váci út 182. building year 2002 free space 3250 sqm Public transport 2 minute walk from

the Gyöngyösi utca station of metro 3 and buses 105 and 120

Contact

Barbara Baráth, Tel: +36 1 429 5050

The newly named Blue Cube office building is located on Váci út, right next to the Duna Plaza shopping center, whose services are thus available at arm’s reach. New tenants may now move into the available space to become Unilever’s neighbors in the building. Two pleasant inner gardens and a cosy restaurant serve the comfort of tenants.

12 special report

www.bbj.hu

Budapest Business Journal | Nov 4 – Nov 17

Developers look afar for deals BBJ

REAL ESTATE developers

-59%

Change in total net revenue of firms on the list in 2010

Since the beginning of the crisis, there have players exiting the Hungarian real estate market, with no new players appearing, leaving only about ten to twelve major developers today, with only a few projects each.

According to Tamir Kishon, the regional director of Nanette Real Estate Group, market supply has been shrinking further with the lack of new projects. In addition, companies in the construction sector are highly unstable. Thus, the only way Nanette can ensure the quality of its projects is by working exclusively with its own construction company, Nanette Construction, which was set up before the crisis.

Postponed projects In the office segment, almost all developers postponed their investment decisions in response to the economic downturn, Futureal sales director Péter Karai told the Budapest Business Journal. In the first half of 2011, only two projects were delivered to the market, Portus Buda’s Calasanz Downtown Offices in the city center and SCD’s Officium house in north Buda. Office buildings to be opened in Q4 2011 include two towers of TriGranit’s K&H headquarters, Erste Group Immorent’s Laurus offices, R-CO’s KÖKI offices and the BAH center.

Speculative warehouse development in the industrial segment has completely disappeared from the market, with only built-to-suit developments left, Karai said. There was a drastic downturn in the segment, and the few handovers this year are all the results of investment decisions made before the crisis, he added.

In the retail segment, Wing’s Hegyvidék Központ in Budapest’s 12th district is the only shopping center development launched in Hungary this year. The first half of the year saw only one major retail center opening, the Europeum on Blaha Lujza tér, developed by Ablon. There are three big projects in the pipeline for H2, including Budapest’s newest and second-largest shopping center KÖKI Terminál, the Szeged Árkád and the Siófok Plaza. The opening of Orco’s Váci1 shopping center has been postponed to next year, Karai noted.

In the residential segment, Kishon foresees a sellers’ market next year. As a result of a slowdown in new projects, the supply of 3,000 flats is not enough to meet the natural demand of a city of two million inhabitants, which is about 15,000 flats per year, according to the expert. Thus, Nanette aims to build 400 apartments in 20122013. Kishon does not expect a further drastic decline in housing prices.

Nanette acquired two new construction sites during the past few months. One in the 9th district is suitable for the construction of 560 flats, while 140 homes are planned on the other site in the 13th district. The developer launched two projects in October, including the construction of residential building Nanette Harmony and another phase of the 100-flat City Home.

Currently, only the most reliable developers are able to secure bank financing, Kishon said.

Commercial banks are willing to provide project financing only under very strict conditions.

“I would still consider securing financing for projects to be a challenge,” said Markus Neurauter, spokesman for Raiffeisen Evolution Project Development GmbH. “Due to the crash that occurred in 2008, this now takes much longer than before, as banks take a closer look and you have to provide them proper due diligence proving the project has the lowest possible risk.”

Going regional Developers agree that plans to raise the VAT rate to 27% next year do not help the

recovery of the construction industry. Government measures aimed at boosting consumption have failed, and the recently introduced FX loan rescue package will further reduce spending. Futureal is seeking investment projects in Poland and Romania, as these markets are more promising than Hungary, Karai said.

“We noticed that there are quite a number of projects on track in Poland and Russia of course, and the Romanian market has been picking up lately too,” Neurauter noted. He pointed out that developers started to build again after a period of replanning which was necessary due to the big hit the real estate sector took in 2008.

“In my opinion, Hungary is still struggling due to its political situation and the developments of the past few months, which of course have an impact on the economic situation and on the real estate sector,” Neurauter said. “But I am optimistic that Hungary will find its way back to positive growth and that there will be investments and transactions again soon.” GL

Moving on

+8 places TriGranit +8 places ECE Projektmanagement +1 place ABLON -4 places Hochtief Largest changes in the list

➔ ➔ ➔ ➔

The Hungarian real estate development market is on life support: there are no projects, no financing, and not many players left.

lists 131 specialthe report

www.bbjonline.hu www.bbj.hu

Budapest Business Journal – March 26 Journal || March Nov 4 –12Nov 17

real estate developers

1

ECE Projektmanagement Budapest Kft www.ece.de

TriGranit Development Zrt 2

3

www.trigranit.com

Budapesti Ingatlan Hasznosítási és Fejlesztési Nyrt

www.bif-irodak.hu, www.bif.hu

7,015

Ÿ

3,660 1,478

2,163

Ÿ

Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ







–

–



–

–

Ÿ

–

–

–



–

–

Ongoing projects in Hungary (investment value in HUF, expected year of completion)

Asset management

Real estate brokerage

Condominium operation

Built-to-suit development

Real estate utilization

Real estate investment

Construction

Project management

Portfolio management

Facility management

Activities and services

Public building

Industrial

Infrastructural

Residential

Commercial

Types of investment

Office

Company Website

Total net revenue (HUF mln) 2010 H1, 2011

Rank

Ranked by total net revenue

www.ablon-group.com

1,836 1,015

5

RE Project Development Kft

1,715

6

Hochtief Development Hungary Kft

1,369

WING Zrt

711

7

8

9

www.raiffeisenevolution.hu

www.hochtief-development.hu

www.wing.hu

11

Ÿ

[1]

Ÿ

Skanska Hungary Property Kft

672

Fadesa Hungária Zrt

546

www.skansa.hu

www.martinsafadesa.com

ConvergenCE Kft 10

Ÿ

Ü48 Corner Center, 2010

(100) –

Gábor Angel Krisztina Czifra –

1033 Budapest, Polgár utca 8–10.

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

Business Center 30 (2007), Gateway Office Park (2008), Europeum Shopping Center (2011)

Magyar Posta, KPMG, Samsung, BASF, Questor, Sony Ericsson

1993 31

– Ablon Group (100)

Adrienn Lovro – –

1132 Budapest, Váci út 30.

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

– Raiffeisen Evolution GmbH (100)

Rudolf Riedl Sabine Wegscheider –

1027 Budapest, Tölgyfa utca 1–3.

(1) 346-6400 (1) 346-6448 sales@ raiffeisenevolution.hu

Ÿ

2002 3

– Hochtief Projektentwicklung GmbH (100)

Ferenc Daróczi, Peter Noack – –

1133 Budapest, Váci út 76.

(1) 452-4030 (1) 452-4040 adel.kolber@hochtief.de

Ÿ

1999 74

DAYTON-Invest Kft (78), GOLUXinvest Kft (22) –

Noah M. Steinberg – –

1095 Budapest, Máriássy utca 7.

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

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

Andreas Lindelöf Péter Béres Erika Loska

1097 Budapest, Könyves Kálmán körút 11.7. em (1) 382-9100 (1) 382-9129 property@skanska.hu

– Grupo MartinsaFadesa S.A. (100)

José Luis Moreno Alcaniz Zoltán Horvát –

1051 Budapest, Bajcsy-Zsilinszky út 12.

(1) 141-31451 (1) 141-31452 –

– Convergen Central Europe Ltd. (100)

Alan A. Vincent – –

1062 Budapest, Teréz körút 55-57/A/5 (1) 225-0912 (1) 375-0445 office@ convergen-ce.com

– IVG Immobilien AG (100)

Kay-Uwe Blandow Tibor Gasser Zsófia Knauer

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

– Codic International SA (100)

Christophe Boving – Bori Gedai

1051 Budapest, Szent István tér 11/B (1) 266-6000 (1) 266-6002 b.gedai@codic.eu

Péter Futó (50), Gábor Futó (50) –

Gábor Futó Pál Darida Péter Karai, Áron Görög

1082 Budapest, Futó utca 47–53.

(1) 266-2181 – info@futureal.hu

– Nanette Real Estate Group N.V. (100)

Alex Goor, Gábor Kiss – –

1066 Budapest, Teréz körút 46.

(1) 472-2818 (1) 472-2819 iroda@nanette.co.hu





–







–



–







–



–







–







–





Ÿ

–

Kerepesi Business Park (2013)

–

Capital Square

2009



Hegyvidék Központ (shopping center), 5 mrd Ft, 2012

Millenáris Irodaházak (2010), K3 office building (2010), Dél-pesti Üzleti Park II. (2010), Átrium Park office building (2008), Agria Park shopping center (2008), Corvinus Egyetem new building (2007)

Ÿ

Ÿ

www.convergen-ce.com

410 190

IVG Hungary Kft

362

www.ivg.hu

Codic Hungary Kft

Ÿ

NR www.codic.eu

138

NR Futureal Cégcsoport www.futureal.hu

Nanette

NR Real Estate Group www.nanette.co.hu





–



–

–

–

–

–



–



–

–

–

–





–



–

–

–

–

–



–

–

–

Ÿ





–

–

–







Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ

Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ 









–

–

–

–

–

–

–

–

–

Ÿ 

–



–







–



–







–





–

–





Ÿ



–





–

Ÿ Ÿ







Ÿ Ÿ

Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ

Ÿ

–





Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ

–

–



–







–



1062 Budapest, Váci út 3.

(1) 374-5600 (1) 374 5601 info@trigranit.com

1994 32





Árpád Török Gyula Ágházi Ernő Koncz

Axel Springer, CIG Pannónia Biztosító, CEMP csoport, G4S Biztonsági Szolgáltatások Zrt, Nemzeti Közlekedési Hatóság, GTS

–

–

Sándor Demján (Ÿ), Sándor Csányi (Ÿ) Peter Munk (Ÿ), Immofinanz Group (Ÿ)

Ÿ

–

–

1106 Budapest, Örs vezér tere 25/A (1) 434-8200 (1) 434-8207 –

–

–

–

Gyula GyalayKorpos, Christoph Augustin – –

1990 27





– ECE Projektmanagement International GmbH (100)

Bonarka 4 Business (office) phase 1 – Krakow (2011), Arena Center (retail) – Zagreb (2010), Bonarka City Center (retail) – Krakow (2009)

–



1996

Address Phone Fax Email

K&H Bank HQs, Budapest 2011



–

Ÿ

REsidence Office Buildings (2010)

Ÿ

Ÿ

Top local executive Finance director Marketing director

Ÿ

Harsánylejtő (2011, 1.3 HUF bln)



Main clients in 2010

Ownership (%): Hungarian Non-Hungarian

Ÿ

ABLON Real Estate Development Kft 4

Previously completed reference projects, year of completion

Year established No. of full-time employees in Hungary on September 1, 2011

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 circulation@bbj.hu

20

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Eiffel Tér Irodaház (2010), City Point 9 Városi Logisztikai Központ (2010), Zala Park Kereskedelmi Park (2010), Park One Irodaház (2008)

Europa Fund, JP Morgan, KPMG

Ÿ

Infopark, RiverPark Offices, StefániaPark office building, renovation of office buildings on Andrássy út 11 and 12

Ÿ

Ÿ

2003

Ÿ

1997

Ÿ

2003

Ÿ

2004 7

–

Ÿ

V48 office building

Krisztina Palace 2010

Ÿ

2006 5

Cordia Sun Resort 2013, Etele City Center 2015

Corvin Sétány phase I, 2015

Ringier Kiadó, epam, Flow PR, DAS, Dumaszínház Kft

2005 110

Ÿ

Ÿ

Ÿ

2006

Ÿ

notes: [1] The Wing Group’s aggregate revenues amount to HUF 48 bln.

Ÿ=

This list was compiled from responses to questionnaires received by Nov 2, 2011 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press would not disclose, NR = not ranked, NA = not applicable 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, 1075 Budapest, Madách Imre út 13–14., or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu

14 special report

www.bbj.hu

Budapest Business Journal | Nov 4 – Nov 17

Agencies: renewals, again BBJ

REAL ESTATE AGENCIES

-9%

Change in total net revenue of firms on the list in 2010

This year got off to a promising start for most real estate agencies, as market confidence seemed to be returning. However, as the year passed by and the international and Hungarian economic situation deteriorated, market confidence began to fizzle out. As a result, property agencies have reapplied the brakes and again started to exercise caution in their decisions.

The focus has been placed on lease renewals and only a limited number of new deals have been signed, agencies say.

In addition to renegotiations, an increasing number of clients are also considering finding their own headquarters, said Adrienne Konthur, managing director of CBRE. “This clearly indicates that property has become part of long-term corporate strategies,” she noted. However, the overall market senti-

ment according to Konthur is much better now than it was a year ago, despite the difficulties. “We have more clients and successfully completed transactions this year than in 2010,” she said.

But market players say competition remains fierce. “There is still an ongoing battle on the market, as transactions have become more prolonged and their value has stagnated in the past year,” Balázs Czifra, managing director of DTZ told the Budapest Business Journal. “Moreover, an increasing number of deals are being signed without involving an agency.”

Still a tenants’ market The continuously changing business environment poses a big challenge for real estate agencies. “The biggest challenge on today’s market is adapting to these changes and serving clients under all circumstances at the highest possible level,” Adorján Salamon, chairmanCEO of Eston International Zrt said.

“Today, it is still a tenants’ market,” CBRE’s Konthur agrees. “Tenants’ needs are more sophisticated than before; they usually look for long-term solutions, but cost efficiency is still an important factor.”

As the market changes, new services are appearing. For example, Eston recently launched a complex project management service. “It’s not only about signing a deal anymore,” Salamon said. If required, Eston will help tenants move into their new home and also assists with furnishing the new premises.

Colliers is also exploring new directions.

Dedicated tenant representation on the office market is one of its recently launched services, and the agency also now offers green building consultancy and certification services.

“Both areas have seen notable success already this year, and we expect them to further strengthen in 2012,” says Ákos Balla, head of valuation, consultancy and market research at Colliers.

While market conditions and investor sentiment remain the key challenges in Hungary, it seems that investors are already exploiting good buying opportunities.

“Interestingly, capital market activity is up, with several key transactions in due diligence now,” Charles Taylor, managing director of Cushman & Wakefield told the BBJ. Although the market remains thin and is quite specific, there are opportunities for investors and vendors alike, he said. However, Taylor warned that capital market transactions would be highly dependent on financing.

Positive outlook Although most real estate agencies are being cautious about the immediate future, longerterm prospects are more promising.

Konthur from CBRE forecasts a definite upswing in the medium-term, although she remains cautiously optimistic about the rest of the current year.

Although DTZ’s Czifra sees some signs of growth on the market, with the current general

political and economic risks, he does not expect notable changes this year, but does think there will be some medium-term improvement.

Tim Hulzebos, managing director of Colliers International Magyarország, thinks that the market will see difficult times ahead, both in the short- and medium-term, but believes that the ability to adapt to the market environment and the strength of the international networks of agencies might positively influence the future for them. “We have nothing to worry about in the medium- term,” he noted.

Cushman & Wakefield and Eston are quite optimistic. The latter forecasts a period of growth for the real estate market in the one or two years after both the Hungarian and international economic situation improves.

Cushman & Wakefield’s Taylor does not expect notable changes in the near future, but sees the end of the tunnel. “Next year could be similar to this, although we already see strong potential in capital markets for 2012,” Taylor said. “Assuming investor demand isn’t impacted any more than it has been, and financing remains available, it could even be better.” PF

Moving on

+2 places GVA Robertson +1 place Colliers +1 place CBRE -2 places DTZ Largest changes in the list

➔ ➔ ➔ ➔

Property agencies have endured a tough year, but the outlook for the medium-term is rosier, they say.

[ expert opinion ]

Vitra Citizen Office – the productive office concept Mária Szmodis Vitra Representative for Hungary

V

itra is a furniture company dedicated to developing healthy, intelligent, inspiring and lasting solutions for the office, the home and public spaces. Vitra’s products and concepts are developed in Switzerland. The design process combines the company’s engineering expertise with the creative spirit of leading international designers.

For the office environment we developed a new concept since the global mega trends like, the digitalisation, diversity, the knowledge of economy and the values of sustainability change the world of work. Good conditions for teamwork are required since 80% of all truly innovative ideas are developed through personal communication! The office today is part of the company’s social commitment.

We are convinced that rooms and their furniture significantly influence motivation,

performance, and health of employees and thus the productivity of every company. Our new concept, the Citizen Office Concept takes the needs of the company just as seriously as those of individual employees.

Citizen Office encourages people to work in different position: so the physical activity is integrated into office etiquette as a matter of course. The workstation areas are similar to the traditional offices but the office forum does not feature a classic workplace with its cafeteria, library, meeting or project places.

The Citizen Office gives the company an identity, it is always tailored to the needs and requirements. The concept finance itself through more economical space utilisation. The highly ergonomic environment provides better working conditions and assures more motivated and thus more productive employees.

www.vitra.com

NOTE: ALL ARTICLES MARKED expert opinion are promotional content for which the Budapest Business Journal does not take responsibility

lists 151 specialthe report

www www..bbjonline bbj.hu .hu

Budapest – March 26 BudapestBusiness BusinessJournal Journal | | March Nov 4 –12Nov 17

real estate agencies

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 circulation@bbj.hu

1

2

3

4

5

6

7

8

Cushman & Wakefield Kft

1,361

Jones Lang LaSalle Kft

770

Colliers Hungary Kft

608

CBRE

580

DTZ Hungary Kft

569

Duna House Franchise Kft

504

Real Management Üzemeltető Kft

381

EHL Real Estate Hungary Kft

230

www.cushwake.com

www.joneslanglasalle.hu

www.colliers.com

www.cbre.hu

www.dtz.com

www.dh.hu

www.rm.hu

www.ehl-hu.com

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

111,500

164,596

501,946















No. of full time employees on Sept. 1, 2011

Relocation

Moving

Tenant representation

Market research, analysis

Feasibility studies

Facility management

Services

Valuation

Total area of managed real estate in 2010 (sqm)

Rented

Total area of sold real estate in 2010 (sqm)

Company Website

Total net revenue (HUF mln): 2010 H1, 2011

Rank

Ranked by total net revenue

Ÿ

9

10

11

12

13

14

15

226

Ÿ

ESTON International Ingatlantanácsadó Zrt

210

www.eston.hu

Ÿ

Otthon Centrum Franchising Kft

182

www.oc.hu

Ÿ

At Home Budapest Network Kft

78

www.athome-network.com

Ÿ

B&V Group Zrt

77

www.bvgroup.hu

Ÿ

Engel & Völkers/E and V Master C.E. Zrt

17

www.engelvoelkers.hu

Flott-Invest International Kft www.flottinvest.hu

Ÿ

17

Ÿ

Ÿ

H1, 2011

Top local executive Finance director Marketing director

Address Phone Fax Email

Ÿ

– Cushman & Wakefield Inc (100)

Charles Taylor – Orsolya Németh

1052 Budapest, Deák Ferenc utca 15.

(1) 268-1288 (1) 268-1289 info.budapest@ eur.cushwake.com

Ferenc Furulyás Kornélia Király Rita Tuza

1051 Budapest, Széchenyi István tér 7–8.

(1) 489-0202 (1) 489-0203 budapest@eu.jll.com

Ÿ

Ÿ

Ÿ











–

–

Ÿ

Ÿ

Ÿ

– Jones Lang LaSalle European Holdings Ltd (100)

Ÿ

Ÿ

Ÿ



–







–

–

Ÿ

Ÿ

Ÿ

– CMN Ltd (90)ILL BEE Prosecuted Ltd. (10)

Tim Hulzebos Balázs Sáfár Boldizsár Horváth

1124 Budapest, Csörsz utca 41.

(1) 336-4200 (1) 336-4201 budapest@colliers.hu

Ÿ

Ÿ

Ÿ











–

–

25

CA Immo, ING, AXA Real Estate, ECE, AON, Lexmark, NSN, Nielsen, EuropaCapital

CA Immo, ING, AXA Real Estate, ECE, AON, Lexmark, NSN, Nielsen, EuropaCapital

– Relam Amsterdam Holdings B.V. (100)

Adrienne Konthur Róbert Hordós Orsolya Simon

1055 Budapest, Honvéd utca 20/A (1) 374-3040 (1) 374-3050 cbrebudapest@cbre.com

25

GLL, ING, Tesco, Raiffeisen, Mosaic Property, VALAD

Ÿ

– DTZ Holdings Plc (100)

Balázs Czifra Márk Szikora –

1062 Budapest, Teréz körút 55–57/B/1 (1) 269-6999 (1) 269-6987 budapest@dtz.com

Ÿ

Ÿ

Ÿ

Duna House Holding Kft (100) –

Guy Dymschiz, Doron Dymschiz – Bernadett Szirtes

1072 Budapest, Rákóczi út 42.

(1) 555-2222 (1) 555-2220 info@dh.hu

Ÿ

András Csillagh (100) –

András Csillagh Anasztázia Bunyevácz Mária BarabásVanyovszki

1138 Budapest, Népfürdő utca 22.

(1) 439-2777, (1) 439-2330 (1) 439-2778 office@rm.hu

– EHL Immobilien GmbH (100)

Andrea Dissauer, Jörg F. Bitzer – –

1133 Budapest, Árboc utca 6.

(1) 451-8040 (1) 451 8041 office@ehl-hu.com 1085 Budapest, Kálvin tér 12.

(1) 327-2050 (1) 327-2055 info@ gvarobertson.com

Ÿ



Ÿ

Ÿ

Ÿ

Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ

Ÿ



0

Ÿ

15,000

0





–















–

Ÿ

Ÿ



–

Ÿ





–

–

–

–

Ÿ

Ÿ

8

Immofinanz

Immofinanz

Heitman, GRT Group, IVG, Volksbank Real Estate, Union, OTP Ingatlan

(100) –

Róbert Tilki – Edina Nagy

Ÿ

WINGSERVE Vagyonkezelő Kft (50.05)InterInvest Kft (49.95) –

Adorján Salamon – –

1024 Budapest, Lövőház utca 39.

(1) 877-1000 (1) 877-1001 info@eston.hu

Kata Kühne – –

1023 Budapest, Lajos utca 28-32.

(1) 487-3300 (1) 487-3333 –

GVA Robertson Hungary Kft www.gvarobertson.com

Main clients in 2010

Ownership (%): Hungarian Non-Hungarian

Ÿ

Ÿ

Ÿ











–



12

Heitman, GLL, GRT Group, OTP Ingatlanalap, Évgyűrűk

Ÿ

Ÿ

Ÿ











–

–

Ÿ

Ÿ

Ÿ

–

–





–

–

–

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ

–









–

–

Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ









–





Ÿ

Ÿ

Ÿ

(100) –

11

Multinational companies, embassies

Multinational companies, embassies

Anikó Gálya (100) –

Anikó Gálya – Rita Varga

1122 Budapest, Városmajor utca 33.

(1) 240-2767 (1) 880-3263 info@athomebudapest.hu

Ÿ

Investkredit Bank, Warimpex, Investkonzult Kft, Palminvest Kft

Investkredit Bank, Warimpex, Investkonzult Kft, Palminvest Kft

– I.M.Finanzholdig AG (100)

Melinda Kovács Péter Würsching –

1146 Budapest, Hungária körút 140–144.

(1) 471-5160 (1) 471-5158 office@bvgroup.hu

Ÿ

E and V Central Europe Kft (100) –

Tamás Bánlaki – –

1125 Budapest, Trencséni utca 14.

(1) 423-0105 (1) 423-0108 hungary@engelvoelkers.com

Individuals (100) –

Margit Bányainé Keresztes – –

1056 Budapest, Belgrád rakpart 3–4.

(1) 268-0763, (1) 411-0091, (1) 352-0837 (1) 267-2637 info@flottinvest.hu

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

16 special report

www.bbj.hu

Budapest Business Journal | Nov 4 – Nov 17

Asset management companies look to provide more complex services Asset management companies expect good years to come, but they have to find a way to reduce costs and increase service quality at the same time.

BBJ patricia fischer

This year has seen a major merger on the asset management company market. At the beginning of 2011, CA Immo International bought Austrian investment fund Europolis for $363 million. The merger naturally had an impact on the operation of CA Immo on its markets in the Central Eastern European region, including Hungary.

The acquisition raised the value of property assets of CA Immo Group from around €3.6 billion as of 31 December 2010 to an estimated €5.1 billion on 1 January 2011. In regional terms, the proportion of the Eastern and South Eastern European segment in the portfolio as a whole was expected to expand from around 19% at present to more than 40%, according to the group’s website.

In Hungary, CA Immo’s assets doubled after the merger to €400 million, Ede

Gulyás, managing director of CA Immo Real Estate Management Hungary Kft told the Budapest Business Journal.

As a result of the merger, the portfolio of CA Immo has expanded to include industrial properties, and the number of office buildings managed in Hungary has increased.“As these properties are high quality buildings with a reliable tenant mix, I believe that our position on the market is sustainable,” Gulyás said.

Cheaper but better There are certain challenges asset management companies have to face, such as letting, keeping tenants, keeping property value and reducing costs, market players agreed.

“Several companies make a mistake when they reduce their cost but at the same time, the quality of services is also deteriorating,” Csaba Zeley, development executive of ConvergenCE Hungary Kft told the BBJ. “But I think that the current crisis provides a good opportunity to find a way of reducing costs but improving quality at the same time.”

The asset management business of ConvergenCE has been quite stable in spite of the worsening economic circumstances.

In addition to classic asset management, the company now offers property management as well.

“We have been dealing with the asset management of the Eiffel Square Office Building, and as we couldn’t find a property management firm that was able to offer the quality of services we needed, we decided to add property management to our line of businesses,” Zeley said.

Complexity rules According to him, the Eiffel Square project is a very successful one due to its location and quality, but not all of the properties in the company’s portfolio are similarly crisis-resistant.

But the company tried to act in time in order to avoid the negative impacts of the crisis.

“In the case of riskier properties, we had started negotiations with our biggest tenants in 2008. We offered notable discounts in exchange for longer lease periods. This strategy worked,” Zeley said.

The value of the managed asset of ConvergenCE is €106 million, and 65% of the managed properties are office buildings, with the rest being retail and industrial. This proportion is not expected to change in the near future, Zeley noted.

Good years ahead Asset management companies are expecting their market to be rather lively in the medium-term.

“Third quarter data from the office market shows that there has not been any new developments, so in my opinion, the emphasis will shift to asset management services,” Zeley said.

Others, however, say that the rental market will also see some life, but only in the short-term.

“In the short-term, I expect some enlivening on the rental market, but I hope that realistic conditions will be created for financial, supply-demand and sustainability issues in the medium-term. These, in my opinion, will create a more reliable and transparent market,” Gulyás from CA Immo said. n

CORRECTION Our article about green tech firms in issue no 17 in September contained an error. Secret Sauce Partners is not directly involved with Remagine Technologies and its executives do not sit on Remagine Technologies’ advisory board. The latter firm does not have a formal advisory board. Only Zoltán Piroska, who is incidentally an executive of Secret Sauce Partners, helped the start-up with advice. Secret Sauce Partners is a San Francisco-based technology company developing fit personalization solutions for the apparel industry.

lists 17 1 specialthe report

www.bbjonline.hu www.bbj.hu

Budapest Business – March 26 Business Journal Journal || March Nov 4 –12Nov 17

asset 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 circulation@bbj.hu

3

www.wing.hu

Ÿ

360,000

1,836

Ÿ

1,015

Ÿ

Millennium Towers, Papp László Sports Arena, WestEnd City Center, Palace of Arts

75

Europeum Shopping City, Gateway Office Park, M3 Business Center, Airport City, Business Center 99

Facility management, projectmanagement, portfolio diversification, real estate investment and leasing

210,000

300

East Gate Business Park, Corvinus Egyetem és Studium Irodaház, Honvéd Center, Agria Park

Portfolio, asset and property management, tennant management, credit controll management, accounting services, controlling

31

0

6

37

57

0

Capital Square, City Gate, Infopark A, IP West, Bartók House, Víziváros Office Center

Property management, facility management, building management.

11

–

–

2

9

–

Ÿ

Ÿ

– CA Immo International AG (100)

–

8

0

–

–

85

15

100

0

– (100)

Katalin Sermer Tímea Földi –

1051 Budapest, Bajcsy-Zsilinszky út 12.

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

Ÿ

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

Valérie Vanbiervliet – –

1024 Budapest, Lövőház utca 39.

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

100

– Convergen Central Europe Ltd. (100)

Alan A. Vincent – –

1062 Budapest, Teréz körút 55–57.

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

30

– IVG Immobilian AG (100)

Kay­Uwe blandow Tibor Gasser Zsófia Knauer

1117 Budapest, neumann János utca 1/E (1) 382-7560 (1) 382-7568 office@ivg.hu

Péter Szíjártó – –

1146 Budapest, Hungária körút 140–144.

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

Csaba Széll – –

1136 Budapest, Balzac utca 25.

(1) 785-4985 – cs.szell@celand.hu

106,000

CA Immo Hungary Kft 4

www.caimmo.hu

634

Ÿ

www.simmoag.hu

6

7

8

9

516

Ÿ

Goodman Hungary Kft www.goodman.com/hu

442

Ÿ

ConvergenCE Kft

www.convergen-ce.com

410 190

IVG Hungary Kft

362

b&V FM Kft

77

www.ivg.hu

www.bvgroup.hu

Ÿ

Ÿ

nR

Ÿ Ÿ

Adrienn lovro – –

1132 Budapest, Váci út 30.

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

0

DAYTOn-Invest Kft (78), GOLUXinvest Kft (22) –

Noah M. Steinberg – –

1095 Budapest, Máriássy utca 7.

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

Ede Gulyás Szilvia GörhönyKovács –

1074 Budapest, Rákóczi út 70–72.

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

Owned by clients –

– ABLOn Group (100)

Own property

1062 Budapest, Váci út 3.

(1) 374-5600 (1) 374-6500 info@tgm.hu

Hotel

Zsolt Völkert Zoltán Lehoczky Ernő Koncz

Office

Sándor Demján (Ÿ), Sándor Csányi (Ÿ) Peter Munk (Ÿ)

11

6

42

–

32

2

Ÿ

Ÿ

21

–

24

12

57

7

100

100

Ÿ

Ÿ

Ÿ

160

100,000

Ÿ

Ÿ

Ÿ

100

Hotel Marriott Bp., River Estates Office Building, City Center Office Building, Blue Cube Office Building

4

Goodman Center Logistic Airport Üllő, Goodman Logistic Center Kecsekmét, Goodman Logistic Center Gyál

–

120

Eiffel Square Office Building, Margit Office Palace, Citypoint9 Logistic Centrum, Terrapark A and B building, Zala Park

Identification and implementation of business plans and value increase potentialities, property related leasing concepts, control and supervision of property and facility management, tenant relationship management, budgeting and cost control

100

Infopark E, RiverPark, StefániaPark, Andrássy 11–12

Owner's representative, technical, and tenant management, financial planning

15

–

Ÿ

FM, PM, AM, rental, construction

15

–

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

– I.M. Finanzholding AG (100)

Ÿ

Real estate portfolio strategy development, overall utilization of properties, selling/leasing of individual assets, advising, reporting, expert studies

21

–

Ÿ

Ÿ

Ÿ

Ÿ

–

100

(100) –

100,000

120,000

120,000

Ÿ

Ÿ

350

Ÿ

Ÿ

Ÿ

170

Ÿ

Ÿ

Ÿ

47,500

300

Ÿ

Ÿ

CE lAND Hungary Asset Management ltd www.celand.hu

Address Phone Fax Email

320,000

S­Immo Hungary Kft 5

Engineering, cleaning, security, leasing, marketing, energy management, controlling tasks

Top local executive Finance director Marketing director

Industrial

711[1]

167,350

1,500

Ownership (%): Hungarian Non­ Hungarian

Retail

WING Zrt

www.ablon-group.com

Ÿ

Services offered in property management business

Abroad

1,836 1,015

2,734

Main properties managed in H1, 2011 (maximum five)

Number of pro­ perties man­ aged

in Hungary

2

AblON Real Estate Development Kft

www.tgm.hu

6,428

Number of tenants in H1, 2011

Ÿ

Portfolio di­ Portfolio diversi­ versification fication according according to to type of property ownership managed (%) structure (%)

Total value of property managed in Hungary (HUF mln)

6,428 2,734

H1, 2011

TriGranit Management Zrt

Company Website

Net revenue from property management (HUF mln)

in 2010

Total net rentable area of property managed in Hungary (sqm)

1

Rank

Total net revenue (HUF mln) 2010 H1, 2011

Ranked by total net revenue

420,000

Ÿ

notes: [1] The Wing Group’s aggregate revenues amount to HUF 48 bln.

Ÿ

7,800

Ÿ

7

6

383

1

–

16

–

100

16

–

–

68

100

–

–

–

Ÿ

–

70

LIFE

PEOPLE Q&A with Wang Fan CEO, Oriental Herbs

▶ page 20

Write less, sell To counter falling circulation and lost revenues, newspapers should use business models that have proved successful elsewhere.

I am an avid newspaper reader. I have piles of publications scattered around the house waiting to be read. I love the touch and the smell of magazines fresh off the presses and get excited every time my subscription arrives. Since I am a journalist, I read papers differently. I analyze the structure of articles, assess the text-to-picture ratio of pages and can easily distinguish between a paid and a barter ad.

Yet it doesn’t take an expert eye to spot the changes that have taken place in the print

media recently. Some magazines have folded, others have decreased their frequency, and some have lowered their pagination.

It is not only the crisis that is to blame for the decline. The printed press’s struggle started well before that, with the switch from offline to online. So the findings of a recent study by WAN-IFRA, the World Association of Newspapers and News Publishers, on the status quo of the press may come as a surprise: newspapers

change in newspaper circulation Asia Pacific Latin-America Western Europe Central Eastren Europe North America still reach more people than the internet.

Newspapers reach 2.3 billion people every day, 20% more than the 1.9 billion that the internet reaches worldwide.

But although papers may still reach more people, circulation in print is declining worldwide: dailies saw a 2% drop, from 528 million in 2009 to 519 million in 2010. (Circulation varies by region. For exact data, see table 1.) Digital newspaper readers have more than made up what has been lost to print. Digital audiences are typically one-third of print readership. So against a 2% decline, digital growth is significantly greater.

The significance of this does not lie in overall numbers, but in changes in purchasing pat-

2009-2010

2005-2010

up 7% up 2% down 2.5% down 12% down 11%

up 16% up 4.5% down 11.8% down 10% down 17%

terns. To convince readers to come back, or online visitors to stay longer, the press must focus on more than content, such as investing in online services. Diversification is one of the few business models that have proved viable in any sector during the crisis.

Traditional content providers, media and newspapers should not get stuck toiling to increase readership. Instead, they should go into e-commerce or organize conferences, exploiting their extensive network and the inside knowledge they have in many sectors. Tying that to a reputable magazine brand, the outcome is likely to be positive. That is a path being followed by Sanoma Media and HVG. The latter’s series

OPINION

In love and crisis everything is allowed. If the home environment has become infertile, it is time for companies to look for new and greener grounds. ▶ editorial, page 23

more of books (most recently on world cuisine) and career fairs are popular because they are associated with a renowned publication.

Linking brands and related areas not only helps keep your customers, it also allows papers to charge more for advertising as advertisers get to be associated with the positive feelings readers have towards a publication.

Relying on non-advertising income is important since digital advertising revenues are not compensating for print’s lost ad revenues. At Sanoma Media, 30% of revenues come from digital, yet when it comes to profitability print takes the lead, said sales director József Steff at a roundtable at the Reklámkonferencia conference where representatives of the print and digital press discussed the difficulties the Hungarian media is facing.

Subscription fees are important as well; it is unhealthy to rely solely on ad revenues,

noted István Tallósi, head of sales at Napi Gazdaság, at the same event.

Even if newspapers find the perfect model, it will take time to recoup the losses of the past couple of years. Tamás Hanák, head of advertisement at national daily Népszabadság is pessimistic: he believes the Hungarian press will have to endure at least two or three more bad years, probably more.

Next year will be a long tough one for the printed press in Hungary, all publishing executives agree. Clients will spend less than this year and in the years to come. That is the bad news. The good news is that with the consolidation of the printed press, surviving publications will receive more attention, earn higher esteem and provide increased value to advertisers. “To make consumers pay, we have to maintain the quality of content,” Steff noted.

So we had better keep up the good work. ZsV

life 19 BBJ WINE TIP

Budafok wine museum Budapest neighborhood turns 10,000 sqm cellar into a museum Hungary’s rehabilitation as a major European center of wine culture took one more step with the official inauguration of the Budafok Wine Town (Budafok Borváros) wine museum and cultural center in the Záborszky Winery – one of the leading vintners in Budapest’s historic wine district of Budafok, and part of the largest network of wine cellars in Europe – in conjunction with the Záborszky Wine Festival.

Budafok, in Budapest’s District XXII, was an independent town until its merger with the capital in 1950 and historically the axis of Hungary’s wine trade, with more than 120 km of cellars and wine caves hollowed out in its limestone foundations beside the Danube.

Its revival as a wine tourism center has been facilitated by an HUF 297 million European Union grant. That has paid for the conversion of unused areas of the Záborszky Winery, itself more than 10,000 sqm in extent, into a display of giant casks, winemaking equipment, and other items of viniculture from Hungary’s ten historic wine regions. Eventually there will even be a diorama of an entire street in a traditional wine town laid out in the Winery’s labyrinthine tunnels.

“The Záborszky Winery’s catacombs, as part of Europe’s largest network of wine cellars, symbolize Budafok’s importance in Hungary’s and Europe’s wine culture,” said

Dietrich Diebel, the project manager for several stages of the development. “With this project, we continue Budafok’s recovery of its heritage.” The Záborszky Winery museum is due to be completed by April 2012. PSM PALACE CATERING és Éttermi Kft. 1222 Budapest Nagytétényi út 64.

Tel: +36-1 227-00-70, +36-1 424-79-55 Fax: +36-1 226-73-71 www.palacecatering.hu

PEOPLE An Oriental success story Wang Fan, managing director of Oriental Herbs, talks about starting a business in Hungary and the prospects for Chinese traditional medicine in the heart of Central Europe.

Q: Most Hungarians probably think that the managing director of a company with HUF 1.7 billion in annual income such as Oriental Herbs should be a man. For a Chinese-born pharmacologist who is also a mother, isn’t it difficult to lead a mid-sized Hungarian company?

A: As a matter of fact, my husband, Dr. Chen, and I head the company together, but we share management duties. He handles the business duties, acting as the “face of the company” in our public relations, while I am responsible for administrative tasks. When we founded Oriental Herbs in 1993 it seemed this would be the easier part of executive duties. Well, after launching industrial production in 2006, management tasks have grown a lot more demanding.

Q: How did you come to choose Hungary for the base of your enterprise? People from Shanghai are said to be famous for their audacity…

A: As a matter of fact, only my husband is from Jiangsu [the province that borders Shanghai], I come from Harbin, in northeastern China.

As for Hungary, it is not only in the center of Europe, but it has an excellent tradition of medical sciences with many Nobel Prize-winning physicians. Even my husband got acquainted with the country through science: in 1988 he visited Hungary under the aegis of a ChineseHungarian international polyclinic project. The following year he was asked to come back and lecture on Traditional Chinese Medicine (TCM) at the Debrecen medical university. At that time, even acupuncture was looked at somewhat oddly, while Chinese herbal pharmacology, let alone its raw materials, was totally ignored. At

〉it is a

cherished dream of ours to open a Traditional Chinese Medicine center in downtown Budapest

traditional groceries at the time, one could only buy black tea, while herbal pharmacy chain Herbária offered camomile and rose hip infusion at best. In order to start and operate his own medical practice, Dr. Chen had to order even the most basic accessories from China, such as acupuncture needles, moxa (mugwort), cupping sets, and of course, medicinal plants. By the time I moved to Hungary with my little daughter in 1993, wholesale ordering was already developing into an independent business branch. In 1994, we founded Oriental Herbs.

Q: Why did you decide to start producing dietary supplements yourselves?

A: Mainly for quality control reasons. The wider the range of our products grew, the more we were concerned with quality assurance. And not only because the national institute of pharmacology forced us to, but mainly for the sake of keeping our clients. We are now

Background There are many who know the Dr. Chen Patika brand: its hologram logo appears on more than 200 Chinese health products, herbal teas and natural snack foods sold in pharmacies, drug stores and retail chains all across Hungary.

Few, however, know that Oriental Herbs, the owner of the brand, is a Hungarian company. Its owners are a couple of Chinese physicians who have been living in Hungary for 20 years. Dr. Chen Zhen and Dr. Wang Fan not only trade in Chinese herbal goods, but also manufacture a large portion of their products themselves in their Budapest-based, GMP-certified factory, purchasing most of their raw material in Hungary. The BBJ interviewed Dr. Fan at the Kőbánya plant, which produces HUF 1.7 billion in annual turnover.

Q: How about your clients? What portion of your turnover comes from retail trade?

A: We do not have our own network of herbalist shops. All our turnover comes from selling to other retailers. Our biggest clients are pharmacies and medical herbalists, more precisely wholesalers delivering medical goods to pharmacies, such as Hungaropharma and Phoenix Pharma. Even supermarket chains like Tesco are becoming important customers of ours. They are not easy clients, so to speak, qualified for Good Medical Practice standards as one can only deliver goods to them under as far as our manufacturing and drug testing very tight conditions. Their bargaining posiis concerned. It was in 2000 that we decided to tion is very strong as they have access to a very package some of our products ourselves. After high number of customers. Fortunately, the joining the European Union in 2004, competi- economic crisis has not affected our business tion in Hungary increased on the dietary sup- significantly, so we do not depend on large plements market, but luckily new opportuni- retail chains. Our customers all know that ties emerged as well. For example, Hungarian health is our most important treasure.

SMEs were able to obtain funding from the EU for technological development. Our company Q: Are you planning to open a herbalapplied for EU-financed support of HUF 150 ist’s shop of your own? million and managed to win funding for new A: Well, it is a cherished dream of ours to open blending, tea-bagging and capsule machines. a TCM center in downtown Budapest where we In exchange, we pledged to hire disabled peo- could offer treatments tailored to the personal ple, a vast majority of our 46 employees. The needs of patients, as is common in traditional financial support amounted to only 17% of Chinese medicine. The opening of such a center the total investment. The rest was comprised is in progress. There are many people who call partly of our own capital and partly of bank us asking where they could buy our products. At loans. Today, almost half of our products are the moment, they can only do so at our Budapest manufactured in Hungary under pharmaceu- plant, though most herbalists also accept orders tical conditions. for specific products. AZs

www.bbj.hu

life 21

Budapest Business Journal | Nov 4 – Nov 17

WHO'S NEWS

Name Zoltán Jutasi Current company/position Synergon Informatika Nyrt/CEO Previous company/position Navigator Investments Zrt/CEO

Jutasi is a member of Synergon’s board and the co-managing director of its system integration unit. He was CEO of Navigator Investments in 2009-10. Before that, he worked as CEO and member of the board at KÉSZ Holding from 2007-09. In the preceding one year, he was managing director of Navigator Invest Kft. He obtained his first diploma from the University of Economics in Budapest in 1995, and later received a post-grad degree from Corvinus University.

Do you know someone on the move?

Send information to research@bbj.hu

Name István Papp Current company/position Microsoft Magyarország/ managing director Previous company/position Cisco/regional director

Before his current assignment, Király was with Siemens Mobile where he worked as head of marketing and later division head.

Király holds degrees in foreign trade and marketing. His new tasks include organizing and overseeing external and internal communication at the company.

Name Béla Király Current company/position Nokia Siemens Networks Kft/marketing and communications director Previous company/position Siemens Moblie/ division head

Name András Loós Current company/position PwC/director Previous company/position PwC London

Papp succeeds László Drajkó, who had been managing director of Microsoft Hungary for the last four years. Earlier, Papp worked at Cisco, which he joined in 1999 and had held various leading posts. He was promoted to regional director in charge of the Adriatic region and Hungary in 2005. Between 2007-10, he worked as deputy CEO at Magyar Telekom. In 2010, he returned to Cisco as regional director and was responsible for the company’s public administration sector operations in various regions.

Loós started his career at Arthur Andersen, after graduating from the economics faculty of the University of Miskolc. He joined PwC nine years ago, and recently returned from the firm’s London office, where he worked for two years. In London, he focused on his area of specialty, accountancy at telecommunications companies.

SPONSORED BY

Name Jason Ding Current company/position BorsodChem/CEO Previous company/position -/-

Name Tamás Sellyey Current company/position Philips Hungary/director of lighting division Previous company/position -/-

As of January 1, 2012, Ding takes over the reins from Wolfang Büchele, who continues his career in Finland as chairman-CEO of Finnish company Kemira Oyj. In addition to his new assignment, Ding is also a member of the board of directors at BorsodChem, and is president at Yantai Wanhua and CEO at Wanhua Industrial Group, which posts he will keep in the future. Ding has been in the chemical industry for 30 years.

Sellyey started his professional career in the banking sector and has worked in the property business since 1998. Among others, he was head of the investment business line of real estate advisory agency DTZ, and worked as sales and marketing director at Indotek Group. He holds a degree in economics from the International Business School, and has been a member of the Royal Institution of Chartered Surveyors since 2010.

Tribute to a true traveller A writer who traveled through the gloomy glamour of Central Eastern Europe between the two world wars was one of the first to introduce Hungary abroad.

Patrick Leigh Fermor, the English writer and soldier who died recently aged 96, introduced Hungary to a whole generation of English-speaking readers – mesmerized by his evocations of adolescent wanderings from castle to castle across pre-war Central Europe.

He chronicled a fascinating, unfamiliar region, and also conjured up a charming aristocratic society in its post-Habsburg glow, which survived World War One and Trianon almost intact. As he says, “the next decade swept away this remote, country-dwelling world, and this brings home to me how lucky I was to catch these long glimpses of it.”

Fermor, son of an eminent geologist, was only 18 when, in 1933, he decided to crown his rebellious adolescence by walking from Holland to Constantinople, taking in Germany, Austria, Czechoslovakia, Hungary, and Transylvania. He exhumed his experiences, helped by miraculously-retrieved notes, in A Time of Gifts (1977) and Between the Woods and the Water (1986) – with a third volume, still unpublished, for the Balkans and Turkey.

Herald of Hungary And although A Time of Gifts is indeed full of gifts, for many readers it is only with the second book, when Fermor crosses the Mária Valéria bridge from Slovakia into Hungary at Esztergom on Easter Saturday 1934, that his travelogue really gets into its stride.

For one thing, in the journey’s earlier stages, “grim events kept breaking in” – Fermor arrives in Vienna during the Austrian Civil War, and mistakes shellfire striking socialist positions for thunder – but from the Hungarian border onwards, “something in the mood of these valleys and mountain ranges weakened their impact”.

Fermor’s gifts of evocation and erudition duly flourish without the pressure of reportage, and he dips deep into the heritage of the lands he crosses, aided by his gentry hosts.

(Fermor himself was no mean scholar even in his teens: what modern student would enliven his or her gap-year ramblings with Latin recitals of Horace?)

Bridging the gap He also effortlessly straddles the Hungarian/Romanian divide. “Could the answer not lie somewhere between the two?” he asks.

Fermor built ties on both sides, then and later. “A war hero of polymathic exuberance, brilliant linguistic skills and an elephantine memory,” as Colin Thubron describes him in the New York Review

of Books, “compared to Lord Byron or Sir Philip Sidney”, he tarried long with a young Magyar gentlewoman in Transylvania, then later settled with a Romanian princess in Greece until World War Two, when his exploits with the SOE in Crete, including the kidnap of General Heinrich Kreipe, cemented his legend.

Greece and the Balkans remained his passion and the subject of other fascinating volumes.

But his epic travelogue truly won him fame – for multiple reasons. It is a marvel of travel writing, but also a recollection of youthful exuberance, a window on the past that happens to overlook a vanished Magyar world.

Time stood still And for English readers, it is a holdover of the great era of pre-war travel literature, of Rebecca West, Evelyn Waugh, Norman Douglas and Robert Byron, preserved intact after half a century – and a reminder of all that Europe has lost since, drowned like the Turkish island enclave of Ada Kaleh where the story ends.

“Estates, much reduced, existed still, and at moments it almost seemed as though nothing had changed,” he writes of Transylvania. “Charm and douceur de vivre were still afloat among the faded décor indoors, and outside, everything conspired to delight.” PSM

22 people

www.bbj.hu

Budapest Business Journal | Nov 4 – Nov 17

UPCOMING

events

AmCham business forum

with Interior Minister Sándor Pintér October 20, 2011 Kempinski Hotel Corvinus Budapest

Nov. 10 Conference: Multinationals - we do need them Location Corinthia Hotel Budapest, Dist. 7, Erzsébet krt. 43-49 Time 9 a.m. – 1 p.m. fee BCCH members: HUF 18,000 + VAT; non-members: HUF 19,800 + VAT Organizer Világgazdaság and the Permanent Commission of the European Bilateral Chambers in Hungary Contact www.bcch.com

canadian chamber of commerce in hungary

Oct. 27 The UK Bribery Act and its implications and relevance for operations in Hungary Location British Embassy, Budapest, Dist. 5, Harmincad u. 6 Time 9:45 a.m.

Fee Attendance is free of charge, but registration is needed Organizer British Chamber of Commerce in Hungary, the British Embassy, and Réti, Antall & Partners PwC Legal Contact www.bcch.com

Financial conference with Citibank

October 4, 2011 Continental Hotel Zara Budapest

speed business meeting September 20, 2011 Novotel Budapest Congress & World Trade Center

netherlandshungarian chamber of commerce

Business lunch with the German-Hungarian Chamber of Industry and Commerce

October 20, 2011 Hotel Intercontinental

Nov. 8 Fifth Annual Conference on Diversity featuring the “AmCham Women of Excellence Award” Ceremony Location Hilton Budapest, Budapest, Dist. 1, Hess A. tér 1-3 Time 9 a.m. – 3 p.m.

Organizer American Chamber of Commerce in Hungary Contact Anita Árvai, anita.arvai@amcham.hu, 428-2086

Nov. 16 All you need to know about cloud computing Location DBH Group, Budapest, Dist. 11, Gábor Dénes u. 2, Infopark D Time 9 a.m. – 11 a.m.

Organizer Netherlands-Hungarian Chamber of Commerce Contact www.dutcham.hu Nov. 17 Business lunch with Foreign Minister János Martonyi Location Gerbeaud, Budapest, Dist. 5, Vörösmarty tér 7-8 Time 12:30 p.m. – 2 p.m. fee Swisscham members: HUF 16,000; non-members: HUF 20,000 Organizer Swisscham Hungary in cooperation with the German-Hungarian Chamber of Industry and Commerce, British Chamber of Commerce in Hungary, Hungarian Joint Venture Association Contact www.swisscham.hu Nov. 22 AmCham Thanksgiving Dinner Location Budapest Marriott Hotel, Dist. 5, Apáczai Csere János u. 4 Time 6:30 p.m. – 10 p.m. fee AmCham members: HUF 15,000 + VAT; nonmembers: HUF 30,000 + VAT Organizer American Chamber of Commerce in Hungary Contact Ildikó Takács-Berka, ildiko.takacs-berka@amcham.hu; 428-2084

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 news@bbj.hu

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〉

OPINION QUOTES

〉Those will be successful after the crisis

who are preparing for the period after the crisis instead of dealing with the immediate future, and we are deliberately doing it this way.

Péter Szijjártó, the spokesman of the Prime Minister, in a television interview on commercial TV channel TV2

〉Those that believe that aspects of social situation and equitableness should be considered in taxation – especially in terms of the personal income tax – will “fall into the pit of the West”.

National Economy Minister György Matolcsy on the first day of the parliamentary session discussing Hungary’s tax package for 2012

〉I don’t want to appear in a city whose

mayor has entrusted the direction of a theater to two known, extreme right-wing anti-Semites.

German conductor Cristoph von Dohnanyi writing to the Hungarian State Opera, canceling an appearance in a protest against Budapest Mayor István Tarlós appointing György Dörner, who is linked to far-right groups and who named playwright István Csurka, known for his anti-Semitic speeches, as his assistant, to head a Budapest theater

〉You don’t like the system? Sure, we

[ editorial ]

Time to get going

A

chieving success outside the country’s borders can be a tough task for businesses. It is also something the current government – trying hard to boost the Hungarian economy – probably does not pay enough attention to. Yet in love and crisis everything is allowed. If the home environment has become infertile, it is time for companies to look for new and greener grounds. This is the strategy that has proved most viable in the past three years and the one most multinational firms have applied. What they lost in their home countries – as most economies in and outside the EU have been hit hard by the crisis – has been more than made up for on foreign markets.

Emerging countries with their people eager to consume goods coming from the developed world can be an ideal target group.

So if demand for your salami is falling here, head to China. After all, paprika is not that unfamiliar to a stomach trained on spicy stuff. Or it may be a good idea to make Mongolians switch from vodka to Tokaji aszú. Or try and sell your designer outfits to the Japanese for whom Hungarian Matyó could be as exotic as a kimono is for us.

These are, by the way, all tried and tested routes used by Hungarian businesses.

If the distance intimidates you, don’t worry: there are plenty of examples in the neighborhood to look at. Real estate developer TriGranit has several ongoing projects, among others, in Poland, Slovakia, Serbia and Ukraine. MOL has just acquired a large part of its Croatian counterpart INA. OTP has been continuously expanding in the Balkans, generally successfully.

One may argue that the above mentioned companies are all strong and large with huge capital reserves. Easy for them. But standing on international ground is not only for the large players. It is, in fact, a strategy that smaller firms could also make good use of in order to stay afloat, or, even better, prosper.

And if the macroeconomic environment and the fiscal situation all remain as uncertain as they are today, then it is also the only way to survive for many firms.

don’t like it either, that’s why we change everything, that’s why we reorganize Hungary. Those who have been fooled will clearly see later that the new system being built to replace the old one that caused the crisis will be much better for them.

Péter Szijjártó, the spokesmen of the Prime Minister, in an interview on public TV channel MTV after the Nem tetszik a rendszer (I don’t like the system) demonstration held on October 23

Your first address if you like to start business in Slovakia! cegekalapitasa.hu BBJ-PARTNERS Netherlands - Hungarian Chamber of Commerce

Media representation: Absolut Media Zrt Address: Madách Trade Center 1075 Budapest, Madách Imre út 13-14., Building A, 8th floor Telephone +36 (1) 398-0344, Fax +36 (1) 398-0345, www.bbj.hu

Editor-in-chief: Melinda Tünde Dóra dmt@bbj.hu • Copyeditor: Tamás Deme • Proofreading: Robin Marshall Editorial staff: Patricia Fischer, Anikó Jóri-Molnár, Gabriella Lovas, Zsófia Végh • Lists: BBJ Research (research@bbj.hu) News and press releases: news@bbj.hu Design: Absolut Design Stúdió (production@bbj.hu) • Art director: Tamás Tárczy • CEO: Tamás Botka (publisher@bbj.hu) Operations director: Balázs Román • Advertising: Absolut Media Kft (hirdetes@amedia.hu) • Sales: Viola Farkas (viola.farkas@bbj.hu) Circulation and subscriptions: Vanda Taletovics-Vedres (circulation@bbj.hu) • Printing: Absolut Print Kft

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