Budapest Business Journal 21/09

SPECIAL REPORT: VOL. 21. NUMBER 09

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NEWS

BACK IN THE RING

State declares smoke trade beneficiaries The winners of the new monopolized trade in tobacco products have left the government with some explaining to do. Not only do the new regulations inconvenience three million Hungarians, applicants close to the Fidesz party got a conspicuously sweet deal when the licenses were awarded.

03 BUSINESS

No barriers offshore

Interview with former finance minister Lajos Bokros who returns to domestic politics with his own party. 07

13 BUSINESS

Photo: Dániel Végel

Hospitality needs to ‘improve its aim’ SOCIALITE

Heading for Silicon Valley Hungarian and Polish projects were awarded joint first prize at the final of the regional innovation competition organized by Silicon Valley’s Singularity University.

31

The latest BBJ Shaker focused on air travel and tourism: eager competitors, taking passenger numbers back to just a little short of the pre−Malév grounding levels, quickly compensated for the loss of the national airline.

The tourism industry now simply wants a more proactive government approach to invite money from abroad back into the system.

11

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Budapest Business Journal | May 03 – May 16

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THE EDITOR SAYS

INSECURITY IN POWER Viktor Orbán’s Fidesz government to this day takes every opportunity to highlight the overwhelming popu− lar support that swept it to power in 2010 when justify− ing its decisions. As Orbán has argued, the governing party’s super−majority in parliament is a reflec− tion of the fundamental changes that society has authorized the cabinet to enact.

It is all the more baf− fling, therefore, why the government is constantly trying to seek some form of public backing when− ever it plans something controversial. First, there were the so−called consul− tations, in which around HUF 1 billion each was spent on spamming the mailboxes of 8.2 mil− lion people with a letter from the prime minister along with a question− naire with questions that were directed, to say the least.

Unsurprisingly, only a fraction of the recipients – based on their responses, diehard sup− porters of Fidesz – both− ered to answer. At the last occasion only 690,000 return envelopes arrived.

Still, this didn’t stop Orbán from citing the results as a rock−hard confirmation of support for his policy decisions among the general public.

Now, the government is yet again reaching out to the populace, using taxpayer money, to rally support for its

decision to make utility companies swallow a 10% price cut, benefitting the public. Apart from the eventual impli− cations of the fee−reduction effort, there is the absurdity of a government that claims to have some of the strongest support in Europe needing constant reaffirmation of its efforts like an insecure child.

It is said that the goal is to show that Hungari− ans support a measure the government has already passed. But show to whom?

The aggrieved companies surely won’t care. They’ll have their own response, either by going to court or by packing up their things altogether and leaving the country.

Orbán’s insists his gov− ernment enjoys strong legitimization whenever dismissing international critiques of his decisions.

When former social− ist prime minster Ferenc Gyurcsány’s Öszöd scan− dal broke out, Orbán con− stantly referred to the pre− mier as illegitimately holding on to his post, and Fidesz boycotted parlia− mentary work. By his logic, winning the elections is in itself all the legitimacy a government needs.

Nevertheless, it is apparently worthwhile using the state budget to allow the same fraction of the public to continue to express their unwavering support; perhaps even the strong need to be reassured and loved.

A GOVERNMENT THAT CLAIMS TO HAVE SOME OF THE STRONGEST SUPPORT IN EUROPE NEEDS CONSTANT REAFFIRMATION OF ITS EFFORTS LIKE AN INSECURE CHILD

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LAME BLAME GAME The Bloomberg news agency published a news item a few minutes prior to April’s central bank base rate deci− sion stating that the benchmark had been slashed to 1%, something that couldn’t be – and obviously wasn’t – factual. A correction was issued within the same min− ute, but the false information nonetheless caused an upheaval on the market and caused the forint to weaken notably for a short while before a correction.

The events played perfectly into the rhetoric pur− sued by the government and a central bank that is now loyal to the cabinet’s goals, a narrative that insists that Hungary is constantly being targeted by specu− lative foreign forces, and that international media organizations are serving their interests in Budapest.

Bloomberg had some explaining to do and still faces an investigation by the finance market regulator on suspicions of market rigging.

Make no mistake, Bloomberg’s error is serious, perhaps the most serious in the textbooks of the profession. How− ever, it was exactly that: a mistake. Without delving into the practical aspects of how international news agencies publish base rate decisions, suffice it to say that the pre− mature release of the base rate call, which was obviously fake to anyone familiar with the state of affairs in Hungary, is a classic fat thumb incident.

These are high stakes, where mistakes do, and should have, consequences. Still, the government’s accusation that there was any deliberate intent behind the course of events is completely unfounded, wrong and unfair. The gov− ernment and its central bank should probably instead start concentrating on their own policy measures, which make the Hungarian currency so vulnerable to any slight shift in sentiment, instead of waiting to pounce on any and every opportunity to point the finger of blame at the media.

BBJ

1 News

NEWS IN BRIEF

Hungary net FDI set to reach €3 bln in 2013 04 ANALYSIS

Assembling the anti−Orbán coalition

10

macroscope

STATE DECLARES SMOKE TRADE BENEFICIARIES The government has completed yet another controversial measure and declared the winners of monopolized tobacco trade. Besides leaving numerous parts of the country without anything to smoke, the list of license winners has drawn calls of foul play.

GERGŐ RÁCZ

STORY HIGHLIGHTS ■

New tobacco trade monopoly takes effect on July 1 ■ Government under attack for its selection of license winners

rience in retail. Many winning applicants were also linked to governing party politi− cians through family or business relations.

The calls of foul play were supported by the fact that the government didn’t publish the actual applications, only the names of the

public the tenders and their evaluation.

Without these, those in power can abuse the distribution of tobacco licenses with− out any limitation,” said Fanny Hídvégi on behalf of the civil liberties group TASz, one of the signatories of the call for the release of data.

The opposition socialist MSzP approached the attorney general over the matter, accord− ing to its chairman Attila Mesterházy.

Government officials have denied any wrongdoing in relation to awarding the licenses. Lázár stressed that the govern− ment would be happy to even further reduce access to tobacco products, but any more limitation is an illusion for the time being, given that some three million people in Hungary smoke.

To make matters more complicated, Lázár added that the government is also looking to increase the profit mar− gin on cigarette prices from 10% to 12% to improve profitability for license hold− ers and to further discourage smoking.

Because of the increased prices, a box of cigarettes will cost nearly HUF 1,000. Of course, the same move is also perceived as a means of sweetening the deal for the handpicked winners.

winners. There is no way to determine why an application was accepted or rejected, nor what the evaluation criteria were.

As a response, a collective of civil liber− ties groups and media organizations have approached the National Development Ministry and the license−coordinating Nemzeti Dohánykereskelemi Nonprofit Zrt to make the tender documents pub− lic. If the state doesn’t comply and release what is deemed to be public information, a lawsuit will be filed.

“The transparency of the tobacco ten− ders can only be assured by making

SHENANIGANS However, as is often the case in Hungary, the implementation hit a snag – several of them actually – very early in the process. The government eventually determined that the tobacco market, which is estimated at HUF 500 billion overall, won’t be sufficient to make the beneficiaries of the tender process profitable. Accordingly, the range of prod− ucts sold at each kiosk, known as a trafik in Hungarian, was expanded to include alco− holic beverages, energy drinks and lottery tickets, all of which were originally excluded.

Furthermore, after the publication of the license winners, it became clear that there would be localities where there was no application, meaning residents in those places would not be able to legally purchase cigarettes. Also, once the list of those who have actually won licenses was published, the government found itself in a political crossfire.

Many applications from people already running shops were turned down, and awarded to others who have no prior expe−

STATE SECRETARY JÁNOS LÁZÁR

THE GOVERNMENT WOULD BE HAPPY TO EVEN FURTHER REDUCE ACCESS TO TOBACCO PRODUCTS

Photo: György Varga / MTI

When János Lázár, state secretary to the Fidesz government, announced last year that the cabinet would introduce a monop− oly on the distribution of tobacco products, the main argument was to protect the health of young people. It was also argued that the changed regulations would boost the econ− omy through giving small, family businesses an opportunity to make a living.

“The government’s goal since 2010 was to reduce the number of sales loca− tions for cigarettes and to make access to tobacco products harder,” Lázár said at a press conference.

The estimated 44,000 locations where tobacco is legally sold will be reduced to 7,000 according to the law that is to take effect on July 1. Those who are allowed to sell cigarettes have won the sales license for 20 years.

THE BACKLASH Apart from smokers having to cope with yet a further price increase and the inconve− niences stemming from the reduced number of stores, the trafik law is set to have addi− tional consequences. For instance, tobacco wholesalers will have to adjust to a brand new clientele, many of whom have no retail experience.

“Tobacco wholesalers will lose almost all their customers who have risk ratings, and will have to manage a client portfolio that completely changes overnight,” said Balázs Vanek, country director for credit insurer Atradius.

The new conditions are also prone to motivate smuggling, especially in locations where there are no tobacco products avail− able or buying them requires traveling lon− ger distances. Atradius said 4% of cigarettes were sold illegally last year, a figure that is predicted to reach 10% in 2013.

The first problematic period will be Hungary’s busy summer festival season.

Visitors to the Hegyalja festival in Tokaj will apparently only have one store avail− able with just one license being awarded in the city. The most popular Sziget festi− val will see crowds going without imme− diately available cigarettes, since the law doesn’t allow temporary points of sale.

04 News

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NEWS FOR THESE PAGES IS TAKEN FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, HUNGARY A.M.

NEWS

IN BRIEF

Budapest Business Journal | May 03 – May 16

If there are no arguments within a party – and, at least at our level, there are no arguments in this party –, it indicates two things. Either we do something really good or something is not right at all Fidesz councilman Ákos Hadházy, in an interview with hvg.hu in the wake of the much−debated tobacco license law

BUDAPEST READY TO ROLL WITH NEW BUSES

Photo: Szilárd Koszticsák/MTI

The Budapest transport holding BKK has recived another shipment of Mercedes−Benz Citaro 2 buses that will be launched in traffic on May 1.

The increased number will allow the reevaluation of where these buses – which are air−conditioned and have low floors to provide easy wheelchair access – are deployed. The buses will be operated by a subcontractor, VT−Transman. Attending the ceremony were Till Oberwörder, sales director at EvoBus Gmbh (c), Prime Minister Viktor Orbán (r) and Budapest Mayor István Tarlós (l).

ECONOMY HUNGARY NET FDI SET TO REACH €3 BLN IN 2013

Net foreign direct investment in Hun− gary is expected to reach about €3 bln this year, the National Economy Ministry said. The amount excludes one−off transactions, such as the sale of German utilities company E.ON’s gas business in Hungary, and also excludes capital in transit, that is, FDI bound for third countries, the ministry noted. Net FDI is expected to reach an average annual €3.5 bln in the mid− term, excluding one−time effects. Net foreign direct investment in Hungary came to €10.5 bln last year, up from €3.8 bln in 2011. Capital in transit accounted for €3.9 bln of the amount last year, up from €2.6 bln in 2011, fig− ures of the National Bank of Hungary show. FDI stock in Hungary came to €78.5 bln at the end of 2012. Net FDI by Hungarian companies abroad reached €8.2 bln last year.

TAX REVENUE EDGES DOWN TO 37% OF GDP

Tax revenue of the Hungarian state was the equivalent of 37% of GDP in 2011, down from 37.7% in the previous year, data compiled by the European Commission and published on Mon− day show. Hungary ranked 12th in the European Union in terms of the over− all tax burden compared to the size of the economy. Indirect taxes accounted for 45.8% of all tax revenue in Hunga− ry, according to the EC’s data. Taxes accounted for 26.8% of consumption and for 38.4% of labor costs.

MNB READY TO INTERVENE ON DOMESTIC SECURITIES MARKET

The National Bank of Hungary

(MNB) last bought Hungarian gov− ernment securities on the second− ary market in 2008, but it is closely watching the liquidity of both the government securities market and the banking system, and is ready to intervene in exceptional situations, governor György Matolcsy said in written response to an MP. In 2008 the MNB bought HUF 213.3 bln in Hungarian government securities to secure the undisturbed operation of that market and in support of the liquidity of the banking system, Matolcsy’s letter added. The MNB held HUF 142 bln in Hungarian government securities at the end of 2012. The MNB does not keep shares in its international reserves.

RETAIL SALES FALL 1.1% IN FEBRUARY

Retail sales in Hungary fell a calen− dar−year−adjusted 1.1% year−on−year in February, slowing from a 2.6% de− cline in the previous month, the Cen− tral Statistics Office (KSH) said. The February drop was revised up from a 1.4% decline in a first reading of data published on April 4. Food sales dropped a calendar−year−adjusted 2.6% in February. Non−food sales edged up 0.4% and vehicle fuel sales were down 3.8%. Unadjusted data shows retail sales fell 2.3% in Febru− ary, decelerating from a 2.6% decline in January. In a month−on−month comparison, retail sales rose 0.2% year−on−year in February after fall− ing 0.4% in January, adjusted for sea− sonal and calendar−year effects. Food sales dipped 0.2% but non−food sales rose 0.7%. Fuel sales slipped 0.7%. In absolute terms, retail sales came to HUF 555.4 bln in February. Food sales reached HUF 269.1 bln and non−food sales were HUF 181.8 bln.

Numbers in the news

4.75% the new historical low base rate, set by the Monetary Council of the National Bank of Hungary on April 23.

11.8% the average unemployment rate in the 15−74 age group in January−March, up from 11.6% in December−February and 11.7% in the same period a year earlier, data published by the Central Statistics Office show.

DOMESTIC

POLITICS

TOP DEBTOR OWES STATE HUF 1.6 BLN

BAJNAI AND MESTERHÁZY TALK COOPERATION

A Budapest−based firm, Ammory− Car Kft currently tops the quarterly revised “black list” at the tax author− ity NAV, owing a total of HUF 1.6 bln from nearly a billion in unpaid taxes and the consequent penalties. In close second is a private individual, Csaba Varga who also owes nearly HUF 1.6 bln. The list of reluctant tax− payers is regularly revised to include companies owing more than HUF 100 mln and individuals with debts of HUF 10 mln or more to NAV.

Heads of the Együtt 2014 move− ment and the socialist MSzP Gordon Bajnai and Attila Mester− házy, respectively, have reached a tentative agreement about the two groups’ future coopera− tion. In what the two party lead− ers described as an amicable and constructive encounter, the sides agreed that the political opposition would need a single figure to lead the election battle against Viktor Orbán’s Fidesz government at the 2014 general elections. They also decided that the opposition sides shouldn’t launch any campaign moves that are expressly detrimental to the causes of other political groups.

They also agreed that there would be upcoming local bi−elections where MSzP and E2014 will enter joint candidates into the running.

STATE ESTABLISHES COMPANY TO TAKE OVER ASSETS OF TROUBLED ALUMINA MAKER

The Hungarian national asset manage− ment company MNV has established a company to take over the assets of troubled alumina maker MAL, the Na− tional Development Ministry said. The company is called Nemzeti−MAL−A Aluminiumtermelő. MAL was ordered under liquidation late in February, and a state−owned receiver took over the company’s management. The National Development Ministry said at the time that the government would intervene to ensure property and assets necessary for production are kept and “to allow production to continue in a new com− pany free of liabilities”. MAL was fined HUF 135 bln in 2011 for environmen− tal damage caused by a toxic sludge spill at its plant in Ajka. A reservoir at the plant ruptured in October 2010, sending a flood of red sludge through surrounding villages, killing ten people and damaging hundreds of homes. The event was Hungary’s worst environ− mental disaster to date.

INFRINGEMENT PROCEEDINGS LIKELY AGAINST HUNGARY

The European Commission is like− ly to start infringement proceed− ings against Hungary over the re− cent constitutional changes. “The commission is working on a thor− ough legal analysis which will lead probably to infringement proce− dures. And this will happen rather quickly,” European Union Justice Commissioner Viviane Reding said at a daily briefing in Brussels at the end of April. The amend− ments were passed in March by the Hungarian parliament, where Orbán’s ruling party alliance en− joys a two−thirds majority.

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News 05

Budapest Business Journal | May 03 – May 16

COMPANY NEWS

Digital service subscriptions made 64.7% of all television subscriptions at Hungary’s biggest television companies at the end of March 2013, according to data from the National Media and Infocommunications Authority.

Shareholders of oil and gas company MOL have approved a proposal to pay a HUF 46 bln dividend on 2012 profit at the company’s annual general meeting. The dividend, which works out to about HUF 460 per share, is 25% of net profit excluding one−off factors. MOL’s net income came to HUF 55.2 bln in 2012, according to the parent company’s report, prepared to Hungar− ian Accounting Standards.

Hungarian pasta maker Gyermelyi has inaugurated a HUF 2 bln mill with a daily capacity for 200 tons of soft wheat and 150 tons of durum wheat, boosting the company’s total milling capacity to 500 tons. Until now, the company has not had its own milling capacity for durum wheat, said chairman Béla Tóth. Gyermelyi buys 100,000 tons of wheat a year from 200 producers. It supplies the farmers with seeds in partnership with the Martonvásár Research Institute of the Hungarian Academy of Sciences. Tóth said the company would spend HUF 1 bln to add storage for 32,000 tons of grain to its existing capacity by the summer. Total investment spending will exceed HUF 3 bln in 2013, he added.

Shareholders of OTP Bank, Hungary’s biggest commercial lender, approved a proposal to pay a HUF 120 per share dividend on 2012 profit at its annual general meeting. The dividend comes to HUF 33.6 bln, according to the bank’s profit−and−loss statement prepared to Hungarian Accounting Standards. The statement shows after−tax profit of HUF 52.6 bln.

Austria’s Erste Group has reported a first−quarter loss of €27.5 mln at its busi− ness in Hungary, narrowing from a €81.8 mln loss in the same period a year ear− lier as risk provisions plunged. Risk provisions fell by 54.6% to €59.5 mln in Q1 from the same period a year earlier. Erste Group noted that an additional €75.6 mln in provisions were allocated in the base period because of a government scheme allowing early repayment of FX mortgages at discounted exchange rates.

Citi Securities and Fund Services has entered in to a definitive agreement to acquire ING’s custody and securities services business in seven Central and Eastern European markets, currently representing €110 bln in assets under cus− tody. The transaction, which is subject to regulatory approval and clearances, in− cludes ING’s local custody and securities services businesses in Bulgaria, Czech Republic, Hungary, Romania, Russia, Slovakia and Ukraine.

Hungarian artificial fertilizer maker Nitrogénművek plans to issue a dollar bond to finance long−term investments, minority owner Zoltán Bige confirmed to MTI. Standard and Poor’s said earlier it assigned a BB− rating to a proposed $200 mln issue, maturing in 2020, by Nitrogénművek.

China’s Zhuzhou Times New Material Tech. Co. plans to establish a base in Hungary to sell earthquake resistant building technology on European mar− kets, the National Innovation Office (NIH) said. The base isolation technology was developed with the assistance of a Hungarian professor, Emanuel Csorba.

Plastic tube maker TU−PLAST has installed a HUF 1 bln production line at its plant in Debrecen, boosting capacity by 25%. TU−PLAST won almost HUF 200 mln in European Union funding and state co−financing for the project. The company can turn out more than 70 million tubes a year; it exports 90% of output.

American automobile interior maker Eagle Ottawa is expanding capaci− ty at its base in the Hungarian city of Szolnok to meet increased demand, the company told MTI. Eagle Ottawa will expand the base by 60% by the fall, creating 150 workplaces.

Photo: Prime Minister’s Office

GYERMELYI INAUGURATES HUF 2 BLN MILL

The annual general meeting of Hungarian drug company Richter approved the board’s proposal to pay a dividend of HUF 660 per share. Richter also paid a dividend of HUF 660 per share last year. The dividend fund is HUF 12.27 bln or 28% of the parent company’s HUF 43.91 bln after−tax profit, according to Hungarian accounting standards.

HUNGARY SIGNS ECONOMIC AGREEMENTS WITH UAE Hungary and the United Arab Emirates signed several economic agreements in Dubai on April 30, among them one on avoiding double taxation and another on the establishment of a trade house in Abu Dhabi. State secretary for foreign affairs and external economy Péter Szijjártó, who signed the agreements, said the sides would establish a joint economic committee. Bilateral trade between Hungary and the UEA came to $1.2 bln last year. The trade house in Abu Dhabi will open in the second half of this year, Szijjártó said. He sees opportunities for Hungarian farm technology and food companies, water management companies, healthcare and research companies, and engineering companies in the UAE.

Magyar Export−Import Bank has signed a cooperation agreement with Russia’s Sberbank and its local unit Volksbank Magyarország. The agreement can produce efficient cooperation in a number of areas, said Eximbank CEO Roland Nátrán. Sberbank deputy CEO Sergey Gorkov ex− pressed hope the agreement would support the strengthening of exports to Russia, Turkey and the CIS. Troubled energy services company E−Star, which is under bankruptcy protec− tion, said at the end of April that it had reached an agreement with its creditors.

E−Star said it had secured, undisputed creditors’ claims of almost HUF 492 mln, and unsecured, undisputed creditors’ claims of HUF 17.9 billion.

German−owned OBO Bettermann Hungary has inaugurated a logistics base at its industrial cable and plastic parts plant in Bugyi, near Budapest. Bugyi will now become the group’s logistics center for Central and Eastern Europe.

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06 News

Budapest Business Journal | May 03 – May 16

ENERGY

NEWS FOR THIS SECTION IS TAKEN FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, ENERGY TODAY NEWSLETTER AT WWW.BBJ.HU/STORE/NEWSLETTER-PACKAGE

E.ON URGES ACTION TO SAVE EUROPEAN CARBON TRADE Europe’s efforts to protect the climate faces “a decade of stagnation” without quick action to save the EU carbon market, the chief ex− ecutive of German utility E.ON said on April 27. “European emissions trading is a patient on his deathbed; either we cure him quickly, or he dies,” Reuters quoted Johannes Teys− sen as saying to Sueddeutsche Zeitung. The

European Parliament on April 16 rejected a Commission proposal to temporarily re− move some of the oversupply that has over− whelmed the $148 bln market for permits to emit carbon dioxide, sending the market to a record low and raising questions about its survival. As a result, investors will find it no longer profitable to put their money into clean technologies, Teyssen said.

EC TO CLARIFY EU ELECTRICITY, GAS GRID INVESTMENT RULES The European Commission is to publish guidelines for investors on the EU’s un− bundling rules for electricity and gas grids “within the next two weeks,” Platts reported on April 25, quoting an EC official. “The commission is finalizing a staff working document [to clarify the unbundling rules] so that the impediments for investment... will be moved away,” the EC’s new internal energy market director, Klaus−Dieter Borchardt, told the EP’s energy committee. Unbundling – separating electricity and gas grids from par− ent energy suppliers – was one of the most controversial issues in the EU’s third energy package when it was adopted in 2009. The current unbundling rules prohibit companies involved in electricity and gas supply from having control over electricity and gas grids.

REGIONAL NEWS FOR THIS SECTION IS TAKEN FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, ENERGY TODAY NEWSLETTER AT WWW.BBJ.HU/STORE/NEWSLETTER-PACKAGE

GREEK LAWMAKERS APPROVE REFORM LAW Greek lawmakers have approved a reform law to unlock about €8.8 bln ($8.9 bln) of rescue loans – from the European Union and the International Monetary Fund – pending since March and “opened the way” for another €6 bln scheduled in May. The law passed easily with the solid backing of the three parties comprising Greece’s rul− ing coalition, by 168 to 123 votes. Greece and the troika of international creditors reached an agreement on April 16. The deal includes the adoption of legislation to extend collection of the real estate tax through 2013 via the electricity company.

Athens had also pledged to cut 4,000 state sector jobs this year and 11,000 in 2014.

CYPRUS PARTLY EASES CAPITAL CONTROLS Cyprus has partly eased capital controls on transactions imposed last month to prevent a run on deposits in the wake of a €10 bln EU−IMF bailout deal, the Finance Min− istry said. Under a new decree, individu− als will now be allowed to make cashless payments within Cyprus of up to €10,000 a month, while the figure for businesses will have a ceiling of €50,000. For transac− tions abroad, individuals will be allowed a monthly maximum of €5,000. At the same

time, people traveling abroad will now be able to take with them up to €3,000. How− ever, a €300−limit on daily withdrawals from banks remains in effect. Cyprus also changed the ultra−low corporate tax rate as part of a package of measures to secure a controversial €10 bln rescue package. Par− liament approved increasing the rate from the current 10% to 12.5%. It also voted to increase the defense levy on profits from interest on deposits from 15% to 30% and raised the tax on credit institutions’ trans− actions from 0.11% to 0.15%.

V4 UNIONS CRITICIZE FUNDING SHORTAGE IN HEALTHCARE Healthcare providers in Czech Republic, Hungary, Poland and Slovakia face a short− age of money, as a result of which the sector’s debt grows simultaneously with the rising profit of the business firms involved, doctors’ unions from the four countries known as the Visegrád Four (V4) agreed on April 20. The V4 union leaders also pointed to opaque con− ditions in the health sector and called on the respective governments to start solving the situation. Union representatives complained that health insurers are not bound to cover the real costs of provided care to health facili− ties. As a result, spending on healthcare per inhabitant in the V4 the states is far below the EU average, the union leaders say.

EU ENERGY COMMISSIONER GÜNTHER OETTINGER

EU MUST AVOID TAP VERSUS NABUCCO SQUABBLE EU ministers must avoid fruitless debate over which of two rival pipeline projects is the way to cut reliance on Russian gas, Reuters reported on April 18, citing a letter by European Union Energy Commissioner Günther Oettinger. The EU executive is anxious to present a united front, while dominant supplier Russia attempts a divide−and−rule strategy by negotiating gas supplies with individual EU member states with conflicting interests. The Union is look− ing to the giant gas field in Azerbaijan as a near−term solution and in June, the Shah Deniz consortium is expected to choose one of the two pipelines vying to ship its gas − Nabucco West or the Trans Adriatic Pipeline. “What we most need to avoid is a discussion on the relative merits of Nabucco West and TAP,” Oettinger wrote to EU foreign affairs chief Catherine Ash− ton. “Current independent forecasts suggest that additional import capacities will be needed, so that both projects could eventually be realized.” The Nabucco West project plans to ship gas from Turkey’s western border via Bulgaria, Romania, and Hungary into the Baumgarten hub in Austria. Analysts say the advantages of TAP, which would run through Albania and Greece into Italy, include a less state−dominated shareholder structure.

ALMOST 30% OF POLES WOULD LOOK FOR JOB ABROAD, STUDY FINDS Almost a third of working Poles would like to look for employment abroad, according to a study commissioned by the Homo Homini Institute. The figure (28.9%) is two times that from a year ago. The most popular potential work destinations were Germany, the UK and countries in Scandinavia. The age group most likely to leave Poland for work is 45−54, the survey found. Separate research by Lazarski University shows that about 140,000 Poles emigrated in 2012.

30% 16.9% 7.9%

GERMANY UK SCANDINAVIA

WOMEN’S, MEN’S PAY STILL UNEQUAL IN CZECH REPUBLIC Women in the Czech Republic must work for almost 15 months to earn the same wage as men for a year on average, orga− nizers of the Equal Pay Day event, held by the Business & Professional Women Praha II, said. According to an information sys− tem on average pay (ISPV), women had an about 23% lower average wage than men in 2012. In public and state services women received a 17% lower salary than men. The ISPV shows that women’s average monthly pay was CZK 22,186 (€861) in 2012, while men earned CZK 28,894/m (€1,121). Men earned 23.3% more in the private sector.

AUSTRIA SAYS WILL TAKE PART IN EU TAX FRAUD TALKS Austria said it would take part in EU talks aimed at limiting tax fraud after weeks of hold− ing out on the issue amid severe international criticism of over banking secrecy law. In a joint statement on April 26, Social Democrat Chancellor Werner Faymann and conserva− tive Vice−Chancellor Michael Spindelegger agreed to join European negotiations on the automatic exchange of banking data. Fay− mann and Spindelegger’s statement also re− peated that “Austrian banking secrecy for resi− dent tax−payers must not be affected”. Austria came under fire as the European Union’s last country to hold onto banking secrecy after Luxembourg announced it was prepared to lift its own regulations on the matter, amid a region−wide push to halt tax evasion.

SERBIAN PARLIAMENT ENDORSES AGREEMENT WITH KOSOVO Serbia’s Parliament on April 26 gave the green light to an EU−brokered deal aimed at normal− izing ties with former foe Kosovo, a landmark accord already approved by the government on April 22. The deal, which has come under fire from ultra−nationalists and Kosovo Serbs, won vast backing in the 250−seat parliament.

Out of 203 deputies present, 173 voted to ap− prove the deal, while 24 were against it. The premiers of Serbia and Kosovo hammered out the deal on April 19, with both sides un− der strong pressure from Brussels to improve relations if they want to move closer to even− tual European Union membership. The accord gives some autonomy to Kosovo Serbs living in northern Kosovo, who refuse to recognize Pristina’s authority. While it has won praise from EU officials, it has angered many Serbs who see it as tacit acceptance by Belgrade of the breakaway territory’s independence..

Photo: Dietmer Mathis

CROATIA IN TALKS WITH EXXON, CONOCO, GE ON GAS, OIL EXPLORATION Croatia, which is set to join the European Union in July, is in talks with ExxonMobil, ConocoPhillips, and General Electric on investments in oil and gas exploration in the Adriatic Sea. “They are all interested, and they are all waiting for the government to pass the amended law on gas and oil re− search,” Economy Minister Ivan Vrdoljak told Bloomberg. Croatia wants to meet increased demand across the region and reduce Eu− ropean dependence on Russian gas. The Adriatic nation needs investment to revive growth after four years of recession or stag− nation. The government is expected to adopt amended laws on hydrocarbon research by June, Vrdoljak said.

Gazprom warned European companies against what it alleges are illicit re−sales of Russian gas to Ukraine, stepping up pressure on its neighbor in a long−standing contractual dispute. Gazprom will look into the legality of Ukraine’s gas purchases from Europe, a company spokesman said on April 24.

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News 07

Budapest Business Journal | May 03 – May 16

MATOLCSY LAYS OUT FINAL TERMS OF MNB STIMULUS PLAN The National Bank of Hungary’s Monetary Council finalized the details of its Funding For Growth Scheme, a loan program for SMEs, at its meeting at the end of April.

According to central bank governor György Matolcsy, the council took into consideration the advice of the Hungarian Banking Associ− ation and the realities of the global economy, including global financing.

The first pillar of the program is that the central bank will make HUF 250 billion of financing available to banks for SME lend− ing. The lenders’ interest margin was earlier to have been capped at 2% on loans financed with the MNB credit. Under the finalized version of the scheme, the interest margin – including all fees and commissions and any possible guarantee charge – will be limited to 2.5%. The ceiling on individual loans has been raised, the minimum amount is HUF 3 million and rather than HUF 400 million, the top end is now HUF 3 billion. The higher upper limit would create resources to pro− vide medium−sized enterprises with asset management credit and development funds.

Using MNB’s refinancing scheme loans with a maximum maturity of 10 years might be possible, Ádám Balog, deputy governor of the MNB said.

The second pillar of the program provided underlying credit to SMEs through the bank−

Photo: Tibor Illyés / MTI

KRISZTIÁN KUMMER

ing system to swap foreign currency denom− inated loans. About 15,000 enterprises have FX loans, and almost 54% of all loans in the portfolio are in foreign currency. Outstand− ing FX loans would be replaced by cheaper forint denominated ones, with a zero percent refinancing interest loan, which banks would pass on to SMEs at a 2% interest rate. Like the early repayment scheme long known to retail banking clients, the MNB will provide for− eign currency to lenders at market rates from its international reserves for loan conversions.

Lenders must commit to repaying their short− term external liabilities with the foreign cur− rency, thus reducing the short−term foreign currency debt of the country by the same

degree as the international reserves, leaving Hungary’s reserve adequacy unchanged.

The aim of the third pillar is to reduce the external vulnerability of the banking sys− tem and the country. The level of two−week MNB bills outstanding will be decreased from HUF 4,500 billion to HUF 3,600 bln.

To cover the HUF 1,000 bln reduction, the MNB offers FX swaps from its own foreign exchange reserves, which can reduce the amount of foreign currency resources of banks with a similar amount.

Matolcsy said that the scheme could boost GDP by seven−tenths of a percentage point in 2013 and the first half of 2014. MNB dep− uty−governor Ádám Balog said that banks are interested in the project, and the FX swaps could be launched early in August. A shift in financing public sector debt towards forint financing could also contribute to a decline in the stock of two−week bills, Balog added. Such a shift falls under the authority of the Government Debt Management Agency (ÁKK) and the government, he added.

The scheme was finalized after consulta− tions with financial and business sector par− ticipants in April. Master agreements on the scheme are to be sent to banks for prior appraisal on May 8, and information on their final form will be published on the MNB web− site on May 15, Balog said. Bilateral frame− work contracts, containing the volumes each given bank intends to make use of, will be concluded on May 15−24, and lenders will be informed of the amount allotted to them on May 28. The scheme will run from June 1 until August 30. The Council will assess the scheme in September.

NON-BANK FINANCING EXPANDING The year 2013 will be about the expansion of non−bank market players and alternative financing products, a survey by DLA Piper on financing acquisitions showed.

According to leading financial market participants, further structural changes are expected in the segment this year.

KRISZTIÁN KUMMER

The company acquisition market showed slow but steady growth in 2012 as 5% more transactions were finalized than in 2011.

More than half of the respondents forecast further grow this year. However, growing optimism is somewhat offset by the fact that 80% of respondents are sure that financing willingness will never again reach pre−crisis levels of 2007.

Last year, refinancing, secondary and tertiary buyouts played the most important roles. By 2013, the number of secondary and tertiary buyouts – transactions in which a private equity investor sells its stake to

another private equity investor and thereby gets out of the transaction – may overgrow refinancing.

Looking at sectoral distribution, business services, healthcare, consumer products and services, financial services, and light manufacturing could show the most promising performance this year. On the other hand, the real estate, leisure and entertainment segments have all been in very unfavorable situations since the beginning of the crisis. In line with international examples, industry, energy, and IT remain in focus in Hungary, with no sign of any boom in real estate for the foreseeable future.

Non−bank financing and alternative financing products are playing an ever− increasing role on the market. In the U.S., non−bank players carry out about 60% of company financing, while in Europe, nearly 80% of debt financing is still expected from banks in 2013. However, the American example is a good prediction of the changes that can be expected in Europe. According to some experts the banks, driven by Basel III compliance requirements to change their activities, may cause a EUR 125−200 billion shortage for European companies. While commercial banks prefer to turn towards

HUNGARY’S ECONOMIC GROWTH Business services

92.9

Healthcare

80.6 Consumer products and services

60.2

Financial services

50.0

49.0

IT, media, telco Source: DLA Piper

traditional markets and safer products due to the tightening of capital adequacy and liquidity ratios, new non−bank actors are expected to come forward to fill the gap left by banks.

Private debt funds are predicted to take second place in financing this year, after the commercial banks, moving up from fourth place in 2012. Their major success is based on their flexibility and quick adaptability. Banks and corporate finance funds will cover 99% of debt financing market (79% coming from banks, while private debt funds will represent 20%), according to market expectations.

CASH REGISTERS: DEADLINE IS NOT REALISTIC Despite recent consultaions, IVSz (the ICT Association of Hungary) says it is still suffering under a deadline that it claims it cannot meet, to have all cash registers in Hungary hooked up to a new system that directly feeds data to the tax authority by June.

KRISZTIÁN KUMMER

It was announced last year that all commercial and service units will be obliged to use cash registers that feature an online data connection with the tax authority, NAV. The objective of the measure is largely to fill budget gaps: NAV wishes to expand its control by a “continuous supervision” of the operation of cash registers and taxi meters via the online connection. It is expected that VAT income will significantly increase – by approximately HUF 95 billion – and the economy will be whitened. While the original time frame for replacing cash registers was May 1, NAV has granted a grace period until June 30 for companies to make necessary changes.

But IVSz feels that the new deadline can’t be met either.

A global shortage of computer chips means testing would be possible only during operation in the stores. It makes the testing process harder and slows down the launch of series production.

At least a few hundred machines should be tested for at least two months in order to be able to manufacture cash registers that operate flawlessly in large quantities. If testing was halted due to the imminent deadline, that would harm government and Hungarian enterprises as well, the association said in a statement. It estimates that after a full transition to volume production, the needed capacity could realistically only be achieved by the end of December 2013.

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08 News

Budapest Business Journal | May 03 – May 16

BACK IN THE RING

GERGŐ RÁCZ

Q

What compelled you to return so prominently to politics?

A: It is quite simple: contrary to its elec− toral promise made in 2010, the Fidesz government has abolished constitu− tional democracy, destroyed the rule of law and returned to authoritarian rule. In addition, it is fighting against European institutions, which is a clear indication that it does not share the basic values and principles of the Union. Last but not least, the economic and social policy of the new regime is irrational and dishon− est. It does enormous harm to the Hun− garian economy and social cohesion. No surprise, therefore, that Hungary has been diverging not only from Western Europe but falling behind Poland, Czech Republic and even Slovakia. This quite obsolete form of government is anti− modern and may deviate Hungary from the mainstream development of West− ern Europe for another century. Our new party, Movement for a Modern Hungary intends to lead the country back onto the road of modernization.

Q

Where do you see your new party in the political landscape?

A: We have a unique worldview. It is based on four important values: uphold− ing an inclusive interpretation of what the Hungarian nation is, sharing fully the European principles of human rights and democracy, believing in the primacy of the market economy over administrative state intervention, and promoting free− dom and human dignity in societal and cultural life. There is no party in Hungary that would embrace all these values at the same time. All parties represented in par− liament today are suspicious of the mar− ket and support excessive state interven−

STORY HIGHLIGHTS ■

Former finance minister Lajos Bokros returns to domestic politics ■ Promises new, unique blend of political perspectives to disillusioned voters

tion. All parties are socialists in terms of their economic policy. They all believe in state ownership and government orches− trated societal engineering. We are the only conservative and liberal formation in the political landscape.

Q

Do you now, in retrospect, agree with the decisions you made then and that those measures were indeed necessary?

A: Absolutely. Those measures were very successful not only in saving Hungary from fiscal collapse but also in restart− ing export−led and fiscally sustainable growth based on productive investments undertaken by the private sector. From 1996 through 2001 Hungary enjoyed high rates of economic growth without

Q

What kind of result can you realistically aim for at the 2014 elections? Which group of voters are you targeting?

A: We target all those voters who realize that economic growth and societal wel− fare are created primarily by dynamic entrepreneurs and skilled workers in society, and not by the state. We call upon those individuals who believe in free markets, free trade and open soci− ety. We invite all people who wish to restore human dignity and are now fed up with the loss of constitutional democ− racy, with institutionalized fear, corrup− tion and blatant expropriation of the fruits of human energy, which is used now for cementing the power of a para− sitic oligarchic order.

Q

You rose to “infamy” during your time as finance minister for the set of austerity measures that were implemented in your term, that are now widely considered a “necessary evil” of the time. Do you see the need for similar steps now?

A: The situation is very different today.

There is no need for austerity measures in addition to what has already been imple− mented by the government in the last three years. We need, however, much more fundamental changes because the present economic and social policy is completely inconsistent even with its own stated goals. First, a new democratic government will be well advised to restore trust and confidence in the market by designing and implementing a rational, honest, stable and predictable economic policy. Second, it has to eliminate all excessive state inter− vention in the economy. Third, all distor− tive and predatory taxes introduced by the Fidesz government in banking, telecom, public utilities, retail trade, etc. should be immediately abolished. Newly created monopolies in retail trade for tobacco, the unbearable burden being put on taxi− cab owners have to be eliminated. Finan− cial savings and productive investments must be stimulated. Fourth, fundamental structural reforms are in need for creating a meaner and leaner, more effective and efficient state. Education, health care, the pension system, taxation and all levels of public administration require comprehen− sive modernization in order to improve the quality, equal access and financial sustain− ability of public services.

Photo: Dániel Végel

Former finance minister Lajos Bokros has announced his return to domestic politics and founded a new political party, the Movement for a Modern Hungary (MoMa), with the goal of representing market−friendly liberal values and seeking the votes of the electorate disillusioned by the rule of Viktor Orbán’s Fidesz government. The Budapest Business Journal caught up with Bokros in Brussels to discuss his controversial political past, his plans for the future and why a former prime minister instructed him to “shut up”.

putting financial equilibrium in jeopardy.

Public debt was reduced from 80% of GDP to 53%. External deficit was financed by foreign investments, direct and portfolio alike. It was an unprecedented period of sustainable economic recovery and con− vergence praised by the IMF as well.

Q

If you were to be in a position of government after the next elections, which cabinet post would you prefer?

WWW.BBJ.HU

News 09

Budapest Business Journal | May 03 – May 16

A: It is too early to speculate on govern− ment positions. The democratic opposi− tion needs to win the next elections.

Q

What would be the top priorities, the most important measures that you see need to be enacted by the next government?

A: If the democratic opposition wins the elections it should try to restore the rule of law immediately. That needs funda− mental changes in the basic law enacted and changed by Fidesz four times in 15 months already. Once a minimum degree of constitutionality is restored, e.g. the judiciary, the central bank, the Constitu− tional Court, the Competition Office, the State Audit Office, the Prosecutor Gen− eral, etc regain their independence, the government should eliminate all monop− olies and distortions which put the Hun−

garian economy into a suffocating strait− jacket and sucked all energy out of free and honest entrepreneurial activity. The government of the democratic opposition will need to attract and encourage inves− tors, foreign and domestic alike, to put their faith in the future of Hungary by undertaking new investments and creat− ing sustainable, well−paying jobs.

Q

You were a minister under a socialist government then won a seat in Brussels with the support of a conservative party and now you have a political formation of your own. Aren’t you worried about how your political history may affect your credibility and what the voters’ response may be?

A: Not at all; I vividly remember that the stabilization measures implemented by

the government 17 years ago were dis− missed by Fidesz, at that time in oppo− sition, as ruthlessly conservative, even Thatcherite. I was proud of this label then and I am still proud of it now. I did not change at all. Looking for a turncoat, you had better have in mind the present rul− ing party and its government. It is truly amazing how Fidesz has turned over time from a youthful liberal, atheist and glo− balist bunch into a baroque caricature of a populist and nationalist, inward−looking creature with a wildly obsolete ideology of authoritarian state capitalism.

Q

What is your biggest critique of the economic policies pursued in Hungary in the past ten years?

A: I am glad that you ask this question.

Even before the Socialists won the elec−

tions in 2002, I was the first to warn them against continuing the irresponsi− ble policy of fiscal overspending which had been started by the first Fidesz regime in 2001. The socialist candidate for prime minister, Mr. Péter Medgyessy, sent me a stern message to shut up. I was openly, stubbornly and consistently against the excessive public sector wage and pension increases and the reckless mortgage lending financed by foreign borrowing, pursued by all governments up until 2009. It was absolutely clear that it would lead to unsustainable levels of public and private debt. When I wrote a long article against the same irresponsi− ble policies of Mr. Ferenc Gyurcsány, the next Socialist prime minister, he labeled me a heartless and narrow−minded fis− cal hawk. When the global crisis struck, his government was obliged to ask for

CURRICULUM VITAE

THOSE WHO KEPT UPHOLDING THE VALUES OF FISCAL DISCIPLINE AND STRUCTURAL REFORMS HAVE BEEN REPEATEDLY SUBJECTED TO FEROCIOUS ATTACKS FROM SHORTSIGHTED, POPULIST POLITICIANS

Bokros came to national renown for his stint as finance minister during Gyula Horn’s government in the 1990s. His term is best remembered for the package of economic austerity measures that have been fused to his name and caused extensive protests throughout the country.

Before founding MoMa he won a seat in the European Parliament with the support of the conservative MDF. Besides his political role he is professor of economics and public policy at the Central European University in Budapest and professor of economics and international finance at the Babes-Bolyai University is Cluj-Napoca. financial help from the EU and the IMF in order to avoid fiscal collapse.

This chain of events proves at least two things. First, all governments in the last 12 years, with the notable exception of that of Gordon Bajnai, pursued the same harmful policies of fiscal overspending which reduced considerably the long− term growth potential of the Hungarian economy and increased excessively the tax burden for future generations. Sec− ond, those who kept upholding the values of fiscal discipline and structural reforms have been repeatedly subjected to fero− cious attacks from shortsighted, popu− list politicians. Nothing has changed in this regard in the last three years. I am convinced that the Hungarian people will see the difference and in the next elec− tions will vote for honest politicians who have sufficient knowledge, proven skills and global experience in crisis manage− ment and are able to lead our country back to the road of modernization, con− vergence and prosperity.

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10

Budapest Business Journal | May 03 – May 16

ANALYSIS

ASSEMBLING THE ANTIORBÁN COALITION

Though at snail’s pace, most of the Hun− garian left−wing opposition is clearly moving towards an alliance. At the same time, the prospective members of the alli− ance are obviously wary of one another, and each move towards cooperation is accompanied by words or gestures that belie their ostensible friendliness towards the potential partners. While everyone agrees in theory that an alliance is ineluc− table and most likely the only chance – such as it is – to defeat Fidesz, no one wants to make the mistake of becoming the sucker that ends up sacrificing too much on the altar of cooperation. Given the assumption that ultimately every− one will have to yield to the imperative of ADVERTISEMENT

E2014 LEADER GORDON BAJNAI AND MSZP CHAIRMAN ATTILA MESTERHÁZY

joining forces, the contenders must play a charade: pretend to be committed to an agreement but at the same time seeking to extort from the others a high price for actually being, well, agreeable.

A MAJOR STEP This explains the recent unwittingly comical back and forth between former

PM Gordon Bajnai and MSzP Chairman Attila Mesterházy. Recently Bajnai’s formation, E14, proclaimed that the alliance business should be concluded

by October 23 – not coincidentally the anniversary of his comeback announce− ment. MSzP countered that the haste is unwarranted, and promptly proceeded to invite Bajnai to begin consultations.

Photo: Tibor Illyés/MTI

With the agreement between Gordon Bajnai and Attila Mesterházy, the left is finally making genuine advances towards an electoral alliance for 2014. But many key issues remain unresolved and there are numerous crucial details that might lead to conflicts down the road. Most importantly, the question of who the alliance will nominate to challenge Orbán has been tabled; with strong claims from both Mesterházy and Bajnai, this could be a bloody fight within the larger battle.

Bajnai in turn rejected the invitation, arguing somewhat oddly that it was too early for that. Finally, after exchanging some irate public messages, public rec− onciliation followed: the MSzP invited Bajnai to join the meeting of its steering committee, which Bajnai said he would do, though only to tout his own sched− ule, he added.

Finally, he must have done more than that, because the press reported white smoke rising from the meeting. Baj− nai and Mesterházy agreed on a break− through: they will field joint candidates in each of the single−member constit− uencies, which make up over half the seats in Parliament. In order to be vic− torious, there is no alternative to win− ning a majority of these seats. And to even have a shot at winning a major− ity, there is no alternative to combin− ing electoral forces in the constituen− cies. Despite the major breakthrough, however, the devil is in the details, and further conflicts are likely. How many of the 106 candidates will each of the formations involved be allowed to nominate? How will the safe seats be distributed among the parties? Will the MSzP machine actually campaign for E14 candidates, who will likely be understaffed? And, the thorniest issue: who will be the PM candidate?

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BUDAPEST ANDRÁSSY AVENUE 3.

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Budapest hosts Credit Management Congress

14

HOSPITALITY NEEDS TO ‘IMPROVE ITS AIM’ This year’s tourism season sees the industry seemingly having largely adjusted to the new situation after the 2012 collapse of national airline Malév. Insiders speaking at the BBJ’s Shaker event said the number of visitors hasn’t changed much, only the composition, and believe the Hungarian administrators should be more welcoming of Russians.

STORY HIGHLIGHTS ■

Competitors have largely filled gap left by the collapse of Malév ■ The government is urged to better facilitate the arrival of a more affluent clientele, especially from Russia

the opportunity, meaning a new Hungar− ian carrier won’t find a gap to fill that would allow it to operate profitably.

“If someone says the national airline will restart, it’s a joke,” Hardy said.

Though legacy carriers also took advan− tage of the space left by Malév, the major

GERGŐ RÁCZ

With Malév out of the picture after suc− cumbing to its crippling debts last Febru− ary, much has changed at the Liszt Ferenc International Airport. Operator Budapest Airport (BA) had to implement layoffs and scratch planned developments, mainly as a result of losing the 1.5 million transit passengers that passed through Budapest annually while Malév was still flying.

There were quite notable changes not only in terms of the passengers coming to Ferihegy, but also the tourists staying in the city, as speakers at the Budapest Business Journal’s latest Shaker event explained.

The main areas where BA communica− tions director Mihály Hardy and leader of the Budapest chapter of the Hungar− ian Hotel and Restaurant Association Balázs Kormány agreed were that Hun− gary still has plenty of options to explore in terms of tourism, and that there is fair money to be made even without a national flag carrier airline.

Issues that aggravate include everyday operating concerns, like the fact that ser− vices in Hungary, for instance high−end hotel accommodation, cost basically half of what industry peers in Western Europe can charge, but the quality of services has to be as good: customer satisfaction is key.

“In a way, tourism is a rotten industry to be in, because if customers are not sat− isfied with just two aspects of a 100−pont scale, then they will be disappointed,” Kormány said.

INFOGRAPHICS IS PROVIDED BY COMMUNICATIONS AGENCY CHAPTER 4. THE ANALYSIS WAS ORIGINALLY PUBLISHED AT WWW.PRESSENCE.BLOG.HU.

NO REVIVAL Hardy stressed that any hopes that the gov− ernment or anyone else may harbor about the creation of a new Hungarian national airline are at this point completely unfounded.

“There is no such thing as a vacuum in international air travel,” he said, recounting the events of 2012. The same day that the Malév demise became fact, low cost carri− ers Wizz Air and Ryanair, Luthansa and air− berlin from the legacy carriers announced the launch of new flights to Budapest. Fur− thermore, Hardy pointed to the fact that whenever any route is freed up because a carrier doesn’t consider it lucrative enough, another airline will immediately pounce on

story of the time since then is the stellar rise in the role of budget airlines. Hardy said 52% of passengers in 2012 flew with low− cost carriers, which played a significant role in BUD being able to recover 90% of its passenger numbers compared to the levels prior to the Malév collapse.

“DOBRO POŽALOVAT” Both Hardy and Kormány highlighted Rus− sia as a major prospective contributor to Hungary’s travel market, though one which remains largely untapped because of the state bureaucracy’s inability or reluctance to better facilitate travel to Budapest from Russian locations.

Apparently, Russian visitors are typi− cally generous in their spending, some− thing that would obviously benefit Hun− gary. However, Russians still have a hard time acquiring a visa to the coun− try because of administrative issues that may be due to the sluggishness of Hungary’s international bureaucracy, or to the still existing widespread aver− sion to Russians stemming from the two countries’ storied mutual history. Visi− tors are coming to Hungary in increas− ing numbers anyway, but there is much more potential out there.

“Business could grow 50%−60% if we didn’t ‘fear’ the Russians, not just the 25%− 30% increase from last year,” Kormány said.

The Russian angle thus holds plenty of potential for Hungary’s tourism and service industry, especially with regard to attract− ing a more affluent customer base. As Hardy explained, the increased role of low− cost airlines has created a channel for a dif− ferent clientele (young people and students) to come to the Budapest, who enjoy the city just as much, but don’t have the means to seek out high−end accommodation and hos− pitality services.

Naturally, businesses gain more from hosting more guests with more money to spend, and would be happier if they could travel without so many administra− tive discouragements. This is something that the speakers urged the state to aid by making access easier, mainly through enhancing administrative processes and the issuance of visas.

These are all the more important for the hospitality sector since the crisis has been particularly painful for hote− liers. As Kormány explained, Hungary is still well behind its regional peers in terms of revenue per room – the most important benchmark for a hotel – not to mention the fact that many ventures that were launched before the financial crisis of 2008 have failed.

“We must target the guests with a sniper rifle, not a shotgun,” Hardy said, high− lighting the need to better focus the coun− try’s tourism strategy as well as adjusting its administrative practices to achieve the desired goal. This better aiming at potential new markets is reached via strategic coordi− nation between Magyar Turizmus Zrt and Budapest Airport.

12

WWW.BBJ.HU

2 Business

Budapest Business Journal | May 03 – May 16

Q&A

‘LUFTHANSA GROUP IS THE BIGGEST LEGACY AIRLINE IN BUDAPEST ‘

The collapse of Malév Hungarian Airlines last year rearranged the Hungarian market. We talked with Ofer Kisch, Lufthansa’s Regional Director of Central and Eastern Europe about the role of low cost and legacy carriers, the importance of national airlines, and an incentive program at Budapest’s Liszt Ferenc Airport.

KRISZTIÁN KUMMER

Q

After 66 years of continuous oper− ation, Malév ceased all flights in the early hours of February 3, 2012. How did you react to the news?

A: The collapse of Malév could have been foreseen as people were talking about it for years. But it just hadn’t happened for so long, so on that night, when bankruptcy was finally announced, we were quite shocked. I have to admit, that we had meetings at Luf− thansa before Malév’s grounding on how to react to such an event and we had some plans in the drawer as well. We were able to react in a couple of hours and provide addi− tional timetable on the Berlin−Budapest and Hamburg−Budapest routes, and also free up two new planes to increase Budapest fre− quencies. On the other hand, we increased the size of the planes to Budapest. Lufthan− sa’s subsidiaries like Swiss Airlines and Austrian Airlines also increased the size of their airplanes to Budapest. Brussels Air− lines (a minority subsidiary of Lufthansa) quickly set up a third frequency to Brussels.

The first days were a very crucial period, as we had to give a valid answer to the spe− cial problems that arose through Malév’s grounding. We had to give some certainty to Malév passengers, so we came up with some special one−way tickets for those who were stuck at their destination and wanted to get back home. Of course, after the first eventful days, we got back to a normal busi− ness course; we check the profitability on all our routes and we setup new lines, if needed, and cancel old ones.

Q

As far as I know, Malév’s flights were substituted by European airlines in days.

Mihály Hardy, spokesman of Budapest Airport said that there’s no chance of a new Hungarian airline, as the market has already filled the gaps.

A: Exactly. According to the latest figures, more than 50% of the traffic at Budapest’s Liszt Ferenc Airport is flown by low cost air− lines, but upper class passengers of Malév have chosen other legacy airlines. Luf−

thansa Group, as the biggest legacy airline in Budapest in terms of passenger numbers, increased its volume and revenue by 20% last year due to the migration of Malév’s former clients. Other passengers have cho− sen other – maybe low cost – airlines. So even if it made some sense to create a new national airline, it would be terribly difficult – and expensive – to lure all those passen− gers back.

Q

So Lufthansa gained through the grounding of Malév?

A: Many people asked me if I was happy on the news about the collapse of Malév. I always say you can be happy for one or two days, but a good and healthy national carrier is good for the market. Usu− ally a national carrier leads the way in avia− tion standards and services on the market, and brings the whole market to a high pro− fessional level. I have to admit that I feel some pity to have lost such a good market partner, even if we were competitors.

Q

Is their any difference in the pas− senger mix at Budapest Airport?

A: As I already mentioned, pas− senger numbers are almost back at ‘Malév− levels’ at the airport. But what Budapest is missing most are the transfer passengers, who were flown to Budapest by Malév and transported on towards further destina− tions. These people disappeared altogether and Budapest ceased to operate as a hub, as there’s no hub carrier in Budapest right now.

Q

How do you see the increasing competition from low cost carri− ers? Aren’t they threatening leg− acy carriers’ business?

A: As far as I can see, the gap between the services of low cost and legacy carriers is decreasing. Last year we offered destina− tions in Europe from €99. So if you’re lucky and ready to book in advance, you can find very attractive offers at legacy carriers too.

Also take into consideration that with a low cost carrier you have to pay for additional services that are already included in a leg− acy carrier ticket price. On the other hand, low cost carriers try to attract SMEs or the business segment. But they have created sales and marketing organizations that didn’t exist in the past, which automatically led to higher operation costs that might, in turn, increase ticket prices.

What bothers me more is that Budapest Airport favors low cost carriers over legacy carriers. According to existing practice, air− lines get incentives from airports all around the world. However, in Budapest, incentive targets indicated by the airport are too high and could be reached in 2012 only by one or two low cost carriers. This means that Lufthansa, even as the largest legacy car− rier at Budapest Airport, had no chance to

CURRICULUM VITAE Ofer Kisch joined Lufthansa’s international trainee program in 1990 and the company’s sales office in Tel Aviv two years later. He was appointed marketing manager of the office in 1994 and leader of Lufthansa in Turkey in 1998.

From 2003 he worked as head of the Israeli operation. He was appointed director of the Central European region in 2010. As such, he directs the marketing and sales operations of Lufthansa, Austrian Airlines, Brussels Airlines, bmi and Swiss International Air Lines from the Budapest office. gain discounts in that way, so its service from Budapest had become more expensive again. This is a very shortsighted practice from the airport.

As you can see, airlines set up new routes and cancel them on occupancy rates and

profitability. Lufthansa is not a low cost car− rier that cancels a flight if it’s seat load fac− tor gets under 80%, but we are also a profit− oriented business, and at the end, we have to rationalize our destinations and routes if we couldn’t make it profitable.

Q

But I hope Lufthansa won’t dis− appear from Budapest. What are your plans for this year?

A: No, we won’t disappear from the Hun− garian market. Even though 2013 is another tough year and we currently don’t see any room for growth, we are taking action to support our leading market position: with the introduction of new Germanwings, our value airline, we aim to serve the Hungar− ian market even better. While all flights to our Frankfurt and Munich hubs will con− tinue to be operated by Lufthansa, start− ing in 2014 direct routes (e.g. to Hamburg or Düsseldorf) will be operated by Ger− manwings. On the new Germanwings we will have three categories on board. The lowest fare is the Basic fare, correspond− ing to a conventional low−cost product.

The Smart fare offers generous seat pitch, includes catering in the form of a snack and non−alcoholic drinks as well as a 23 kilo− gram baggage allowance. The new Best fare includes access to Lufthansa lounges, pri− ority check−in and the use of the fast lane at security checks, plus more miles in the Miles & More program. By transferring the direct routes to Germanwings, we are con− fident we have come up with an attractive offer for our passengers!

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2 Business

Budapest Business Journal | May 03 – May 16

13

No barriers offshore

Mobile net is well known

Family firms are crisis proof

Interest in offshore countries increasing

Elderly are the least familier with it

200 new jobs could be available this year

1,452

HUNGARIAN FIRMS HAVE AN OWNER REGISTERED IN CYPRUS

Over the past 20 years the number of Hungarian companies owned by at least one entity registered in an offshore paradise has continuously increased, according to the latest analysis by business information provider Bisnode.

The most popular offshore destination is Cyprus – 1,452 Hungarian companies had an owner registered in Cyprus at the end of Q1 2013. The Seychelles is second with 1,168 and Switzerland third with 906 companies.

Regardless of tax rate, conjuncture or recession, the number of those interested in the classical possibilities offered by offshore paradises has grown continuously. “These countries offer very low or zero tax levy on foreign income and onshore countries cannot compete with this advantage,” Bisnode’s managing director József Keleti said.

No steady decrease has been observed in any of the destination countries. The number of Hungarian companies with an owner registered in Bermuda, the Netherlands Antilles or the Bahamas all diminished last year, however, the decrease wasn’t significant. Despite the ongoing Cyprus crisis, only five Hungarian companies with an owner registered in the island state ceased to operate in Q1 2013.

Meanwhile, the number of Hungarian companies with a registered owner in Dominica jumped 23−fold in 10 years. In the case of Belize and the Seychelles Islands the growth was 13−fold.

“In the years following the change of regime the world opened up. Hungarian economic actors have begun to establish links with foreign firms and countries, gradually learned the methods established there, and finally used the opportunities,” Keleti said. KK

82.3%

OF HUNGARIANS KNOWS WHAT MOBILE INTERNET IS

A survey by the National Media and Infocommunications Authority showed that most Hungarians, 82.3%, know what mobile Internet is. Based on interviews with 1,019 adults, only 9.1% of respondents answered incorrectly, and 8.5% didn’t answer at all.

Every housewife asked was able to correctly describe mobile Internet, as could almost all students (97.4%). Full−or part− time active employees were nearly as accurate (90.9%), but among the unemployed, or those living from social security handouts, the proportion was slightly lower (86%). Not surprisingly, the highest proportion of those not knowing the precise answer was among pensioners (38.9%).

The higher the educational level of a person, the more aware they were of mobile Internet.

Among those having only eight years of elementary schooling, the proportion of correct answers was 60.9%, while it was 88.9% of those with a college or university degree.

There were no significant differences among different types of communities (villages vs. towns and cities), but the highest proportion answered right in Budapest (89.7%).

Outside the capital and elsewhere among the country’s regions, residents from Central Hungary did best (89.5%), while on the Northern Plains, this proportion was only 75.3%.

The proportion of correct answers is inversely propor− tional to age: 97% of the 18−29 age group answered right, while it was only 61.3% among citizens who are 60 and over. KK

HUNGARIAN COMPANIES WITH AT LEAST ONE OFFSHORE OWNER (2013 Q1)

WHAT MOBILE INTERNET IS?

HUF 275 bln

Beside their domestic presence, Hungarian family businesses play an ever−greater role on export markets as well, a survey among members of the Family Business Network Hungary (FHB−N) showed. Member firms employ several tens of thousands of workers. On average, four family members work in a family business in very different roles, like financial−economic leadership or operative management. Total revenue of member firms grew to HUF 275 billion in 2012 from HUF 255 bln in the previous year.

“We’re proud that FBN−H members could grew – although minimally – in harsh economic conditions. From a certain point of view, family businesses have proven more crisis proof than multinational companies (MNCs),” said László Rudas, founder and president of FBN−H. “Our decisions are motivated by other factors, the long−term strategy is totally different and our firms are driven by other values. Family businesses are interested in long− term preservation of values and development,” Rudas added.

During recent years, Hungarian family firms laid off far fewer employees than MNCs. More family enterprises are moving into the markets of neighboring countries or – in several cases – even further afield. Last year, the export ratio of FBN−H members was 25%, realized mainly in agriculture, the food industry and machinery.

Moreover, the member firms of FBN−H are significant suppliers and service providers to big automotive and chemical companies working in Hungary, which are also manufacturing mainly for export. KK

REVENUES OF FBN-H MEMBERS (HUF BLN)

Correct answer Inorrect answer DNK/DNA Source: Bisnode

Source: NMHH

THE REVENUE OF FBN-H MEMBER FIRMS IN 2012

Source: FBN-H

14

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2 Business

Budapest Business Journal | May 03 – May 16

BUDAPEST HOSTS CREDIT MANAGEMENT CONGRESS The Federation of European Credit Management Associations is to hold its first Pan−European Credit Management Congress in Budapest on May 16−17. The organization expects some 250 international experts from across Europe to discuss and share credit management best practices and trends. The two− day event will take place at the Hungarian Academy of Sciences.

ZSOLT BALLA

“While credit management has a longer his− tory in some Western countries (e.g. Ger− many, the Netherlands, the United King− dom) it has only recently been identified as a key function of the finance department in most Eastern European countries,” says Dr. Michael Sauter, credit management expert and managing director of Guardean GmbH. “This also ties into the typical key issues companies in credit management are work− ing on: while in Western European coun− tries they work on more complex issues like credit management process automation via software, in Eastern European countries it might be more basic questions like defining the right information mix between inter− nal and external data, basic scoring meth− ods for client evaluation or standard credit management process design.”

ADVANCED PROCESSES On the other hand, he points out that there are companies in Eastern Europe with very advanced credit management processes.

“In the end it depends on the individual company what priority good credit manage− ment has within their organization. In addi− tion, some Eastern European countries (e.g.

Czech Republic, Hungary, Poland) recently have become the home of shared service centers for global companies and are oper− ating key finance processes, including key credit management processes, for the entire organization,” he points out.

Most companies, by now, have some form of credit management, be it standard dun− ning procedures (the process of method− ically communicating with customers to ensure the collection of accounts receiv− able), or some form of client scoring and rat− ing. It does, however, make a big difference if credit management is implemented as a corporate philosophy within the company with clear guidelines and a shared belief between credit management, sales and top management. This typically does not only depend on the country of origin, but even more on the overall quality of the company and their governance structure.

GATHERING EXPERTS FECMA is now gathering renowned experts

STORY HIGHLIGHTS ■

Budapest hosts first Pan-European Credit Management Congress ■ Experts gathering from 14 countries.

■ Discussing the industry’s important innovations

ously in broad corporate profiles. Software technology can also help to optimize data collection, data consolidation and other credit management processes and as such increase transparency about clients and improve effectiveness and speed of credit management processes

the value and worth of the credit man− agement profession has never been more needed and sought after,” says Glen Bulli− vant, President of FECMA. “The basic theme of the congress is to ‘share credit management best practices and to learn from others’. The congress is an

CREDIT MANAGEMENT STILL NEEDS TO BETTER ALIGN WITH SALES AND INTEGRATE PROCESSES EFFECTIVELY TO MANAGE THE RIGHT MIX BETWEEN RISK AND OPPORTUNITY from across the industry, from public orga− nizations and it also invited researchers, as speakers for its upcoming conference. The content is designed to be relevant to all credit managers, whatever the size of their organization or their business sector.

“In light of the increasing competition in most markets and high financial risk due to ongoing market instabilities, credit management still needs to better align with sales and integrate processes effec− tively to manage the right mix between risk and opportunity,” Sauter says, speaking of the industry’s recent main focus areas.

“In addition, with business overall get− ting more international in most industries, credit management needs to adapt to this and effectively needs to provide the right mix between central and local responsibili− ties,” he adds. This, among other topics, will be discussed during the conference, as well as the “rapidly developing areas” of credit management.

Important innovations can be found in the area of production and provisioning of external data: information that in the past would have been manually collected by researchers, who called companies to ask about their financial performance, can today be retrieved by automatic search robots that scan the Internet for publicly available data and consolidate this continu−

The agenda includes international speakers from ABB, Agfa Graphics, Donna Karan, Ingram Micro, Scania Financial Services, and Wolters Kluwer, as well as local speakers from the Hun− garian National Bank, Sapa Group and Waberer’s. For more details, visit: www. cm−congress.eu.

The congress is accompanied by an exhibition of leading international ser− vice providers such as AON, Atradius, Bisnode, Bureau van Dyk, Euler Hermes, Guardean, and Sungard, which provide professional support in various areas of credit management from data provision− ing and credit insurance to software pro− cess support.

TOUGH PERIOD FECMA has brought together experienced credit managers from across the Continent to share their expertise and experiences.

The conference is designed to be practical, not academic, and therefore of meaning and value to all who attend. There will also be ample opportunity set aside for networking in its truest sense.

“The Pan−European FECMA Credit Management event is an important con− gress, coming as it does at a time when Europe’s various national economies are going through a very tough period, and

HUNGARIAN CREDIT MANAGEMENT ASSOCIATION The Hungarian Credit Management Association was founded in 2010 with the aim of enhancing awareness and industry recognition of the credit management profession, and for credit management to be accepted as an integral part of the Hungarian business community and culture.

opportunity for both the starter who wants to get an overview on potential, structure and trends of credit management, as well as the expert who wants to get hands−on expe− rience from leading global players about how they manage the challenges to imple− ment good credit management within their organizations,” Sauter adds.

BBJ

3Special Report Office market stuck in deep freeze 16

Green office effect

19

Facility management market buzzing 25

16

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Budapest Business Journal | May 03 – May 16

OFFICE MARKET REAL ESTATE STUCK IN DEEP NEWS FREEZE STORY HIGHLIGHTS ■

The Budapest office market shows no strong signs of recovery ■ Central bank stimulus is eyed as a potential source of a boost

The commercial real estate market remains longing for some excitement in a sector where new developments are all but nonexistent. Developers are cautiously eyeing the central bank’s recently announced stimulus plan for much−needed impetus.

GERGŐ RÁCZ

It is all too obvious that the boom on the Budapest office market fueled by the pre−crisis plenty in financ− ing is a thing of the past, likely never to return. With only a handful of new projects completed over the past few years, industry players are confident that the situ− ation has gotten as bad as it will get, but are still not seeing any obvious signs of a strong recovery.

For the time being, developers see little chance for a pickup in the volume of new invest− ments in commercial prop− erty, especially seeing that the currently available space seems to be more than sufficient to meet market demands.

The Budapest Research Forum, an umbrella orga− nization for property agen− cies, said the Budapest office scene had a vacancy rate of 19.6% in the first quarter of the year. While this shows improvement on the year as well as on the quarter, it still means that overall vacancy is stuck near the 20% mark, just as it has been for the past several years.

Its latest survey also saw BRF revisiting its categorization of certain buildings, which eventually found there is currently 3,145,467 square meters of modern office space in the first quarter of 2013. There are also other estimates on the market that the overall office vacancy in buildings – that may be of too low a quality to be included in BRF’s statistics – is actually closer to 30%.

noted that the 20% vacancy rate isn’t changing while ‘sec− ond−hand vacancy’ increased by 45,000 square meters last year. This shows that tenants are adjusting their office needs by occupying smaller and more efficient offices when moving to a new location; thus even the expansion of a company can lead to overall vacancy increasing.

The lack of movement has also affected rents, which have hardly changed for years, putting tenants in a strong posi− tion when moving to a new location, and especially if they are renegotiating their contract, which is the most promi− nent trend on the market.

“Current headline rents are typically in the range of €11− €13 per square meter for average ‘A’ category properties.

Compared to the peak of 2007; this reflects a change of some 15−20%,” CBRE said.

In this respect, there is little expectation of any change in the near future, consid− ering the country’s over− all economic performance, which is compounded by the international pressure of the eurozone crisis.

“The vacancy rate will likely stay high, preserving rents at their current lows,” property consultant Col− liers International said.

19.6% THE VACANCY RATE ON THE BUDAPEST OFFICE MARKET AT THE END OF THE FIRST QUARTER IN 2013, DROPPING BELOW 20% FROM THE SAME PERIOD IN 2012

NOTHING TO BUILD The new construction pipeline isn’t exactly in full flow either. There are two completions scheduled for the year, one in each half, with an aggregate 34,000 square meters of new space coming to the market, according to figures pub− lished by property consultant CB Richard Ellis. There are two completions planned for 2014 with relatively high pre− lease levels, adding another 33,000 square meters to the market aggregate.

“The Budapest market is clearly suffering from an imbal− ance of available supply and new demand,” CBRE said. It

SOME HOPE FOR GROWTH Although it isn’t tangible yet in Hungary, the region overall is starting to attract investors again. According to CBRE, the Central and Eastern European region drew €2.6 billion in invest− ments during the first quar− ter of the year, thrice as much as in the correspond− ing three months of 2012.

With the lasting stand− still in commercial property, any expansion for the over− all industry will likely come from residential develop− ments. After years of freef− all, the Hungarian construc− tion industry produced a 7.2% year−on−year growth in February. Central Statistics Office figures show that the latest result was the best in well over a year by a consider− able margin. The KSH added that the figure might not be indicative of a trend−turner since winter months normally produce a maximum of 60% of the activity seen in other months of the year.

The industry overall can also be hopeful in wake of the new stimulus measures announced by the central bank, which could spur both household demand for housing as well as a source of funding for new developments in the commercial segments.

“The financing difficulties and high interest rates are also hurting developers. The MNB’s new incentive program offers businesses loans at a 2% interest rate and could therefore also serve as a huge boost to property developers,” said Attila Déry, senior analyst at housing brokerage Otthon Centrum.

IVG CONCLUDES 2,000 SQM OF RENEWALS AT OKTOGON HÁZ IN Q1

Oktogon Ház office building, managed by Germany real estate group IVG Hungary, has already seen two tenants – Millward Brown Kft and IND Kft – renewing their lease contracts, for altogether approximately 2,000sqm, in the first quarter of 2013, IVG Hungary said in a press release.

Last year several tenants, such as Storck Hungária Kft, HMP Consulting Kft, Resilux Kft and United4 Skyline, chose to extend their lease contracts. Oktogon Ház comprises two office wings with a total office area of 7,280sqm, of which approximately 5-6 units are available offering 200-500 sqm of office space.

Oktogon Ház can also offer accommodation on a less grand scale: the smallest leasable office unit is 150sqm.

ORCO WELCOMES NEW TENANT IN ORCO BUSINESS PARK

Orco Property Group has signed a new contract for Building B of Orco Business Park, the company said in a press release. The new tenant, Eurobus-Invest Regionális Közlekedésfejlesztési Zrt, is a member of Arriva and Deutsche Bahn, and operates scheduled, contracted, long-distance and international bus services in Hungary and Slovakia. Exobus will open its combined Slovakian and Hungarian center in Orco Business Park.

The company leased 142sqm of office area from April 15. The currently leasable area at Orco Business Park is 5,280sqm.

AIRPORT CITY SIGNS NEW TRANSACTION

Kuwait-based Agility Magyarország Kft has singed a contract for expanding its center in the Airport City Logistics Park, thus increasing its area from 3,500sqm to 5,000sqm, Airport City developer Ablon said in a press release.

With the signing of the transaction, the second phase of the park is now 100% full, Ablon said. Airport City Logistics Park opened in 2008, and all existing tenants have renewed their lease agreements. According to future plans, some 40,000sqm of leasable area will be added to the park, Ablon said.

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Budapest Business Journal | May 03 – May 16

TENANTS GROW WISER The office rental market has changed significantly in the past few years; tenants have become more familiar with current market circumstances and know that in Budapest things have turned in their favor.

KRISZTIÁN KUMMER

The total Budapest office stock (including owner−occupied and speculative buildings) reached 3,145,467sqm in the first quarter of 2013, according to the Budapest Research Forum, which comprises CBRE, Colliers International, Cushman & Wakefield, DTZ, Eston International, Jones Lang LaSalle and Robertson Hungary.

The office vacancy rate now stands at 19.6%, indicating an improvement both on the previous quarter and on the same period of 2012. The lowest vacancy rate (15.3%) was measured in the south Buda submarket, whilst the highest vacancy level is still seen in periphery region (31.8%).

SERVICES INCLUDED “During the past five years, rental levels and conditions have gone through a sig− ADVERTISEMENT

nificant change,” said Anikó P. Kovács, property adviser at DTZ. “Landlords have become more flexible when it comes to retaining good tenants and attract new ones. Higher incentives and flexible lease conditions have become common mar− ket practice. This has caused a significant decrease in effective rents, as tenants are still in a strong negotiating position.”

“Today, post−crisis decline in rental prices has slowed for most of the buildings; however, the range of lease incentives are more com− plex and larger than 5−6 years ago,” said Erika Lóska, head of office and industrial agency at Jones Lang LaSalle. “In the wake of the cri− sis, decision−making by tenants is more con− scious. Not only rents are compared, but also the cost of parking, the efficiency of buildings and operating fees. Also, on several occasion, the range of services has been extended by elements that previously tenants developed at their own expense (bike storage, changing rooms, showers, etc.),” she added.

SOMETHING ATTRACTIVE Real estate market players – developers, ser− vice providers, and investors alike – have to come up with something very attractive to convince tenants. “We clearly perceive that the demand for category ‘B’ properties has remained intact,” said Gábor Székely, chairman of real estate investment com−

pany Appeninn Holding. “However, ten− ants’ requirements are constantly changing.

If a tenant decides on moving on, in addition to competitive prices, flexibility on uniquely designed, quickly developed spaces, a quick decision, complete execution, and the sharing of the fit−out costs are equally important.”

JLL’s Lóska added that, “For agencies, a very broad range of services and provid− ing those professionally and with a max− imum reliability is essential. A consul− tant’s most important asset is its human capital, which needs to be continuously motivated and developed to retain.”

The value of the human element was a view shared by Kovács at DTZ. “The best surveyors know every corner of the mar− ket, are up−to date and adapt their ser− vices to the changing market.”

GREEN HOUSE Last year only one mayor development was finished in the Budapest area: Skan− ska opened its Green House project in mid− December. It has attracted a diverse interna− tional tenant mix – both headquarters and shared service centers – and 66% of the build− ing is leased already. Regarding the fact that other development projects are constantly lag− ging behind schedule and lacking prelease contracts, Skanska’s story is already a success on the Budapest market.

“At Skanska we self−finance our devel− opments. This unique business model is a clear advantage when it comes to maintain− ing our market position in the current finan− cial climate, and winning new tenants who look for the security of a reliable developer,” said Grzegorz Strutynski, managing direc− tor of Skanska. “We also believe that the demand for quality green offices is existing, and we will continue to offer them in our portfolio of sustainable offices. The built− in green technologies contribute not only to unparalleled energy efficiency and signifi− cantly decreased service charges, but also a healthy, bright and comfortable work envi− ronment,” he pointed out.

One of the new tenants in Green House is the Avis Budget Group. “When we decided to move, we compiled a crite− ria list and we weighed the factors,” said Lóránt Besnyi, head of finance and facili− ties. “That way, we filtered out at least half of the 58 applicants. However, it became clear very fast that if we don’t want to give up on some of our main criteria – primary location, attractive rental price, 6,000sqm on at most three levels and the possibility to increase the area, Green House was the only option. Moreover, when we made our decision, the building was already struc− turally complete, contrary to other proj− ects we have seen only on paper.”

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Budapest Business Journal | May 03 – May 16

MUTED DEMAND MAKEOVERS FOR HIGH-END FOR SHOPPING SUBURBAN MALLS HOUSING The high−end residential market concentrated around Budapest is seeing chilly times, with an increasing number of defaults and little in the way of demand, a survey from the Otthon Centrum housing brokerage shows.

Unsurprisingly, readily available bank loans prior to the subprime mortgage cri− sis of 2008 allowed not only widespread

rency−based policy, a unit of change in the forint exchange rate meant a bigger increase in their installments as well as their overall debt,” said Kata Kühne, man− aging director of the Otthon Centrum.

OC cites data from the financial mar− ket regulator PSzÁF that shows 14% of defaulted real estate assets are concen− trated in Pest County.

“This unfortunately adversely affects the residential property market, since high debts also narrow the sellers’ room for maneuver, which adds to the surrounding area being even frostier than the capital,” Kühne said.

Consequently, demand for high−end property in suburbia has also dropped.

business investments and foreign currency mortgages for households, but also extrava− gant residential purchases. These assets are typically located in a few wealthy districts of Budapest and the surrounding suburban areas that became a popular destination for families fed up with city life.

“Because of the higher property value those moving to the suburbs took out big− ger loans and in the case of a foreign cur−

Barely 5% of any interest is targeted at assets worth HUF 50 million or more, and only every fourth prospective customer shows any interest in houses valued at HUF 30 mln or more.

Demand in general for the areas surround− ing Budapest is set to deteriorate given the dropping number of people moving out of Budapest, as evidenced by figures from the central statistics office.

GERGŐ RÁCZ

ADVERTISEMENT

With no major additions expected in the next few years on the retail property market, existing shopping malls have decided to up their game by revamping and readjusting to the needs of their customer base.

GERGŐ RÁCZ

The modernization of first−generation Buda− pest shopping centers has become the dom− inant trend on the Budapest residential market, according to a joint study by OTP Property Investment Fund and property con− sultant Jones Lang LaSalle.

“The motivation behind the overhaul of the units or repositioning through raising the comfort level is clear: a makeover with a good concept will bring a good result in moti− vating shoppers, and ultimately, tenants,” said Balázs Tóth, OTP Property Investment Fund’s chief executive.

The trend is particularly noticeable in the pioneering shopping malls in Budapest: MOM Park has successfully repositioned itself to introduce a brand new tenant mix; Mammut has implemented extensive refur− bishing to improve its design; and Pólus Cen− ter has undergone a HUF 1.1 billion overhaul.

The example of Pólus clearly shows how much the situation and habits have changed, the study said. Built 17 year ago as one of the very first of its kind in the Hungarian capi− tal, the complex underwent an extensive aes− thetic and technical revamp, while the layout of the promises was also adjusted to better accommodate customer demands.

JLL managing director Ferenc Furulyás noted that Pólus is a comparatively rare exam− ple, when a fragmented ownership can come to an agreement on such a costly venture. In the case of Pólus, besides the majority own− ers, many of the smaller tenants have own− ership stakes as well, meaning that the deci−

sion to go ahead with the makeover had to be made in unison. In other cases, the multiple owners’ varied opinions are often the biggest obstacle to going ahead with such projects, Furulyás said.

It is exactly for this reason that second− generation plazas are controlled via special purpose frameworks, which require less in the way of consultations among the owners before reaching a decision on matters such as investing in upgrades.

The overhauls have the potential to be highly successful Furuylás said, given that SHOPPING CENTERS IN BUDAPEST (SQM)

Available stock

New stock

* forecast Source: JLL

when they were built, there were plenty of valuable central locations in the city to be acquired. This is especially appealing com− pared to Western Europe, where retail is fre− quently situated in the city outskirts.

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Budapest Business Journal | May 03 – May 16

GREEN OFFICE EFFECT

GERGELY HERPAI

“In our opinion, a ‘green office’ building can only be so−called if it meets the require− ments of an internationally recognized rat− ing system,” Mariann Tóth, leasing manager of HB Reavis Hungary Kft told the Budapest Business Journal. It seems obvious, but the question arises: what kind of rating system should a company building green offices use? “The HB Reavis Group has chosen the BREEAM rating system in relation to the Váci Corner Offices building, which is still

tors and tenants of a property all keep in mind the low cost side: fortunately, green offices are also interesting to them, since they can generate savings,” explained Edit Csizmadia, the communication manager of KÖVET, the Association for Sustain− able Economies. The non−profit NGO also coordinates the Green Office Competition between 15 companies and organizations, like Budapest Bank Zrt and Heineken Hun− gária Sörgyárak Zrt. According to Barta, the construction and renting out of green offices was once mainly based on marketing, but today for many big companies environmental awareness and sustainability are basic principles.

under development − the first tenants can move in in Q2, 2014 −, thus achieving the goal to comply to a complex set of require− ments in regards to the conceptual design process, the construction and the operation of the building itself,” she explained.

A COMPLEX SYSTEM “International certifications for green build− ing assessments are based on a holistic approach. To achieve some level of clas− sification you must meet certain require− ments, and there are also some optional requirements. It is difficult to name the spe− cific parameters, because those are depen− dent of the type, the location of the build− ing, and also the classification system itself,” said Zsombor Barta, senior consultant of BREEAM International and Vice President of the Hungary Green Building Council (HuGBC). Key elements include the strategic and intelligent location of a given building, access by both private and public transport, and the careful selection of construction materiel, excluding those that are harmful to health and environment.

WHY GO GREEN? Green offices are nice, but most large com− panies are still mainly interested in bot− tom lines and the lowest possible cost. It may come to a surprise to some, but green offices can be actually cheaper. “Inves−

Photo: Skanska

Protecting our environment has become a major issue not just for the human race – individuals and whole countries – but also big companies, which are either forced to or want to comply with today’s green requirements as much as possible. That’s why “green offices” are ever more numerous today. The question, however, is what parameters specify whether an office is truly green or not?

STILL A LONG WAY TO GO “In Hungary we have about 25 offices that are either already classified as green, or awaiting final classification. For Central Europe this number isn’t particularly good, but it isn’t bad either. The buildings that are actually classified as green are still very low in number, about 5% compared to the non− classified office buildings. But I must also add that in 2012 every big office develop− ment was green, so we can talk about 100% here. Let’s not forget either that those classi− fications were first used in 2009 and it was only by 2012 that they were widely known and accepted and also required on the Hun− garian market,” Barta told the BBJ.

EXPERT OPINION

A TRULY RESPONSIBLE ENTERPRISE, A TRULY GREEN PRODUCT On the occasion of winning a national CSR award and receiving LEED Platinum final certification, Skanska Property Hungary’s Managing Director Grzegorz Strutynski reflects on the first quarter of Green House.

Receiving the Truly Responsible Enterprise award at CSR Marketplace 2013 – organized by the KÖVET Association for Sustainable Economies – is a real manifestation that our conscious efforts towards being a responsible business and our dedication to sustainability are being recognized within the community.

Our submission for the award included both theoretical and practical aspects of our corporate activities. It outlined our complex business model built on an environmentally conscious, socially responsible, transparent, and ethically correct management approach, and it also described our future-proof office building, Green House.

The Green House project – delivered in December 2012 – is an unparalleled success on the Hungarian office market

both in terms of quality, design and leasing results. The office building recently received LEED (Leadership in Energy and Environmental Design) Platinum certification with a top score of 93, making Green House the greenest certified operational office building in the country, as well as the customers’ first choice for cool, healthy and energy efficient green offices.

The ‘Workplaces by Skanska’ approach aims exactly at that: going beyond simply building offices, and redefining the concepts of work, space and collaboration instead. Accommodating the preferences and the working style of Generation Y, Skanska creates workplaces where new technologies, functional common spaces, collaboration, mobility and flexibility are integral.

The international tenant portfolio consisting of both headquarters (ABB, Deichmann, Isys-On and Skanska), as well as international shared service cen-

ters (AVIS Budget Group SSC) contribute to the building’s 66% occupancy level. A mere four months after the official handover, these results and acknowledgments already reassure us that Skanska plays an important role in Hungary, providing real solutions both in the business and the social sense.

www.skanska.hu

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

Budapest Business Journal | May 03 – May 16

A DONE DEAL? With property developments on hold, restructuring and refinancing are moving the real estate market in most parts of the region.

STORY HIGHLIGHTS ■

In Austria, investors can still get financing ■ Russians are interested in Ukranian property

Europe in Prague. She added there is only a limited amount of speculative office developments on the way. Humlova also sees fewer small retail schemes “due do the saturation of the market”.

Banks are cautious in Romania as well where, as a result of lacking financ−

CAUTIOUS CLIENTS Where developments are not on the rise, they have been replaced with crisis− related property issues. “We now work more on restructuring, securitization and distressed assets,” Lagler explained.

“There is also a shift from long−term

REGIONAL REVIEW

Property development was among the first sectors across Europe to stall when the crisis hit: cautious investor behavior and stringent lending terms have hardly helped in the recovery since. Yet it was not only developers who suffered; law firms, traditionally hired to facilitate high−value transac− tions, felt the effects too.

Although developments have never really stopped, the Austrian office and retail sector has also been touched by the crisis. Currently, there are a handful of major constructions going on in the coun− try. A major one, which rail commuters between Budapest and Vienna must have seen, is a multi−use complex at the new Central Station in Vienna, developed by the Immorent/Porr/Simmo consortium.

Among its future tenants will be Erste Bank: the company is moving offices from its current building in downtown Vienna. “Looking to cut back on overall costs, a growing number of companies decide to move from several locations in old buildings in the center to newly built developments, but we cannot talk about a boom yet,” said Michael Lagler, a real estate lawyer at Schoenherr Austria.

The office buildings left behind will most likely be refurbished and a part of them will be turned into apartments, due to a recent surge in demand for homes in prime locations that has driven house prices up in Austria.

When the country’s office sector might return to its record level of 2007 (470,000sqm in office leases, according to figures of CB Richard Ellis) is unknown.

Banks’ willingness to lend has faded; still, Lagler is positive. “The markets are sta−

DEVELOPMENT SITES

FOR SALE

BALATONALMÁDI – 9,519 + 58,165 m2 BUDAKESZI – 2,750 m2 – 68,600 m2 BUDAPEST, XIII. VÁCI ÚT – 2,890 m2 BUDAPEST, XVI. RÁKOSPALOTA – 12,000 m2 + 6,000 m2 BUDAPEST, III. TARHOS U – 4,849 m2 More information:

Tel.: 36 (1) 327 2050 E-mail: industrial@robertson.hu www.robertson.hu

Photo: wilth/flickr

E

20

WWW.BBJ.HU

3

THE ZŁOTE TARASY SHOPPING CENTER IN WARSAW

ble. Austria is a market where investors can still get financing. It takes a good project to receive it, though.” Investments in hotels with long lease contracts with a reputable operator can still be realized in Vienna and in secondary cities. In 2011, Schoenherr’s team around partner Peter Madl in Vienna advised Morgan Stan− ley Real Estate Funds on the sale of the Austrian part of a hotel property portfo− lio with a total value of around €450 mil− lion to Lebanese businessman Toufic Aboukhater.

BARGAIN HUNTING There is heightened Russian interest in Ukrainian property, among other places.

Prospective clients are looking for bar− gains and try to take advantage from fore− closures and other types of bad assets.

“They show much interest but are reluc− tant to sign an agreement, that’s the rea− son why the number of deals is not that high,” said Dmytro Biryuk, real estate attorney for Schoenherr Ukraine. The coverage of pledge may be 2.5 times as high as the loan amount said Biryuk, a factor further delaying deal making.

“It is very difficult to obtain develop− ment financing, unless you have long− term secured lease income. Should you have that, though, it can be quite cheap,” said Olga Humlova, a partner at Dentons

ing, new developments are scarce. The country’s high exposure to foreign banks is an obstacle in the way of real estate projects – parent banks tend to favor projects in Western Europe, says Dan Borbely, partner at Tuca Zbarcea & Associatii, a local law firm with a major real estate department. Poor sup− port from the government and parlia− ment to boost market activity is another factor. Borbely would like to see state− aid driven programs – there are some in place helping private individuals to finance apartments – in the business sector as well. “These programs are good as they boost the construction sec− tor and the market immediately reacts, but we would need more.”

Sectors where some modest activ− ity is seen are office, retail and logis− tics. Office vacancy dropped last year but so did the number of new develop− ments: compared to 2011, new office supply fell by 70%, according to data published by Knight Frank.

Poland, on the other hand, is a country where deals are happening. The market was hit hard but developments are ongo− ing. In its Q4 2012 market industrial and logistics overview, CBRE reports grow− ing development activity both in terms of built−to−suit and speculative construc− tions, the latter in the office sector as well.

assignments to urgent operations with very little time for preparation.”

Showcasing these trends are the firm’s recent deals of UNIQA Real Estate AG’s acquisition of 14 specialist markets and shopping centers, as well as the refinanc− ing and restructuring package for the entire Praktiker group.

With the heat of the market fed by loan−inflated deals gone, many law− yers are turning ( back) to practices (for instance M&A) they previously handled or deal with more day−to− day tasks like tenant−related issues or maintenance contracts.

Law firms conduct more litigation than before. Clients are less willing to set− tle disputes amicably and rather blame court decisions or lawyers if un−happy with the result, Lagler noted. They tend to be more budget−driven than earlier.

Procurement officers mostly look only at the price and do not so much care about quality. There certainly are more firms competing for the same business, Hum− lova confirmed.

Clients listen more carefully to the advice given and are not willing to accept risk. They also look for brief and precise advice. This, however, has little to do with the crisis, they are simply more aware of the market and the business.

WWW.BBJ.HU

21

3

Budapest Business Journal | May 03 – May 16

CATEGORY ‘A’ OFFICE BUILDINGS IN GREATER BUDAPEST

ipwest.iroda.hu

4+3+3 422

13 3,70

Magyar Posta, AON, Samsung, Orange, Tesco

9

73 3

19 609

12,50– 13,50 1100 Ft

Albemarle, KCI, Ferrero, First &OLHQWV (/0Ŝ

8

60-3,000 3

10 385

11 990 Ft

Evosoft, British Telecom, Dalkia

32,000 38,000

26,500 30,100

TERRAPARK NEXT A&B OFFICE BUILDINGS

5

CITY GATE www.citygate.iroda.hu

WELLNESS AND SPORT SERVICES

24-HOUR RECEPTION AND SECURITY SERVICES

GREEN ENVIRONMENT

SUITABLE FOR DISABLED PEOPLE

IN-HOUSE FACILITY MANAGEMENT

BANK OFFICE/ATM

–

–

LEASING AGENT, NAME, WEBSITE

RESTAURANT, CAFÉ

»

Cushman & :DNHÀ HOG info.budapest@ eur.cushwake. com

–

–

OWNERSHIP (%) HUNGARIAN NONHUNGARIAN

ADDRESS PHONE FAX EMAIL

– Ablon Group (100)

1138 Budapest, Dunavirág utca 2.

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

–

– (100)

1133 Budapest, Váci út 76.

(1) 501-2800 (1) 501-2801 RIÀ FH#FDLPPR KX

–

– (100)

1117 Budapest, Budafoki út 91–93.

(1) 501-2800 (1) 501-2801 RIÀ FH#FDLPPR KX 2040 Budaörs, Puskás Tivadar út 4.

(1) 225-0912 (1) 375-0445 info@ terraparknext.com

DTZ

Csibi Andrea, info.budapest@ eur.cushwake. com

–

– JP Morgan (100)

9

50 3

13 450

9-11 3

Roche, Continental, Raiffeisen, Invitel, Pioneer, Carlsberg, Bellinda, Berlinchemie

22,800 25,000

8

157 3

10 407

12–13 1,200 Ft

NSN, IBM

–

CA Immo

–

– (100)

1092 Budapest, Köztelek utca 6.

(1) 501-2800 (1) 501-2801 RIÀ FH#FDLPPR KX

22,500 26,200

8

300 5

12 410

12,95– 13,50 3,7

»

»

»

»

– –

1133 Budapest, Váci út 96–98.

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

Terrapark Kft www. terrapark.hu

– 7HUUDÀ QDQ] GmbH (100)

2040 Budaörs, Puskás Tivadar utca 3.

(23) 423-323 (23) 423-324 szilagyie@ terrapark.hu

Barbara Baráth barbara. barath@ simmoag.hu

– (100)

1134 Budapest, Váci út 35.

(1) 429-5050 (1) 429-5055 RIÀ FH#VLPPRDJ KX

ConvergenCE www.convergen-ce.com

– Europa Fund II (100)

1062 Budapest, Teréz körút 55–57.

(1) 225-0912 (1) 375-0445 RIÀ FH# convergen-ce.com

– IVG Funds (100)

1117 Budapest, Gábor Dénes utca 2.

(1) 382-7560 (1) 382-7570 RIÀ FH#LYJ KX

–

– ABLON Group (100)

1139 Budapest, Váci út 99.

(1) 225-6600 (1) 225-6601 sales@ablon.hu 2040 Budaörs, Szabadság út 117.

(1) 880-7200 (1) 889-0575 hungary@ orcogroup.com

www.terraparknext.com 4

INDEPENDENT POWER SUPPLY

330-4,500 3-5

BICYCLE PARKING

9

GREEN TECHNOLOGIES

WASTE RECYCLING

35,900 50,800

SERVICES

NATURAL LIGHT AND AIR VENTILATION

CURRENT MAIN TENANTS

3

IP WEST

www.capitalsquare.hu

AVERAGE MONTHLY RENT IN 2013 (EURO/SQM) AVERAGE MONTHLY SERVICE CHARGE IN 2013 (EURO/SQM)

2

CAPITAL SQUARE

www.gatewaybc.hu

NO. OF ELEVATORS NO. OF PARKING SPACES

GATEWAY OFFICE PARK

MINIMUM LEASABLE OFFICE SIZE (SQM) MINIMUM LEASE TERM (YEARS)

1

NO. OF LEVELS

COMPANY WEBSITE

NET OFFICE SPACE (SQM) TOTAL GROSS SIZE OF BUILDING (SQM)

RANK

Ranked by net office space

24,500 26,200

NORDIC LIGHT www.skanska.hu 6

TERRAPARK C, D TÖMB 19,869 21,280

5

15 1-3

13 529

6–9 3

S & T Consulting, Ricoh Hungary, GDF Suez, Welt 2000, GoodMills, Flaga, Partner in Pet Food, Bioderma, EDCO, BAT

19,487 20,681

10

300 3

11 352

12,5 3,65

Citibank, Digi Kft, Fitness Trade Kft

www.terrapark.hu 7

8

RIVER ESTATES OFFICE BUILDING www.simmoag.hu

EIFFEL SQUARE OFFICE BUILDING AND CULTURAL PARK 9

www.eiffelter.hu

7

220-450 5

10 365

20 3,8

Cetelem Bank, AXN, ESAB, Givaudan, Mastercard, Medicover

7

200 3

7 350

11–12 3

STRABAG Zrt, Lufthansa Systems, Pannontej

–

IVG www.ivg.hu

4/10

90-1650 3-5

3+2 313

9–10 3,95

KPMG, Fundamenta, Unicredit Bank, Viasat

–

»

17,200 18,114

7

20 1

3 393

5,9–9,9 4,5

Kaiser and Kraft, Kardex, Baush and Lomb, General Motors

–

–

–

»

–

–

» »

17,000 30,000

9

360 3

5 406

12-12,50 1100 Ft

HP, Novartis

–

–

CA Immo

–

– (100)

1114 Budapest, Bartók Béla út 43–47.

(1) 501-2800 (1) 501-2801 RIÀ FH#FDLPPR KX

7

300 5

8 270

11,90– 12,90 2,60

Lufthansa Systems, EIT, IVG

JLL www.jll.hu

– Bluehouse Capital (100)

1117 Budapest, Neumann János utca 1/E (1) 382-7560 (1) 382-7570 RIÀ FH#LYJ KX

18,500 23,700

INFOPARK BUILDING D www.infopark.hu 10

11

»

BUSINESS CENTER 99 www.ablon-group.com

ORCO BUSINESS PARK 12 www.orcobusinesspark.hu

13

18,500

BARTÓK HOUSE www.bartokhaz.iroda.hu

17,300 21,200

INFOPARK BUILDING E www.infopark.hu 14

17,000

»

–

CURRENT MAIN TENANTS

6 252

12,9513,50 855 Ft

ABB, AVIS Budget Group, Deichmann, Isys-On, Skanska

16

OFFICE GARDEN II ZZZ RIÀ FHJDUGHQ KX

MARGIT PALACE OFFICE 17 BULIDING –

18

KRISZTINA PALACE www.krisztinapalace.hu

16,159 27 000

16,100 17,300

16,000 18,000

R70 OFFICE COMPLEX 19

15,932 17,261

LOMB BUSINESS CENTER 20

15,700 28,685

www.r70.iroda.hu

www.lombbc.hu

21

22

23

OFFICE GARDEN I ZZZ RIÀ FHJDUGHQ KX

LAURUS OFFICES ZZZ ODXUXVRIÀ FHV KX

INFOPARK BUILDING A infopark_a.iroda.hu

15,000 26,000

13,973 27,000

13,500 13,600

8

4

120 5

100 3

6 311

8 229

12,50 960 Ft

Syngenta, TATA, Shell, Heineken, Pirelli

13 3,5

$9,6 )ŃYiURVL ÌWpOŃWiEOD *HWURQLFV 9HQWLY Health, Toyota, Oberbank

6

250 3

7 399

13 3,59

Deutsche Leasing, Granit Agricalture, LeRoy, Flairspring

10

100-1800 3

9 450

11-12 1100 Ft

TEVA, Allegrone, 'HYHORU ÉUXNHUHVŃ

8

15,700 3-5

4+2 440

13,50-16 3,80

»

6 350

11,50– 12,50 3,80

Phillips, HP, Sio-Eckes, Aloha Informatika, PQS International

10,5 – 11,5 3,50

Aréna Hall Kft, BDO 0DJ\DURUV]iJ .IW ING Biztosító Zrt

8

13

5

120 5

269.03 3

100–1 3

8 247

6 375

11–12 1200 Ft

,%0 3DQDVRQLF ,QYLWHO

»

–

–

–

–

–

–

–

–

–

LEASING AGENT, NAME, WEBSITE

BANK OFFICE/ATM

IN-HOUSE FACILITY MANAGEMENT

SUITABLE FOR DISABLED PEOPLE

GREEN ENVIRONMENT

24-HOUR RECEPTION AND SECURITY SERVICES

WELLNESS AND SPORT SERVICES

RESTAURANT, CAFÉ

»

–

Robertson www.robertson. hu

'DYLG -RKQVWRQ info.budapest@ eur.cushwake. com

–

Cushman and :DNHÀ OHG

–

Eston, CBRE

–

»

–

Robertson www.robertson. hu

–

Balázs Szerdahelyi balazs. szerdahelyi@ immorent.com

Cushman & :DNHÀ HOG info.budapest@ eur.cushwake. com

–

INDEPENDENT POWER SUPPLY

AVERAGE MONTHLY RENT IN 2013 (EURO/SQM) AVERAGE MONTHLY SERVICE CHARGE IN 2013 (EURO/SQM)

15

16,800 17,800

BICYCLE PARKING

NO. OF ELEVATORS NO. OF PARKING SPACES

www.skanska.hu

GREEN TECHNOLOGIES

WASTE RECYCLING

MINIMUM LEASABLE OFFICE SIZE (SQM) MINIMUM LEASE TERM (YEARS)

8

100 5

GREEN HOUSE

SERVICES

NATURAL LIGHT AND AIR VENTILATION

NO. OF LEVELS

COMPANY WEBSITE

Budapest Business Journal | May 03 – May 16

NET OFFICE SPACE (SQM) TOTAL GROSS SIZE OF BUILDING (SQM)

RANK

22

WWW.BBJ.HU

3

OWNERSHIP (%) HUNGARIAN NONHUNGARIAN

ADDRESS PHONE FAX EMAIL

–

– –

1134 Budapest, Kassák Lajos utca 19–25.

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

GRT Group (100) –

1117 Budapest, Alíz utca 2.

(1) 327-2050 (1) 327-2055 info@ RIÀ FHJDUGHQ KX

– -3 0RUJDQ

1027 Budapest, Henger utca 2.

(1) 225-0912 (1) 375-0445 info@ FRQYHUJHQ FH FRP

–

– Union ,QYHVWPHQW (100)

1123 Budapest, Nagyenyed utca 8–14.

(1) 327-2050 (1) 327-2055 info@aiglincoln.hu

–

– (100)

1074 Budapest, Rákóczi út 70–72.

(1) 501-2800 (1) 501-2801 RIÀ FH#FDLPPR KX

–

– ABLON Group (100)

1139 Budapest, Váci út 99.

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

– Heitman (100)

1117 Budapest, Alíz utca 1.

(1) 327-2050 (1) 327-2055 info@ RIÀ FHJDUGHQ KX

–

–

K1A Real Estate 1103 Budapest, 0DQDJHPHQW .ŃpU XWFD $ Kft (») (1) 392-4075 IR CEE Project (1) 392-4081 'HYHORSPHQW balazs.szerdahelyi@ Holding Gmbh immorent.com (»)

–

– (100)

1117 Budapest, 1HXPDQQ -iQRV utca 1.

(1) 501-2800 (1) 501-2801 RIÀ FH#FDLPPR KX

– HGA Capital (100)

1117 Budapest, Gábor Dénes utca 4.

(1) 382-7560 (1) 382-7570 RIÀ FH#LYJ KX

–

– ABLON Group (100)

1138 Budapest, Esztergomi út 44–48.

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

–

– ABLON Group (100)

1132 Budapest, Váci út 30.

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

–

– (100)

2220 Vecsés, /ŃULQFL ~W ² (1) 501-2800 (1) 501-2801 RIÀ FH#FDLPPR KX

INFOPARK BUILDING C www.infopark.hu 24

25

13,240

»

NEW AGE CENTER www.newagebc.hu

BUSINESS CENTER 30 26 www.bc30.hu

EUROPOLIS PARK 27 BUDAPEST AEROZONE www.europolispark.com

13,200 20,400

13,000 19,800

13,000 65,000

7

360 1

4 184

11 3,95

»

–

IVG, ZZZ LYJ KX

8

13,200 3-5

4+2 244

13,50-16 3,80

»

9

300-4 3-5

4+2 221

11,50 3,80

Quaestor, BASF, EOS, KSI, Polygon

4

60 3

6 570

11-12 1080 Ft

DHL, Fedex, UTI, 0$63('

–

–

–

–

– German (100)

1075 Budapest, 0DGiFK ,PUH ~W 13–14.

(1) 268-1900 (1) 269-6684 info@ madachtrade.hu

–

–

–

CBRE

–

–

– (100)

1027 Budapest, Kapás utca 6–12.

(1) 501-2800 (1) 501-2801 RIÀ FH#FDLPPR KX

Róbert Papp, Eszter Bólyai www.robertson. hu

–

PBW Ingatlanalap (AEW Europe) (») –

1072 Budapest, Rákóczi út 42.

(1) 799-3120 (1) 799-3121 emke@ aeweurope.com

–

–

–

–

»

–

»

–

Cushman and :DNHÀ OHG

MADÁCH TRADE CENTER www.madachtrade.hu 12,000

28

»

VIZIVÁROS OFFICE 29 CENTER YL]LYDURV LURGD KX

30

EMKE OFFICE BUILDING www.emke.hu

11,654 13,368

11,400 17,670

7, 10

18-930 1

4 250

9,9-11,9 1320 Ft

Lilly Hungária Kft, /DNDWRV .|YHV pV 7iUVDL =UW 0RUOH\ $OOHQ 2YHU\ hJ\YpGL ,URGD

7

84-2200 3

6 233

12,50-13 1200 Ft

Cemex, Santander, Swedisch Embassy

8–10 1265 Ft

Budapest Bank, EDF, Tellabs, /HYL 6WUDXVV 5(*86 2IÀ FHV Groupama Garancia Biztosító, Cegelec, Fleming, <YHV 5RFKHU

11

250 3

5 136

–

–

–

WWW.BBJ.HU

INDEPENDENT POWER SUPPLY

BICYCLE PARKING

WASTE RECYCLING

GREEN TECHNOLOGIES NATURAL LIGHT AND AIR VENTILATION

LEASING AGENT, NAME, WEBSITE

BANK OFFICE/ATM

IN-HOUSE FACILITY MANAGEMENT

SUITABLE FOR DISABLED PEOPLE

GREEN ENVIRONMENT

24-HOUR RECEPTION AND SECURITY SERVICES

WELLNESS AND SPORT SERVICES

RESTAURANT, CAFÉ

SERVICES CURRENT MAIN TENANTS

AVERAGE MONTHLY RENT IN 2013 (EURO/SQM) AVERAGE MONTHLY SERVICE CHARGE IN 2013 (EURO/SQM)

NO. OF ELEVATORS NO. OF PARKING SPACES

MINIMUM LEASABLE OFFICE SIZE (SQM) MINIMUM LEASE TERM (YEARS)

NO. OF LEVELS

NET OFFICE SPACE (SQM) TOTAL GROSS SIZE OF BUILDING (SQM)

RANK

COMPANY WEBSITE

23

3

Budapest Business Journal | May 03 – May 16

OWNERSHIP (%) HUNGARIAN NONHUNGARIAN

ADDRESS PHONE FAX EMAIL

– IVG Funds (100)

1093 Budapest, Közraktár utca 30–32.

(1) 382-7560 (1) 382-7570 RIÀ FH#LYJ KX

–

Danubius Házak Ingatlanhasznosító Zrt, Wallis Asset Management Zrt (100) –

1138 Budapest, Váci út 141–143.

(20) 971-4728 (1) 899-9801 vasadi.tamas@ wallis.hu

–

– ABLON Group (100)

1146 Budapest, Hungária körút 179–187.

(1) 225-6600 (1) 225-6601 sales@ablon.hu 1138 Budapest, Váci út 182.

(1) 429-5050 (1) 429-5055 RIÀ FH#VLPPRDJ KX

RIVERPARK OFFICES www.riverpark.hu 9,865

31

32

»

DANUBIUS HOUSES (I-II-III) www.wing.hu

M3 BUSINESS CENTER 33 PHASE A www.m3bc.hu

BLUE CUBE OFFICE 34 BUILDING www.simmoag.hu

9,700 14,713

9,600 10,000

9,587 10,220

8

120 3

4 135

12–14 2,70

Henkel, MSC, Bisnode

–

8

30 6 month

7 260

10,5 1000 Ft

CIB Bank, Erste Bank, Imperial Tobacco, Nuance Recognita, iTelligence, SIXT

9

80-8,200 3-5

2 185

8-11 3,95

Groupama, Brother, Sumitomo, Strautmann

5

300 3

5 185

10,5 3,65

Unilever Magyarország Kft

–

7

220 3

3 130

10,50 3,90

»

–

4 120

14,50– 15,50 3,95

Aegon, Wolf Theiss, Alpiq, Texas Instruments

–

–

–

Robertson www.robertson. hu

»

–

»

–

Barbara Baráth barbara. barath@ simmoag.hu

– (100)

IVG www.ivg.hu

– HGA Capital (100)

1117 Budapest, Infopark sétány 3.

(1) 382-7560 (1) 382-7570 RIÀ FH#LYJ KX

Robertson, www.robertson. hu

–

– Volksbank AG (100)

1085 Budapest, Kálvin tér 12.

(1) 327-2050 (1) 327-2055 RIÀ FH# robertson.com

–

– ABLON Group (100)

1146 Budapest, Hungária körút 179–187.

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

–

– HGA Capital (100)

1117 Budapest, Infopark sétány 1.

(1) 382-7560 (1) 382-7570 RIÀ FH#LYJ KX

–

– (100)

1052 Budapest, Bajcsy-Zsilinszky út 12.

(1) 429-5050 (1) 429-5055 RIÀ FH#VLPPRDJ KX

1062 Budapest, Aradi utca 8–10.

(1) 382-7560 (1) 382-7570 RIÀ FH#LYJ KX

INFOPARK BUILDING B www.infopark.hu 35

36

8,590

»

KÁLVIN CENTER www.kalvincenter.hu

M3 BUSINESS CENTER 37 PHASE B www.m3bc.hu

8,448 9,170

8,400 12,000

10

150 5

7

250-6,000 3-5

3 161

11 3,95

CreditExpress, ÖkoPannon

8

250 1

4 100

9–10 3,90

»

–

–

–

–

–

–

–

»

IVG www.ivg.hu

Barbara Baráth barbara. barath@ simmoag.hu

–

– HGA Capital (100)

– ABLON Group (100)

1139 Budapest, Váci út 91.

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

INFOPARK BUILDING I www.infopark.hu 38

8,200

»

CITY CENTER 39

www.simmoag.hu

–

7

32 2

4 100

13 3,95

Tumlare, AFP, Associated Press, Itochu Hungary, Jetro, Sopron Bank, Dow Jones, Belga Nagykövetség Vallon Régió

8

150 1

4 339

9 3,70

IND Kft, Millward Brown Hungary Tanácsadó Kft, Kelly Services

–

–

–

IVG www.ivg.hu

6,600 9,000

5

90-3760 3-5

2 78

10 3,50

Coty, Mattel, Danfoss

–

–

–

»

–

5,540 6,500

8

80 3

11 173

11 1,100 Ft

Ad Novum, Top Soft, Napi Tipp

–

–

–

–

CBRE

–

– (100)

1027 Budapest, Kapás utca 11–15.

(1) 501-2800 (1) 501-2801 RIÀ FH#FDLPPR KX

5,455 5,820

7

15 1

2 65

10,5 4

UniCredit Leasing, Volksbank, ACE, OASE

–

–

–

–

Barbara Baráth barbara. barath@ simmoag.hu

–

– (100)

1016 Budapest, Hegyalja út 7–13.

(1) 429-5050 (1) 429-5055 RIÀ FH#VLPPRDJ KX

5

80 1

2

9–13 3,40

IVG www.ivg.hu

–

– HGA Capital (100)

1061 Budapest, Andrássy út 12.

(1) 382-7560 (1) 382-7570 RIÀ FH#LYJ KX

– IVG (100)

1143 Budapest, Stefánia út 101–103.

(1) 382-7560 (1) 382-7570 RIÀ FH#LYJ KX

8,178 8,587

–

OKTOGON HOUSE www.oktogonhaz.hu 7,280

40

»

41

BUSINESS CENTER 91

42

BUDA BUSINESS CENTER

43

BUDA CENTER

www.ablon-group.com

budabusiness.iroda.hu

www.simmoag.hu

ANDRÁSSY 12 www.andrassy-11-12.hu 5,368

44

»

»

»

–

–

–

–

STEFÁNIAPARK www.stefaniapark.com

45

5,320

»

4

280 3

2 63

13 3,20

WTS Klient, Segafredo, bnt

–

–

IVG www.ivg.hu

–

24

WWW.BBJ.HU

3

Budapest Business Journal | May 03 – May 16

HOTELIERS PRESSURED FROM MULTIPLE SIDES Hoteliers continue to face a challenging environment with the Hungarian economy still far from healthy growth, not to mention the limitations the conditions place on the prices hotels can charge.

GERGŐ RÁCZ

The hotelier industry is facing challeng− ing times, with many projects brought down by the economic crisis, the reces− sion limiting domestic spending, and with the latest trend, the proliferation of various coupon group discounts, having the potential to spark a wave of bankrupt− cies, hotel operators claim.

These offers allow customers to achieve considerable discounts on a various range of goods and services, an average of 55% last year, according to data provider eNET. And hospitality services are by far the hot− test−sellers in the coupon businesses, with

travel accounting for 38% of aggregate turn− over from services purchased with the dis− counts last year.

Obviously, the public’s craving to pounce on a bargain is a boon for the leading cou− pon providers. The biggest online book− ing provider, szallas.hu, said it doubled the value of its orders to HUF 6.4 billion last year, in part because of the many three or four−day weekends, but also because it launched its own coupon service last year.

The appeal is clear and hotels remain eager to get involved in couponing to increase visitor numbers. Industry records show that 74% of hotels had some kind of similar discount offer in 2010. By 2012, the figure had risen to 84%.

IS IT WORTH IT? The main problem with the phenomenon from the providers’ side is that the ubiq− uity of the coupons significantly reduces their profits from the list price as it is. Fur− thermore, coupon guests typically don’t represent a particularly affluent clientele, meaning they are less likely to purchase

ADVERTISEMENT

HOTELS STRUGGLE WITH LOW OCCUPANCY

MAJOR NUMBER OF FAILED HOTEL PROJECTS ARE NOW WITH THE BANKS further services that might allow hotel operators to cover the gap.

The Hungarian hotel industry is an underachiever as it is. In terms of reve− nue per room, which Balázs Kormány, leader of the Budapest chapter of the Hungarian Hotel and Restaurant Associ− ation, says is the most essential indicator for anyone running a hotel, Budapest is performing rather poorly in comparison to its regional peers and especially com− pared to Western Europe. In a survey of 30 countries, Budapest came in only one short of dead last in terms of revenue per room, he said at the Budapest Business Journal’s latest Shaker event.

There are also concerns about the long− term profitability of the hotels, espe−

cially those built in the boom prior to the Lehman Brothers crisis. As Kormány explained, a major number of these proj− ects are now with the banks that provided the funding, making the finance sector the biggest hotel owner in the country.

Kormány urged the state to aid the industry in any way it can. “The stand− ing 27% VAT rate on hospitality services is fantastically high,” he said.

And while he said he fully supports ventures such as the overhaul of Feren− ciek tere or the construction of a new national sports stadium, he called for additional, more exciting additions to the city, since these are the reasons that foreigners will be all the more inclined to visit the capital.

WWW.BBJ.HU

25

3

Budapest Business Journal | May 03 – May 16

FACILITY MANAGEMENT MARKET BUZZING There is hardly any activity in development and the outlook for the property market can only be perceived with tentative hopes. But the management segment, meantime, is abuzz with activity and an increasing number of players want to grab a piece of the cake.

GERGŐ RÁCZ

Since tenants are becoming more con− scious and have an increased range of providers to choose from, pricing has become highly competitive. In the case of small portfolios, for instance a sin− gle building, price is everything. In this segment clients don’t necessarily care about the credentials or the available capacities of the service providers, only the cost they come at.

However, as Vágó pointed out, In the case of bigger, or even national port− folios, clients are very circumspect in how they select a provider. “For such a

2.1% Y/Y INCREASE IN FACILITY MANAGEMENT FIRMS’ NET REVENUE IN 2012

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THE INFOPARK E OFFICE BUILDING IN BUDAPEST

The lack of any significant space coming to the market means that companies man− aging the office buildings are putting all the more effort into keeping their clients, who are, in turn, all the more active to seek out the best deals.

“Companies may achieve significant savings when renegotiating their lease, helping them through this tough eco− nomic period,” said Judit Varga, head of the office agency at property consultant CB Richard Ellis.

Accordingly, the facility management segment is highly active with intense competition and several new players appearing. “Since this is the segment of the property market where the most action is and the most tenders are being called, it is unsurprising that several new players are entering the scene,” said Lászó Vágó, CEO of Strabag FPS. These include property consultants, other real estate companies that have launched management departments, or even smaller businesses, like cleaning companies.

commission, there are only a handful of companies that come into consider− ation,” he said.

COST AND ENERGY He added that the conscious tenant approach is also becoming more appar− ent in how tenders are called with an increased level of professionalism and precision, something that is now also being seen in the public sector and pub− lic precedents.

When choosing an office, the main factors remain unchanged: location and cost, the latter being highly dependent on energy use.

“The main aspects besides the pres− ervation of the building are energy− efficient operation, sustainability, environmental awareness and reduc− ing cost,” said István Rezsó, operating manger of the Bank Center complex in central Budapest.

“Tenants are continually asking for the optimization of costs. The best

opportunity to achieve this is through energy. Although price levels have largely settled, calling tenders and rationalizing energy use still pays off on the short term,” Vágó said. This is all the more important since energy costs more than the service fee paid to the management.

Tenants also tend to appreciate addi− tional facilities like the availability of parking or the manager’s readiness to cater to individual requirements.

“We offer very flexible, tailor−made conditions for our partners, which allows us to maintain an almost 100% tenant retention rate,” said Attila Madler, IVG Hungary’s asset manager of the Oktogon Ház office complex.

26

WWW.BBJ.HU

3

Budapest Business Journal | May 03 – May 16

FACILITY MANAGEMENT COMPANIES

1

12,000

12,000

30

40

30

6

%XGDSHVWL (UŃPŝ Zrt, Vodafone Magyarország Zrt, EDF DÉMÁSZ Zrt, Szombathelyi Országos Büntetés-végrehajtási Intézet, Zwack Unicum Zrt

Managing Buildings.

2

FUTURE FM LÉTESÍTMÉNYGAZDÁLKODÁSI ZRT

6,188

6,188

67

12

www.future-fm.hu

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE FAX EMAIL

2004 447

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

László Vágó Gyula Jászai Gábor Landi

1095 Budapest, Máriássy utca 7.

(1) 325-1850 (1) 325-1855 info@strabag-pfs.hu

– –

Ferenc Batári – –

1148 Budapest, Fogarasi út 5.

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

Sándor Demján(»), Sándor Csányi (»), Sándor Nyúl (») Peter Munk (»)

Philip Evans Zoltán Lehoczky (UQŃ .RQF]

1062 Budapest, Váci út 3.

(1) 374-6516 (1) 374-6571 info@ trigranitmanagement.com

– Cushman & :DNHÀHOG ,QF

Charles Taylor =VX]VDQQD .LVV Orsolya Németh

1052 Budapest, Deák Ferenc utca 15.

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

– Artelia Austria GmbH (»)

Hubert Mühringer Péter Radó Bereniké Sólyom

1075 Budapest, Wesselényi utca 16.

(1) 479-6020 (1) 479-6029 contact@ hu.atreliagroup.com

– REIWAG GmbH (100)

György Kollár Margit Szász –

1061 Budapest, Paulay Ede utca 12.

(1) 381-6000 (1) 381-6019 iroda@reiwag.hu

–

2003 91

Biggeorge (»), 19 9DJ\RQNH]HOŃ .IW »), Drexler & &R +ROGLQJ .IW ») –

Gábor Décsi Zsolt Jurecska .LQJD .XUWD

1023 Budapest, Lajos utca 28–32.

(1) 423-0000 (1) 423-0001 info@domefsg.hu

–

–

1999 80

Tibor Balogh (85) András Balogh (15) –

Tibor Balogh György Osváth –

1112 Budapest, Brassó út 64.

(1) 248-3800 (1) 248-3809 center@millenia.eu

– Rustler Gruppe GmbH (100)

Valentin Langbein – –

1123 Budapest, Alkotás utca 17–19.

(1) 434-2690 (1) 434-2699 info@rustler.hu

(100) –

Dániel Jellinek Péter Gnädig –

1148 Budapest, .HUHSHVL ~W (1) 688-1700 (1) 688-1701 info@in-management.hu

OTHER

REAL ESTATE DEVELOPMENT

MAINTENANCE

FINANCE MANAGEMENT

INFRASTRUCTURAL SERVICES

MAIN CLIENTS IN 2012

Magyar Telekom, MOL, Magyar Nemzeti Bank, OBI, Retail Hungary, WING Zrt, ERSTE Bank

www.strabag-pfs.hu

YEAR ESTABLISHED NO. OF FULL-TIME EMPLOYEES ON APRIL 1, 2013

STRABAG PROPERTY AND FACILITY SERVICES ZRT

OWNERSHIP (%) HUNGARIAN NONHUNGARIAN

SERVICES TECHNICAL SUPERVISION

LOGISTICS AND TRADE FACILITIES (%)

INDUSTRIAL FACILITIES (%)

PORTFOLIO

OFFICE BUILDINGS (%)

COMPANY WEBSITE

NET REVENUE FROM FACILITY MANAGEMENT IN 2012 (HUF MLN)

TOTAL NET REVENUE (HUF MLN) IN 2012

RANK

Ranked by total net revenue

–

Property Management, Energy Management, Energy Audit

Cleaning services, technical operation management, security services, gardening, car ÁHHW PDQDJHment, catering, document management

1991

»

TRIGRANIT MANAGEMENT ZRT www.trigranitmanagement.com 4,872

3

4

CUSHMAN & WAKEFIELD KFT

5

ARTELIA KFT

6

ZZZ FXVKPDQZDNHÀHOG FRP

www.hu.arteliagroup.com

REIWAG FACILITY SERVICES LÉTESÍTMÉNYGAZDÁLKODÁSI KFT

1,768

»

»

30

»

–

»

70

»

–

–

»

»

–

–

–

–

–

–

–

1,734

173

83

–

17

SEB ImmoInvest *PE+ 6KHOO .)& Starbucks, Déli % UR &HQWHU .IW /LVW Group

935

»

»

»

»

»

5

Raiffeisen Ingatlanalap, Graphisoft Park Services, GDF Suez, Voith Industries Services, Allianz, Biggeorge's

70

,PPRÀQDQ] Tengelman, Emerson Worldwide, Johnson & Johnson

–

Asset management, property management, lease

–

1994 31

1993

»

2001 11

2001

»

www.reiwag.com

7

DOME FACILITY SERVICES GROUP KFT

605

559

60

35

www.domefsg.hu

8

MILLENIA LÉTESÍTMÉNYh=(0(/7(7ł =57

374

www.millenia.eu

9

RUSTLER KFT

10

IN-MANAGEMENT KFT

www.rustler.hu

www.in-management.hu

»= would not disclose, NR NA = not applicable

= not ranked,

»

20

10

306

306

80

10

10

GTC, Budapest Bank, Erste Immorent, List Group

301

»

39

51

10

»

–

–

–

–

2008

»

1997

»

This list was compiled from responses to questionnaires received by April 29, 2013 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14., or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu

Socialite PEOPLE ON THE MOVE

BOOK REVIEW

Simple: Conquering the crisis of complexity 28 GASTRO ROUND-UP

Boutique butchers in Budapest

ALESSIO BONFANTI Electrolux / factory director 30

29

HUNGARIAN PROJECT WINS REGIONAL INNOVATION COMPETITION Hungarian and Polish projects were awarded joint first prize at the final of the second regional innovation competition organized by Silicon Valley’s Singularity University.

The two winners are due to travel to NASA’s California research center this summer.

➜ READ ON

Photo: Mohai Balázs / MTI

ZSOLT BALLA

WWW.BBJ.HU

28

Budapest Business Journal | May 03 – May 16

BOOK REVIEW

KEEP IT SIMPLE Why do we tolerate complexity in our lives?

Do we have a choice?

Alan Siegel and Irene Etzkorn argue that we do, and that, now more than ever, we need to strive for simplicity.

For four decades, Alan Siegel and Irene Etzkorn have been on the frontlines of the battle to make things simple. They have consulted with Xerox, American Express, 3M, the U.S. Air Force, the Internal Rev− enue Service, and many other busi− nesses and organizations, helping them to streamline their products, services, processes and communi− cations. They have achieved dra− matic results.

Siegel and Etzkorn believe in sim− plicity as a philosophy, a guiding principle and a way of life, but they have learned first−hand that it’s not simple to make things simple – it demands a commitment to clar− ity, honesty, discipline and intel− ligence. They believe that three ADVERTISEMENT

things can be said with certainty: simplicity works, it is accessible to all of us, and we’ve never needed it more than we do today.

Those three statements are at the core of Simple – a book that exposes the overly complex things we do, reveal the reasons why we do them, and makes it harder for us to keep on doing them again and again. Examining the best and worst practices of an array of orga− nizations, big and small, Siegel and Etzkorn recast simplicity as a mind−set, a design aesthetic and a writing technique. They show how having empathy and distilling your message can reduce the distance between company and customer, hospital and patient, government and citizen – and increase your bot− tom line.

Among many other things, they explain how OXO designed a mea− suring cup that sold a million units in its first 18 months, where Target got the idea for their ‘ClearRX’ pre− scription system, why the Flip cam− era became road−kill in the wake of the iPhone, and how New York City simplified its unwieldy bureaucracy with three simple numbers.

By exposing the overly complex things we encounter every day, Simple reveals the reasons we allow confusion to persist, inspires us to seek clarity, and explores how social media is empowering con− sumers to demand simplicity. The authors write that, “We hope that by the time you finish reading this book, you’ll feel as strongly about the value of simplicity as we do and will refuse to accept the complex− ity that inhibits informed decision making, puts your health at risk, endangers your family’s safety, and places you in a financial hole.”

Whether you’re searching for a new approach at work or at home, this book reveals how life might be, were it just a little bit simpler.

SIMPLE

by Alan Siegel and Irene Etzkorn Published by Random House Business Books ISBN 9781847940940 Available to order through www.hungaropress.hu

WWW.BBJ.HU

29

Budapest Business Journal | May 03 – May 16

GASTRO ROUND-UP

BOUTIQUE BUTCHERS IN BUDAPEST It isn’t easy buying meat of reliably high quality in Budapest.

To make life easier for shoppers committed to quality, we have compiled a list of shops where the standard is far above average.

The mantra of the importance of the quality of basic ingredients is especially valid when it comes to meat. And it cannot be emphasized enough that the relationship between butch− ers and their customers is one of trust. It is rare for people to switch butcher. They have one who is theirs and who they know will always provide them with what they want in just the way they desire. We confidently rec− ommend any of the shops below to those who don’t already have a butcher to call their own.

KONRÁDY HÚSBOLT (Konrády Butcher’s Shop) MOM Park Budapest’s (and Hungary’s) most exclusive butcher’s shop when it comes to both style and product range. The selection consists solely of luxury items: wagyu beef, Argentin− ean sirloin, Scottish lamb cutlet, rib eye steak, T−bone steak, Nebraskan omaha steak and the most expensive Spanish ham, Joselito − just to mention some of the big names. In ADVERTISEMENT

regular Saturdays to make sure they don’t miss out, not just at Easter. Easter, inciden− tally, is a very important time for the mas− ter butcher: many say that he sells the most delicious hams in the city. He prepares all kinds of smoked delicacies by traditional methods, first salting the meat, then placing it in a spicy marinade, before smoking it on beech−wood.

terms of Hungarian products, the shop is strong in mangalica, including mangalica sausages, and of course divine Hungarian salami. The shop also sells sous vide meats, which can be cooked at home in minutes.

PÉTER KURUNCZI MASTER BUTCHER Fény utca Market IV/10.

Péter Kurunczi’s shop is the last on the left on the top floor of the market towards Retek utca (street). It stands out from the other shops not only thanks to its high−qual− ity selection, but also its image. Attractive meats seem to call out to customers from the small counter and even bib gourmand− class restaurants cannot resist. Excellent quality veal and lamb also form part of the selection. Customers have to hurry even on

MANGALICA ÉS TÁRSAI HÚSPATIKA (Mangalica and co. Butcher’s Shop) H−1111 Budapest, Bartók Béla út 50.

Its main profile is as a place to eat in, with sandwiches, salads and all kinds of mangalica roasts on the menu. The emphasis is firmly on mangalica, since that is the only type of meat that is sold and eaten here. Monte Nevado ham, made in Spain from Hungarian man− galica, is available exclusively at Húspatika. It is matured for at least two years using Span− ish techniques, in Spanish wind and humidity and with Spanish salt, before being brought back to Hungary.

MÉSZÁRSTEAK Hegyvidék Shopping Centre József Gál (whom everyone calls Józsika) began his mission in 2008 in the Great Mar− ket Hall (Nagycsarnok), which led to him opening his first shop of his own in Buda− pest’s poshest shopping centre towards the

end of 2012, and has now earned him the title of “celebrity butcher”. Yet a real achieve− ment lies behind that title. Józsi, who calls himself a butcher imitation, has played an important role in animating Hungary’s gas− tronomic life. Chefs first found proper, fatty beef for roasting in his shop, and he now has a serious range of steaks in his meat coun− ter. He has also played an important role in educating customers, many of whom first learned from him what a French cutlet is, what beef cheeks are good for, how to cook a steak and that you need beef kidney suet for a hamburger. In his upmarket shop, he now sells not only the customary selection of poultry, pork, veal, lamb and beef, but also pâtés, rilettes, salamis and sausages.

This article is taken from Fine Restaurants, the BBJ’s 2013 restaurant guide.

To get your copy of the book, visit www.amedia.hu

WWW.BBJ.HU

30

Budapest Business Journal | May 03 – May 16

WHO'S NEWS

Name ZOLTÁN VISY

Zoltán Visy became an art director at Cluso from February 2013, having previously spent eight years at Ogilvy. “We followed his work for a long time; we felt that his vision was very close to ours, that’s why we’re very happy the he could join us,” said Lajos Horváth, creative partner at Cluso.

Current company/ position CONTINENTAL / HEAD OF HUNGARIAN COMMUNICATIONS

Andrea Bagdy was appointed to coordinate Hungarian communication from April 1, while her predecessor is on maternity leave. Bagdy previously worked before as the recruitment and employer branding team leader at the Budapest factory of Continental Automotive Hungary. She will fulfill the communications and employer branding tasks of the five Hungarian factories of Continental from the Budapest office.

Supported by

Send information to research@bbj.hu

Name GYÖRGY KERÉNYI Current company/ position TASZ / COMMUNICATIONS DIRECTOR

Current company/position CLUSO / SENIOR ART DIRECTOR

Name ANDREA BAGDY

Do you know someone on the move?

Name ALESSIO BONFANTI Current company/ position ELECTROLUX / DIRECTOR

György Kerényi has been appointed communications director for Társaság a Szabadságjogokért (TASz, Association for Human Rights). He started his career as a journalist at Magyar Narancs and was a founder of Tilos Rádió. He was also a founder of Rádió C and an associate lecturer at the Art Theory and Media Research Institute of Eötvös Lóránd University. He was editor-in-chief of MR1 Kossuth Rádió between 2006-2010.

Alessio Bonfanti has been appointed director of the refrigerator factory in Nyíregyháza as of May 1, 2013.

Bonfanti has moved from Ukraine, where he worked as the head of a washing machine factory. The plant manager joined Electrolux in 2002 and has gained extensive experience in manufacturing systems in Hungary and Romania, as well as in research, development and manufacturing technology.

Name BARBARA LIZA SZŰCS Current company/position ADVERTICUM / PRODUCT MANAGER

Name GYULA KARÁCSONYI Current company/ position ELECTROLUX / PROJECT MANAGER

Barbara Liza Szűcs has been appointed product manager at Adverticum as of April 1. Her duties include handling customer requests regarding the adserver system, contacting the developers, as well as facilitating internal communication among the customer service, sales and marketing departments.

The role was created specially to achieve more successful customer communications. Szűcs has worked at Adverticum since 2009.

Gyula Karácsonyi has been appointed project manager responsible for refrigerator production at Electrolux. He is based on the company’s site at Jászberény, but will work for much of the time in Cairo, playing an important role in starting up a new refrigerator factory in Egypt. He will also continue to support work at other European manufacturing plants. Karácsonyi has worked for Electrolux since 2004.

ADVERTISEMENT

Fine Dining on Smartphones Download Your App for Smartphones and Tablets

Download this app to discover the gourmet metropolis Budapest!

WWW.BBJ.HU

31

Budapest Business Journal | May 03 – May 16

➜ HUNGARIAN PROJECT WINS REGIONAL INNOVATION COMPETITION Singularity University’s second regional final took place on April 12 at Design Ter− minal with 10 competing projects from across the region. On offer were a pair of scholarships, each worth $25,000, for proj− ects that have the potential to improve the lives of at least 1,000,000 people in the upcoming three years, using “exponentially developing technologies”.

The winners were Márton Juhász from Hungary and Aleksandra Orchowska from Poland.

Juhász lives in the neighborhood of a hos− pital, and meets paralyzed people on a daily basis. These people usually get about with joystick−controlled wheelchairs, although when controlled with their mouths, the joy− stick substantially limits their vision. Gyro− Set, therefore, was designed to replace the joystick with a gyroscope−based system, which responds to head movements, and allows people who cannot move their limbs to move and communicate.

Orchowska won the other scholarship with her project entitled Cukeriada, a game and mobile application developed for children diagnosed with diabetes which helps them identify the symptoms of their conditions, and to better incorporate available treatments in their daily routines. The system also helps these kids to regard their illness, and its ongo− ing treatment as a self−evident part of life rather than a traumatic event.

Juhász and Orchowska will take part in a three−month course at Singularity University, located at the NASA research base, later this summer. They will have the opportunity to gain hands−on experience with some of the latest innovations and trends of today’s technology, including space−technology, 3D printers and alter− native means of transportation.

The intense education will also give the winners an opportunity for an inside look at the operation of some of the big− gest enterprises as well as some newly launched startups in Silicone Valley. By the end of their course, each will be given the chance to be mentored by top execu− tives of major Silicon Valley firms, and in some cases participants are granted funds to launch their own companies.

Singularity University is a non−profit learning institution located in Silicon Valley, founded in 2009 with the aim to “assemble, educate and inspire a cadre of leaders who strive to understand and facilitate the devel− opment of exponentially advancing technol− ogies and apply, focus and guide these tools to address humanity’s grand challenges”. In contrast with traditional, accredited four− year universities, Singularity University offers ten−week courses intended for gradu− ate and post−graduate students and ten day programs for senior corporate executives and senior government leaders.

MÁRTON JUHÁSZ FROM HUNGARY AND ALEKSANDRA ORCHOWSKA FROM POLAND

Interested in innovation, and what technology can do to improve our future? Join us at the Budapest Business Journal’s Going Global conference on startups, entrepreneurship and the state of innovation in the Hungarian business environment!

At the conference, the leaders of some of Hungary’s most innovative vative companies will speak about how to use the strengths of the region’s gion’s economies and avoid the pitfalls. For more information on the conference, visit www.bbj.hu.

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BBJ conference

Too big for a small pond?

GOING GLOBAL CONFERENCE – STARTUP AND INNOVATION IN HUNGARY What are the things that launch a Hungarian startup success story?

What are the challenges these enterprises have to face at the start, or even later on? How does the business world welcome a startup concept that stems from Hungary? Is it possible to keep the initial momentum going?

How do you make sure that the first idea leading to the breakthrough will be followed by others, and the company won’t be just a one−hit wonder but become an established element of the international business landscape?

SPEAKERS: GYULA FEHÉR co−founder−CTO, Ustream

ÁKOS BERZI CFO, Organica Water

BALÁZS VINNAI CEO, IND Group

IMRE HILD CEO, iCatapult

GÁBOR BOJÁR Chairman, Graphisoft

SÁNDOR KÜRTI President, Kürt Co

MIKLÓS FEKETE partner, PwC Hungary

PRISZCILLA VÁRNAGY CEO, Be−novative Inc.

MÁRTON JUHÁSZ

These and other questions will all be answered at the Budapest Business Journal’s conference on May 28, 2013.

winner Global Impact Competition2013

ZOLTÁN VARGA CEO and chairman, Central−Fund Ltd.

SÁNDOR ZETTWITZ

DATE: May 28 (9.00 am – 2.00 pm)

CEO, 77 Elektronika Kft.

LANGUAGE: Hungarian (with simultaneous English interpretation) PARTICIPATION FEE: HUF 35,000+VAT/person, (Fee includes: conference documentation, full lunch and coffee breaks.)

FOR EARLY BIRDS (registration by May 10): HUF 29,000+VAT/person, DISCOUNTS − BBJ subscibers: 15%, 2−4 registrations: 15%, 5 or more registrations: 20% THE PROGRAM MAY BE SUBJECT TO CHANGE

FOR MORE INFORMATION, UPDATES AND REGISTRATION: WWW.BBJ.HU. E-MAIL: EVENT@BBJ.HU PHONE: +(36) 1 398 0344