Budapest Business Journal 21/21

SPECIAL REPORT:

REAL ESTATE NOV 04, 2013 – NOV 14, 2013

VOL. 21. NUMBER 21

BUDAPEST

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CALL TO ARMS

Photo: Károly Árvai

Prime Minister Viktor Orbán assumed the role of a military leader in a threatened nation on October 23, calling his followers to fall in rank ahead of next year’s elections.

His concerns seem exaggerated based on how his would−be challengers were busy bickering among themselves in another part of town. 03

BUSINESS

SPECIAL REPORT

SOCIALITE

Audio reconstructed

Sell it smaller!

Q&A: Fine visions

In an era of compressed music, the high− end audio market has had to find new ways to recruit customers. A new generation of audiophiles is emerging: music purists who appreciate cool design more than anything.

This niche is therefore moving to the trendy ultra high−end.

08-09

The government’s ban on opening new hypermarkets didn’t hold back the retail industry for long, with the major players all planning significant expansion. Since shoopers now tend to put a premium on convenience and proximity, the ban no longer seems like a big deal.

16

László Baán, general director of the Museum of Fine Arts talks to the Budapest Business Journal about his ambitious concept that includes the establishment of an entire museum quarter with five new buildings located near Városliget. 26-27

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Budapest Business Journal | nov 04 – Nov 14

SUBSCRIPTIONS Call +36 1 398-0344, or email circulation@bbj.hu BUDAPEST BUSINESS JOURNAL 1 year HUF 27,500+VAT 6 months HUF 13,750+VAT 3 months HUF 6,875+VAT Newsletters HUNGARY A.M., ENERGY TODAY, REGIONAL TODAY 1 year HUF 179,000+VAT 6 months HUF 104,900+VAT 3 months HUF 58,900+VAT BOOK OF LISTS 2012-2013

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THE EDITOR SAYS

LEFT WING ON LIVE SUPPORT Looking at the lineup of speakers at the political opposi− tion’s October 23 commemorative event, an observer could excused for feeling he or she had been hurled back in time by several years. It is more than three years since the last left wing government’s collapse in 2010, but despite that, and all that has transpired since, it seems only the same old faces – who have already been rejected by the voters, and in no uncertain terms – have any ambition of making a challenge.

After overcoming that disbelief, it doesn’t take long to grasp the idea that Gábor Kuncze, Gábor Fodor, Ferenc Gyurcsány, Lajos Bokros and Gordon Bajnai are, indeed, the faces of the disparate opposition to Viktor Orbán’s gov− ernment, and they are the cream of the crop.

Not only do all the polls show that these people are lack− ing in any significant political appeal that might draw in a critical mass of voters, it also shows the political left’s utter inability to learn from its past mistakes, or for those who made those mistakes to reach the necessary conclu− sions and step aside.

As a consequence, and this is perhaps the saddest thing, both for the left and Hungarian politics in general, the opposition has completely failed to reinvent itself, to try and find new faces, new voices. It has now been almost four years since Hungarian voters gave a very clear mes− sage that they have had quite enough of the governance that led up to 2010 and showed these ladies and gentlemen of the left the door and yet, still, next to nothing changes on the left.

What we have instead is the sowing of further derision throughout, with various actors accusing each other of rejecting unity and an all−inclusive left−liberal charge to overcome Fidesz next year, without any seeming aware−

ness that, if anything, the legacy of the past is the biggest hindrance.

Gyurcsány still doesn’t seem to be anywhere near coming to terms with the fact that his persona alone is toxic to any organization he is involved with because of how deeply and widely rejected he is throughout Hungarian society, a sen− timent that doesn’t strictly adhere to party lines.

Lajos Bokros may have been ‘rehabilitated’ by time for the painful cuts made during his ministership in the ’90s, but thinking he could sway voters in any significant way is rather optimistic.

Kuncze and Fodor remain vulnerable targets for all the corruption affairs that sunk their now defunct lib− eral SzDSz party, and their credibility is thus equally in question.

Despite Attila Mesterházy’s drive to repopulate the elite of his MSzP party with new figures and oust the old guard through various means, a survey of the voices of those opposed to Fidesz’s policies reveals nothing but the relics of and old and failed age.

The only solace any opposition advocate may take from the polls is that the majority of those surveyed say that the country is heading in the wrong direction and that a change in government is called for. Still, when it comes to party preference, not only does the left not have enough votes, even if all the individual factions are added up, but all projections show Fidesz once more claiming a two−thirds parliamentary major− ity next spring.

Fidesz supporters and the media loyal to the government are only asking the others to hold off from their bickering for a few minutes until the popcorn is ready and they can sit down, relax and fully enjoy the show.

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HOLD YOUR SILENCE The media has once more managed to anger the governing Fidesz party and the planned response will be painful, involv− ing criminal law, and set to hinder the already shaky state of transparency in the country even further.

A bill filed by prominent members of the government parties would level prison sentences on anyone manu− facturing fabricated video or recordings with libelous intent, and an even bigger punishment for those who distribute these contents.

The move is allegedly a direct response to the scan− dal connected to the Baja bi−elections after the Hvg. hu news portal published a staged video recording por− traying a bribe to rig the elections and ran it under the headline ‘Proof of elec− tion fraud’.

This bill would outlaw any such publication, not only invoking a new age of self− censorship in the media, but also threatening individuals, since the wording of the bill shows the regulations would also apply to them.

If we want to be sarcastic, we could rejoice that the new law would limit the proliferation of the almost daily hoaxes and panic−mongering on social media that users seem to be all too anxious to fall for. Since the law also applies to companies, a business dissatisfied with the contents of a recording portray− ing its activities could also seek prison sentences on those dis− tributing the content involved, so the litter in your daily Face− book feed would likely be cut in light of the penalties.

The reality is less heartwarming. It is nothing but an out− rageous move to limit the freedom of the press and citizens’ basic right to access information of public significance.

True, Hvg.hu made an incredible error of judgment when it gave credence to a recording that even the slight− est consideration to the cir− cumstances of how it was made would have revealed to be a fake. The resignation of its editor−in−chief was an appropriate response. Still, if it was convinced that a piece of information or a record− ing in its possession serves the interest of the public, like election fraud or corruption, it is its duty to make that available to the public.

With the new law, the sup− posedly free press won’t exercise its duty, since the smallest suspicion of foul play – and let’s admit it, the tapes that suddenly appear in the media seldom origi− nate from straightforward sources – may entail a three− year prison sentence, whereas actually making the fabrication only entails one.

Even if a recording turns out to be false, there are experts to determine that and if they are made with the explicit purpose of targeted defamation, there are already legal steps that can be taken. Revising the legal system to incorporate the proposed changes won’t help the taxpay− ers make better decisions, and won’t help authorities inves− tigate wrongdoings; it will only help those who have some− thing to hide.

IT IS NOTHING BUT AN OUTRAGEOUS MOVE TO LIMIT THE FREEDOM OF THE PRESS AND CITIZENS’ BASIC RIGHT TO ACCESS INFORMATION OF PUBLIC SIGNIFICANCE

BBJ

1 News

NEWS IN BRIEF

Jobless rate reaches four−year low

04

NEWS

Larger labels in Europe to curb smoking

07

politics

DIVIDED OVER UNITY The political opposition used the October 23 commemorations to further deepen the existing rifts between its various factions, while Prime Minister Viktor Orbán was content to remind his followers that, despite all the indications, reelection in 2014 is by no means a done deal.

STORY HIGHLIGHTS ■

Political relations sour on the left after public disputes ■ PM Orbán urges supporters to stay involved in the political process and continue support

system. Anybody who forgets that is, in my mind, mistaken,” he added.

If anything, the events on October 23 only deepened already existing tensions between Gyurcsány’s DK and the Social− ist MSzP, which he left in October 2011, and highlighted the abundance of hot

issues between the former premier and his colleagues on the left.

Socialist MP Nándor Gúr said that in light of the events Gyurcsány is a “trai− tor”, and the effort apparently ended any chance Gyurcsány may have had to try and convince Mesterházy and Bajnai to reopen cooperation negotiations that were concluded shortly before.

“The deliberate disturbance of the October 23 commemoration has destroyed even the most minimal moral basis to hold negotiations,” MSzP and E2014−PM said in a joint statement. The two parties stressed that they “will not

reopen the recently concluded cooper− ation agreement”, and will focus their efforts solely on getting their message to the voters.

Gyurcsány attempted to salvage the situation by expressing his regret over the events and saying in an inter− view that if his person was indeed the main obstacle to forming an all−inclu− sive opposition unified front that has a genuine chance at victory, he would be happy to step back. Still, he didn’t stop his calls for the revision of the existing political pact.

On the anniversary of the uprising against Soviet occupation in 1956, the political opposition showcased its big names from the present and the past, commonly highlighting the deplorable state of the country’s institutional sys− tem ‘destroyed’ by the Orbán govern− ment.

They were also very open in criticiz− ing others within their extended camps, mostly targeting objections at Attila Mesterházy’s MSzP and Gordon Bajnai’s Együtt 2014 for their bilateral election pact for 2014 that doesn’t include any other parties.

“If we go on this way then we’re going to lose next year and the cause of free− dom, the cause of the republic, the option of ascension and a true Euro− pean existence will fail,” former prime minister and head of the Demokratikus Koalíció Ferenc Gyurcsány said.

The former premier’s calls for a uni− fied, fully inclusive opposition pact and a single candidate for prime minister were echoed by other well−known speak− ers, including former liberal ministers of the MSzP−SzDSz era Gábor Fodor and Gábor Kuncze, along with former finance minister Lajos Bokros.

SALT IN THE WOUND A group in the audience who were later identified as supporters of the Gyurc− sány party expressed their dissatisfac− tion by not allowing Mesterházy to start his own speech for several minutes by loudly chanting “unity”.

“If we really want to overcome Orbán’s system and we genuinely think that pol− itics don’t equate to preserving selfish interest, then we must also accept that we aren’t each other’s enemies,” Mes− terházy said in response as part of his address. “Our enemy, our opponent is Viktor Orbán and his unfair, vile, lying

OPPOSITION DEMONSTRATORS ON OCTOBER 23

Photo: Zsolt Szigetváry/MTI

GERGŐ RÁCZ

DISCIPLINE IN THE RANKS In the meantime, Viktor Orbán and his governing Fidesz party could mark the revolution’s anniversary without any such concerns in front, once more, of a huge crowd, fueled by the ‘Békemenet’ march organized by media and public figures loyal to the government.

Orbán paid homage to the revolution− aries of 1956 and compared those times to the present, saying Hungary is once more under attack from abroad through aid from within, which makes the result of the upcoming general elections all the more important. He insisted that it was crucial for everyone supporting his party to get involved in the political pro− cess and make sure no vote is lost, or risk losing the achievements of the past years.

“You mustn’t believe that your govern− ment can win the battle for you and with− out you, you can’t simply leave the job to the government or parties,” he said.

Orbán told his followers that the time is approaching, with the 2014 general elections only months away, when the political right can once more expect to confront unfair and devious plots just as it has been made to do in the past.

“We are in no rush, but slowly and surely we have to start up our machine, call our troops to fall in rank, just as we did in 2010,” Orbán said.

IF WE REALLY WANT TO OVERCOME ORBÁN’S SYSTEM AND WE GENUINELY THINK THAT POLITICS DON’T EQUATE TO PRESERVING SELFISH INTEREST, THEN WE MUST ALSO ACCEPT THAT WE AREN’T ENEMIES

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 | nov 04 – Nov 14

Why don’t you just f**k off, or, as, supposedly, we live in a democracy, eat s**t to change your diet ordered by your editors?

István Lovas, Brussels correspondent of conservative daily Magyar Nemzet, in an official letter to the Hungarian International Press Association, saying that foreign correspondents in Budapest have failed to report on large scandals of the Socialists

Thousands of people in several cities participated in a protest on Sunday (October 27) demanding autonomy for Székely Land in Romania. Speakers at the Budapest event claimed that self−rule is a fundamental right that is currently denied ethnic Hungarians by the Romanian government. Public media also reported on several solidarity protests in European cities. The political parties in Hungary mostly supported the drives. Later in the day Romanian officials dismissed the prospect of Székely autonomy, saying Romania is an integrated country.

ECONOMY MNB CUTS BASE RATE BY 20BP The National Bank of Hungary’s Mon− etary Council decided at a meeting on October 30 to reduce the bank’s key rate by 20bp to 3.40%, in line with expectations. The cut was the latest in an easing cycle started a year ago in August and came amidst inflation well under the central bank’s 3% mid− term target. In a statement published after the decision was announced, the Council said there was still a “signifi− cant degree” of unused capacity in the economy and inflationary pres− sure was likely to “remain moder− ate over a sustained period”. Taking these factors into consideration, as well as perceptions of risk associated with the economy, the Council said “further cautious easing of monetary conditions may follow”.

DEFICIT COULD REACH 2.8% OF GDP Hungary’s general government defi− cit could be 2.8% of GDP next year, if HUF 100 billion in the Country Protection Fund remains unspent, according to a fresh analysis of the 2014 budget bill by the National Bank of Hungary. Assets in the fund, equivalent to 0.3% of GDP, have been set aside in the government’s budget bill to ensure the 2.9%−of−GDP defi− cit target is met. If the government exhausts the fund, the deficit could reach 3.1% of GDP, according to the central bank analysis. The MNB as− sumed a shortfall equivalent to 0.5% of GDP for revenue from VAT and 0.2% of GDP for revenue from other taxes. However, the shortfalls could be countered by less spending on co−financing for European Union−

funded projects to the tune of 0.4% of GDP as well as more than targeted revenue from social security contri− butions equivalent to 0.2% of GDP. Added up, the factors would result in a cash flow−based deficit of 0.1% of GDP over the target. The accrual− based deficit would be two−tenths of a percentage point over the 2.9% tar− get.

JOBLESS RATE REACHES FOURYEAR LOW The average unemployment rate among Hungarians between the ages of 15 and 74 was 9.8% in July− September, the lowest level since the summer of 2009, data published by the Central Statistics Office (KSH) shows. The rate was down from 9.9% in June−August and 10.4% in the same period a year earlier. There were 434,200 unemployed in the 15−74 age group on average in July− September. The number included 300,600 between the ages of 25 and 54. National Labor Office data show there were 484,000 registered job seekers in Hungary at the end of Sep− tember, down 8.1% from 12 months earlier. The employment rate in the 15−74 age group averaged 52.3% in July−September, up from 52.2% in June−August and 51.4% in the same period a year earlier. The employ− ment rate in the 20−64 age group was 64%.

S&P AFFIRMS HUNGARY ‘BB/B’ RATINGS; OUTLOOK REMAINS NEGATIVE Ratings agency Standard and Poor’s has affirmed its ‘BB/B’ long− and short−term foreign and local curren− cy sovereign credit ratings on Hun− gary. “The outlook remains negative, reflecting at least a one−in−three

Numbers in the news

39% of the EU average is Hungarians’ purchasing power, coming to the equivalent of €5,009 a year, market research company GfK Hungária Piackutató says.

75 foreign individuals have paid HUF 75 mln for residency bonds in order to gain permanent residency in Hungary.

chance of a downgrade if the policy framework lessens confidence and medium−term economic growth pros− pects, or significantly raises financ− ing costs and leaves the country ex− posed to sharply diminished capital inflows,” S&P said. S&P said Hunga− ry’s creditworthiness continues to be constrained by the economy’s weak growth prospects, limited monetary flexibility, and high stocks of public and private external debt. It added that the rating was supported by the economy’s “well diversified economic and export structures, which ensure a relatively stable tax base”.

DOMESTIC ADVOCATE SAYS 2028 BUDAPEST OLYMPICS POSSIBLE If there is continued economic growth and fiscal discipline, Hungary has a realistic chance of hosting the 2028 Olympic Games, head of the Buda− pest Olympics Movement (BOM) Attila Szalay−Berzeviczy told weekly Figyelő. The head of the foundation said that Budapest should submit an application at the nearest possible time, in 2015, since even though it won’t win that time around, it will nonetheless bring a wealth of expe− rience that will certainly help an ac− tual bid. Nonetheless, if the country wants to host the games in the distant future, it should already designate facilities and areas where the events will be concentrated, he said.

TAX AUTHORITY SWAMPED WITH LAWSUITS There were 1,636 lawsuits filed against the tax authority NAV by the end of September for a total value of HUF 57 bln, political daily Magyar

Nemzet reported. The value is sig− nificantly higher than in 2012, when the authority had to deal with 2,102 legal challenges in the whole year.

The most common grounds are com− panies wanting to reclaim VAT and private individuals questioning the findings of investigations into their personal wealth increases. NAV said it has won 70% of the cases.

POLITICS FIDESZ SUBMITS AMENDMENT TO PENAL CODE TO PUNISH MEDIA FORGING The governing Fidesz party has sub− mitted a bill that would introduce a prison sentences for those preparing forged audio and video recordings with the malicious intent of libel. The amendment would also levy prison terms on those publishing such re− cordings. The move comes after a video was released purporting to portray Fidesz’ preparations for elec− tion fraud at the recent bi−elections in Baja. The video turned out to be a fake and led to the resignation of Hvg. hu editor−in−chief Gábor Gavra after his site published the recording under the title ‘Proof of election fraud’.

PM FINALIZES LIST OF CANDIDATES The Párbeszéd Magyarországért group spun off from the green LMP has final− ized its list of nominees for the 2014 general elections and the European Parliamentary elections. PM will run in association with Gordon Bajnai’s Együtt 2014 and enter contenders in 11 districts. The domestic list will be led

by PM co−chair Tímea Szabó, while her peer Benedek Jávor will head the Euro− pean parliamentary list.

Photo: Szilárd Koszticsák / MTI

PROTESTS HELD FOR SZÉKELY AUTONOMY

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News 05

Budapest Business Journal | nov 04 – Nov 14

COMPANY NEWS

The Budapest Court has authorized the launch of bankrupt− cy proceedings against Best Reisen Kft, Hungary’s second largest travel agency, Turizmus Online reported. The com− pany suspended its operations in August, leaving some 800 of its clients at their travel locations.

RÉZANGYAL GETS MAJORITY STAKE IN SPIRIT MANUFACTURER

German engineering giant Bosch will move production of starters from Hildesheim, Germany, to its base in the Hungarian city of Miskolc by 2018, a spokesman for the company’s Hungarian business has confirmed. The transfer could boost headcount at the base in northern Hungary, said Ferenc Ficzere. At present, 3,800 people work at two Bosch plants in the city, including 2,200 at one that supplies the automotive industry.

Ficzere said a smallscale investment at the base next year could also boost headcount. The size of the investment and the rise in headcount will be finalized at the end of this year, he added. A spokesman for the parent company announced the transfer of the starter production.

The move will result in 400 redundancies in Germany. Bosch employs about 8,500 people at ten units in Hungary. About 1,000 work in R&D. Last year, the group had revenue of HUF 594 bln in Hungary. Bosch has invested more than HUF 250 bln in the country.

Photo: Balázs Glodi

LOCAL BOSCH SPOKESMAN CONFIRMS CAPACITY MOVE TO HUNGARY

The €300 million Poznan City Center shopping and entertainment complex, built by Hungarian construction company TriGranit, held its grand opening in Poznan on October 24, TriGranit owner Sándor Demján announced at a press conference.

Magyar Telekom aims to raise the coverage rate of its 4G Long Term Evolution (LTE) mobile network from almost 40% to 80% by 2015, the company said. Magyar Telekom launched retail 4G/LTE mobile Internet services at the start of last year. The coverage rate of the network in Budapest reached 99% for outdoor service and 83% for indoor service at the end of 2012.

Switzerland’s Dyntell group is selling invoicing software developed by Hungary’s Pannon Szoftver in the United States, Dyntell Magyarország managing director Péter Salga said. Dyntell expects its Hungarian units to close this year with revenue about the same as last year’s HUF 700 mln.

Austria’s Erste Group said losses at its Hungarian business widened to €100.9 mln in Q1−Q3 from €64.1 mln in the same period a year earlier.

Erste Group said it paid €36.8 mln on a financial transactions duty, introduced at the start of 2013, in Q1−Q3.

Hungarian vehicle−parts maker Ples Járműalkatrészgyártó has launched a HUF 1.6 bln investment to set up an R&D and a wheel− safety measuring and certifying center in Borsodnádasd. The company employs 170 workers.

Chinese optical cable maker Comlink has picked Hungary as the site of its first production base outside of China, the Hungarian Investment and Trade Agency said. Comlink picked Hungary because several of its business partners, among them Huawei, ZTE and IBM, are already present in the country.

Hungarian pasta maker Gyermelyi has put into operation a grain store and an egg production facility, built at a combined cost of more than HUF 1.7 bln. The company produces 26,000 tons of pasta annually, 90% of which is sold domestically. Gyermelyi is market leader in Hungary, selling almost one−third of all pasta.

Prímagáz, Hungary’s biggest seller of bottled gas, is shutting down a plant in Algyő and moving production to another base in eastern Hungary to achieve “a more advantageous market position”, regional daily Délmagyarország said. Prímagáz has operated the plant in Algyő for more than 40 years. It has five other plants around the country.

Metal casting company PCI Formaöntöde, a unit of French−owned Pineaud Casting Industry, has completed a HUF 941 mln production

Following a multi−step procedure, Rézangyal Kft has become the majority owner of spirit maker Békési Pálinka Zrt. Zoltán Békési Jr will still manage the company after the acquisition, while new owner Rézangyal will have a significant role in the fields of sales and marketing, it said in a press release. Zoltán Békési Jr remains president of the board of directors at Békési Pálinka Zrt.

hall at its base in Mohács. PCI Formaöntöde employs 71 people at present.

Croatian bakery Mlinar plans to open 20 shops in Budapest by the end of next year, the business said, after opening its sixth location in the capital. Mlinar, which sells frozen products as well as pastries it makes on site, opened its first shop in Hungary last spring.

Vinegar maker Buszesz Ecet is spending more than HUF 365 mln to expand its product palette, the company said. Buszesz Ecet won HUF 100 mln in European Union and state grant money for the project, which will add a mineral water and soft drink bottling line to its production.

After buying up more stock in Egis recently, Singapore−based CSAM Asset Management now holds a 5.192% stake in the Hungary−based pharmaceutical company. CSAM’s purchase represents a strategic investment for the holding company, with a buyout offer from France− based Servier on the table until November 5. CSAM is a holding company for OTP Bank CEO Sándor Csányi.

Express delivery firm DHL has opened a 17,000 sqm logistics base at the site at Budapest Airport. Deutsche Post DHL has been operating at the base since August and road segment DHL Freight will start operating from there in December, Frank Appel, CEO of Deutsche Post DHL said.

Regional railway company GySEV Cargo, indirectly owned by the states of Hungary and Austria, has expanded the capacity of its container terminal in Sopron (western Hungary) by 470 containers or 20%, CEO János Skala said. GySEV Cargo won HUF 106 mln in EU and central budget grants for the expansion. Total cost came to more than HUF 350 mln.

Austrian aluminum wholesaler Ingrid L. Blecha is building a HUF 1.3 bln logistics base in Daruszentmiklós (central Hungary). The warehouses at the 7,000 sqm base will be completed next May. The company will make 20−25 new hires as a result. Ingrid L. Blecha will supply the Hungarian market, one of its biggest, from the base as well as markets in the east.

Univer will use only Hungarian produce to make its paprika−based condiments this year, in spite of the “catastrophic” pepper harvest, CEO Károly Molitorisz told MTI. With the pepper crop down as much as 40% in some places, Univer is relying on its own reserves from smallholders around its base in Kecskemét (central Hungary). The 1,100 tonnes of sweet paprika, 1,100 tonnes of sharp paprika and 1,200 tonnes of bell peppers will be just enough to tide the company over till the next harvest, he added.

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06 News

Budapest Business Journal | nov 04 – Nov 14

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

EU STARTS ASSOCIATION TALKS WITH KOSOVO The European Union launched negotia− tions for a Stabilization and Association Agreement (SAA) with Kosovo on Octo− ber 28, news sites reported. “This is an acknowledgment of Kosovo’s efforts in moving forward key reforms, as well as to their progress in building neighborly relations with Serbia,” commented EU Enlargement Commissioner, Stefan Fule.

Hashim Thaci, Kosovo’s Prime Minister, said it was an “historic day” and that an “irreversible chapter” was being opened.

One of the main difficulties for Kosovo to join the EU will be its status. Currently, five EU member states have not recog− nized the former province of Serbia, which declared independence in 2008.

The EU has already signed association agreements with all other West Balkan countries that are not members.

CZECHS FACE IMPASSE AS SOCIAL DEMOCRATS LOOK FOR PARTNERS The Social Democrats, the winners of the Czech Republic’s snap election, reached out to parties with opposing policy goals after an unexpectedly close race set the ADVERTISEMENT

course for protracted government talks.

The Social Democrats garnered 20.5% support with all votes counted, a record− low tally for an election winner, the Sta− tistics Office said. ANO, a pro−business party founded by Slovak−born billionaire Andrej Babis, had 18.7%. The Commu− nists were third with 14.9%. Having failed to secure a majority with the Commu− nists, the top vote getter’s natural ally on economic policies, the Social Democrats need an agreement with parties opposed to some of their priorities including tax increases and debt limits. Voters in the Central European country went to the polls on October 25 to decide who will take over from the caretaker government appointed by President Milos Zeman this summer.

BULGARIA EASES CITIZENSHIP TERMS FOR FOREIGN INVESTORS Bulgaria has amended a law to ease the process for granting permanent resi− dence to foreigners who have invested at least BGN 1 million (some €511,000), a local news site reported. The amend− ment to the Foreigners Act also envisions easier access to Bulgarian citizenship

for foreigners who have made an invest− ment of more than BGN 2 mln, as well as for their families, novinite.com said.

The law concerns investments made in public companies or joint ventures, or money deposited at a Bulgarian bank for five years. The control and oversight of the criteria will be done by the Bulgarian Investment Agency.

SERBIA TARGETS ASSETS TO FIX BUDGET Serbia will sell or turn around hundreds of unprofitable state−owned companies to cut the amount they drain from the budget via subsidies and to secure World Bank loans. The government will address the first 153 “most critical” companies by the middle of 2014, Economy Minis− ter Sasa Radulovic told a conference in Belgrade on October 18. The World Bank will lend $250 million to Serbia early next year and the same amount later in 2014 if it is successful, said a World Bank private sector specialist. The companies, which employ more than 51,000 people, “cre− ate a hole in the budget, and at the same time, we have no growth”, Radulovic said.

Prime minister Ivica Dacic’s government announced a battery of measures to cut the budget deficit and rein in debt on Oc− tober 8 after his deputy Aleksandar Vucic said the Balkan state was “virtually on the verge of bankruptcy”.

70% OF POLES AGAINST EURO ADOPTION The poll by the Public Opinion Research Centre (CBOS) found nevertheless that

78% of respondents felt that Poland had benefited from joining the EU in 2004.

The survey was carried out simultane− ously in three other EU member states.

Both Czechs and Hungarians shared Po− land’s doubts about joining the single cur− rency. Some 70% of Czechs were against the introduction of the euro, as were 61% of Hungarian respondents. Meanwhile, in Slovakia, which adopted the euro in 2009, 40% of respondents disapproved of the change.

TYMOSHENKO EXIT BILL SUBMITTED TO UKRAINE PARLIAMENT A Ukrainian lawmaker with President Vik− tor Yanukovych’s ruling party has submit− ted a bill to Parliament that could allow jailed former premier Yulia Tymoshenko to go abroad for medical treatment, news agency AFP reported on October 18, cit− ing the parliament’s register. The release of Tymoshenko, who is serving a seven−year sentence for abuse of power while in office, is seen as a key condition for Ukraine to sign an Association Agreement with the European Union at a summit in Novem− ber. According to the draft, the bill says that a court should decide whether to treat convicts abroad, as well as the terms and conditions. The new rules would apply to all convicts, not just Tymoshenko. On Oc− tober 17, Yanukovych clearly signaled his willingness to free his main political rival for the first time. He said that currently Ukraine did not have a law to allow Ty− moshenko to go abroad for medical treat− ment, adding that he would be ready to sign such a bill if Parliament adopted it.

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News 07

Budapest Business Journal | nov 04 – Nov 14

LARGER LABELS IN EUROPE TO CURB SMOKING Will larger health warning labels on cigarette packets prevent the young from smoking? European legislators certainly hope so.

ZSÓFIA VÉGH

Images of decayed teeth, missing toes and lung cancer have, for some time, been used to try and discourage smokers from lighting up the next cigarette – without much in the way of results. Labels informing users of the potential health hazards have hardly been more successful. With the high−level threshold people have these days, getting used to horrifying images doesn’t take long. In addition, for all the pictures, many cigarette packets still boast an appealing design, even if a third of it is covered.

To make images unavoidable, the European Parliament in October agreed on enlarging the size of warning labels.

Originally, MEPs suggested the labels cover 75% of packaging. The proposal that was eventually approved says that health warnings should cover 65 % of both the front and the back and appear on all sides of the unit packet and any outside packaging.

(Currently, 30% of the front and 40% of the back should be covered.) On the new packaging, brand names would be moved to the bottom of the packet. Manufacturers cannot suggest (on the packaging) that their products are less harmful or, in any way, healthy. Resemblance with cosmetics or

food should be banned as well. This latter is emphasized as several makers have included vitamins and flavorings – such as fruits, spices, herbs, alcohol, candy, menthol and vanilla – that has helped develop addiction in those who are not genuine fans of the taste of nicotine. Stimulants like taurine and caffeine are also to be prohibited. Sugar, though, remains legal. If approved by the European Commission and its Council, countries will have 18 months to make the legislation effective.

Whether it will be effective in health terms is not certain. Smoking makes kids feel more mature and in control, plus it’s cool, so why give it up? If restrictions on selling points and hiked prices have not worked, why should labeling? National tobacco shops still serve under−18s indirectly who ask older customers to buy them cigarettes. Increased prices have not curbed use substantially either.

Rather, they have given rise to roll−your− own tobacco sales. For those who smoke half−used cigarettes, price rises are not a factor anyway. Children younger than 14 years old, or who cannot afford to buy cigarettes at all, often collect what others have thrown away. “In the staff lounge, we fill jars with water and place the butts in them, otherwise kids collect and smoke them,” said Ágnes Nagy, a gym teacher at Tüskevár, an elementary and high school for children with special needs. In Nagy’s experience, it is impossible to stop kids smoking, especially those with lax parental control. They will find a way – and the tobacco – to smoke outside school.

Standard VAT return in the EU could reduce administrative burden and is expected to reduce the amount of uncollected VAT. But how would Hungary apply the new rules?

Attempts to make smoking less appealing have delivered partial success. The current EU directive came into effect 12 years ago yet smoking is still the leading preventable cause of death with 700,000 casualties per year. Statistics show a 12% drop between 2002 and 2012, to 28% from 40%, but this comparison is made between the EU−15 and EU−27, where significant differences can be observed in smoking habits.

“Though smoking is decreasing among adults, in many countries the number of young smokers is rising at alarming levels”, said Linda McAvan, a British MEP, citing data from the World Health Organization.

There are, however, some promising trends. In Canada, warning images were introduced in 2011. Since then, half of young smokers have decided to quit.

LOT FEWER DODGY DEALS TO COME The European Union’s Transparency Register for interest representatives aims to provide information to the public on those with the potential to influence European policy making, and those who benefit from EU funds. An ongoing review of the scheme hints that things are changing for the better.

As a result, the accountability of the European Institutions is improving, and with it the previously poor image of lobbying.

LEVENTE HÖRÖMPÖLI-TÓTH

The Institutions of the European Union are legally obliged to maintain dialogue with representative groups of citizens and ensure transparency to the possibly great− est extent. The Transparency Register for lobbyists was set up in compliance with that obligation, merging the former sepa−

STORY HIGHLIGHTS ■

The Transparency Register for EU lobbyists has proved a success ■ Ongoing review should result in further efficiency

rate schemes of the European Parliament and the Commission into a single entity in 2011.

Achievements were presented in a recent seminar in Budapest under the endorsement of the American Chamber of Commerce in Hungary and the Joint Venture Association, a business alliance of foreign and domestic investors.

The Transparency Register is a data− base where interested parties may reg− ister by indicating information on their finances, HR resources and the amounts of EU money received. Registration takes place on a voluntary basis. In addition, registrants are bound by a code of con− duct to play by the same rules with ‘name and shame’ sanctions are in place to deter from wrongdoing.

The main idea is to allow the public to gain access to crucial information on who is involved in influencing the EU’s deci− sion−making process, and how. In a sim− ilar fashion, certain member states have

STANDARD VAT RETURN?

just – or are about to – take initiatives at the national level.

WELL-EARNED SHOULDER TAPPING Importantly, however, the scheme is not designed to fight corruption. For that pur− pose there are other, more specific means available in the weaponry of the EU such as OLAF, the anti−fraud office or the whistle− blowing system.

The Transparency Register is currently being reviewed, with the voluntary nature of registration in particular being hotly debated. In defense of the current structure it is argued that it is in the organizations’ best interest to play along. Therefore, the damage of non−involvement should have enough reputational consequences.

Nearly 6,000 organizations have realized the importance of joining and feedback is positive. Cleaning the mess in relation to lobbying is music to the ears of the public as the profession’s image has been poor. By making data accessible, the industry can gain substantial credibility. The European Institutions can use some shoulder−tap− ping too on the part of the public, in partic− ular in the wake of the European elections scheduled for 2014. Indeed, the whole European project is bound to benefit from more transparency.

On October 23, the European Commission submitted an amendment proposal concerning the so−called standard VAT return. The published proposal aims to achieve its goal through a modification of the VAT Directive. “We must, of course, also remember that the current proposal is the result of a number of minor and major compromises which still makes fast and transparent flow of information difficult,” Sándor Hegedüs, senior partner of the tax division of RSM DTM points out.

According to the proposal, the standard VAT return would reduce the administrative burdens of enterprises by approximately €15 billion annually, thereby promoting cross−border economic activities within the European Union. Through the faster availability of information, the EC also expects to see a substantial reduction in the €193 bln annual amount of uncollected VAT. Under the amendment, the part of the standard return that would be compulsory for all member states would only include five data fields: the tax payable and its basis, the tax deductible and its basis, and the balance of the two, i.e. whether the taxable person is to pay, or whether he may reclaim VAT in the given period and in what amount.

An interesting question from a Hungarian perspective is how the Hungarian standard summary report can be aligned to the new regulation.

“In this regard there are two options: the current form of the summary report will either be eliminated due to the standard VAT return, or legislators will have to think of something new instead,” Hegedüs says. No member state is likely to be granted an exception; the maximum that might be allowed is a derogation from the new regulation, allowing some flexibility, but even then only if sufficient justification has been made.

“Hungary will most likely have to prepare for difficult negotiations and efficient background consulting for its derogation request to be approved by the Union,” the RSM DTM expert warns.

BBJ

2Business insight

Lending with care: Q&A with Provident CEO Botond Szirmák

11

AUDIO UNDER RECONSTRUCTION An audiophile is ready to go to extremes to enjoy his ultimate passion, pure music to the full. Apart from shelling out fortunes for the best equipment, they may even change power supplies from the streets to their hi−fi room, constructed with immaculate acoustics, to get the full benefit. But there is a whole new generation of music purists out there who appreciate cool design more than anything. The high−end niche is therefore adapting and instead of going extinct, as many predicted, it is moving to the trendy ultra high−end.

LEVENTE HÖRÖMPÖLI-TÓTH

STORY HIGHLIGHTS ■

When using the description ‘high−end’ in the realm of hi−fi, you would imagine premium quality items delivering, or helping in the production of, exceptional sound. An

High-end audio industry reinventing itself ■ Efforts to appeal to the young bear fruit through strong design

The first ever Audio & Vision Show, to be held in the Hilton Hotel West End on November 16-17, promises a jaw-dropping experience for visitors. Chief organizer Krisztián Zsóka is looking forward to it. “The show focuses on presenting audio and video consumer electronics from the upper-middle section all the way to high-end. The highlight should be a 160 square meter ballroom that will be set up with a cutting-edge JB movie system. Such systems are used in real movie theatres, now visitors will have the ultimate chance to experience their home version in action.”

The targets are those who have the financial means to afford such equipment, but either have not shown any interest or have not heard about it. “We are eager to educate people so that they start paying attention to what – and how they listen to,” Zsóka notes.

“The first thing that must be cleared from the outset is what music a potential customer listens to. This is what counts above all, the system must be put together bearing that in mind.”

The money issue comes only afterwards. For it is the genre that specifies what components you will need. There is no such thing as a system that plays all music equally well. “If you are into opera, for instance, but have only HUF 500,000 to spend, forget about having a top system. That genre requires a far bigger investment,” Zsóka says by way of an example.

To get a taste of whether such spending is worth it, all you have to do is to go to the show where you can feel, hear and see for yourself.

Photos: Audiophyl Kft

SHOWTIME IN A HOTEL NEAR YOU

outrageous price tag is consequently also part of the equation to underline exclusivity.

A branch−wide concept goes beyond this simplified stereotype by claiming that it is the recognition gained by specialists and customers that makes a product eligible for being called high−end.

Although such category boundaries look rather blurred, there is not much to argue over about the fact that the Internet and digital technology have caused severe damage to the top audio segment. Super compressed MP3s rule the day. They are

played on mobile gadgets, exchanged or streamed online. Quantity supersedes any other aspect, which meant music became more like a currency for most people. This development has questioned the very existence of the high−end industry, as the need for reproduction quality seems to be fading into irrelevance. But is this really so?

A NEW BREED OF TRUE BELIEVER

iPod mania has apparently inspired a whole new crowd of potential audiophiles. The numbers of those who have had enough

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Budapest Business Journal | nov 04 – Nov 14

9

HIGH-END HYPE FOR YOUR EARS

of flat sounds, played on mass devices, is growing by the day. This latest breed of music enthusiasts still enjoy their songs in convenient mobile methods or by using online music services like Spotify or SoundCloud. However, they are also increasingly seeking revelation, a pure connection to the source.

And high−end manufacturers have become partners in satisfying this generation’s hunger for a premium experience. Not that they had a choice about whether to go down the path of adapting to this brave new Apple world.

As a first step, USB ports were added to entire product lines. Next, the swift spread of AirPlay, an Apple application allowing wireless streaming of audio and video, has forced the high−end industry to seek further compatibility.

EYES FIRST

It became clear very soon that providing killer sound systems alone would no longer be enough in the long run. Fashion – and the ‘coolness factor’ – is of equal, if not greater, importance. All of a sudden, it was cool again to wear slick headphones or go on an Easter egg hunt for second−hand vinyl. Accordingly, products have to pass the aesthetics test first, as with Thiel Audio, a revered speaker maker. They have realized that the younger generation ‘listen’ through their eyes first, and then their ears.

Capitalizing on the vinyl renaissance, Music Hall Audio, another pre−eminent manufacturer, partnered up with Urban Fitters to carry its turntables. Following a successful introductory phase, higher−end turntables now have robust sales too. See what happens if high−end embraces hot design?

Another direction the industry has turned to is audiophile downloading.

Scottish specialist Linn Records has lossless download to offer thanks to its deal with Universal providing high−res editions of top artists’ albums. The right gear to

play those files remains a pre−condition, but the concept itself shows the industry’s readiness for flexibility.

publicity,” explains brand manager Dániel Regős. “The price level is considerably lower than is the case for other Beo products; in return more items are sold.”

OVERDOSED BY HYPE

Not every high−end distributor is dazzled by the hyper−trendy design lines. Attila Jancsa, owner of Audiophyl Kft warns not to get blinded that easily. “You need to differentiate between hype and real value. Most brands calling themselves high−end simply represent life style. There are, however, a few true manufactures where items are made from noble material solely by hand. These products are more like instruments.”

Jancsa draws a parallel with the car industry. “In terms of cars, everybody knows what the highest niche is. When it comes to music, people get sold mostly superficial mass products, even in the high− end section. In turn, we offer ultra−high− end pieces with a special aura, whilst we see the limits of such demand, and so more affordable quality gear is also available.”

TAKE YOUR TIME, BUT NOT TOO LONG

The supersonic speed at which the whole music industry is changing has made it a particularly hard for a cult premium brand like Bang & Olufsen (Beo). The whole philosophy of the Danish company is to stand for timelessness, in the Nordic fashion of slowing things down. Therefore, their designs aim to outlive quickly changing trends. This concept is further strengthened by the policy that, after ten years, they offer to buy the gear back in order to place it on the thriving second hand Beo market.

Striving to create products with a long life span did not mean that the firm could simply stand still and watch the technology revolution speed by. It teamed up with Apple too and, due to the firm’s payment− by−installments scheme, Beo became available to a clientele for whom otherwise it would have been out of reach for good.

“The cooperation with Apple gives us extra

A NOW OR NEVER CHOICE

Another way of adjusting to the winds of change was to advance in the automotive sector. “Music consumption habits have changed. People are not just at home to listen to music anymore. They are rather on the run, driving, taking public transport or walking. That’s why we wanted to expand to the car market,” Regős notes.

It took years to convince Audi that the idea would work. Now the car package is available for all models and is picked by three out of every five buyers. A special incentive to push clients to go for the €6−8,000 option is that it is made a ‘now or never choice’: the system can be built in only at production, not fitted afterwards.

The marriage with the automotive sector has proved to be so successful that BMW and Aston Martin have signed up as well and now auto hi−fi systems account for around 20% of all Beo sales.

Yet, Bang & Olufsen gets still gets customers through word−of−mouth and for home entertainment purposes. “We serve between one and two hundred clients per year in our Hungarian branch. They find us almost exclusively through interior architects or because somebody drew their attention to the brand,” Regős says.

HIGH-END REDEFINED

Interestingly, when discussing home entertainment, Regős insists that Beo does not consider itself a high−end brand at all, except for in its pricing: “In the case of high−end, you get the desired quality only if every component is like that. Power supply, cables, speakers. And you need an insulated room with special acoustics too. And what for? Only to listen to music on your own.”

Headphones are undoubtedly back on the wish list of the music-loving crowd. With everybody on the run, they offer the ultimate solution for a quality listening experience. In contrast to cheap ear buds, they provide perfect shelter from the world around. Leading German labels like Sennheiser have developed insulation systems that seal the listener off from any outside disturbance.

“The experience is so intense that you become one with the music. It plays directly in your head,” says Barnabás Komáromi, editor of hi-fi specialist portal av-online.hu.

“Top headphones can give you a lot deeper impression of what music is like for real, even in the case of an average quality recording. But no high-end product can work magic if the source is of poor quality.”

Manufacturers focus on design as well. Hip editions such as Beats by Dr. Dre produce vast sales figures, but pretty much every company in the high-end section have come up with a slick street wear design. Such items are expensive, but are designed for long-term use.

Another reason why headphones increasingly appeal to audiophiles is their comparative price advantage over high-end systems. “Music comes only from two sides, as opposed to hi-fi systems with surrounding sound,” Komáromi notes. “In return you get highend quality for the fraction of the money of what an entire system would cost. All you need to invest in is the headphones.”

And some high-res music.

Beo instead aims to create the best sound and vision experience under natural conditions, in living rooms, dining areas or bedrooms, so that people can actually share the cutting− edge experience.

At this point of the Budapest Business Journal’s visit, the sound system is turned on in the store. Music seems to be flowing out of the speakers gradually. The brand manager starts stroking the speakers gently. Seriously, that is how the volume is controlled. If this is not high−end redefined, then what is?

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Budapest Business Journal | nov 04 – Nov 14

11

LENDING WITH CARE Provident is expecting demand for its micro loans to pick up in Hungary as the economy grows along with domestic consumption. The Budapest Business Journal spoke with the company’s chief executive, Botond Szirmák, who is optimistic and says that his company has managed to restore a tarnished reputation to become a widely appreciated business.

GERGŐ RÁCZ

BACKGROUND Provident is a member of the International Personal Finance group, active in eight countries. Its business model involves small personal loans on short maturities that the company’s employees deliver directly to customers, often in cash.

The company has actively been rebuilding its reputation over the past few years after it received several serious reprimands from the finance market regulator for high inter− est rates and for misleading customers.

Q

How has the 2013 business year turned out so far?

As for any financial company, the situation is challenging; we too are affected by the finance sector tax. Still, I’d say that we are in a good position. We have worked hard over the past few years to reestablish the reputation of the company, and this is also showing in general perception. We have been recognized as one of the best employ− ers in Hungary this year, we have been rec− ognized as a Superbrand, received Customer Focused Financial Service Provider and First Class Call Center certificates from GfK, and our level of service is also well received (the satisfaction rate is above 90%).

Q

How have the past years affected Provident’s loan portfolio?

We have a 12% share of non−performing loans, which is better than in the case of most commercial banks. Given our business model, where our colleagues interact with our customers locally on a regular basis, we also have a chance to keep better track of their financial situation and potential issues. Over the past few years we have also shifted to a very conservative model of lend− ing based on a strict scoring system. After evaluation, we approve only 40% of the loan applications we receive.

Q

Hungarians have an almost proverbial reputation for lacking any general knowledge about financial matters.

Do you see that changing?

What we are seeing is that customers are becoming far more knowledgeable and cir− cumspect in financial matters. True, it was common earlier that they took out loans that were too big for their needs or means. This is in large part due to the model of commer−

STORY HIGHLIGHTS ■

Provident pursues conservative lending, rejects 60% of applications ■ Sees economy improving with growth fueling domestic consumption

cial banks, where they gave loans several times the amount that the given customer may have actually needed if there was col− lateral. Our model involves smaller sums, meaning we can give loans for the exact amount needed, and there is also no issue about risks pertaining to foreign currencies

Szirmák has led Provident Pénzügyi Zrt since 2008, having joined the company in 2002.

He implemented a new strategy that led to the company’s current successful operation and solidified its reputation.

CV

and exchange rate fluctuations. Also, since Provident loans are typically for a one−year maturity, customers have a time frame they can realistically plan with.

Q

Previously, Provident loans were used mainly for financing retail purchases.

Is that still the case, or has the trend changed?

Our parent company, International Per− sonal Finance publishes quarterly a ‘Financial Wellbeing and Inclusion Report’, carried out by YouGov (a lead− ing international, full service online mar− ket research agency on consumer credit issues) with 5,000 of our customers. It shows that 50% resort to loans whenever some unexpected spending item comes up in their everyday life, while 29% use them to cover expenses related to their homes. These are all one−off costs that the customers know they will be able to repay but may not have the amount read− ily available at the time they have to pay.

The survey also showed that 65% said they have become more cautious in tak− ing out loans and two−thirds also said they sign up for less than their scores would entitle them to.

Q

What are your business targets for this year and the immediate future?

Our main focus is to ensure growth for this year as well as next. We currently have a customer base of more than 280,000, which we are looking to expand to 300,000. Despite the customer num− bers targeted, the most important aspect is to make the growth sustainable and to avoid business moves that could in any way damage the reputation of the com− pany. We are also exploring the option of regional expansion to the Balkans, which could be serviced from our Buda−

WHILE I THINK HUNGARY IS A MARKET THAT DEFINITELY NEEDS STRONG REGULATION, THE MOST IMPORTANT ASPECT IS HOW IT’S DONE, AND NOT WHO’S DOING IT pest base, creating new jobs in the pro− cess.

What is your impression of the current regulatory environment in Hungary?

Do you expect any change from the central bank taking over the role of the finance sector watchdog from October?

While I think that Hungary is a mar− ket that definitely needs strong regula− tion, the most important aspect is how it’s done, and not who’s doing it. We have had favorable cooperation with the author−

Q

ities before and I don’t see any reason why that should change. Over the recent years we have addressed only a few complaints that we are also actively encouraging our customers to make so we can identify any flaws in the quality of service. Besides, the central bank’s stimulus program shows a good direction, the need to take measures to fuel growth and expanded consumption.

I am hopeful that it will be successful in boosting economic growth and consump− tion, which will also be seen in lending sta− tistics. Overall, I am far more optimistic now then I was at the start of the year.

12

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2 Business

Budapest Business Journal | nov 04 – Nov 14

TIME APPROACHING LASTING STRENGTH TO TAKE PROFITS FROM HUNGARIAN ASSETS FOR THE EURO?

EXPERT OPINION

The central bank’s thirst to reach a record low base rate month after month seems unabated, but market analysts say that the prolonged cutting cycle is rapidly drawing to a close and investors should seriously consider taking the yield on their Hungarian investments.

Pé Péter SOMOGYI S CITIBANK CIT CENTRAL CE EUROPEAN CLUSTER, IN INVESTMENT HEAD

W

Sterling has rallied sharply recently and drivers of this rebound have been the recent improvement in the economic outlook and the associated upside surprises to UK data prints. Furthermore, the upwards pressure on UK yields has been another driver of recent sterling strength.

In an environment of higher US Treasury yields, Bank of England forward guidance has so-far not been able to anchor UK rates markets. In fact, UK rate differentials have widened ever since Carney took the helm at the BoE and interestingly, GBP is still lagging these rates markets developments.

September BoE minutes presented a reduced case for further monetary easing. The most notable change for the September minutes was that no Monetary Policy Committee members saw the need for additional stimulus. Citi’s forecasts for EUR/GBP are at 0.83 and 0.82 in 0-3 months and 6-12 months respectively. Against the dollar, they see cable at 1.66 over the next 12 months.

GERGŐ RÁCZ

Seeing no inflationary pressures, but favorable outlooks for growth and still plenty of unused potential in the economy, the National Bank of Hungary’s Monetary Policy Council reduced the central bank base rate by 20 basis points from 3.60% to 3.40% at its October meeting.

The cut came fully in line with market expectations and consequently caused muted market reaction and the indication is that there is no stopping just yet.

“In the Council’s view, considering the outlook for inflation and the real economy and taking into account perceptions of the risks associated with the economy, further cautious easing of monetary conditions may follow,” the statement accompanying the announcement said.

The country’s risk environment and CPI trends appear to allow the central bank to carry out two more 20 basis point cuts this year, something that is also supported by the dovish wording of

convince rate−setters to stop, but this also assumes the continuation of the favorable international mood. Any improvement, and there is a chance the indicator could go below the mark.

“We do not find it very likely at the moment that they would stop cutting rates before the 3% mark is reached,” 4cast said.

TIME TO CASH IN

In contrast, there are also opinions that the supportive global ambient is quickly petering out, something likely to send Hungary assets sliding.

“In our opinion, the base rate will start to increase again next year while the euro−forint exchange rate will surpass 300, which is why it is advisable to realize the yields achieved with Hungarian assets within this year,” István Horváth, investment director at K&H Alapkezelő said in a note.

There are also lingering concerns about the eventual impact on the financial sector from the government’s next measure to phase−out foreign currency mortgage loans. Economy Minister Mihály Varga announced

CHANGES IN THE BASE RATE 7

5,25

3,5

2013.10.30.

2013.09.25.

2013.08.28.

2013.07.24.

2013.06.26.

2013.05.29.

2013.04.24.

2013.03.27.

2013.02.27.

2013.01.30.

2012.12.19.

2012.11.28.

2012.10.31.

2012.09.26.

0

2012.08.29.

1,75

2011.12.21.

NOTE: ALL ARTICLES MARKED E XPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILIT Y

hile the euro could remain supported against the U.S. dollar and Japanese yen after the Fed’s no taper in September, the direction against other G10 currencies seems less clear. Citi analysts suspect that recent EUR strength has been driven by the persistent weakness in Emerging Markets FX and G10 smalls. As risk recovers however, they think that EUR strength could fade somewhat, especially if seen alongside less supportive data.

In regard to policy, European Central Bank President Mario Draghi reiterated his cautious assessment of the eurozone’s growth outlook and potentially signaled growing concerns about the liquidity situation. However, in the absence of significant dovish surprises from the ECB, the single currency need not come under sustained selling pressure across the board. In an environment of persistent market uncertainty, the ‘safe haven’ EUR could remain resilient, especially against less liquid G10 currencies. Citi analysts forecast EUR/USD at 1.30 in a six to 12 months horizon.

Source: MNB

Important Disclosure ‘Citi analysts’ refers to investment professionals within Citi Investment Research and Analysis, Citigroup Global Markets and voting members of the Global Investment Committee and Global Portfolio Committee of Citi Private Bank.

This document is based on information provided by Citigroup Investment Research and Analysis, Citigroup Global Markets, Citi Private Bank and Citigroup Alternative Investments. It is provided for your information only. It is not intended as an offer or solicitation for the purchase or sale of any security.

Information in this document has been prepared without taking account the objectives, financial situation or needs of any particular investor. Accordingly, investors should, before acting on the information, consider its appropriateness, having regard to their objectives, financial situation and needs. Any decision to purchase securities mentioned herein should be made based on a review of your particular circumstances with your financial adviser. Investments referred to in this document are not recommendations of Citibank or its affiliates.

Although information has been obtained from and is based upon sources that Citibank believes to be reliable, we do not guarantee its accuracy and it may be incomplete and condensed. All opinions, projections and estimates constitute the judgment of the author as of the date of publication and are subject to change without notice.

Prices and availability of financial instruments also are subject to change without notice. Past performance is no guarantee of future results.

Subject to the nature and contents of the document, the investments described herein are subject to fluctuations in price and/or value and investors may get back less than originally invested. Certain high-volatility investments can be subject to sudden and large falls in value that could equal the amount invested. Certain investments contained in the document may have tax implications for private customers whereby levels and basis of taxation may be subject to change. Citibank does not provide tax advice and investors should seek advice from a tax adviser.

Investment products: (i) are not insured by the Federal Deposit Insurance Corporation; (ii) are not deposits or other obligations of any insured depository institution (including Citibank); and (iii) are subject to investment risks, including the possible loss of the principal amount invested.

the statement, London−based emerging markets analysts said.

Analysts think that the reasons for the central bank to call it quits in terms of continuing the cuts are stacking up, such as economic growth and rising core inflation, not to mention the risks.

“It’s not clear that rates can be lowered much further without causing the forint to weaken, particularly in the context of the growing risk of a flare−up in tensions between the government and local banks,” Capital Economics senior regional analyst William Jackson said in comment.

Economists at the 4cast London− based financial consultancy agreed that the 3% mark is the bumper that will

that a relief package suggested by the Hungarian Banking Association isn’t acceptable to facilitate the goals laid out by the government. He declared that the cabinet will launch a measure of its own making with an unknown amount of consideration of the banks’ suggestions.

“It remains very difficult to provide any meaningful cost estimates given the degrees of freedom at play,” analyst for the Nomura international finance company Peter Attard Montalto said, envisioning further serious losses for the banking industry and potential further involvement from the central bank and its reserves.

BBJ

3Special Report Foreclosure pressure

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Sell it smaller!

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Love (for risk) is in the air

REAL ESTATE Hungary’s stagnant real estate market over the past years seems to hold all the hopes for the opportunistic investors, whereas established players seem to hold on to their glum views of the market. Whichever the case, something is bound to happen next year.

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IDLE CAPACITY FOR MORE TOXICITY It took some trimming on the eligibility criteria, but the national asset management agency is finally closer to its designated purpose.

Regardless, the once priority government venture fell well short of all that it was hoped to achieve.

GERGŐ RÁCZ

The Orbán cabinet raised the idea of establishing an institution to handle trou− bled assets and toxic loans as one of the very first of its measures when it took office in 2010 as part of its still ongoing drive to quench household debt.

It was meant to purchase assets about to be foreclosed and where the residents were consequently close to eviction, allowing them to stay on as tenants, while finding a financial solution that was also acceptable to the lending bank.

Over time, the project was put on the back burner, since it lacked overall inter− est and the eligibility criteria for apply− ing, or even moving to the ‘debtor village’ set up for troubled non−paying families, proved too high.

SLOW SETUP Setting up the institution, the National Asset Manager (NET), in itself took well more than a year, there are still numer− ous obstacles to participating in the pro− gram, and there is a good chance that the project is too late to overcome these diffi− culties at this point, having so far fallen short of every target.

Responding in 2010 to the govern− ment’s announced plans, Pricewater− houseCoopers released a research piece on the subject, citing the examples of other countries where local economic sit− uations necessitated similar measures.

For instance, it notes a similar scheme ADVERTISEMENT

in Malaysia between 1998 and 2002 that STORY HIGHLIGHTS ■

Setting up toxic asset manager was more than a year behind plan ■ Narrowly set eligibility caused, and still causes, muted interests

eventually saw 92% of troubled policies entered into the program after hammer− ing out terms that were acceptable to all parties. At the end of the period, the insti− tution was disbanded, having completed its task.

The key aspect in the Asian coun− try was that the government acted very quickly to hold talks with the involved sides about the terms and conditions, reached an agreement and was able to set up the framework in a fast an efficient manner.

The Hungarian government didn’t want to or couldn’t mirror this approach and as a result, the NET had to wait until the spring of 2012 to announce the first phase of foreclosures that will be per− formed with the involvement of the state agency.

Even then, it quickly turned out that the parameters of the assets and the value thresholds defined in the legislation weren’t inclusive enough, compelling the government to amend the law and create a broader range of eligibility, which was announced last May.

By October 2012, NET said banks had

offered 1,100 real estate assets at an aver− age value of HUF 6.7 million, showing that the number of properties doubled as a result of the expanded eligibility.

This was still well short of the 8,000 total agreed for 2012 between the state and the Hungarian Banking Association.

It took until July 2013 to even get close to the target, when NET reported that the total number of properties offered by the banks had reached 7,300 and then sur− passed 9,000 late September. Under the course of the program, NET said it spent HUF 6.4 billion in state funds to relive HUF 13.8 bln in mortgage debts between January 2012 and June 30, 2013.

DEBTOR TOWN The other, more controversial aspect of the governments’ relief effort is the construc− tion of a village near Ócsa, a town in Pest County of little more than 9,000 inhabit− ants. The site was to provide alternative accommodation to those who were com− pletely unable to pay their loans and who couldn’t participate in NET’s relief pro− gram, so they had to relocate.

When Ócsa was named as the location, initially the concerns were that the poten− tial flood of new residents would present an unbearable burden for the local infra− structure and fundamentally upset bal− ances in the town. Also, since the newcom− ers were, given their circumstances, likely to be poor, there were voices projecting the artificial creation of a poverty ghetto.

On the financial side, the govern− ment received constant criticism that the greenfield project was way more expen− sive than buying up existing properties and offering those to the troubled fami− lies.

The government was also exposed to political critique because the prospect of moving to Ócsa was far less appealing to the target group then originally hoped.

There were a reported 588 applications in the first wave, but most were rejected because they failed to meet the original criteria.

Here too, conditions were loosened and a lot of rejected applicants were accepted in the second round but, underlining the drop in interest, there were only 23 new applications for residence.

When an opposition MP questioned the government approach of spending HUF 2.5 bln on securing the homes of a mere 40 families, seeing that there are still numerous vacancies in the newly built Ócsa district, state secretary János Fón− agy said that considering the favorable additional effects of the project, like more local employment under public work pro− grams or increased local agriculture, the funding is by no means a waste.

Nonetheless, it is now fairly clear that the government has abandoned the original timeline of adding a second section to the Ócsa district; whether it will be taken off the shelves in the future remains to be seen.

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FORECLOSURE PRESSURE It is no longer a novelty that a large percentage of banks operating in Hungary are loss making. Those that were heavily involved in property loans have been hit the worst and given the government’s continued drive to drastically phase out foreign currency loans, they are the ones set to bear the brunt.

GERGŐ RÁCZ

As if the constantly rising transaction taxes, the unpredictability and the gen− eral loss−making outlook weren’t bad enough for the Hungarian banking sec− tor, they also still have to deal with the large volume of foreclosed properties on their hands, seemingly with little success.

While banks now oversee some 115,000 foreclosed assets, according to the Q2 fig− ures released by the finance market reg− ulator PSzÁF (since integrated into the central bank), only 20,912 properties were offered for auction.

On the one hand, there are periodic ADVERTISEMENT

STORY HIGHLIGHTS ■

Banks have yet to fully exploit auction quotas on foreclosed assets ■ Sector is loss-making, 18% of household loans non-performing

quotas set for sales, on the other, banks say they aren’t interested in going to auc− tion and would rather try to find a mutual solution that will ensure continued pay− ment from customers. Accordingly, banks aren’t even exploiting their designated quotas in full. PSzÁF’s summer statistics show that between late 2011 and mid− 2013, banks only took advantage of 68% to 84% of their allowance, meaning 2,000 to 3,000 assets marked for auction every three months.

It will remain to be seen whether banks change this approach, seeing that after a favorable turn in the first quarter of 2013, regulatory statistics show the sector went back into the red in the second three months of the year. Banks sustained an aggregated loss of HUF 43.5 billion in the period, which subtracted from the first quarter gains of HUF 79.4 bln, leading to the industry’s accumulated HUF 35.9 bln first half result, PSzÁF said.

The period also saw an increase in non− performing loans (policies that are over− due by 90 days or more) by 0.4% to 17.2%

in the corporate sector and by 0.7% to 18% for retail customers.

GOING AFTER THE MONEY Despite the statistics showing some lenience paired with self−preservation, there are numerous complaints from cli− ents against the banks and their attempts to reclaim outstanding money. Interest groups representing mortgage debtors unable to pay their debts regularly hold marches in Budapest, voicing their griev− ances and plastering the bank branches’ fronts with pamphlets.

Others report instances where the banks unilaterally announce drastic increases in monthly installments for loan policies without offering any realis− tic alternative. In the case of foreign cur− rency mortgages for housing, negative equity is also a well known phenomenon, where exchange rate changes and inter− est mean that the debt is now higher than the actual value of the asset, so even if its auctioned, the policyholder still has unpaid debts and no place to live.

Nonetheless, the overall perception of banks remains largely favorable. A Sep− tember survey by Bankmonitor.hu found that 62% of respondents in a representa− tive survey are satisfied with their bank and would recommend it to friends and families.

115,000 foreclosed assets overseen by banks

The surveyed respondents are mostly concerned with how the banking sector’s relations are developing with the central government. Of the sample, 62% said that the banking sector and the government have an “unhealthy relationship and there is a need for more balance”, 37% thought that “despite the disputes they are con− ducted in a normal manner”, and only 1% thought the relationship was “balanced”.

The specialist site’s manager Balázs Sándorfi said he too was surprised by the fact that there was no major difference in the case of those surveyed who are hav− ing debt repayment problems. Even here, 63% said that there would be a “need for more balance”, rather than supporting the government in face of the banks, he said.

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SELL IT SMALLER! Retailers may have initially objected to the government’s ban on the construction of new shopping centers, but they have learned to cope by building bigger networks of small outlets. Customers seem to prefer proximity to size anyway.

GERGŐ RÁCZ

STORY HIGHLIGHTS ■

Changing shopping habits have reduced interest for shopping in hypermarkets ■ Retailers respond by expanding networks of small units in densely populated locations

The prospect of doing business in retail in Hungary hasn’t lessened a bit, but it requires a new approach that active companies are in the process of implementing.

Without any realistic chance of building further huge block retail outlets or hyper− markets thanks to prohibitive legislation, the chains have found a far more favorable tactic is to have more outlets, each of which are nec− essarily smaller in size, but are closer to the customers and more convenient.

“Everywhere in the region, including Hun− gary, it is clearly visible that the appeal of the hypermarket channel is diminishing and a growing group of customers is orienting towards discount retail or specialized smaller units,” Tesco−Global’s press department said.

The shift in strategy was apparent in the case of Tesco, which first established itself on the Hungarian market with its hypermarkets, but then started building a network of smaller units in central locations under the Tesco Express brand.

Hungarian competitor CBA has been aggressively expanding over the past years, through takeovers as well as new openings, giving it wide coverage in many areas. For example, there are five stores within walk− ing distance of the BBJ’s downtown editorial office in Budapest sporting the CBA logo, and there isn’t any indication that the process will stop.

“We are planning to continue on the started path and will be opening dozens of new stores in the near future,” the company’s communi− cations director Attila Fodor said.

BRANCHING OUT THROUGH FRANCHISE While CBA has been relying on involving franchise partners for the expansion of its national network for several years, Austrian competitor Spar is only now adopting this approach, having thus far relied on outlets it directly owns.

As the company’s communications direc− tor István Fehér explained, Spar commenced the introduction of its Hungarian franchise chain in 2012. In the future, a larger number of Spar outlets will be operated in the struc− ture, which is already common in the firm’s Austrian home market, but conditions weren’t

thought adequate in Hungary up until last year.

In one notable step, Spar has agreed with compatriot energy firm ÖMV to open fran− chised stores at five of its Hungarian fuel sta− tions.

“The Spar supermarkets opening in the first year will operate as a test and future developments will commence pending cus− tomer responses,” Fehér said, declining to comment on reports that Spar plans to launch some 100 new outlets in the near future.

BANISHED BLOCK RETAIL When parliament ratified the so−called ‘plaza stop’ bill at the end of 2011, which banned the construction of retail units larger than 300 square meters in size, the profession was dis− gruntled. Insiders argued that the ban was adverse to the economy in general since its takes business from the construction sector

and consequently prevents job creation. It was also perceived as a tool specifically targeted to prohibit the growth of big foreign chains that relied on hypermarkets, and to bene− fit domestic competitors that had a different business model, like CBA. Seeing the change in overall customer hab− its in such a short period of time, retailers now probably aren’t particularly worried that they can’t build huge outlets anymore.

“While we don’t disclose our business plans, we can still say that due to the chang− ing shopping habits, the plaza stop doesn’t in any way obstruct our investments,” Tesco said.

While retailers agreed on the general trend of a stronger orientation towards convenience and proximity over size, there is still some interest in building big.

As the Budapest Business Journal learned from the Economy Ministry, there are cur−

rently 11 requests for a waiver on the ban being processed. The ministry has jurisdic− tion over whether to green light such proj− ects after examining them on a case−by−case basis. It says that, since the law took effect, it has approved exemption for 89 projects and rejected 69.

“Requests for exemption were approved in all cases where the investment’s planned pro− file, location and size didn’t mean an excess load on the environment and if the project included the refurbishment of dilapidated spaces and roads, if they reduced the noise load and if they also included additional infra− structural developments,” the ministry said.

Economy Minister Mihály Varga said in June that the government has no intention of revising the plaza ban anytime in the future, citing the continued need to support domes− tic vendors and retailers from strong multina− tional competitors.

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LOVE (FOR RISK) IS IN THE AIR What once was like a packed beach party with cocktails and champagne now rather gives the impression of a place stricken by the twin effects of tsunami and nuclear fall−out.

The situation on Hungary’s real estate front has been critical, indeed, since the first waves of the crisis devastated its landscape. However, an expert from a leading law firm hints that a ‘love for risk’ is back in the air, at least among some investors, which could result in the long−yearned−for recovery on the market.

STORY HIGHLIGHTS ■

The Hungarian real estate investment market might see an upturn soon ■ Certain real estate funds may have a price hiking effect

market. However, this is not transparent at all, as the first big player who clinches a deal for a depressed price could win most. Any− one coming afterwards would have to face the price hiking consequence of such a transac− tion,” Ungár elaborated.

Few in town would know better than him.

LEVENTE HÖRÖMPÖLI-TÓTH

The Hungarian real estate market has been something of a frozen lake for the past five years, driving many who used to make a liv− ing from it out of business. But it now looks like the first cracks on that stubborn ice layer may soon appear, or so it seems to Attila Ungár, partner and head of the real estate practice at law firm Lakatos, Köves and Partners.“There is valid reason to believe that so−called opportunistic funds and private equity, both known for their extreme affection for high−risk environments, are going to − or some already started to − make their move.

Their swift decision making process and lack of bureaucracy should allow them to do so in a fast and efficient manner,” the senior lawyer told the Budapest Business Journal.

His view is fuelled by the fact that major real estate market players have approached the law firm lately seeking due diligence in relation to large−scale real estate projects. In addition, the acquisition teams of major real estate broker firms seem to be more active this year and “brokers are always the ones who are affected by market developments first. Their actions can’t be without reason,” Ungár added.

WHEELS READY TO TURN FOR OPPORTUNISTS

What has been deterring potential inves− tors from entering the Hungarian real estate market is country risk. “A fund manager has a hard time to sell a country with such a neg− ative international press coverage to clients who have other options that offer the same yields at a lower risk,” Ungár emphasized.

True enough, the whole CEE region was ignored in the initial phase of the crisis, but Poland and Czech Republic were back in the game as early as 2010. Hungary, in turn, has not managed to regain confidence, a fact mostly put down to its fast changing regula− tory framework, which makes sound business planning much harder.

However, “after a long time, investors seem to be seriously considering stepping back onto the stage of the Hungarian real estate

Lakatos, Köves and Partners are a full service law firm with an almost exclusively foreign cli− entele, a rarity among local firms in the Hun− garian legal field.The company also has one of the most well−established real estate prac− tices in Budapest, one that not only succeeded in keeping clients, but also grew in absolute terms and market share in spite of the crisis.

Ungár is rather optimistic about upcoming developments. Without revealing any spe− cifics, he refers to American investors being busy preparing the ground for potential proj− ects in logistics and retail. On the Hungarian real estate market, a €100 million investment would count as a big shot, and that is what everybody is keeping an eye out for.

Conditions are ideal for market entry as far as low prices are concerned, but lending

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HOLD YOUR OPPORTUNISTIC HORSES “Indeed, both opportunistic funds and private equity have stepped on the stage of the Budapest real estate market. However, they keep an eye out only for exceptionally good bargains,” commented Tibor Tatár, CEO of Futureal Development Holding. “High running yields are more important to them than the quality of real estate and the sustainability of rental revenues. Therefore, I expect no breakthrough as regards quality properties in 2014, either. Poland and Czech Republic will remain the main investment targets in the region.

The really good news would be if such – primarily German – real estate and pension funds reappeared in Budapest that think in terms of long-term investments.

But there is still a lot of work to do concerning the economic and political credibility of the country for that to happen.” still needs to catch up. On the other hand, the vacancy rate of office buildings is at a worry− ing 20−25% with huge disproportionalities: some of them are vacant up to a staggering 50%, whereas the best ones are fully occupied.

Ungár has another reason to bet on things turning for the better. Several real estate funds that were set up in the last years of boom in 2007/2008 are expiring or due to expire shortly. Should the inves− tors not be willing to prolong their invest− ments, they will need to bring the assets to the market, and that would mean they start selling as early as 2014. The gloom might be over soon after all.

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A HUNGARIAN’S CASTLE IS HIS HOME? It has raised hackles in the real estate business that country manor houses have become so inexpensive in Hungary that one can buy one for the price of an average Budapest apartment. But what is the problem with them exactly? Why are they in such low demand? The Budapest Business Journal asked two chateau managers about their experiences.

ANDRÁS ZSÁMBOKI

Prónay Castle of Alsópetény is the epit− ome of optimal re−utilization of a coun− try estate in the hilly northern region of Hungary. Since 2011, it has been func− tioning as the conference center of P92 IT Solutions, a Hungarian IT company that employs 120 people – hence classifiable as a mid−size firm in Hungary today. “József Molnár, the owner of the company began to ponder around 2008 that it would be a good idea for the company to purchase a piece of real estate, which would make it possible for the management to withdraw ADVERTISEMENT

into safe seclusion with strategic clients if necessary,” explained Szilvia Tömösvári, the manager of the manor house. “As P92 has steady partners such as Sony Music, the royalty calculation system of which has been developed by P92, or the Grass Roots Group Plc, P92 could easily afford the acquisition of this chateau,” she added.

It was clear from the start that events organized by the company itself would only take up a small proportion of the capacity of the chateau; its operation would have to make a profit by hosting

outside events and organizations. “After conducting market research, we learned what requirements our future conference center would have to meet.” Tömösvári lists the criteria as follows: the place can− not be farther than an hour’s drive from Budapest (Alsópetény is 50 minutes from the capital city, and 40 minutes’ drive from the airport); it has to be equipped with a conference room, and at least 20 single rooms for guests. “The most impor− tant criterion, however, is exclusiveness,” the manager said. “It must be possible to separate the location from the outside world.”

The location consists of the main house built around 1750, a minor chateau con− structed around 1820, and a former manor building which is now also under protec− tion. During the decades of state social− ism, the main chateau was given over to a number of roles – doctor’s office, a min− ers’ club, even a center for the Commu− nist Youth –, and its physical condition deteriorated considerably. “In the ter− razzo of the minor chateau a weaving fac− tory was established. The machines were ruthlessly fastened to the marble floor; we have restored the floor to its original state,” Tömösvári said. “The reconstruc− tion of the manor building into a modern bath house was awarded a Podmaniczky Prize,” she added.

The largest amount of funding was received from the European Union. “We won HUF 52 million in the framework of the Northern Hungary Operative Pro− gram (ÉMOP). The half−finished com− plex, including the park, was bought for HUF 140 mln by P92 in 2008. With the cost of renovation included, the purchase price still remained under HUF 1 billion,” Tömösvári points out. “If we manage to obtain more funding, our next goal will be the construction of new private clinic for ophthalmic surgery.”

COUNTING ON A RETURN In terms of management, the Károlyi Cas− tle at Fehérvárcsurgó (in northwest Hun− gary) is special because it is operated, though not owned, by a member of the family of Károlyi counts who once called it home, György Károlyi. “The cultural pro− file of the castle is organized by a non− profit foundation which is financed by a for−profit company spinning off the cas− tle’s capacities in the hostelling industry,” Károlyi explained to the BBJ. “I picked up

the know−how of such financial constructs during my career in France,” he added.

The count, who left Hungary in 1947 as a child, gained ample experience in com− pany management in Paris. He worked as a financial executive of Fiat’s French sub− sidiary from 1978 on. Since he retired from that position in 2005, he has been devoting all his energies to the recon− struction and the worthy re−utilization of the Fehérvárcsurgó castle. Across 15 years, HUF 1.5 bln has been spent on the reconstruction of the castle building and its 50−hectare park. “One−third of this sum was provided as a long−term loan by Hungarian Development Bank. However, the precondition of the loan was that our foundation should obtain at least manage− ment rights for the sake of putting a mort− gage on the estate,” Károlyi explained.

One−third of the investment comes from money sourced directly by the count, the bulk of which is the Károlyi family for− tune, although some of it was gathered from donations – such as a generous con− tribution provided by the Los Angeles− based Foundation Hungaria Nostra. “The final third of the investment came from subsidies, first provided by the Hungar− ian state, later from EU funds via the New Széchenyi Plan and KDOP projects.

The József Károlyi Foundation, respon− sible for the cultural profile of the castle, organizes conferences on the spot related to Hungary’s re−integration into the main− stream of European modernity, like Hun− gary’s political transition or Hungarian horticulture. The Károlyi Foundation has been accepted as a full member of the European Assembly of Cultural Meet− ing Points, and been awarded with the emblem of UNESCO’s heritage program.

As far as the money making/spinning− off is concerned, the organizing of confer− ences yields no income at all, quite the con− trary, in fact. An annual gardening show attracts 10,000 visitors and more than 100 exhibitors who, of course, pay a participa− tion fee. Three−quarters of the income are generated by special events organized by outside event planner. The hotel business, on the other hand, creates major expenses as well. “We employ 20 local people, spend− ing approximately 50% of our income on their salaries and social security,” Károlyi remarked. “For the time being, a HUF 150 mln annual revenue does not cover the expenses. We need to mobilize other resources for that,” he added.

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LOW REAL ESTATE EXPECTATIONS Property development in Hungary has seen some difficult times lately.

According to an article on hvg.hu in 2012, the collective investment performance of the largest real estate developers was as low as EUR 118 million, which is a decrease of 90% from the ‘golden age’ of real estate development before the economic crisis. The Budapest Business Journal spoke to three development companies about the difficult present and a possibly brighter future.

GERGELY HERPAI

“This year was up to our expectations.

Leases are about what our customers and ourselves anticipated from this year, and we are on schedule with our ongo− ing office project, Eiffel Palace, the new headquarters of PricewaterhouseCoo− pers,” István Kerekes, leasing director of Horizon Development said. Rudolf Riedl,

CEO of RE Project Development, is also quite content with 2013, but only given a starting point of low expectations. “Gen− erally speaking the year was not bad.

While there was no chance of any kind of serious development, we still had a quite good year. We have been able to sign quite large number of new lease contracts as well. But from the point of new devel− opments, 2013 was an absolute zero,” Riedl confirmed.

Gábor Győző, head of sales at Shikun & Binui stressed that, for his firm, 2013 was a year of stagnation. “We tried – and still try – to maintain our present projects to a decent level.” Since Shikun & Binui is an international firm with many subsidiar− ies in other Eastern European countries, Győző has some perspective about how Hungary fares compared to the region, and it’s clear that in those countries busi− ness is a lot stronger. “That’s the Hungar− ian market’s peculiarity, that business isn’t prospering here,” he added.

BRAVE NEW FUTURE? “As long as the overall philosophy of the Hungarian government does not change, I do not expect a positive change in the investment sentiment,” Riedl told the BBJ when asked what he expects from 2014 and beyond. Kerekes doesn’t expect a boom in the coming 12 months either, a view with which Győző agrees: “Next

CASE STUDY

NOTE: ALL ARTICLES MARKED CASE STUDIES ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILIT Y

INVESTMENT COSTS: A PLUS WHICH BRINGS A MINUS According to analysts, the number of investments financed by EU grants may rise in the fields of industry, commerce, services and agriculture as, together with other reasons, the funds not yet allocated have been rescheduled.

Whether you are going to make an investment with or without support, we have invited Péter Hársfalvi, managing director of Aktuál Bau Kft, a company with several decades of experience as a general contractor, to help ensure that the costs can be managed and the deadlines can be met.

I

f, during the tenders for the construction process, it turns out that the investor cannot, or will not finance construction, the architect often comes under pressure to simplify the plans, and the contractor to reduce the costs, which often leads to incomplete solutions. The expert says that the initial plans often include the client’s dreams as drawn by the architect. The contractor and the reality of the budget only come into the picture later.

“One solution can be if the contractor, who is involved as early as the planning process – and who knows the available budget – provides support for the investor and the designer both in technological and technical issues. If, due to the tender announced for construction, this is not possible, we recommend hiring a separate company for coordination and implementation, which at first glance may seem to be an additional cost. However, our own experience shows that it is quite the opposite: ultimately, this option has always led to rationalisation and savings in costs if we have managed to get an independent expert involved in time to coordinate the work of the designer and the contractor on the client’s behalf. When Aktuál Bau carries out construction work as a general contractor, its work is supported by an independent team. We try to devote the necessary time to construction and provide alternatives to the customer that offer different technological as well as technical solutions.”

Disproportionate time allocation We often use a building for 30–50 years. Still, in many cases, we devote very little time to building it. According to Péter Hársfalvi, the optimal time allocation is not meant to make it easy for the contractor but rather aims to ensure high-quality implementation, which also reduces the number of warranty issues. “Sometimes, after an unreasonably long decision process taking as much as 2-3 years, only 3-4 months are left for construction without any buffer. Therefore, we cannot take into account any external factors, such as the weather.

Moreover, it has even happened that the building, which was completed to a tight schedule, was then left vacant for months because the client, for other production-related reasons, was unable to put it into operation. Our profession also requires time for the creative process, which ultimately results in savings on costs and, more importantly, in better solutions and more satisfied clients.” www.aktualbau.com

THAT’S THE HUNGARIAN MARKET’S PECULIARITY, THAT BUSINESS ISN’T PROSPERING HERE year? We’d like to be ever the optimist, but it’s getting harder and harder,” he said. “Still, a definitive positive change must happen in the future, since our com− pany has already witnessed it in other countries. In Hungary we still aren’t there, but we hope that next year will bring the wanted change. In 2014 we will have elections and political change will affect the real estate development busi− ness a lot as well,” he added.

THE REAL CHALLENGE: FINANCING Many CEOs share the opinion of Kerekes concerning the real problem for develop− ers in Hungary, namely the lack of financ− ing. “There are no new entrants into the market. The internal macroeconomic data are not favorable to new tenants,” he added. Riedl, of RE Project Development, agrees. “With the Swiss franc and HUF loans, the banks have huge problems on the neck and nobody knows yet what will come out in November [the deadline set

by the government for the banks to come up with and acceptable action plan]. Thus Hungary is still considered a risk invest− ment. No international institution is ready to invest in Hungary because gov− ernment policy is unpredictable. So there are simply no buyers and investors, and hence no new projects, because of the lack of financing,” he added.

STAGNATION “For the next year I foresee only stagna− tion,” stated Kerekes of Horizon Develop− ment. “What I do see now is a big fight for new tenants or just to keep the existing ones, and honestly I don’t see a positive change for the next one−to−two years,” he added. Shikun & Binui’s Győző goes along with that. “In other European countries we already see a positive trend of stronger investment and a clear optimism from the companies. In Hun− gary we are clearly getting ever more behind,” he concluded.

WWW.BBJ.HU

21

3

Budapest Business Journal | nov 04 – Nov 14

Real estate developers

5,052 2,588

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Cheminova MagyarorszĂĄg Kft, Gnocco Kft

– (100)

Rudolf Riedl Sabine Wegscheider –

1027 Budapest, Ganz utca 16.

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

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(1) 225-0912 (1) 375-0445 RIĂ€FH#FRQYHUgen-ce.com

ASSET MANAGEMENT

REAL ESTATE BROKERAGE

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BUILT-TO-SUIT DEVELOPMENT

REAL ESTATE UTILIZATION

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Budapest Business Journal | nov 04 – Nov 14

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WWW.BBJ.HU

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Budapest Business Journal | nov 04 – Nov 14

23

MANAGING REAL ESTATE CHALLENGES Hungary’s economic crisis is more than five years old, so it comes as no surprise that in the field of asset management the situation far from perfect. The Budapest Business Journal interviewed four companies specialized in asset management, asking four essential questions: how have they fared this year; what do they expect from 2014 and beyond; what are the main challenges of the market specialized in asset management; and what are the general trends to be expected for the years to come?

GERGELY HERPAI

“We have managed to meet our chal− lenges despite the adverse market con− ditions,” confirmed Csaba Széll, CEO of CE Land Holding. He added that the com− pany had managed to grow in regards of services, clientele, and staff numbers.

ADVERTISEMENT

Ede Gulyás, CEO of CA Immo Real Estate Management Hungary is also content about 2013: “This year, the indi− ces for office space leased are especially good,” he told the BBJ. “Concerning the Budapest office market, we have man− aged to achieve better results compared to the average score measured in the cap− ital’s office market,” he said.

Csaba Zeley, CEO of ConvergenCE, is also happy about its achievements for the year thus far. “For ConvergenCE, 2013 is a successful year. We are in partner− ship with two reliable and committed cus− tomers: Europa Capital and GT Morgan,” Zeley said.

Katalin Sermer, country manager at S IMMO Hungary, is little less enthusias− tic, though. “We managed to maintain our position and it’s a nice result, but it was very challenging year for us. Still, ‘no news is good news’ as they say.”

WHAT’S NEXT? As for 2014 and the years ahead, Széll thinks that professionalism will have an ever more important role on real estate asset management in Hungary. “We will have to reposition more real estate. So the professionalism concerning investments, valuations, and knowledge of the tenants’ market will be an essential factor,” he told the BBJ. For Gulyás the challenge will be the extension of lease contracts, since many

will expire. “The outcome of the possible extension of those contracts will define the success of our portfolio and also our future tasks concerning the lease of real estate.”

Zeley doesn’t expect a great change concerning the asset management mar− ket in general. “Still, what we do expect – or at least hope for – is that foreign com− panies will finally trust local companies to do the local asset management.”

CHALLENGES To be successful next year, each com− pany needs to meet specific challenges.

While Széll of CE Land Holding was happy about its achievements in 2013, he doesn’t hide that this year was excep− tionally challenging for his company, and the market as a whole. “New invest− ments are few and far between, and the number of buildings themselves are get− ting reduced. The quality of the buildings is also getting weaker. The banks are not using strong enough property manage− ment strategies. There is neither enough liquidity nor enough transactions in the market. The tenants are pessimistic about the present and future performance of their own companies,” he told the BBJ. While Gulyás at CA Immo Real Estate Management Hungary Kft is a bit more optimistic, he has a similar opinion about the present state of asset management.

“We have observed a certain recovery

both in the office and the logistics mar− ket, but the commitments are typically for short−term periods. Companies are very careful and they assume slow growth in their own business, which will not change over the next few years to come.”

As for the possible growth of the asset management market itself, Széll is also cautions concerning next year.

“I am not yet optimistic for 2014, but I do expect a perceptible growth for the other years to come.”

WWW.BBJ.HU

24

3

Budapest Business Journal | nov 04 – Nov 14

Asset management companies

2

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www.simmoag.hu

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BBJ

4 Socialite PEOPLE ON THE MOVE

BOOK REVIEW

The Amazon story Upcoming events

28 31

LAURENT POIRON Hungarian-French Chamber of Commerce and Industry / chairman

➜ Pages 26-27

Photo: Razlan/Flickr

FINE VISIONS

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26

Budapest Business Journal | nov 04 – Nov 14

FINE VISIONS László Baán, General Director of the Museum of Fine Arts, has been entrusted with the management of a project to relocate the Hungarian National Gallery.

The government decided in July of this year to move the gallery out of the Buda Castle, in order to make way for the establishment of a government quarter that would include the building that currently houses the national art collection.

The relocation of the National Gallery alone would make necessary the construction of a new museum building. Baán, however, has expanded the project even further, and his ambitious concept now includes the establishment of an entire museum cluster with five new buildings located near Városliget: the new homes for the National Gallery – Ludwig Museum, the Hungarian Museum of Photography, a new Ethnographical Museum, the Hungarian Museum of Architecture, and the Museum of Hungarian Music.

The Budapest Business Journal talked to him about the latest with this mega project.

ANDRÁS ZSÁMBOKI

Q

The unification of the National Gallery and the Museum of Fine Arts was decreed back in 2011. What can you tell us about the new concept of the National Gallery in terms of its con− tent? Originally, the National Gallery housed a collection of Hungarian art from the earliest times to the late 20th century, while the Museum of Fine Arts was home to an international collection. The two have now been united. It is an open question what the function of the new National Gal− lery building will be. Would it not be better to prepare an artistic concept before the international architectural

ing. The former Royal Palace, con− verted into the National Gallery in the 1970s at the technological level of that age, or the former Hungarian Supreme Court converted into the Ethnograph− ical Museum in the same decade, did not in practice prove to be ideal solu− tions, and are increasingly anachronis− tic today.

Q

How about the reconstruc− tion of the present Museum of Fine Arts’ façade facing Dózsa György út? Why is that recon− struction project not part of the Budapest Liget concept?

The reconstruction of the Museum of Fine Arts is currently on the agenda, irrespective of the Liget Budapest Proj− ect. In recent years, the main façade of the building has been renovated; fur− thermore, all the halls housing tem− porary exhibitions and some of the halls devoted to the permanent exhibi− tions have been reconstructed, too. The renewal of the Egyptian exhibition’s space is scheduled for this year, as is the reconstruction of the Old Sculpture Collection.

Q

competition for the museum build− ings is announced at the end of this year? Are there preparatory meetings going on in which the opinions of art experts are represented?

The concept of the New National Gal− lery (ÚNG) is going to be prepared by a joint team consisting of experts from the National Gallery and the Museum of Fine Arts, as well delegates sent by the most important professional orga− nizations in the museum business.

(The concepts of the cluster’s other four museums are going to be worked out by six− to 14−member expert teams that will include the directors of the insti− tutions, representatives of professional organizations, and invited experts.) In the international architectural competi− tion to be announced in a few months, architects will have to adapt their plans

to the specified functional profiles of the museums. It goes without say− ing that no museum building can be planned without taking exposition con− cepts into consideration.

Q

You mentioned that the New National Gallery would replace the present one.

What does this mean if the collec− tions themselves are not separated any more?

The present floor space of the National Gallery in the Buda Castle covers 30,000 square meters. The new build− ing will have a similar−size floor space but with more rational land use and facility management indica− tors. A collection can be managed in a much more cost−efficient way if it is located in a purpose−designed build−

Earlier, there was a plan to open the so−called Roman− esque Hall of the Museum of Fine Arts to the public, and to relo− cate the restorers’ workshop from the museum to a nearby complex that for− merly functioned as the Szabolcs utca Hospital. Why is this element not men− tioned in the current plans?

The Romanesque Hall had not been accessible to the public since World War II because it has been occupied by the restorers’ workshop. Now, however, it has been made part of the Liget Buda− pest Project to establish a National Center for Artworks’ Storage and Resto− ration (abbreviated to OMRRK in Hun− garian) in Szabolcs utca, which will make it possible to devote the Muse− um’s Romanesque Hall to other uses.

The government has already instructed us to prepare the building permit plan and also provided the necessary fund− ing for the establishment of the new museum cluster. Since the future loca− tion of the new Center for Storage and Restoration is not part of the City Park, it is not going to be affected by the con− struction; that is why the architectural idea competition evaluated in October this year did not deal with the reloca− tion of the restorers’ workshop.

Q

The new Museum of Pho− tography is also designed to replace something, but which institution is it going to replace? Cer− tainly the Kecskemét Photo Museum, but maybe also the Mai Manó Museum of Photography, and the Ernst Museum with its permanent Robert Capa collection as well?

Replacing the Mai Manó Museum and the Ernst Museum is not the goal of the future Museum of Photography. Not

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27

Budapest Business Journal | nov 04 – Nov 14

gested. Both the Hungarian Museum of Architecture and the House of Hungar− ian Music are going to house permanent as well as temporary exhibitions that will introduce visitors into their specific fields; but what is even more important is that both museums are going to place great emphasis on interactive exhibi− tions and museum education. Their community spaces will enable both institutions to participate in the bus− tling life of the neighboring Városliget, which will be re−landscaped as well.

THE MOST POPULAR SHOWS IN THE PAST DECADE Vincent Van Gogh in Budapest Dec 1, 2006- Apr 1, 2007 483,000 visitors

even the city of Kecskemét will be left without photographic exhibitions, as the present collection is rich enough to leave room for the Kecskemét com− plex to operate an exhibition space of its own. The aim of the construction of the new museum is not centralization, but the worthy placement of a national

collection that boasts one of the most successful branches of Hungarian art internationally, namely photography.

The new museum quarter is the most suitable location for that.

What will the public be able to hear and see in the future Hungarian Museum of Archi−

Q

tecture and Museum of Hungarian Music? In what ways will one be more than an archive of architectural docu− mentation, and the other more than a library of musical scores?

They are going to be something com− pletely different, and they are going to be much more than what you have sug−

THE DOUBTS OF A WINNER

Monet and friends Dec 1, 2003 - march 15, 2004 250000 Botticelli to Titian Oct 28, 2009 - Feb 14, 2010 231,000 El Greco, Velázquez, Goya Jan 28, 2006 - May 14, 2007 208000 Cézanne and the past Oct 26, 2012 - Feb 17, 2013 198,000

Architect István Berkeczi was one of the winners of the architectural ideas competition concluded in October this year.

In spite of that, and simultaneously with receiving his prize, he expressed his doubts on the pages of Építészfórum, an online forum of the Hungarian architectural profession. His concerns can be summed up as follows:

...And the Incas arrived May 18 - Sept 30, 2007 146,000

1) For those visitors who come from far away, visiting the museums will become too costly. Since free parking areas presently available on the edge of the Városliget will cease to exist, and new underground parking facilities – with parking fees – will be established instead, most of the car-bound public will find the Városliget area too expensive to visit.

2) Over-concentration of museums. The planned Városliget institutions might pull away visitors from those areas that presently house the museums. The Buda Castle will lose one of its main tourism magnets if the National Gallery moves out; so will Kossuth Square without the Ethnographical Museum; even MÜPA (the Palace of the Arts) will be less attractive without the Ludwig Museum.

3) The planned continuation of Városligeti fasor (boulevard) into Városliget is an ill-conceived idea. It will damage the greenery, and it will cut the park into two halves architecturally.

4) There is a chance that, in the long-term, there will not be enough funding available for the high-level financing of the new institutions. The maintenance of the institutions will draw funding away from project financing.

The splendor of the Medici Jan 24 - May 18, 2008 130,000 Rembrandt 400 June 30 - Sept 25, 2006 120000 The Art of Friedensreich Hundertwasser Oct 11, 2007 - Jan 13, 2008 100,000 Source: Museum of Fine Arts

Caravaggio: St John the Baptist, ca. 1600 © Pinacoteca Capitolina, Roma

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28

Budapest Business Journal | nov 04 – Nov 14

BOOK REVIEW

THE AMAZON STORY Amazon made its mark sending new books quickly in nice, smile−embossed boxes. But its visionary founder wasn’t content with just being a bookseller.

Jeff Bezos wanted Amazon to become the world’s store. He wanted to offer limitless selection and seduc− tive convenience at disruptively low prices. To do this, he developed a corporate culture of relentless ambition and secrecy that’s never been cracked. Until now.

Brad Stone, a financial journalist and longtime observer of Amazon, was given unprecedented access to the company’s employees, both current and former, in order to write ‘The Everything Store’. He conducted more than 300 interviews in order to write a revealing, definitive biography of the company and its creator.

Compared to tech’s other elite innovators – Jobs, Gates, Zuckerberg – Bezos is a private man. But he stands out for his hyper−competitive business strategies and his restless pursuit of new markets, leading Amazon into risky ventures like Kindle and cloud computing, and transforming retail in the same way that Henry Ford revolutionized manufacturing.

‘The Everything Store’ contains new details about Amazon’s practices and strategies, and presents an honest picture of Bezos’ leadership style, which has been called both aggressive and abrasive. While many have been inspired by his approach, others have been traumatized by it, and Bezos is known for being unfor− ADVERTISEMENT

giving towards those who make mistakes. Amazon’s culture is “notoriously confrontational”, Stone explains, “and it begins with Bezos, who believes that truth springs forth when ideas and perspectives are banged against each other, sometimes violently”.

Amazon has developed a reputation for ruthless− ness, as many will know, and much of this is to do with its dealings with book publishers. ‘The Gazelle Proj− ect’ gained its name because Bezos suggested that Amazon approach small publishers in the same way a cheetah approaches a sick gazelle. However, a posi− tive customer experience is the number one priority for Amazon, and Bezos recently wrote a note to his lead− ership team called ‘Amazon.love’ in which he stressed how important it is for Amazon to be a company that is loved, not feared.

For anyone interested in Amazon, Jeff Bezos, lead− ership, entrepreneurship, or simply the story of a company that was built in less than two decades and sold $61 billion worth of products in the last year, ‘The Everything Store’ delivers. It is a meticulously researched book about the company that placed one of the first and largest bets on the Internet, and forever changed the way we shop and read.

THE EVERYTHING STORE

by Brad Stone Published by Bantam Press ISBN 9780593070468 Available to order through www.hungaropress.hu

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Budapest Business Journal | nov 04 – Nov 14

RESTAURANT REVIEW

THE ESSENCE OF HUNGARIAN HOSPITALITY If restaurants were cars, Múzeum Café would be a Bentley. It is traditional, stylish, and just being in it is a great treat. “Tradition meets present” runs its motto, and it seems to keep its word.

Múzeum Café is maybe the place where even a day−trip visitor should try Hungarian cuisine.

It was originally designed as a café in 1995 and has not changed its profile since then. The beautiful rooms have partially kept their original decorations with Zsolnay tiles on the walls, and the huge oil painting made by the famous Hungarian painter Karoly Lotz. Live piano music every evening shows a commitment towards the traditions of hospitality. The menu offers the best ingredients such as foie gras, porcini mushrooms, veal, lamb, etc. It was hard to choose, we’d like to have tried them all.

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Finally we made up our minds and decided to start with roasted porcini with lemon and parsley pesto, and a mixed starter called the ‘Múzeum Sampler’, a combination of goose liver pâté, beef tenderloin carpaccio and smoked trout. The porcini was a perfect starter, delicious and fresh, and its greatness lies in its simplicity and the quality of the chunky mushroom bits. ‘Múzeum Sampler’ was the very opposite in terms of being complex and vivid; it is a culinary adventure. The trout, smoked on beech homemade, was fantastic; the beef carpaccio melted in our mouths; and the foie gras pâté with small pieces of mushroom in it was light, creamy and aromatic – a perfect harmony of tastes and textures.

We had a Hungarian white wine, a fruity Nyakas Chardonnay, with the starters, which proved to be a great choice.Our main course was grilled trout and pearl−barney risotto with chestnut and sage, a perfect fall dish, and lamb shank with vegetable dumplings. The trout’s skin was crispy and the fish itself perfectly grilled.

The barney risotto was creative and

delicious, a fine example of when a great chef uses traditional ingredients with a modern approach. The lamb, finely seasoned with rosemary, garlic, white peppers and sage, was so tender and soft that we could use a spoon to get the meat off the bone. We try the house wine, a dry and fruity red Cabernet franc of the Twickel Winery from the Szekszárd region.No dinner should end without dessert, so despite being quite full, we went for a couple of classics: Trifle a la Somló, the second most famous Hungarian dessert after Dobos cake, and a mini walnut cheesecake. Both sweets were perfectly made. The cheesecake was as light as a soufflé, and the Somló trifle unforgettable.

Múzeum Café is highly recommended for those who enjoy simple but perfectly made dishes, and who want to know more of the values of Hungarian gastronomy. RATATOUILLE

MÚZEUM CAFÉ 1088 Budapest, Múzeum körút 12

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Budapest Business Journal | nov 04 – Nov 14

WHO'S NEWS

Name TIM SEMANCHICK Current company/position PHILIPS HUNGARY / COUNTRY MANAGER

Philips Hungary has announced the appointment of Semanchick as its country representative, effective October 1, 2013. The 42-year old U.S. national will combine this role with his current position of head of finance Philips Central and Eastern Europe. He holds a BSc in Accounting and an MBA with concentration on global management. He takes over the country manager role from Joost Leeflang, who remains the CEO of Philips in Central and Eastern Europe.

Do you know someone on the move?

Supported by

Send information to research@bbj.hu

Name LAURENT POIRON

The board of directors of the Hungarian-French Chamber of Commerce and Industry has unanimously elected Poiron as new chairman of the chamber. Poiron arrived in Hungary at the end of 2011 and was elected a member of the board at the chamber in 2012. He is the CEO of the Hungarian branch office of BNP Paribas.

Current company/position HUNGARIANFRENCH CHAMBER OF COMMERCE AND INDUSTRY / CHAIRMAN

Name IGNACIO JAQUOTOT Current company/position INTESA SANPAOLO / HEAD OF THE INTERNATIONAL SUBSIDIARY BANKS DIVISION

Jaquotot has been appointed new head of the International subsidiary banks division at Intesa Sanpaolo. Most recently, he held the position of CEO of VUB Banka, the Slovak subsidiary with more than 200 branches, 32 corporate branches and a branch in the Czech Republic. Jaquotot has held various positions in Europe and South America since 1984.

UPCOMING EVENTS

NOV 07

NOV 13

NOV 13

NOV 19

21ST ANNUAL BUSINESS FORUM LOCATION Sofitel Chain Bridge Budapest,

EU-CHAMBERS BUSINESS DRINKS LOCATION Kempinski Hotel Corvinus Budapest,

1051 Budapest, Széchenyi István tér 2.

TIME 2-8 PM FEE German-Hungarian Chamber of Industry and Commerce CONTACT www.ahkungarn.hu

1051 Budapest, Erzsébet tér 7-8.

TIME 5-7 PM FEE For members only: HUF 5,000 (HUF 3,940 + VAT) ORGANIZER EU Chambers of Commerce in Hungary REGISTRATION www.euchambers.hu

SEVENTH AMCHAM DIVERSITY CONFERENCE AND WOMEN OF EXCELLENCE AWARD CEREMONY LOCATION Budapest Marriott Hotel,

SEMINAR & COCKTAIL: CARTEL LAW AND LENIENCY POLICY IN HUNGARY LOCATION Budapest Marriott Hotel, ű

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1052 Budapest, Apáczai Csere János u. 4.

TIME 9 AM -3 PM ORGANIZER American Chamber of Commerce in Hungary CONTACT anita.arvai@amcham.hu

1052 Budapest, Apáczai Csere János u. 4.

TIME 4:30-7:30 PM FEE Free for members; for non-members HUF 19,050 (including VAT) ORGANIZER American Chamber of Commerce in Hungary CONTACT anita.arvai@amcham.hu

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