Budapest Business Journal 22/20

port 3Special Re climate

BBJ

ment Improving invest

Real Estate

SPECIAL REPORT: VOL. 22. NUMBER 20

The property market in Hungary is finally after showing some life that the long slow period followed the economic downturn of 2008.

DAVID LAWRENCE

of improving economic A combination investor more favorable indicators and the real estate an sentiment is strengthening in Hungary after investment market following the economic extended slump crisis. downturn and eurozone in figures released This is reflected indicate growth in that by consultants investment volume commercial property are being concluded first as transactions sectors. For the in all markets the year, €440 million of three quarters volume was recorded still, in investment JLL. Hungary according to and the behind Poland were however, lags where the figures Czech Republic, €1,050 mln respectively have €1,930 mln and period. CBRE for the same timeyear−on−year rise in recorded a 126% to €396 mln for the investment activity first three quarters.to the improving In addition environment, increasing such macroeconomic is attributed to investment activity inexpensive to the factors as the comparatively market compared and products on the and Czech markets, thriving Polish seeking a capital that is the amount of of investors. Debt disposal the home at increasingly available range finance is also Although a wide are for Hungary. and local investorsmore of international the country, the and at now active in German are actively looking for €45 mln. conservative institutional and institutionals However Eiffel Palace goes have still not returned office center albeit with caution.

Austrian investors economic A” income producing the Hungary, alternative to – from both an purpose “class international developer is does provide an the as uncertainty properties. The continues to by an on – Poland and investment Hungary perspective searching for new stable and long and political of an arms’ length proves that and yield premium cautious investors. of this fund is to focus on Korpás, subject transaction Republic.” deter these very and domestic an active market term investments,” said Eszter transaction. “The Skanska Czech great trust in at Erste Asset Both international Further, they require Budapest investors have Budapest Estate Fund Manager completed other interest in the that provides liquidity.estate office market Real investors have IVG Group has and increasing Zoltán Linczmayer, transactions. The to a The Budapest real up as Erste Open− Management. market,” commentedof Skanska Property office pick sqm Stefánia Park is continuing to Investment Fund has sold the 5,300 successful DEAL Managing Director investor after a of DEFINING Budapest office Hungary on the deal. end Real Estate private German the Hungarian sqm north wing defining summer operating in Hungary tender, and Eiffel Palace by been Hungary sold the acquired the 11,000 completed Vision In a Skanska has been Development has leasing and deal, Skanska Property office center Futureal’s recently National 1987 by developing,to investors. developer Horizon center. The complex, 17,800 sqm Green House Torony since by the Hungarian mln. product Towers office is purchased út business corridor, Hungarian open−endedmanaged selling office a reported €45 Skanska deal Fund, located in the VáciAugust and preleased to the to the Bank (MNB) for closing of the said Michael in is also extending Real Estate Investment a member “The Hungary,” the Interest for was delivered Hungary its Management, significant use as a recent transaction Hungary. “The Diófa Fund Bank was the to KPMG for retail sector. In Real Estate completed Partner at C&W yields for by FHB Group. Erste Prime office acquisition. Edwards, holding back, however to circa of the headquarters.

Netherlands’ ING 50% stake in partner in the institutionals are are now falling will open the of its remaining Budapest office and action can be felt financial is regarded as a significant a significant move by one the up the sale deal Hungarian activity is on 7.30%. “Movement investment market, so The recovery of the in that a door. In general, in step in the market on the Hungarian to opportunities property investment we are looking forward and we are continuously the near future

REAL ESTATE OCTOBER 31, 2014 – NOVEMBER 13, 2014

BUDAPEST

BUSINESS JOURNAL HUF 1,250 | €5 | $6 | £3.5

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

NEWS

Tax plan not expected to hurt too much

Voting with their feet

While they noted that several of the measures contained therein are unorthodox, analysts said they didn’t expect a very negative impact from what we have seen of the proposed tax plan for 2015. Still they do expect other factors to slow GDP growth in the coming year.

03 NEWS

Diplomatic fracas over cooking oil When the U.S. decided to revoke the entry privileges of several Hungarians, it stirred strong words between officials from both countries.

While the issue is shrouded in secrecy, it appears to involve charges of corruption aimed at Hungarian tax officials, who may have gotten burned in a long−simmering feud among vegetable oil firms.

06 BUSINESS

SOCIALITE

Have a lively time in a local cemetery All Saint’s Day is the time when Hungarians dress up the burial places of loved ones, lighting candles and making ordinarily beautiful cemeteries even more lovely places to visit. 27

Photo: MTI: János Marjai

A proposal to start taxing Internet traffic sparked two rapid demonstrations, in which tens of thousands made their displeasure with the government clear. 5

Here come the Emirates The first commercial flights of the Dubai−based Emirates Airline started in late October and will be regular from now on. At the same time, the airline launched a major call center in Budapest, their second such center in Europe and one that will serve nine countries.

08 SPECIAL REPORT

Hungarian property gives good yields While other CEE countries may be more popular among investors, Hungary offers better returns than the more crowded markets like Poland and Czech Republic, according to analysts who surveyed the region.

14-15

WWW.BBJ.HU

Budapest Business Journal | October 31 – November 13, 2014

SUBSCRIPTIONS

3Special Report climate

BBJ

Real Estate

SPECIAL REPORT:

Improving investment The property market in Hungary is finally after showing some life that the long slow period followed the economic downturn of 2008.

DAVID LAWRENCE

of improving economic A combination investor more favorable indicators and the real estate an sentiment is strengthening in Hungary after investment market following the economic extended slump crisis. downturn and eurozone in figures released This is reflected indicate growth in that by consultants investment volume commercial property are being concluded first as transactions sectors. For the in all markets the year, €440 million of three quarters volume was recorded still, in investment JLL. Hungary according to and the behind Poland were however, lags where the figures Czech Republic, €1,050 mln respectively have €1,930 mln and period. CBRE for the same timeyear−on−year rise in recorded a 126% to €396 mln for the investment activity first three quarters.to the improving In addition environment, increasing such macroeconomic is attributed to investment activity inexpensive to the factors as the comparatively market compared and products on the and Czech markets, thriving Polish seeking a capital that is the amount of of investors. Debt home at the disposal increasingly available range finance is also Although a wide are for Hungary. and local investorsmore of international the country, the and at now active in German are actively looking for €45 mln. conservative institutional and institutionals However Eiffel Palace goes have still not returned office center albeit with caution.

Austrian investors economic A” income producing the Hungary, alternative to – from both an purpose “class international developer is does provide an the as uncertainty properties. The continues to by an on – Poland and investment Hungary searching for new stable and long and political perspective of an arms’ length proves that and yield premium cautious investors. of this fund is to focus on Korpás, subject transaction Republic.” deter these very and domestic an active market term investments,” said Eszter transaction. “The Skanska Czech great trust in at Erste Asset Both international Further, they require Budapest investors have Budapest Estate Fund Manager completed other interest in the that provides liquidity.estate office market Real investors have IVG Group has and increasing Zoltán Linczmayer, transactions. The to a The Budapest real up as Erste Open− Management. market,” commentedof Skanska Property office pick sqm Stefánia Park is continuing to Investment Fund has sold the 5,300 successful DEAL Managing Director investor after a of DEFINING Budapest office Hungary on the deal. end Real Estate private German the Hungarian sqm north wing defining summer operating in Hungary tender, and Eiffel Palace by been Hungary sold the acquired the 11,000 completed Vision In a Skanska has been Development has leasing and deal, Skanska Property office center Futureal’s recently National 1987 by developing,to investors. developer Horizon center. The complex, 17,800 sqm Green House Torony since by the Hungarian mln. product Towers office is purchased €45 út business corridor, Hungarian open−endedmanaged selling office Skanska deal (MNB) for a reported the Fund, located in the VáciAugust and preleased to the closing of the Michael Bank extending to in Real Estate Investment a member “The Hungary,” said the Interest is also was delivered significant for use as its Hungary a recent transaction Hungary. “The Diófa Fund Management, Bank was the to KPMG for retail sector. In Real Estate completed Partner at C&W yields for by FHB Group. Erste Prime office acquisition. Edwards, holding back, however to circa of the headquarters.

Netherlands’ ING 50% stake in partner in the institutionals are are now falling will open the of its remaining Budapest office and action can be felt financial is regarded as a significant a significant move by one the up the sale deal Hungarian activity is on 7.30%. “Movement investment market, so The recovery of the in that a door. In general, in step in the market on the Hungarian to opportunities property investment we are looking forward and we are continuously the near future

REAL ESTATE

BUSINESS JOURNAL BUDAPEST B

VOL. 22. NUMBER 20

HUF 1,250 | €5 | $6 | £3.5

OCTOBER 31, 2014 – NOVEMBER 13, 2014

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

NEWS

Tax plan not expected to hurt too much

Voting with their feet

While they noted that several of the measures contained therein are unorthodox, analysts said they didn’t expect a very negative impact from what we have seen of the proposed tax plan for 2015. Still they do expect other factors to slow GDP growth in the coming year.

03

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

NEWS

Diplomatic fracas over cooking oil When the U.S. decided to revoke the entry privileges of several Hungarians, it stirred strong words between officials from both countries.

While the issue is shrouded in secrecy, it appears to involve charges of corruption and Hungarian tax officials, who may have gotten burned in a long−simmering feud among vegetable oil firms.

06 BUSINESS

Here come the Emirates Photo: MTI: János Marjai

A proposal to start taxing internet traffic sparked two rapid demonstrations, in which tens of thousands made their displeasure with the government clear. 5

The first commercial flights of the Dubai−based Emirates Airline started in late October and will be regular from now on. At the same time, the airline launched a major call center in Budapest, their second such center in Europe and one that will serve nine countries.

08 SPECIAL REPORT

SOCIALITE

Hungarian property gives good yields

Have a lively time in a local cemetery

While other CEE countries may be more popular among investors, Hungary offers better returns than the more crowded markets like Poland and Czech Republic, according to analysts who surveyed the region.

14-15

All Saint’s Day is the time when Hungarians dress up the burial places of loved ones, lighting candles and making ordinarily beautiful cemeteries even more lovely places to visit. 27

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EDITOR-IN-CHIEF: Tom Popper ASSOCIATE EDITOR: Robin Marshall EDITORIAL STAFF:

Florence De Bruyere, Maria Fedorova, Aniko Fenyvesi, Gergely Herpai, Levente HörömpöliTóth, Christian Keszthelyi, Gabriella Lovas, Robin Marshall, Zsófia Végh, András Zsámboki LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES:

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THE EDITOR SAYS

Orthodox austerity might not be so bad As of this writing, the government was still finalizing its tax and budget plan. While the details may change, one thing seems sure: The plans will be unorthodox and will not involve austerity. Too bad. The current government loves to brag about its unorthodox policies, which have included renationalizing pensions, special taxes on various sectors and – though we don’t hear much about it – heavy reliance on EU funds. The government also likes to brag that it will never resort to the awful austerity that helped make its predecessors unpopular.

Judging by the mass street demonstrations, alternatives like an Internet tax are not the way to go.

Along with the eurozone crisis, problems caused by Russian sanctions and other external headaches, Hungary’s economy and its budget are still burdened by the dead weight that no government has had the courage to eliminate since communism.

In the 1990s, Poland went through the pain of getting rid of the

inefficient, overpriced government programs that had remained since socialism. Now Poland is one of the star economies of Europe. Like previous regimes, Hungary’s current Fidesz leadership will do almost anything to avoid telling the people the bad news: The government cannot afford to do everything that it used to do. An over−active state is too expensive, which is partly why the communist leadership walked away from power.

Instead of using their super majority in Parliament to push through unusual policies, Fidesz could take advantage of their politically powerful position to offer a workable solution. Passing more understandable and transparent taxes would encourage business. Abandoning ailing government programs that the state really can’t afford would be good for the country’s fiscal health Achieving both is simply a matter of having the courage to admit that boring, orthodoxy and unpleasant austerity are sometimes the best medicine.

The West is the obvious choice Some of the more extreme voices in Hungarian politics, unfortunately including among them high−ranking members of the ruling Fidesz party, are making noises about reconsidering our relationship with the European Union and the United States.

Through a situation not entirely of its own making, the government may soon be forced to announce a clear choice between Russia and the West. The decision is awkward but the choice is obvious. Perhaps things have changed since the Soviet era, when many Hungarians gave their lives trying to break free from Moscow’s dominance, but that does not mean that Russia’s current one−man government is an attractive partner.

While EU membership brings difficult budgeting responsibilities, it also brings the EU funding that has been propping up this economy.

Friendship with the U.S. means letting pushy multinationals complain about corruption, enduring Russian sanctions that hurt agriculture exports and risking higher gas prices. It also

brings a lot of business and NATO membership, which provides security from the kind of incursions and intrigue that are destabilizing Ukraine.

Reports suggest that Russia may be funding rightwing, Euro− skeptic parties, ranging from the Front National in France to Jobbik in Hungary. We see the Hungarian government arranging cozy gas deals and taking €10 billion credit lines for Russian firms to build new nuclear reactors, and it seems clear that the Russian government is romancing the Fidesz leadership too. But the government of Vladmir Putin is run for the benefit of a small powerful group at the expense of the rights and freedoms of the general populace.

It is unfortunate that the world situation is forcing our leadership to make a decision, and that Western demands for loyalty can seem downright arrogant. But the new Russia, run by one man, without transparency, is not a reasonable alternative.

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Tamás Botka CIRCULATION AND SUBSCRIPTIONS: circulation@bbj.hu

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Above is the Erzsébet híd, or Elizabeth Bridge, in 1946, when it was still in ruins about a year after being blown up by retreating Germans in the Battle of Budapest, near the end of WWII. At left is the bridge as it now.

For an even more recent picture of the bridge, check our cover page.

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1 News

NEWS

Internet tax sparks demos 05 NEWS

Corruption charges fly

06

macroscope

Analysts: Tax plan would have minor impact Although the overall effect of the government’s tax proposals is expected to be slightly negative, external factors are deemed more important.

The Budapest Business Journal presents some of the most important macro data of the past fortnight.

Year−on−year increase in retail sales in August, according to the KSH. Non−food sales were up 6.8% in the period.

7.4% Official unemployment rate between July and September, though those figures count “fostered workers” who work for the government for less than minimum wage as being employed.

Independent MP Zsuzsanna Szelényi speaks in Parliament on October 28 during discussions of the government’s proposed tax plan.

He said that the impact the sanctions have on Germany, and the resulting reduction of business there, will have a more significant impact on Hungary’s economy. Tóth says the Russia−Ukraine crisis might reduce Hungary’s GDP by a couple of tenths of a percent, and that the slowdown of the Eurozone, especially Germany’s economy could hurt the domestic economy more.

Further pessimism is warranted by a worsening economy in regions that are important for Hungary, and also by the disappointing macroeconomic figures of the domestic economy, including drops in industrial output, retail sales and exports.

Tóth also said that the foreign policy of the government could have negative effects on the economy, especially the recent tension between Hungary and the United States, sparked by the American blacklisting of six unnamed Hungarian officials.

American multinational corporation General Electric (GE) is present in numerous sectors in Hungary, employing more

than 13,000 people, and it is crucial for Hungary to maintain GE’s positive attitude towards the country, he said.

In terms of GDP growth, this year has been outstanding, according to Gabler, who said by the end of the year Hungary is expected to achieve 3.3% GDP growth. For the following year, J.P. Morgan recently downgraded the GDP outlook for Hungary from 2.5% to 2.2%, while both the Hungarian government and the National Bank of Hungary expects it to be 2.5%.

Tóth said that 2.5% is in line with the expectations for the global market, while Gabler said that Hungary could be satisfied with 2.3%.

The cabinet is expecting to see a state deficit of 2.4% and to reduce state debt to 75.4% by the end of this year. Gabler believes that the latter figure is an optimistic one, though not impossible. The main decisive factor will be the forint’s stance on the interbank market. He thinks the forint will strengthen this year, and will reach around 305 to the euro.

2.10%

Still the base lending rate in Hungary after the central bank’s Monetary Council met on October 28. The bank has been holding the rate since July.

HUF 14.2 bln Surplus of Hungary’s cashflow−based general government deficit, excluding local councils, in September. It was a good month, which helped the government narrow the gap to 85.8% of the target for the full year.

Source: KSH, MTI

WATCHING EXTERNAL FACTORS According to Gabler, taxes and the budget will not have as strong an impact as other external factors. He said Hungarian exports to Russia and Ukraine only account for 4% of GDP, so the sanctions do not have a strong direct impact.

Speaking X of figures

2.5%

CHRISTIAN KESZTHELYI

While the proposal for an Internet tax drew tens of thousands of demonstrators into the streets, analysts assessing the current tax proposals for 2015 say the impact of the whole package on the Hungarian economy would be mixed, and probably slightly negative.

Although Gergely Gabler, chief economist of Erste Bank Hungary, cautioned that it is still early to draw conclusions about the tax package, as the whole budget plan has not yet been published, he did say he thought the proposed Internet tax is a negative surprise. He maintained that it is strange, as it would generate HUF 20 billion in revenue for the state budget, far less than the special tax levied on the bank sector, which generated HUF 200 bln.

Buda Cash analyst Gergely Tóth told the Budapest Business Journal that as there are only negligible changes to the tax system, and as no major structural changes were made, its effect would hardly be earth shaking, though he did say that the unusual tax structure, such as the Internet tax, might weaken trust in the economy. In general, Tóth said, the so−called “unorthodox” policy of the government is unfavorable for businesses. The introduction of the Internet tax would place unexpected and significant burdens on companies in the telecommunication sector, while other companies might also encounter hardships as a result of many new taxes aimed at them.

On the spending side, Gabler said if Hungary acts upon its plans to increase military wages by 50%, it would increase disposable income, which could give a significant boost to the GDP as a result.

MACRO

WWW.BBJ.HU

04 News

Budapest Business Journal | October 31 – November 13, 2014

Businesses line up for €21.9 bln EU money pot There will be fewer tenders for government contracts as more EU Structural Funds go directly to businesses.

The race for European Union funds is on, as the first call for proposals to fund the export−related activities of Hungarian firms came out in early October. As a result of a recent partnership agreement, the Brussels money taps have opened in Hungary for the upcoming seven years. According to the deal, €21.9 billion will be available until 2020.

This amount is the equivalent of around one quarter of the country’s annual GDP. What’s more, EU money is behind much of the physical capital in this country: Up to 97% of all economic developments in Hungary during 2007− 2013 were carried out with the help of European Union Structural Funds, according to estimates.

In the 2014−2020 funding period, much more of the money will go to businesses, instead of being spent on big infrastructure projects.

Interest in this funding is abundant.

A survey conducted by KAVOSZ, a representative body of businesses, found that 71% of SMEs plan some sort of development in the near future and nearly half of those would like to acquire European funds for implementation.

While there is no guarantee of success, it seems clear that those firms chosen by the government for “strategic partnerships” are front−runners in the competition for EU money.

MORE FUNDS GO STRAIGHT TO FIRMS During the previous, 2007−2013 funding period, a whopping 74% of the funds were handled through government procurement, such as civil engineering construction projects. That system was open to abuse, and the EU has already investigated Hungary’s distribution and threatened to freeze funds in the last couple of years.

The problem with government procurement for EU−funded projects is “a practice of using inappropriate selection and evaluation methods to favor some bidders above others,” Dr. Aliz Szloboda from Transparency International Hungary told the Budapest Business Journal. “Some 50% of the tenders consist of only one bidder, and that, per se, signals the risk of corruption.”

Now, more money will go directly to businesses. “In 2007−2013 only 16% of Brussels resources were used directly by businesses for economic development. That figure will grow to 60% in the upcoming term,” the Information Department for Development Policy of the Prime Minister’s Office explained to the BBJ. MINISTRIES NOW EVALUATE APPLICATIONS

Photo: MTI: György Varga

LEVENTE HÖRÖMPÖLI-TÓTH

HOWDY PARTNER! From left are László Szabó, state secretary of the Ministry of Foreign Affairs and Trade, Johann Marihart, president of Agrana, and Kaposvár Mayor Károly Szita at the official signing ceremony for Agrana’s strategic partnership with the Hungarian government. Agrana, a multinational, owns Magyar Cukor Zrt., the last sugar factory in Hungary. As the table below shows, strategic partnerships, given to firms deemed important to the economy, are helpful in securing ministry approval for EU Structural Funds.

Total amount of EU grants Strategic Partner received 2007−2013 (million HUF) Bosch

7632

Delphi

3589

Linamar Hungary

3186

Teva

1784

Continental

1707

Phoenix Mecano

1579

IBM

1457

Egis

1433

Leier

822

Jabil

794

Coca−Cola HBC

707

Hankook

637

GE

503

Denso

405

Suzuki

403

Daimler

306

Knorr−Bremse

282

Waberer’s

269

Richter

214

Alcoa−Köfém

118

Lego

55

Heineken

44

Samsung Electronics

7

The other change is the way the money is handed out. NFÜ, the central agency for development that has been in charge of allocating EU funding for private sector applicants, will be gone as of January.

All control, including resource allocation and strategy making, will be shifted to ministry level. Thus, ministries will handle both professional control and financial supervision in terms of the operative programs in their relevant field.

The idea is that those making the decisions about granting funds should have more specialized expertise. For example, business development projects would be supervised and controlled by the Ministry of National Economy, but education−related projects would be the responsibility of the Ministry for Human Resources.

The government claims that central government officials work there under a more regulated and transparent scheme.

However, Miklós Ligeti, head of the legal department of TI Hungary stressed to the BBJ that transparency won’t necessarily increase just because funds−related administration is shifted to the ministries.

“While everybody talks about fraud at the implementation level, it is of far more importance how the areas eligible for funding are determined. That is the real hotbed for corruption,” Ligeti said. The Commission has identified 11 priority objectives, but member states have the discretion to name exact operative programs for funding purposes.

‘STRATEGIC PARTNERS’ FIRST IN LINE Another key factor in getting the grants may be a “strategic partnership”. In the last couple of years, the government has made a policy of declaring strategic partnership agreements with companies that government officials deem to be major players of the Hungarian economy. So far 40 such agreements have been made, and 23 of those businesses have been awarded EU grants – typically worth hundreds of millions of forints – through the Hungarian government in the 2007− 2013 budget period.

Since the first strategic partnership agreement dates back to July 2012, and most of the grants had been approved before, it cannot be claimed that the existence of such a commitment assured the green light for funding automatically.

Nonetheless, most of the firms chosen as strategic partners are firms that are active in investing in development, so they can be expected to go to the EU well again. When they do, it is likely that their grant applications will be successful.

LOANS AND VENTURE CAPITAL Non−refundable European Union funds are undoubtedly the most sought after. However, the 2014−2020 period will see an increasing amount of returnable funds. That is in line with the intended elevated use of other financial instruments such as loans and venture capital funds.

The fully state−owned Széchenyi Capital Investment Zrt. has HUF 14 bln at its disposal, of which 85% stems from EU sources. The rest comes from the state budget. So far HUF 5 bln has been allocated to 45 companies, but by the end of the year the aim is to hit the HUF 9 bln mark with 80 firms. Capital is granted at an expected annual return of 10−12%.

The Széchenyi funds may be combined with private VC. For example ÁERON, a clothing design company operating in New York, supplemented its funding from DayOne Capital with state VC. But other schemes are also popular. Under the New Széchenyi Loan, EU funds can be applied for at favorable terms, whereas the Széchenyi Card Program offers loans with subsidized interest. The national bank’s wonder weapon is NHP, a growth loan program that provides financing at 2.5% for up to ten years.

WWW.BBJ.HU

Budapest Business Journal | October 31 – November 13, 2014

News 05

100,000 march against Internet tax plan Government officials were surprised when a large cross−section of Hungarian society joined two mass demonstrations against the Internet tax, and many people expressed general frustration with the country’s leadership.

It happened so fast that even the organizers seemed surprised – and the government was obviously caught off guard.

On October 21, Economics Minister Mihály Varga announced that the 2015 spending plan would include a new tax of HUF 150 per downloaded gigabyte on Internet service providers (ISPs). By that evening work had begun on a Facebook page to organize a demonstration against the tax. By October 26, a crowd estimated at 30,00−40,000 gathered to demonstrate. By October 28, a second Crowds head for Erzsébet Bridge in the second demonstration. demonstration was held with a bigger crowd, which Reuters estimated at 100,000. Parallel demonstrations were the government keeps trying to control the tax, saying it would be capped at held around the country – including freedom of the press and free speech, and HUF 700 per month per home user and in Debrecen, Nyíregyháza, Szeged, a tax on the Internet was perceived by insisting that ISPs would pay it, not Miskolc, Győr and Pécs. many as an extension of this effort. consumers. But this was clearly not Within a week, a large anti−government The first demonstration had a slightly enough, and organizers went ahead with movement had formed – with no political younger crowd, who seemed more like the second demonstration. basis, simply a joint aversion to an the tech−savvy people who would care The loose−knit group of organizers Internet tax. But the shared dissatisfaction a lot about their Internet service, and promised that they are ready for another expressed by the marchers clearly went did end in some vandalism of the Fidesz demonstration on November 17, when beyond the tax. party headquarters.

Parliament is scheduled to have a final During both marches, there were The second demonstration seemed vote on the matter. frequent chants of “dictator!” and “Orbán, like a much broader cross−section of Except for cutting back its proposal clear out!”, referring to Prime Minister society, including many people who said for the Internet tax after the first Viktor Orbán. There were also many EU they voted for Fidesz in 2010 but had demonstration, the ruling Fidesz party flags and chants of “Europe! Europe!” to become disillusioned since Fidesz won has not demonstrated a cohesive reaction express solidarity with the rest of Europe the election and began to rewrite the to the strong opposition that seems to and anger over the feeling that the current constitution and dramatically reform the have surprised it. According to the Wall leadership is pulling away from the EU. country’s governance.

Street Journal, after the second protest, Aside from the Internet tax, a common After the first demonstration, the Antal Rogán, head of the governing complaint among demonstrators was that government dialed back its plans for Fidesz party’s parliamentary faction, said ADVERTISEMENT

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Photo: Amy Brouillette

BBJ STAFF

the Fidesz party is open to other opinions and welcomes constructive proposals, but others call change unlikely.

According to HVG and other media, the plan for an Internet tax was heavily favored by the Prime Minister and he did not want to back down. Now, analysts say, if Orbán does back down, he would look weak and indecisive.

Political scientist Zoltán Somogyi posted on his Facebook page that MSZP “collapsed after the introduction of a ‘vizitdíj’ [a fee patients were required to pay for every doctor’s visit] worth HUF 300” and Fidesz “will collapse after introducing an Internet tax worth of HUF 700.”

While it may be early to predict the collapse of the government, for now, it does seem to be scrambling for answers.

WWW.BBJ.HU

06 News

Budapest Business Journal | October 31 – November 13, 2014

Cooking oil may have fueled diplomatic row A testy exchange between the U.S. Embassy and Hungarian leaders appears to be at least partially rooted in a battle over control for the Hungarian vegetable oil market.

The news that the United States was banning six Hungarian officials from entry to the U.S. on charges of corruption led to a diplomatic fracas that apparently started when simmering tensions over the cooking oil business boiled over into something bigger.

While some of the conflict is veiled in secrecy, it seems that the issue grew out of a battle for control of the rape− seed oil trade – a battle pitting a U.S.− based multinational that dominates the local market against Hungarian firms that the Americans claim are able to undercut them because they can cheat on taxes.

On October 27, Economy Minister Mihály Varga reportedly told Parliament that Bunge – and two other U.S.−based food companies, Glencore and Cargill – are involved in the tax authority’s investigations of fraud by unnamed companies. Varga said that one of the American firms, presumably Bunge, sparked the investigation. He added that he would take assistance from the American Embassy, but they refuse to give it.

The row over the travel bans on unnamed officials comes as tensions were already rising between the Hungarian and American governments.

Now that the gloves are off, American officials are also complaining openly that the Hungarian government should more clearly back the EU’s sanctions on Russia. The speaker of the Parliament, László Köver, told reporters that America is trying to start a coup ADVERTISEMENT

André Goodfriend, charge d’affaires at the U.S. Embassy.

against this country’s government. In other apparent fallout, the head of the Hungarian tax authority has left the country, and had reportedly not been seen in public since as of press time.

BUNGE’S COMPLAINTS While the situation in the Ukraine and the Hungarian government’s “Opening to the East” policy probably put American and Hungarian interests on a collision course, it seems that at least some of the trouble has to do with Bunge. Since at least 2011, Bunge, maker of the market−leading vegetable oils Vénus and Floriol, has been complaining that its competitors have been able to avoid paying value added taxes. They said they found it very upsetting that the Hungarian tax service did not carry out harsh enough measures toward the VAT abusers.

Buff Greebe, head of Bunge’s local operations, said that VAT abuses were causing about €1 billion in damage annually to the Hungarian state.

Among the foodstuffs affected by VAT abuse, Greebe named vegetable oil,

sugar, coffee and meat. Of course he was most upset about vegetable oil makers who, Greebe alleged, were able to offer their products much cheaper because they avoided the 27% Hungarian VAT tax – the EU’s highest.

In November 2013, Hungarian tax official and whistleblower András Horváth went public with complaints of officials allowing certain food companies to avoid paying billions of forints in taxes. Horváth’s complaints went uninvestigated and he eventually left the tax service.

According to an October 20 report by index.hu, Bunge officials were allegedly approached by officials who said they could help the company either evade taxes or avoid a tax investigation if it agreed to make a large payment to a government−friendly foundation.

Official confirmation of any of this is not yet forthcoming. Bunge is not addressing this issue and the American Embassy says it is not its job to discuss the matter. According to an October 18 press release from the embassy: “Certain Hungarian individuals have

Photo: Attila Nemeth

ANDRÁS ZSÁMBOKI

been found ineligible to enter the United States as the result of credible information that those individuals are either engaging in or benefiting from corruption. This was a decision by the Department of State under the authority of Presidential Proclamation Number 7750 and its Anti−Kleptocracy Provision of January 12, 2004. Criminal proceedings are up to the host nation to pursue. U.S. privacy laws prohibit us from disclosing the names of the individuals involved.”

In fact, it appears that the story came to light because one of the people told by the embassy that they could not go to the U.S. complained of their plight to the Hungarian media.

While the list of the six banned people has been open to much speculation, one name that many sources agree on is Ildikó Vida, the head of the Hungarian tax authority NAV, who was spotted and taped by RTL TV reporters at an airport in Vienna around October 22 and has not made a public appearance since.

Some Hungarian officials are accusing the U.S. Government of false innuendo, saying that this is really a slander of the Hungarian Government cooked up because the Americans are angry with Hungary’s opposition to Russian sanctions.

André Goodfriend – charge d’affaires at the U.S. Embassy and America’s highest−ranking local representative while politics back in Washington prevent the appointment of a full ambassador – has since been coming out in the open with criticism of the Hungarian government.

It would seem that the timing is in part coincidence: Hungarian Prime Minister Viktor Orbán is a lone voice in the EU opposing Russian sanctions, he has been cooperating with Russians on gas pipeline actions, to Ukraine’s detriment, and he came out against liberal democracies this summer – so open U.S. criticism of him was to be expected soon. But it would also seem that the charges of corruption, which the U.S. Embassy apparently was not planning to publicize, have pushed tensions out in the open. And now it may be a while before things simmer down.

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News 07

NEWS

IN BRIEF NAVRACSICS FINALLY MADE EUROPEAN COMMISSIONER Tibor Navracsics, the Hungarian nominee for a European commissioner’s portfolio, was appointed commissioner for culture, education, youth and sport, Jean−Claude Juncker, the European Commission’s president, announced at a plenary session of the European Parliament on October 22. Navracsics was deprived of the citizenship portfolio in the new European Commission, as other MEPs demanded Juncker not assign the portfolio to a former member of the government of Hungary’s Prime Minister Viktor Orbán, who is directly responsible for the non−observance of civil rights and fundamental freedoms, according to international media outlets, Sofia News Agency novinite.com reported, citing Bulgarian National Radio.

Greek Commissioner Dimitris Avramopulos will receive the citizenship portfolio. “I have decided to place citizenship under the responsibility of Dimitris Avramopoulos commissioner in charge of migration and home affairs – issues, very close to the heart of Europe’s citizens – who

will work in close cooperation on this matter with justice and consumers commissioner Vera Jourova. I wish at the same time to reiterate my confidence and trust in Tibor Navracsics who performed excellently in his hearing and demonstrated a strong European commitment – which is why you considered him qualified as commissioner,” Juncker was quoted as saying by the EC press office.

REPORT: AUDI SLOWDOWN WAS MESSAGE TO HUNGARY When German carmaker Audi stopped work at its plant in Győr in August, sending Hungary’s production numbers into a tailspin, it was Germany flexing its economic muscle in response to Chancellor Angela Merkel’s dissatisfaction with Hungary’s government – dissatisfaction she discussed with Prime Minister Viktor Orbán in talks this month, hvg.hu reported. The news portal also said that the pressure from Merkel was coordinated with pressure from the U.S., which recently revoked the visas of six Hungarians. According

to reports, the head of Hungary’s tax office and two other officials were among those told they could not enter the United States. When they met in Milan around October 9, Merkel warned Orbán to be careful with the handling of EU funds and drew the prime minister’s attention to the importance of Western ties for Hungary, according to the hvg.hu report. The report also said that German and U.S. officials had apparently been discussing problems of corruption in Hungary for some time.

According to hvg.hu, the slowdown at the Audi plant seemed like an aberration, because there is usually a warning before such an event and because there was not such a dramatic drop in Audi’s sales. The news portal also claimed to have information that the slowdown was meant to show Hungary’s government how important Germany is to this country’s economy. The Hungarian government has been pointing to increased production as a sign of its success, and Hungary posted some of its worst production numbers in months after the slowdown. The article by hvg.hu speculates that the American dissatisfaction with Hungary built up over what would appear to be pro−Russian diplomacy from this country, including a decision to shut off the gas pipeline to Ukraine.

MNB KEEPS RATES ON HOLD The National Bank of Hungary’s (MNB) rate− setting Monetary Council decided to leave the central bank’s key rate unchanged at 2.1%, in line with expectations, Hungarian news agency MTI reported on October 28. Following a rate−setting meeting in July, the Council said it had completed an easing cycle started two years earlier.

JP MORGAN CUTS GDP FORECAST FOR HUNGARY, CEE Hungary’s economy, along with those of its Central and Eastern European peers, is facing a slowdown in the headwind of a struggling eurozone and the Ukraine−Russia crisis, London−based emerging markets economists said on October 27. In a markedly revised update released to investors in London, JP Morgan said that downward revisions to its euro area and emerging markets growth forecasts have prompted it to lower its GDP growth forecasts for Central Europe. It said it has shaved off 1 percentage point from its average GDP growth forecasts for the third quarter of this year for the CEE region, including Hungary, due in part to the “unexpected collapse” in the August industrial production data. The firm also reduced its regional forecast for the first half of 2015 by 0.5 percentage points on average.

JP Morgan now expects Hungary’s economy to expand at a rate of 2.2% in 2015 against its previous forecast of 2.5%. “Idiosyncratic factors plus lower 2015 oil price assumptions have spurred the changes, mostly downward, in our EMEA EM 2015 growth forecasts [...]

Although Central European countries are net energy importers and will benefit from lower oil prices, weaker growth in the euro area and Russia will dampen demand for CEE exports.”

The deceleration in Chinese growth will also contribute to weaker export growth, mainly indirectly. “The regional slowdown, in our view, has [also] been related to the direct and indirect negative spillovers from the Russia− Ukraine crisis, which we now expect to remain unresolved through 2015,” JP Morgan’s London−based economists said.

PROMOTION

Allergy Advice

slackens after a few weeks of medication according to clinical research. There is no exception, wherever in the world, whatever the medicine and whoever the group of patients – we get negligent with At least half the population in the developed world can be the course and forget to take the pills,” Dr. tested for some form of protein intolerance, which is the Nékám warns of the human factor. gateway to more severe symptoms of allergy.

Perhaps the most patient-friendly solution is immune therapy – such as Allergies are classified into six different noticeably,” says Prof. Dr. Kristóf Nékám, pollen extraction administered under the types: we can differentiate between allergologist and immunologist at Dr. Rose tongue with a drop dispenser – although respiratory, dermatological, pharmaceutical, Private Hospital. it usually takes months or even years to systemic (or combined), and job-related Sometimes the allergic response to take notieceable effect. allergies. The large scope and diversity pollens or nuts, for example, subsides “Alternative medicine and naturopathy of symptoms means that each of us is without treatment. Should the allergy have their own popular protocols. None likely to experience some form of allergic linger on, it is better to avoid the allergen the less, their effectiveness is rarely reaction at one point in our lives. altogether. “It is quite demanding of the proven by scientific methods,” says the What brings it on? Genetic disposition patient, time consuming and hard on your expert. “Having said that, some of these certainly plays a role, however, recent wallet – take a gluten free diet for example alternative methods – the likes of salt medical research suggests that – and not always successful,” explains chambers, phytotherapy, acupuncture environmental conditions and lifestyle are professor Nékám. and respiration therapy – may provide the main culprits.

In more persistent cases one might effective relief in specific cases. In my “Changing your lifestyle is unfortunately resort to medicine. “Administering the experience, it is worth complementing not a surefire cure for your allergy, although right medicine when the allergens – medical treatment with the right it has been proven beyond doubt that pollen, fungus or mite – are present naturopathic remedies for the best result.” giving up smoking and leading an active, can prove effective, albeit the so called Dr. Nékám points out the importance of sporty lifestyle mitigate the symptoms ‘therapeutic discipline’ of patients always prevention. If allergy is obviously running

in the family, mothers-to-be are advised to watch their weight gain during pregnancy, especially in the last trimester. Babies of overweight mothers are most likely to develop asthma in their childhood. The timing of conception and birth is not easy to pinpoint ahead, even with careful family planning. All the same, if you are worried about allergy try to avoid the season with high pollen concentration: between July and September.

Good to Know Honoring his achievements in the field of allergology and immunology, as well as his social activities as the founding chairman of the Hungarian Allergy Association, Professor Nékám has recently been decorated with the Order of Merit Commander’s Cross, one of the most prestigious civilian badges awarded by the state in Hungary for outstanding professional endeavors. The entire staff of Dr. Rose Private Hospital is proud to have Dr. Nékám on our team.

TEL: (+36) 1 377-6737 WEB: www.drrose.hu ADDRESS: Széchenyi square 7/8, 1051 Budapest

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

Budapest Business Journal | October 31 – November 13, 2014

BBJ

2Business Emirates set up base in Budapest, launches daily route The first commercial flight of the Dubai-based Emirates airline landed in Budapest on October 27, and launched its first daily flight between Budapest and Dubai on October 28.

The route is operated by an Airbus A330-200 aircraft with enough room for 276 passengers, with cargo of up to 12 tons. Emirates’ commercial deputy

CEO Thierry Antinori said capacity of the flights is expected to be upgraded in the future on growing demand.

On the same day as it launching the first flight, the airline opened a call and client service center in Budapest. Representatives of Emirates said at the inauguration that the center is their second in

COMPANY NEWS

MTEL BOOSTS 4G COVERAGE TO 73%, TARGETS 93% Magyar Telekom, the Hungarian subsidiary of German giant Deutsche Telekom, will boost the coverage rate of its fourth−generation (4G) mobile network from 53% to 73%, when the company launches frequencies it purchased at a recent tender, CEO Christopher Mattheisen said at a press conference on October 17.

With the use of the new frequencies MTel is connecting 450 4G base stations to the network at midnight on Friday, providing their subscribers with data transfer speeds up to 150 Mbps, the CEO said. By the end of 2015, the 4G−coverage rate is expected to reach 93%, he added. National Media and Infocommunications Authority (NMHH) head Mónika Karas presented the CEO with the frequency licenses at the press conference.

MTel announced in September that it would pay HUF 58.7 bln for the frequency packages and capitalize HUF 36.8 bln for the present value of the future annual band fees related to the frequencies.

INVITEL DEVELOPING NETWORK Invitel continues the implementation of its large−scale development program launched in 2012, worth close to HUF 4.5 bln, the company announced. The purpose of the development is to offer high−quality services to as many subscribers as possible, using the latest fiber and microwave technologies (targeted at businesses). Entering a new stage, high−quality services will become available for tens of thousands more households across 18 towns and cities in Hungary, increasing broadband coverage by three−and−a−half times.

Invitel is introducing broadband technology and the benefits offered by higher−quality interactive, digital CATV and IPTV, the 21 HD channels currently available or Internet that’s much faster than previously available, to another close to 25,000 households, on top of the 323,000 households upgraded earlier. By the end of the year the number of households covered by broadband technology will exceed 410,000, Invitel added. The company is also expected to build ten new head stations with microwave technology by March 2015 to cover Budapest and

Europe, following Manchester in the UK, and the seventh globally. As in Manchester, the Budapest center is expected to serve nine countries, initially receiving only calls for reservations. The Budapest center opened with 30 employees, with the airline planning to raise headcount to 300 within one year.

parts of larger towns and cities densely populated by businesses, thereby adding wider coverage to services already available.

AUDI HUNGÁRIA TO PRODUCE TT ROADSTER German car producer Audi is launching production of its third−generation TT Roadster models at its plant in Hungary, located in Győr, early in November, Audi Hungária Motor announced today. Production of the new models

Parliamentary state secretary at Hungary’s foreign affairs and trade ministry, László Szabó, said at the opening that the Budapest center and the launch of a direct Budapest-Dubai flight showed that the government’s “strategy of Eastern Opening is starting to work”.

is officially scheduled for November 5. The Hungarian unit declined to reveal the exact number of planned cars to roll out. However, Audi Hungária stated that the plant would continue to operate in three shifts at full capacity, to produce multiples of last year’s output of over 40,000 cars. Last March, managing director of Audi Hungaria Motor Thomas Faustmann expected to triple output, saying that the next− generation TT Coupe would account for about 10% of the total output.

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BBJ

3Special Report Real Estate

Improving investment climate The property market in Hungary is finally showing some life after the long slow period that followed the economic downturn of 2008.

DAVID LAWRENCE

A combination of improving economic indicators and more favorable investor sentiment is strengthening the real estate investment market in Hungary after an extended slump following the economic downturn and eurozone crisis.

This is reflected in figures released by consultants that indicate growth in commercial property investment volume as transactions are being concluded in all markets sectors. For the first three quarters of the year, €440 million in investment volume was recorded according to JLL. Hungary still, however, lags behind Poland and the Czech Republic, where the figures were €1,930 mln and €1,050 mln respectively for the same time period. CBRE have recorded a 126% year−on−year rise in investment activity to €396 mln for the first three quarters.

In addition to the improving macroeconomic environment, increasing investment activity is attributed to such factors as the comparatively inexpensive products on the market compared to the thriving Polish and Czech markets, and the amount of capital that is seeking a home at the disposal of investors. Debt finance is also increasingly available for Hungary. Although a wide range of international and local investors are now active in the country, the more conservative institutional German and Austrian investors have still not returned as uncertainty from both an economic and political perspective continues to deter these very cautious investors.

Further, they require an active market that provides liquidity.

The Budapest real estate office market is continuing to pick up as Erste Open− end Real Estate Investment Fund has acquired the 11,000 sqm north wing of Futureal’s recently completed Vision Towers office center. The complex, located in the Váci út business corridor, was delivered in August and preleased to KPMG for use as its Hungary headquarters. Prime office yields for Budapest office are now falling to circa 7.30%. “Movement and action can be felt on the Hungarian investment market, so we are looking forward to opportunities in the near future and we are continuously

Eiffel Palace goes for €45 mln.

searching for new properties. The purpose of this fund is to focus on stable and long term investments,” said Eszter Korpás, Real Estate Fund Manager at Erste Asset Management.

DEFINING DEAL In a defining summer Budapest office deal, Skanska Property Hungary sold the 17,800 sqm Green House office center to the Hungarian open−ended Torony Real Estate Investment Fund, managed

by Diófa Fund Management, a member of the FHB Group. Erste Bank was the financial partner in the acquisition.

The deal is regarded as a significant step in the recovery of the Hungarian property investment market in that a

“class A” income producing office center by an international developer is the subject of an arms’ length investment transaction. “The transaction proves that investors have great trust in Skanska and increasing interest in the Budapest market,” commented Zoltán Linczmayer, Managing Director of Skanska Property Hungary on the deal.

Skanska has been operating in Hungary since 1987 by developing, leasing and selling office product to investors.

“The closing of the Skanska deal is significant for Hungary,” said Michael Edwards, Partner at C&W Hungary. “The institutionals are holding back, however a significant move by one will open the door. In general, activity is on the up

and institutionals are actively looking at Hungary, albeit with caution. However Hungary does provide an alternative to – and yield premium on – Poland and the Czech Republic.”

Both international and domestic investors have completed other Budapest office transactions. The IVG Group has sold the 5,300 sqm Stefánia Park to a private German investor after a successful tender, and Eiffel Palace by the Hungarian developer Horizon Development has been purchased by the Hungarian National Bank (MNB) for a reported €45 mln.

Interest is also extending to the retail sector. In a recent transaction the Netherlands’ ING Real Estate completed the sale of its remaining 50% stake in

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Budapest Business Journal | October 31 – November 13, 2014

HOT PROPERTIES: Clockwise from this photo: MOM Park, Office Garden, Stefánia Park and Vision Tower.

the 47,000 sqm Allee shopping center in Budapest to the Nationale−Nederlanden fund for a reported €95 mln. The German investor, Allianz Real Estate has already bought a 50% share in the leading Budapest retail center for €100 mln. In the logistics sector, Blackstone acquired the Tulipan logistics park for Logicor, its European logistics platform. JLL put prime shopping center yields at 7.25% compared to 9.25% for logistics centers.

This is a significant development in that Hungary is now included in regional logistics portfolio acquisitions. In the hotel sector, the Dubai−based Al Habtoor Group has purchased the Intercontinental Hotel in Budapest. The group, which is active in hotel and hospitality development, bought the Le Meridien Hotel in Budapest in 2012.

POSSIBILITIES With regard to possibilities on the market, the portfolio owned by the German investor, AEW Europe (the 27,000 sqm MOM Park consisting of 30,000 sqm of retail and 20,000 sqm of office space, the 27,000 sqm WestEnd Business Center

Hungary does provide an alternative to – and yield premium on – Poland and the Czech Republic. and the 13,000 sqm MKE office center) is available to investors. Other office developments available are Office Garden and the Mosaic office portfolio consisting of three small office centers. “Investors are looking at Budapest rents and capital values and conclude that they have got to be close to bottom. Budapest was the first city where a market was established before Prague and Warsaw and they consider that it is probably a good time to look very selectively at prime product, despite the political difficulties,” commented Troy Javaher, Head of CEE Capital Markets at JLL.

Opinions differ as to when deals will be concluded with German and Austrian institutionals. Interest from institutional investors is picking up for Hungarian assets but some commentators do not anticipate enquires translating into successful transactions. It is more likely they will be in a second wave of investors following the closing of a number of large deals. “We see large private equity investors, Anglo Saxon money, private and Middle Eastern investors active in Hungary. Missing are the German and Austrian investors. The German funds are sensitive to liquidity and will only become

active when others have returned to the market,” said Benjamin Perez−Ellischewitz, Head of Capital Markets at JLL. Local investors have noticeably increased their activity and 2014 will be the first year on record when Hungarians outperform all other nationalities on the purchaser side.

“This is quite a remarkable phenomenon in a market which had been driven exclusively by foreigner investors in the past,” concluded Tim O’Sullivan, Head of Capital Markets at CBRE Hungary. “CBRE expect international investor interest for Hungarian assets will increase once again, as investors turn their attention to Hungary as core assets come to the market. More foreign money will find a home in Hungary over the next 12 to 18 months and therefore the share of international buyers, will increase again at the cost of local investors.”

O’Sullivan estimates a value of up to €300 mln in due diligence that could still transact in 2014. Based on this estimation, investment volume could reach €600−650 mln in 2014, a 135% increase on last year and close to the level registered in 2011.

Confidence is seen as growing, and 2015 is expected to be an even better year.

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Budapest Business Journal | October 31 – November 13, 2014

Transparency and efficiency Pál Baross, FRICS, developer of the Allee shopping mall, and former Hungarian chairman of the Royal Institution of Chartered Surveyors (RICS) was appointed Chairman of the Budapest Municipality’s Real Estate Holding (BFVK) in 2010. The organization Baross heads is in charge of handling properties belonging to the city. For someone who spent a career in private real estate, taking up local government was a significant change, as he explains in this exclusive interview with the Budapest Business Journal.

ANDRÁS ZSÁMBOKI

Q

Can you elaborate on some of BFVK’s more controversial real estate decisions in the last four years?

A: Clearly the CET/Bálna project attracted the most intense media and political interest. This landmark architecture was positioned as a commercial undertaking

in a PPP structure. The problem with the “Hungarian approach to PPP” is that it puts all the commercial risks on the public sector. For someone like me, with an extensive commercial real estate practice, it was evident that the project was designed to get the development money out fast (for the private party) and leave the money−losing exploitation of the project to the municipality.

Less controversial, though it still attracted much media attention, was the

Pál Baross.

sale of a number of cinema properties in the Budapest Film portfolio. Supporting “art movies” was part of the cultural mission of the municipality, but it became

evident that there was a decline in attendance and 500,000 art moviegoers yearly was an ambitious target in the context of multiplex offerings. So we

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to international practices, “institutional real estate”, “company real estate”, “commercial real estate” and “surplus real estate”. The policy declared that the main priority is delivery of the most appropriate real estate solutions for supporting municipal services, be they institutions or be they companies. The commercial portfolio should be managed in the context of market conditions, including decisions to disinvest. The “surplus real estate” had to be tested in the context of alternative use, long−term urban development strategy and the prospects of the real estate market.

and the only improvement thus far is a strategic plan for the housing sector, which was accepted by Budapest General Assembly in the summer of 2014. When implemented, the housing stock will also be allocated to the “four quarters”.

Budapest Business Journal | October 31 – November 13, 2014

selected a “core cinema house portfolio” and the rest were offered for sale – with cultural/educational content in use. I think the best deal from this strategy was the tender that created a new life for the ÁTRIUM Mozi.

Q

How has the municipality’s asset management changed in the last four years?

A: In fact, in 2010 I had two simultaneous appointments, I started to work in the cabinet of the deputy mayor responsible for finance and asset management, and as chairman of the asset management company. This allowed a twin−track approach to impact on the decision making about public real estate. In the cabinet we developed the regulatory framework and in the BFVK streamlined the operational performance of managing the real estate assets.

In the beginning we started with a “big bang”, merging the facility management and the asset management companies of the municipality into one. This provided some 20% savings in costs and an opportunity for a seamless operation from asset registration to tenant records, rent collection and handling maintenance. We moved from rented offices to our own, which also reduced our occupational costs.

Q

Is BFVK now a less bureaucratic and more proactive organization?

A: It took me sometime to understand the “public” (and therefore ADVERTISEMENT

bureaucratic) and “private” (and therefore businesslike) sphere of the organization. I think that there were lots of improvements that we could make over the last four years in the business operation of the company, such as clear organizational structure, the adaptation of the asset register, improvements in real estate valuation, data management, property inspection, and the like.

You could call these improvements in business processes. But the company cannot make asset decisions, such as what to buy, what to sell, to whom it can rent, and at what price. Such decisions are delegated to the public sphere, the asset committee or the general assembly of Budapest Municipality.

And before these decisions get to the committee level, the relevant municipal administrative departments, often six to ten bureaucratic units, vet them. This can be a frustrating process. Yet one has to acknowledge that this is an essential part of transparency and legality.

Q

But you worked “inside” in the cabinet and “outside” in the asset company.

Were you able to streamline the public and business decisions?

A: Yes, the opportunity came in my cabinet position to develop through the public sphere a new Municipal Asset Management Strategy that gave a clear policy framework as to how to handle the “four quarters” of public real estate asset portfolios. These were, with reference

Q

Public rental housing is almost non−existent in Budapest. Could you improve anything here?

A: This is a sore point. As a real estate professional, I am aware that in big cities the housing segment is 50−60% in private home ownership, 20−30% in private rental and another 20−30% is in public rental. In Budapest around 90% is in private home ownership and the public rental sector is around 5−7%.

Budapest Municipality owns about 1,200 dwellings, about 0.002% of the stock! This offers no leverage for housing policy. On top of that, these units were nominally owned by the municipality, but managed by a variety of institutions, companies, and administrative units. BFVK was to look after some of them as a facility management company but had no access to the rental revenue. I inherited a mess

Q

As an active lecturer and speaker at conferences you promote an active public role in urban development, collaboration with the private sector, the discredited PPP structure. Could an asset management company such as BFVK play a role?

A: One of my favorite anecdotes from my “first 100 days” in the public sector is that I put forward a possible development project with a note that there were “some commercial risks” in the course of realization. One of the department heads discretely called me up for a cup of coffee and advised me “Pál, in this place you go to jail for taking risks”. The project was deleted from the agenda. Yet in the course of the last four years, BFVK played a developmental role, not by undertaking development risks but by removing development risks from the utilization of public land holdings. Unfortunately BFVK’s land holdings in the “surplus” quadrant are too miniscule to make a marked impact on Budapest’s development trajectory.

However this may change in the future, if it receives the guardianship of all the surplus land holdings along the Danube’s embankment.

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Budapest Business Journal | October 31 – November 13, 2014

Strong year predicted for CEE investment market Poland is likely to continue to dominate in terms of volume, but Romania is offering higher yields, and Hungarian property also pays well.

DAVID LAWRENCE

Central European investment volumes are increasing as yields are continuing to compress. This increase in investment activity is expected to continue into 2015 with a combination of low interest rates and a significant amount of investors looking for a home for their equity. Although the Polish and Czech markets are continuing to thrive, research from consultants indicates that investors are again considering Hungary and Romania, as competition for limited product is increasing in the other two countries. Both Hungary and Romania provide a yield premium as the different market sectors are viewed as being at the low end of their development cycles. Retail is generally regarded as the investment market sector showing the most promise into 2015.

But it is expected to remain second to office with regard to the volume of deals, although ahead of the improving industrial sector.

The Polish investment market is continuing to dominate CEE as investment volumes for 2014 are expected to top €4 billion for the year, the highest volume since 2006. More than €2 bln in volume is predicted for the Czech Republic. Romania, the second largest EU country from the region after Poland, is finally regaining its status as an investment destination and 2014 is expected to set a new post−2008 economic crisis investment volume benchmark. That said, institutional investors have still not entered Romania.

PROVINCIAL POLAND Activity in the booming Polish investment market is not confined to Warsaw as the country is attracting investors to regional cities, not only for retail and industrial

Eurovea shopping center in Bratislava.

product but also for office. In a recent deal, Starwood Capital Group purchased three office developments from Ghelamco. The 78,000 sqm “class A” portfolio consists of Katowice Business Park in Silesia and the T−Mobile Office Park and Lopuszanska Business Park, both in Warsaw. “Improving business conditions and easing credit conditions are likely to support an increase in investment in Poland,” commented Keegan Viscius, Vice−President of Starwood Capital Group on the deal.

The Polish investment fund, Octava FIZAN, has acquired a 48,000 sqm office portfolio consisting of six assets across five cities in Poland. The portfolio consists of FDS Plaza and Light House in Warsaw, Quattro Forum in Wroclaw, Winogrady Business Center in Poznan, Red Tower in Lodz and Alfa Plaza in Tri−City. The deal reflects continued investor appetite for offices in Poland from prime to secondary/ value−add product in both Warsaw and increasingly in regional cities. Also outside

the capital in Wroclaw, GLL has bought Green Day from Skanska for €44 million.

PRAGUE UPTURN The Prague office market is also active after a two year downturn. One of the largest transactions in Prague in the first half year was the purchase of City Tower office center

by PPF Real Estate for €130 mln. In another deal, HB Reavis Group sold the 19,500 sqm River Garden Office I to the Czech investor Prvý realitný fond (PRF), for a reported €50 mln plus. “The Czech Republic is back on the investment map, which was not the case two years ago. Although Prague offices will be the highest in terms of volume, retail will be more regional and logistics will be both around Prague and regional,” said Tewif Sabonyui, Managing Director of JLL in the Czech Republic.

BUCHAREST BOOM Office was the dominant sector in deals in Romania in the first half year as it accounted

for 80% of deals. The largest transaction was the acquisition by Globalworth of the BOB and BOC office buildings in Bucharest in addition to 446 apartments and 25 retail units in an adjacent project from RREEF for €210 mln. Globalworth also purchased Tower Center International in Bucharest for €58 mln. The international investor is focusing its activity on Romania.

SHOPPING THERAPY JLL put prime office yields for Warsaw and Prague at 6% compared to 7.3% for Budapest and 8% for Bucharest. This compares to prime shopping center yields of 5.5% for Poland, 6% for Czech, 7.25% for Hungary, and 8% for Romania.

Consumer spending growth forecasts for Central Europe and prices for quality retail schemes are increasing and demand is spreading from the capitals to regional cities. This is causing sellers and owners to consider bringing retail centers to the market and significant activity is expected

CASE STUDY

NEW LEASES AND RENEWALS IN BUILDINGS OF S IMMO HUNGARY S IMMO Hungary - one of the major players on the Budapest real estate market - is enjoying the results of its efforts and investments of recent years. More than 9,000 sqm of office space have been let to new tenants in the buildings owned and managed by the group. Moreover, satisfied tenants extended their contracts on another 7,000 sqm. The refurbishment of office buildings is on-going: offices and common areas were remodelled in several buildings, and HVAC systems are being upgraded.

It is for good reason that numerous enterprises and institutions have been loyal to S IMMO for many years. In fact, some of them for more than 20 years: S IMMO Hungary is committed to investing in its buildings. Several refurbishment and renovation works were started in 2013. This year, aesthetic refurbishment and the renewal of public spaces are being performed throughout the portfolio, and the renovation of the buildings will continue in 2015 as well.

The goal of the improvements is to keep pace with the office requirements of the 21st century: environmentally conscious considerations are implemented while modernizing the main engineering systems and in the course of aesthetic

TWIN CENTER IS FULLY LET Twin Center office building was fully let to the Hungarian Office of Immigration and Nationality, which now has more than 6,500 sqm of office space and 1,000 sqm of storage space at its disposal.

S IMMO Hungary’s other office properties in Budapest have also achieved good interim results: in 2014 lease agreements on more than 7,000 sqm have been extended in total to date and contracts were concluded with new tenants for more than 9,000 sqm.

refurbishments. Selective waste collection and bicycle racks, as well as showers and changing rooms are available in all office buildings.

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

13 YEARS OF SUCCESS AT S IMMO HUNGARY The Vienna-based S IMMO AG has now been operating for more than 13 years in the domestic real estate market, its Hungarian subsidiary, S IMMO Hungary manages close to 100,000 sqm of commercial property, including centrally located office buildings in Pest and Buda (River Estates, Pódium, Buda Center, City Center, Maros BC, Twin Center and the Blue Cube which was selected as the Office Building of 2013), as well as the Budapest Marriott Hotel. www.simmoag.hu

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Budapest Business Journal | October 31 – November 13, 2014

A need for better financing Csaba Zeley, Director of Asset Management at ConvergenCE, talks about the outlook for the property market in Budapest, and Hungary.

BBJ STAFF

T-Mobile Office Park in Warsaw.

in the next 12 months. Investors on their part are widening their search net in terms of quality and geography. The biggest recent investment deal for Central Europe was the acquisition of the Eurovea shopping center in Bratislava by the Slovak J&T Real Estate from Ballymore Properties.

In Poland, TriGranit, Europa Capital and PKP sold the 60,000 sqm Poznan City Center retail complex to a consortium of ECE and Resolution fund. “Core investors are looking at Poland and Czech for prime, landmark shopping centers, viewed to offer better value against other core European countries, whilst the regional cities across both countries have opened up with a significant shift of core and value−add capital towards this sector,” said James Chapman, Head of CEE Capital Markets at C&W. “Prime shopping centers in Hungary and Slovakia are also back on the radar for investors searching for stock.”

LOGISTICALLY SPEAKING In addition to retail, the logistics sector is attracting investors with a number of CEE portfolio deals. In one of the biggest transactions of the year, the U.S.−based Blackstone has acquired the 200,000 sqm Standard Life Poland logistics portfolio for €118 mln. Standard Life made the purchase through its European logistics platform, Logicor. Industrial yields are put at 7% for Poland and Czech, compared to 9.25% for Hungary.

HOTEL INVESTMENTS Outside the more traditional investment sectors, the hotel investment market has

been active. This year has seen the sale of the Four Seasons Hotel in Prague to Northwood for a reported €80 mln. Further hotel transactions are expected to close this year in Prague. According to C&W it makes more sense to buy an existing trading hotel rather than build a new one, simply because of the property prices that are still below replacement costs.

Income−producing products are available in SEE and investment deals are expected to be concluded. There is a lot of interest in Serbia, but people do not know how to access product in the country.

Further east, no investment deals have been concluded in Ukraine this year and investment has fallen by 49% year− on−year in Russia due to political and economic concerns.

“What we have started to see is investors looking at Budapest and Bucharest,” concluded Troy Javaher, Head of CEE Capital Markets at JLL. “I was hoping this would happen a year ago but it did not.

Budapest was the first city where a market was established before Prague and Warsaw and they consider that it is probably a good time to look very selectively at prime product despite the political difficulties.

Investors feel comfortable with Hungary because of the past, and feel comfortable with Romania because of the future and they are looking forward.”

JLL predicts that with the last quarter of the year traditionally being one of the busiest periods, and with a number of deals at an advanced stage, then CEE 2014 investment volume could reach €6−7 bln. If achieved, this would be the highest level since the economic downturn.

Country

Q2−Q3 2014 Volumes (€ millions)

Poland

1,930

Czech Republic

1,050

Romania

510

Hungary

440

Slovakia

374

Other CEE

275

Source: JLL

Q

Assuming the Hungarian market has reached a level of “maturity”, in which sectors and locations do you see further development opportunities?

A: I believe that the Hungarian market has definitely reached a certain level of maturity.

What I expect as a next step of development is a “wave” of modern office buildings in large cities in the countryside, such as Győr, Székesfehérvár, Debrecen and Szeged.

These cities have always lacked modern developments since the Hungarian market is currently very focused on the capital.

Q

How does the quality of new office stock compare to product in Poland, Czech and Western Europe?

A: I am glad to say that we are equal in this regard to the Polish and Czech markets and not significantly behind Western cities.

Now that the market is very dry with regard to new supply, the question is whether the first− and second−generation buildings can be refurbished to meet these standards.

Csaba Zeley

be followed by international buyers as well, who will recognize that the yield difference compared to Poland is less than the country risk, if any. This will be a clear proof of this sentiment change. I expect a significant compression of yields compared to recent transactions seen in Hungary.

Q

Is there enough investment grade product to meet the demands of international investors?

A: The Hungarian office market is still not a big market, because of the weak supply in the last couple of years there is a lack of true grade “A” or “trophy” products, not just from a leasing perspective, but also from an investment point of view. I assume that after the “trophies” are traded, the next wave will be products that have development, stabilization or refurbishment/ re−positioning potential.

Q

Q

Q

Q Q

How important is green and sustainability accreditation for tenants, lenders and investors in a project?

A: It is getting ever more important for both tenants and investors. It is also important for lenders, as long as it is a concern for tenants and investors. It started as a “box− ticking” exercise a couple of years ago, but today many corporates have an interest in moving to buildings which are not just built but also operated on a daily basis in a green way. Investors now consider green certification as a must and it would potentially put their exit strategy at risk if a building lacked an internationally recognized green accreditation.

How central is this in the planning of your own projects?

A: The sooner someone starts thinking green when starting a development, the better and, of course, the easier and cheaper. The criteria of a green certificate are significantly easier to meet if a developer takes them into consideration from the very early days of planning.

Q

How do you see the investment climate in Hungary changing in the coming year? Is sentiment towards Hungary improving? Where do you expect to see yields moving in the coming year?

A: Sentiment towards Hungary has definitely improved in the last couple of months. I am expecting that the local buyers, such as FHB and Erste Funds will

Is there enough demand in the office and retail sectors for further development?

A: There is definitely demand in the office sector, since net absorption has been positive for the last couple of quarters.

The real question is whether there will be a lending market to support it. Extremely high percentages of pre−leases are currently expected by banks, in a market that has never been a pre−lease market. Tenants want to touch and walk the buildings before signing a lease, and more importantly, one of the biggest drivers of the market, the shared service centers, have confidentiality issues due to the proposed closing down of offices elsewhere in Europe. Therefore they only arrive in Budapest 6−8 months before they set up their new offices.

Is development debt finance more readily available?

A: It has difficulties, as mentioned before. The debt financing currently on the market mainly focuses on core assets in sales or in re−financing.

What possibilities do you see in upgrading existing assets?

A: Since development debt financing still does not exist without significant pre−leases, and these pure pre− lease transactions are very rare in Hungary, the only way to provide new developments and new supply is refurbishment and re−positioning. If an asset is fundamentally good from a structural point of view and the location is appropriate, the refurbishment of common areas and mechanical plants, HVAC will enable the asset to compete on the market.

16

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Budapest Business Journal | October 31 – November 13, 2014

What the insiders think We asked people in the business what their sentiments are on the Hungarian real estate market. This is what they had to say.

DAVID LAWRENCE

been deterring the more conservative institutional investors from making investment acquisitions, despite the fact that Hungary was the first CEE country where an established investment market was developed in the ’90s.

What we have started to see is investors looking at Budapest. I was hoping this would happen a year ago but it did not. People look at Budapest rents and capital values and conclude that they have got to be close to bottom.

Budapest was the first city where a market was established, before Prague and Warsaw, and they consider that it is probably a good time to look very selectively at prime product despite the political difficulties. Investors feel comfortable with Hungary because of the past and are now looking forward.

there will be more. Investor confidence is key for this market and currently the macroeconomics are showing a very positive outlook, which is reducing the country risk that has been present in Hungary for some time.

MIKE EDWARDS Partner, Cushman & Wakefield Hungary

TROY JAVAHER Head of CEE Capital Markets, JLL Investment, development and tenant demand in Hungary has been subdued in the aftermath of the 2008 economic downturn and subsequent eurozone crisis as the country has suffered from “negative sentiment” in the view of lenders, investors, developers and companies considering establishing an office, warehouse or retail outlet in Hungary. Uncertainty from both an economic and political perspective has

MIKE ATWELL Head of CEE Capital Markets, CBRE We have seen a marked increase in investor interest in Hungary, focused primarily on Budapest.

Recent investment transactions of prime buildings demonstrate positive investor interest and the expectation is that

in Europe, the Hungarian market is showing some positive signs. Budapest offers great investment potential for opportunistic investors with a relatively higher risk profile looking for greater yields, resulting in increasing property investment volumes and a growing number of transactions.

Investors are showing a more positive attitude compared to previous years, the property market is improving and rental fees are expected to increase in the following years. We expect that the following years will be more prosperous than the previous ones.

Sentiment towards Hungary is improving in the sense that genuine deals such as the Green House and Vision Towers acquisitions are being concluded. However the German funds are still missing. It was hoped that they would have returned by now, but this should be so in the next 6−12 months. Therefore there is still a need to sell the Hungary story to investors.

Investors are wary of nationalistic governments and in this way it can be a hard sell. What is significant is that German bank representatives have been seen actively looking at the Hungarian market. It is significant that a Hungarian asset has been included in a recent CEE regional logistics portfolio deal.

TIM HULZEBOS Managing Director, Colliers International Hungary

SÁNDOR HABÓCZKY Head of Real Estate, Schoenherr Hetényi Attorneys at Law Pictured here and above is the Green House offices.

Although real estate investors are still focusing on more mature core markets

The German and Austrian investors have still not been seen in Hungary.

There are more sellers than buyers at the moment and everything seems to be for sale. However Green House, Eiffel Palace and Vision Towers have been successfully sold to Hungarian investors. Private equity has been looking for bargains in recent years but for the market to move on it needs to conclude more conventional investment transactions rather than distressed assets. In addition to Hungarian investors we could start to see the traditional investors and new investors such as Chinese and Middle Eastern money.

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Budapest Business Journal | October 31 – November 13, 2014

Logistics property market picking up demand, commented Ferdinand Hlobil, Head of CEE Industrial at C&W. Despite positive indicators for Central Europe on both the demand and development sides, leading CEE industrial developers are still following cautious development strategies, driven by built−to−suit projects. Indeed, limited speculative construction along with rising demand could result in a shortage of available industrial premises. CEE vacancy is falling in most CEE markets, as take−up has been considerably higher than supply in the last four years, according to C&W.

As movement of goods heats up, the development of logistics centers has increased in Hungary, which is finally catching up with its neighbors in this field.

DAVID LAWRENCE

Prologis Park.

Q3 2014

Logistics Park City logistics Total

Completions (sqm)

0

0

0

Stock (sqm)

1,661,700

186,400

1,848,100

Vacant space (sqm)

309,800

34,700

344,500

Vacancy rate (%)

18.6

18.6

18.6

Lease transactions (sqm) 67,600

1,500

69,100

New (sqm)

37,900

1,000

38,900

Renewal (sqm)

16,100

0

16,100

Expansion (sqm)

13,700

400

14,100

Prelease (sqm)

0

0

0

largest lease in this market this year, following the contract that was signed with Schenker for 26,600 sqm at Prologis Park Budapest−Sziget.” Prologis Park Budapest− Gyál consists of five buildings totaling more than 150,000 sqm of distribution and office space, located 17 km west of Liszt Ferenc International Airport. The park is adjacent to the M5 motorway that leads south towards Serbia and Romania.

Figures for the individual CEE countries

reflect the supply side performance and therefore provide comparative success indicators for the different markets in the region. Take−up for Hungary reached 180,000 sqm for the first half year compared to more than one million sqm for Poland and 570,000 sqm for the Czech Republic. The latter two countries are taking advantage of their natural geographic position in the “industrial heartland” of Europe by leading the market in terms of both supply and

Source: BRF

The Hungarian industrial sector of the real estate market is showing signs of significant improvement in take−up after a period of limited growth and high vacancy. The earlier downturn had been in contrast to the thriving Polish and Czech logistics markets, which have been capitalizing on their advantageous geographic position close to Germany.

Year−on−year up to October, take−up for Hungary has increased by 85% to 250,000 sqm. Limited speculative development in combination with strong absorption has brought vacancy rates down to 18.6%; they have been above 20% in recent years.

Strong demand in Central Europe pushed the average CEE vacancy rate down to 9% in the summer and in general Poland, Czech, Slovakia and Romania have been recording vacancy of below 10%, according to Cushman & Wakefield (C&W).

As of the third quarter of the year, the size of modern industrial stock in Budapest and its surroundings stood at 1.84 million sqm according to the Budapest Research Forum (BRF), which comprises CBRE, Colliers International, C&W, DTZ, Eston International, JLL and Robertson Hungary.

The largest new deal was signed at Prologis Park Budapest−Gyál, where logistics services provider Syncreon Technology has established its first Budapest−based distribution center with 22,000 sqm of space. “After a period of consolidation and cautious customer demand in Hungary we are now seeing an increase in demand for high−quality, well−located logistics facilities,” said László Kemenes, Country Manager at Prologis Hungary & Romania.

“We are proud of signing our second−

SPECULATING AGAIN However, industrial developers such as Prologis are once again undertaking speculative development projects. The company has seven speculative and built− to−suit projects under construction in Central Europe, including 7,500 sqm of built−to− suit space at Prologis Park Budapest−Sziget, due to deliver this year to DB Schenker, and 30,000 sqm of speculative space at Prologis Park Prague Airport. The occupancy rate of the company in its CEE portfolio (Poland, Czech, Slovakia, Hungary and Romania) stood at 90% at the end of the first half−year.

“The leasing markets in Central and Eastern Europe are improving, albeit at an uneven pace,” said Ben Bannatyne, Managing Director for CEE at Prologis.

However, some industrial developers have argued that there is no need for speculative development, due to the short development time period of around seven months. Within this short construction period, industrial stock can be constructed in accordance with the requirements of tenants.

DHL is the largest tenant in Hungary with 103,000 sqm of space. The Internet retailer Amazon is the biggest tenant in Poland with 325,000 sqm, and is set to place a warehouse in the Czech Republic for goods that have been returned by German customers.

With regard to the quality of buildings, requirements are changing with the development of Internet shopping and the increasing interest in, and demand for green and sustainable features in buildings.

“The quality of the site, the cost and quality of the workforce, infrastructure and the costs of the lease are seen as important in the selection of industrial accommodation,” concluded C&W’s Hlobil.

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Budapest Business Journal | October 31 – November 13, 2014

Offices: Limited pipeline delivers quality product Development continues to move slowly as uncertainty deters investors from big commitments here, but the top−end projects are going ahead – and they’re finding buyers.

DAVID LAWRENCE

Office development in Budapest continues to be limited as uncertainty from an economic and political perspective has been deterring developers and investors from working in Hungary. Only 80,000 sqm of space is scheduled for delivery in 2015 and 2016 according to CBRE, and this has brought vacancy down to the lowest level for the past five years. However on a positive note, it is only well specified, quality projects that are going ahead. Although occupier activity is strong, there is a lack a new entry to the market and vacancy remains high.

Debt finance for Hungary is difficult to source in what is regarded as an uncertain economic environment and therefore office development in Budapest has been limited to developers with the required equity and those able to secure large preleases to meet strict lending requirements; indeed, a large proportion of the limited immediate office pipeline is preleased.

The development market is quiet and the tendency is to only commence construction when substantial preleases have been concluded. However, Robert Papp, senior consultant at Robertson Hungary argues that the difficulties of the Budapest office market are misrepresented. “The right asset in the right location will have no problem letting as has been the case with Skanska’s Green House and Atenor’s Váci Greens,” he said.

FORUM RESEARCH The Budapest Research Forum (consisting of CBRE, Colliers International, Cushman & Wakefield, DTZ, Eston International, JLL and Robertson Hungary) concludes that vacancy is falling and officially stands at 17.5% in a city with circa 3.2 million sqm of speculative office stock that traditionally has had high vacancy. However many analysts argue that this is not a true reflection of vacancy and recorded stock should be rationalized, as there are a number of outdated first generation buildings from the 1990s that should be taken out of the equation. Further, there is a wide variation in vacancy between the different sub−districts and therefore developers and investors need to consider the position in a particular sub− market before arriving at a decision as to whether to develop.

Although office development in the Hungarian capital is limited, the cranes in the Váci út business corridor are an indication of the popularity of the area, which has developed into the major out−of− center business district of Budapest. Such international and Hungarian developers as Skanska, Atenor, HB Reavis, Wing and Futureal are able to source the finance and

Budapest One. Below is Skanska’s Greenhouse.

construct in what is considered to be a challenging office market.

The latest delivery in Váci út is the 11,000 sqm north wing of Futureal’s 23,500 sqm Vision Towers office center. A built−to−suit prelease deal for one wing of the three− winged center was agreed with KPMG before construction commenced. The north wing has subsequently been sold to investors.

“With regard to finance it was proven in the case of Vision Towers that if we start a good project from equity and we get the first tenants, then we get financing,” said Tibor Tatár, CEO of Commercial Development at Futureal. The 9,000 sqm southern wing is scheduled for delivery later in the year.

The prolific Slovak developer, HB Reavis has recently delivered its first Budapest project, the 21,000 sqm Váci Corner office complex in Váci út. Zoltán Radnóty, CEO of HB Reavis Hungary expects the complex to be fully let by the second half of 2015 and the building was already 33% pre−let on completion. The complex was designed by the prolific Hungarian architect, Laszló Szász and has been awarded a BREEAM Excellent accreditation. A €21 million debt financing agreement has been concluded with Raiffeisen Bank, as was the case with earlier HB Reavis projects in Slovakia and the Czech Republic. The developer

is currently prioritizing the Polish, Czech and Hungarian office markets and is now developing two office centers in London.

CLASSICAL BUILDING Another major delivery was the rebuilding of a classic building in Budapest’s central fifth district. The 12,000 sqm Eiffel Palace office development by the Hungarian developer Horizon Development is a new building that has been constructed behind the original 1890s facades. Horizon achieved a 9,000 sqm pre−let and has subsequently sold the building to the Hungarian National Bank (MNB) for a reported €45 mln. The center achieved both LEED and BREEAM accreditation.

Skanska, an experienced developer in Budapest, is set to commence construction of the first phase of its 26,000 sqm Nordic Light. The complex has been LEED Gold pre−certified. The aim of Skanska is to prelease the center and therefore create an exit strategy with a sale to investors. Over the summer Skanska Property Hungary sold the 17,800 sqm Green House office center to a Hungarian open−ended property fund.

“We believe that our next project will perform equally successfully both among tenants and investors,” commented

Zoltán Linczmayer, Managing Director of Skanska Property Hungary on the deal.

A notable transaction was an 8,500 sqm prelease a Wing’s V17 office project in Váci út. The company will therefore undertake a new 12,000 sqm office project, due to deliver in mid−2016.

With regard to further pipeline, Futureal has launched the €170 mln Budapest One business park adjacent to the terminus of the recently completed Metro 4 line, located on the western edge of Budapest.

The 70,000 sqm project is seen as part of the redevelopment of a road, metro and rail transport hub. Futureal is perusing a phased development strategy with construction going ahead once pre−lets have been concluded. The development project is planned to become a business and leisure hub that will include retail and service elements. “Vacancy is high but there are not many possibilities for 10,000 sqm requirements that we can offer. Also technical specifications from tenants are changing very quickly and the project will offer high quality space that conforms to new technical specifications. Companies are looking three to four years ahead and with preleases we will be able to secure the financing,” said Tatár.

He further comments that at least 50% of a development phase needs to be preleased before the start of construction. Therefore the development strategy is described as “speculative with preleases”.

Budapest One was designed by Hungary’s Mérték Architect studio, while experts from Advanced Building and Urban Design (ABUD) worked on the environmental concept. The building will include such amenities as a green terrace and roof gardens, inner garden and restaurants, and even a roof running track. As with its other projects, Futureal is seeking green accreditations for the project. “In 2013, Colliers estimated that the proportion of green certified office space would be 12% by the end of 2014. This number is now over 20%,” said Norbert Szircsák, Senior Associate of Green Advisory Services at Colliers International. Colliers has been appointed to certify CA Immo’s office portfolio consisting of six office buildings totaling 100,000 sqm according to the LEED rating system.

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Budapest Business Journal | October 31 – November 13, 2014

Design: WhitePages office provides ‘creative environment’

Views of the cafes and restaurants of the seventh district and an interior tree dominate the Budapest office of WhitePages.

DAVID LAWRENCE

Seattle−based software service provider WhitePages established its European headquarters on the top floors of the 14,000 sqm LEED accredited Madách Trade Center in the central seventh district of Budapest in 2013. Thus the Budapest office works for the American market from its three−level office, which offers stunning views of central

Budapest. “We chose the site last June based on the location and the interior environment,” said Dániel Lehoczky, CEO of WhitePages at the recent Office Night Tour, organized by Europe Design, Irodakereso.info and the OGH news service.

The tour also visited Graphisoft Park and the Regus Office in the Bank Center.

The WhitePages office space was designed by the Serbian architect and interior designer Nikola Martinovic, who based it around a large living tree that dominates the center of the office. “The working environment aims to build up the creative strategy of the workers

Nikola Martinovic and the space he designd for WhitePages.

with a large common area that facilities mixing between the employees. The design does not harm the panoramic 360 view of the inner city of Budapest and the office is dominated by the tree,” he explained.

The open plan office has a facility for a 30−person conference area and the top floor has a lounge function with rest areas and a bar.

“The first thing you see when you enter the office is this beautiful view. So the idea

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CONVERGENCE

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was to bring this view inside and to provide a strong motivation for work. So we used the tree as a motive with its strong roots as the center of the space. This is a living tree that we brought in. The space is divided vertically on the tree floors; each is connected to the tree. We also tried to use natural material such as wood,” explained Martinovic.

The state−of−the−art office also has a robot that facilitates direct communication between Seattle and Budapest.

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Budapest Business Journal | October 31 – November 13, 2014

There’s a line to get into Aréna Plaza.

Retail property indicators improving Cuts in consumer spending took a big bite out of retail development, but as the economy improves, the market is coming back.

DAVID LAWRENCE

Although Hungary was the first country in the CEE region where modern shopping centers were developed, development activity has been severely cut back as consumer spending power, and therefore retail sales, have remained low since 2007 as a result of the economic downturn and subsequent eurozone crisis. From a positive viewpoint retail sales have now started to improve with GDP growth of more than 3% expected for the year, and a strong improvement in spending is expected to continue into 2015. January− August retail growth showed a 5.2% year− on−year growth. When retail development will resume remains to be seen with no official announcement of construction of pipeline development projects.

With no significant development since the completion of the Allee shopping center in Buda by ING Real Estate in 2007, shopping center owners have been undertaking asset management of their centers, including refurbishments and upgrading the tenant mix. This is in response to rising demand from retailers looking to either enter Hungary or expand their presence in response to improving economic indicators. On the demand side the lack of 500−1,000 sqm space in the best performing shopping centers has put upward pressure on rents. Developers, in partnership with local authorities, have also been improving and developing the infrastructure of major high streets in the center of Budapest.

The last delivery was the 20,000 sqm expansion and refurbishment by Germany’s ECE of the Árkád shopping center in Budapest, bringing the size of the development to 68,000 sqm and making it the largest retail center in Hungary. In terms of CEE shopping

center stock, Budapest is now behind Prague, Bucharest and Warsaw in terms of sqm of stock.

With economic concerns causing uncertainty among developers, investors and lenders, pipeline projects have still not gone ahead. With no pipeline projects under construction, the next shopping center deliveries will not be at least until 2017, given the necessary lead−in development period. The next scheduled delivery is the 44,000 sqm Etele City Center by Futureal. The planned scheme is located next to the Budapest One business park, adjacent to the terminus of the recently completed Metro 4 line, located on the western edge of Budapest.

The development project is planned to become a business and leisure hub that will include retail and service elements.

Work on the retail component is due to start in the second half of 2015.

The only other Budapest pipeline project is the 37,000 sqm Mundo shopping center in the Zugló district of Pest by the Polish developer, Echo Investment.

The two projects have already received exemptions from the restrictions on retail center development introduced by the government in its last term.

STAGNANT STOCK Given the lack of new development, shopping center stock in Budapest remains stagnant at a little over 770,500 sqm in 25 assets according to JLL. Shopping center density stands at 443 sqm per 1,000 inhabitants. Strip mall and outlet centers account for a further 196,000 sqm in the capital agglomeration. The current shopping center stock outside of the capital stands at 540,000 sqm in 33 centers.

Against the background of limited development and increasing competition in the Budapest shopping center market, Budapest shopping center owners have been carrying out renovations in an attempt to improve and modernize the design and tenant mixes of retail schemes. “Due to stiff competition among shopping center owners and the increasing importance of e−commerce, redesigning and refurbishments will gain in importance in the future,” said JLL. In general Hungary is the subject of increasing interest from both mass−market

Zara Home will be an excellent addition to the already very popular Fashion Street. brands and luxury retailers after a period when retailers looking to expand shunned Hungary. The best performing centers – the 47,000 sqm Allee, the 66,000 sqm Arena Plaza and the 45,000 sqm WestEnd – have waiting lists for tenants and therefore are able to command the highest rents according to CBRE. Outside of these centers, a second tier of shopping malls is also recording improved retail performance.

“The best performing centers are Arena Plaza, WestEnd and Árkád in Pest and Mammut, MOM and Allee on the Buda side of the city,” commented Viktória Szabó, Head of Retail at Cushman & Wakefield. “With regard to the quality of shopping centers, the tenant mix is on a similar level to that in Western Europe with the leading centers improving their tenant mixes and others undergoing refurbishment.”

EXTENSIVE UPGRADE In response to demand, Trigranit have undertaken an extensive upgrade of its flagship WestEnd City Center, which opened in 1999. With regard to tenant mix there are now fewer small retail units and a greater presence of large international brands.

Both Sweden’s H&M and Spain’s Inditex Group have expanded their units in Aréna Plaza, which opened in 2007 and is now owned by Lanebridge Investment Management. H&M have extended its clothing and home furnishings outlet to two floors and Zara now has a 2,500 sqm

store. More than 30 of the 200 brands in the center are moving or reconfigurating their existing stock.

Refurbishments are also being undertaken in the central high streets; the renovation of Váci utca, for example, was completed in April. This has connected the southern and northern parts of the street, and an effort has made to improve the retail attractiveness of the southern part.

FASHION MILESTONE In the central street front retail area Zara Home is set to open its first 900 sqm Hungarian store on Fashion Street in central Budapest, with the street front prime retail area developed by Immobilia.

Fashion Street offers around 8,000 sqm of retail space and restaurants on Deák tér and Bécsi utca and is directly linked to Budapest’s traditional high street, Váci utca. “This is another great milestone for the high street shopping area of Budapest and for Fashion Street to secure such a prestigious and globally recognizable brand,” commented Viktória Szabó, Head of Retail at Cushman & Wakefield Budapest, which sourced the site for Zara Home. “Market entries such as these only reinforce the market recovery and Zara Home will be an excellent addition to the already very popular Fashion Street.”

Prime Budapest shopping center rents vary between €50−80 per sqm per month according to JLL. However rents are significantly higher in some high performing centers. Prime high street rents for a 50−150 sqm unit on Váci utca are put at €80−100 per sqm per month.

Retail per capita sales are 30% higher in Budapest than the average for regional cities according to CBRE. Following the capital, Győr, Székesfehérvár and Szeged in the west and south of Hungary have the highest retail sales growth.

“There are positive signs with regard to retail spending, but no new development that would refresh the retail market,” concluded Erika Pál, Head of Retail at JLL Hungary. “If the construction of centers starts in 2015, these will not deliver until 2017−2018. The retail market is still challenging because of this lack of new development. Retailers want to locate to the best shopping centers and it is not easy to find the right 500−1,000 sqm units.”

WWW.BBJ.HU

Budapest Business Journal | October 31 – November 13, 2014

21

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EXPERT OPINION

YOUR banker as YOUR business partner BBJ: How would you summarize the gist of structured financing?

Daniel Hatvani: In many instances, structured financing can be a synonym for project financing. A project or an instrument is being financed, and the debt is repaid by the revenue generated from the project. It is essential to note, that in case of structured financing we always talk about long-term payoff and usually long term contracts securing incomes for the project.

For structured financing a classic example can be the financing of an office building, where the rent paid by tenants cover the debt expenses, or the financing of a power plant, where the generated and sold energy covers such expenses, or even the financing of a highway, where the state is paying an availability fee to the project company. In these projects the borrowers are most of the time special purpose vehicles, or project companies in other words, who have no employees. Their balance sheet is usually very simple, as on the assets side they have the project itself — which is the real estate or the asset — and on the liabilities side they have the owners’ equity and the bank debt provided for the project. One more important thing: in most cases of structured financing, the leverage, the asset and the cash-flow itself are the most important collaterals, it rarely happens that the project owner gives additional financial assurances behind the credit.

BBJ: What does the structured financing department do inside CIB? D.H.: Basically our department has two chief functions: dealing with and handling the cases concluded in the last 5-10 years and recruiting new partners — as I always refer to our clients and investors — and acquisitions. I would like to spend more time with the latter, though it is an essential part of our everyday job to serve our existing portfolio.

BBJ: What kind of services does CIB offer for clients in structured financing?

D.H.: Our (potential) partners approach us with project ideas, which means that they bring their own business models and concept on the planned structure of their project. We provide them with a financial model, which contains the assumptions and requirements of the bank, and we try to find the common basis with their ideas: a concept that is still acceptable to our partners and already acceptable for the bank. Practically, this is the very first step for deciding whether it is interesting from the bank’s point of view to cooperate in the project.

In the following steps of acquisition, negotiation and contracting, we take somewhat of an advisroyrole, again

aiming to complete the ideas of our partners with our own experiences, and creating a sustainable deal. In all our businesses we have a back and forth communication, exchanging experiences and making decisions bilaterally in order to establish a structure that is sufficient for both the bank and our partner.

BBJ: Bank experts and analysts are carefully optimistic about the global economy, what do you see in the sector of structured financing?

D.H.: In my opinion, a change has started in 2013 and been ongoing in 2014. We are now experiencing a growing trend in demand regarding project loans, mostly real estate loans.

I believe that this trend will continue in 2015.

We have seen foreign, institutional investors re-entering the market, who are not only seeking prime asset investments but are also a bit more opportunistic, and are looking for deals with potential upsides. Also, we have seen some Hungarian individuals who — with the end of the crisis — slowly dare to invest their savings. We strongly believe that through learning from the experiences of the last couple of years the market can make secure business decisions. Of course we can not yet afford to get immediately involved in projects that are not in line with our lending policies, but we can definitely make recommendations for our potential partners regarding changes in the business model or their project concepts that would make their concept more attractive to CIB and more efficient for them. Again, I’d like to point out our somewhat advisory role in this process.

BBJ: Could you mention an example without stating names?

D.H.: We have recently signed a new credit line for the acquisition of an office building. The significance of this deal is that our management has consented to financing a project that would have clashed with our risk sensitivity a couple of years ago. “We investigated the asset and found its value and cash flow to be sufficient enough for us to finance it, so basically this is close to a pure loanto-value based deal.”

BBJ: What about the consciousness of your partners?

D.H.: I believe that those investors who could survive the crisis could do so because they were able to learn from their experiences — even from their failures — and this indicates awareness. We are also aware enough to see ourselves as investors rather than creditors, and see our clients as partners. Before the crisis in the banking sector this attitude was rare. We believe that, if our partners are unable to make revenue on their investments aside from paying their debt, then the deal is insufficient and is not worth it for our partners. A bank should never speculate in a way that their debtors use all their available cash

Daniel Hatvani Head of Structured Finance at CIB Bank

from the project on paying the debt back first. Of course the credit risk importance of the initial leverage (debtequity ratio) must not be harmed, but if we followed the path of getting all the credit back first, and let our partners make revenue only after that, we could not talk about success stories.

BBJ: What should your partners keep an eye on to minimalize risks?

D.H.: Basically, a project has three pillars to rest on. If any of these pillars collapse, or are not properly represented from the beginning, the whole project is ruined. These three pillars are: (1) an asset with a sufficient quality, (2) a cash flow that predicts pay-off according to the most conservative approaches and (3) a project sponsor who provides the initial equity, and who can coordinate the project by satisfying all the emerging needs. Without nurturing all of these pillars we cannot talk about a successful project. In my view all those projects that broke down during the crisis lacked essential attention on one or more of these pillars. These are the three pillars to consider in order minimalizing risks.

BBJ: How does it help you in your everyday business to have the know-how of an international parent bank in the background?

D.H.: It gives security for us, that our owner has declared their commitment to stay in Hungary, regardless of how difficult it has become for banks to operate in the country recently. We have an approved program until the end of 2017. We are given clear and achievable goals by our parent, and this evidently drives growth. We have local competence to make decisions, though whenever we have questions we can turn to our parent bank, which offers many decades of international experience and can support us in making a deal. We are committed to the country, and we are available for our future partners with a vast array of services.

www.cib.hu

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

BBJ STAFF

WWW.BBJ.HU

22 3

Budapest Business Journal | October 31 – November 13, 2014

Home buyers and loans on the rise The Hungarian residential market has seen its busiest year for a long time in 2014. A rise in transaction numbers, credit volumes and investor interest has characterized the residential market this year.

ZSÓFIA VÉGH

This year has been the busiest on the Hungarian residential market for a very long time. After more than five years of inactivity, some dormant parts of the sector have started to become active once more. Up to October, demand for housing had grown by more than 10%, and prices have begun to rise by an average of 1−3% in major cities and the capital, according to the data of Otthon Centrum.

The reason for the increase varies: Experts point at restored consumer confidence that allows the completion of ADVERTISEMENT

A sketch of the planned development at the Corvin sétány.

previously postponed home purchases.

First homebuyers can now afford a home owing to the roughly 15−20% price drop over the past few years. Growing families who need more space also account for the rise. This group benefits from loans subsidized by the state and can tap into some very competitive

bank loans too. Banks offer loans at an average 6.8% interest rate which are often more favorable than those offered by the state, and even loans at less than 6% are not that uncommon.

Bank lending has mirrored the uplift both in mood and buying. Lending volume in the first eight months

increased by 60% compared to the same period in 2013, data from the Hungarian Central Bank (MNB) shows. Financial institutions have lent HUF 147.6 billion overall, which is only HUF 3.5 bln shy of last years’ total amount (HUF 151.1 bln). Though still only a quarter of purchases are financed by bank loans,

WWW.BBJ.HU

3

Budapest Business Journal | October 31 – November 13, 2014

Hungarian suspicion of credit seems to be slowly fading.

The other motor of demand comes from investors. Put off by historic low benchmark interest rates, they are looking for more profitable options for their money. Property is currently a good bet, offering annual yields of 6−7% compared to the 2% bank account savings make.

Housing has become such an attractive form of investment that a quarter to a third of this year’s home purchases was carried out by investors. “Counting on a (slow but steady) price increase, this group of buyers who purchase homes to let can expect to recoup their investment in ten years. Unlike customers who buy dwellings for living, most investors don’t take out loans,” Gábor Rutai, senior analyst and head of PR at Duna House told the Budapest Business Journal.

In line with the rising interest, the number of home sales has increased.

September saw a record number of transactions (10,059), a 25% increase year on year says the Duna House real estate network’s Property Barometer, a periodical overview of the housing market. September was the second strongest month in the past five years with only the month of the early repayment of household foreign currency mortgage loans ahead. Duna House estimates total turnover in the first nine months has neared 74,000 transactions, 17% y.o.y. growth compared to the same period of 2013. Compared to the pre− crisis volumes of 191,000 transactions in

2007, the current figures are moderate.

Yet if growth rate remains stable, next year the market could see 120,000 homes sales, Duna House predicts.

NEW HOMES SCARCE Not all fields have picked up the pace though. New home construction is still scarce: developers and banks are equally wary of entering into an agreement without the necessary backing. Even where developers are prepared to build, banks simply do not finance construction unless at least half to two−thirds of the units are pre−sold. This makes financing rather difficult as buyers have also become more cautious, having seen a number of unfinished projects in the past few years. They need assurances that the project will be finished and the developer won’t disappear with their money. More stringent bank requirements, such as a minimum of 40% owners’ equity, have not helped boost new home building.

There a handful of 5−20 apartment condominiums, but no large−scale projects in the pipeline, with one exception: a 227−home apartment building at Corvin sétány is due in late 2015. Developer Futureal Group said it was able to embark on construction thanks to previous projects that had yielded good profit. Though home prices in the development are rather steep (around HUF 500,000 per sqm) they are popular with investors who tend to let 40 sqm apartments for around €700 per month. Futureal

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SIZE OF THE AVERAGE MORTGAGE BEGINS TO CLIMB BACK UP As total volume increases, the average mortgage loan is HUF 6.5 million according to data from Duna House. “Prior to the crisis, loans ranged from HUF 8−10 million,” László Bánfalvy, managing director of Otthon Centrum Hitel Center told the Budapest Business Journal.

Then it slid back to HUF 4−5 mln. Today, it is around HUF 6−7 mln, and the number of HUF 10 mln and higher mortgages is increasing, Bánfalvi added. Interestingly, loan tenure has not shortened – most still take out loans for 15−20 years, but home buyers are way more conscious than they used to be. Ever more opt for a fixed interest rate home loan: the more optimistic prefer shorter repayment periods, the cautious stay with 10−20 year fixed rate. A quarter of those taking out a mortgage are in their 20s, 25% are in their 30s, the rest are older.

Those whose salary is HUF 150−250,000 per month may be slightly overrepresented, but in general loan seekers price range is even.

claims almost all their units have been sold or let, and the newest building will also be sold out rapidly.

Due to the lack of newly built homes some unfinished projects are now being resurrected. The higher prices and fast sales have also attracted a new player to the market: BYair, an Israeli construction firm, is developing the Sidi Angel residential park near Árpád Híd. The firm has sold 40% of its units in one tower, and began both sales and construction of the second phase this fall, the BBJ learnt from Sidi’s sales representatives. The estate will number

328 homes. BYair is also planning to add 1,250 apartments, 43,000 sqm office space and 10,000 sqm retail space to its local portfolio in district ten at Fehér út.

Yet not even a rise in investor interest and budding consumer confidence has been enough to really kick−start new home construction. Hungarian building material suppliers association MEASZ proposes, among other things, cheap mortgages at a 2.5% rate and a HUF 30,000 subsidy per square meter if the home has an A+ energy efficiency rating.

WWW.BBJ.HU

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Budapest Business Journal | October 31 – November 13, 2014

Real estate developers

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ECE PROJEKTMANAGEMENT BUDAPEST KFT.

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MAJOR CLIENTS IN 2013

OWNERSHIP (%) HUNGARIAN NONHUNGARIAN

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

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Interspar, Media Markt, Gap, Zara, H&M, C&A, Hervis, New Yorker, Bershka, Pull&Bear, Stradivarius

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Europeum BevĂĄsĂĄrlĂłkĂśzpont (2011), *DWHZD\ 2IĂ€FH 3DUN (2008), Airport City Logisztikai Park (2008), Business Center 30 (2007), Buy-Way Dunakeszi bevĂĄsĂĄrlĂłpark (2006)

Marriott Courtyard, Magyar Posta, Vodafone, Panalpina, Trilak, MĂźller

– CPI Property Group (100)

Adrienn Lovro – –

1132 Budapest, VĂĄci Ăşt 30.

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

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1033 Budapest, Polgår utca 8–10.

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Auchan, Spar, Media Markt, Gap, Zara, H&M, C&A, Massimo Dutti

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IP West IrodahĂĄz (2009), The Quadrum IrodahĂĄz 1. fĂĄzis (2008), Haller Kert IrodahĂĄz (2008), Market Central Ferihegy Kiskereskedelmi Park (2007), M1 Business Park (2006), Airport Business Park (2004), AlkotĂĄs Point IrodahĂĄz (2002), Infopark (1999)

Heitman, GLL Real Estate Partners, Union Investment, ,PPRĂ€QDQ] $* /% Immo, CA Immo, DEKA Investments, Guardian Managers

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HegyvidĂŠk Shopping Center (2012), DĂŠlpesti Business Park F csarnok (2012), MillenĂĄris IrodahĂĄzak (2009), K3 IrodahĂĄz (2010), Ă trium Park IrodahĂĄz (2008), Agria Park Shopping Center (2008), Corvinus Egyetem new building (2007)

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ASSET MANAGEMENT

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CPI HUNGARY KFT. www.cpigroup.hu 5,682 3,420

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Yuval Kishon – –

1095 Budapest, Mester utca 83/C (1) 919-3333 (1) 919-3303 –

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Cheminova MagyarorszĂĄg Kft., Gnocco Kft.

– Raiffeisen evolution project development GmbH (100)

Rudolf Riedl Sabine Wegscheider –

1027 Budapest, Ganz utca 16.

(1) 346-6400 (1) 346-6448 krisztina.major@ raiffeisenevolution. com

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ATENOR GROUP 10 HUNGARY KFT. www.vacigreens.hu

PROLOGIS HUNGARY 11 MANAGEMENT KFT. www.prologiseurope.com

BIGGEORGE'SNV REAL ESTATE 12 DEVELOPER ZRT.

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REAL ESTATE INVESTMENT

CONSTRUCTION

PROJECT MANAGEMENT

PORTFOLIO MANAGEMENT

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

PUBLIC BUILDING

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–

PREVIOUSLY COMPLETED REFERENCE PROJECTS, YEAR OF COMPLETION

MAJOR CLIENTS IN 2013

OWNERSHIP (%) HUNGARIAN NONHUNGARIAN

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE FAX EMAIL

VĂ CI GREENS "A" building, 2013

GE Infrastructure, GE Hungary, SYKES, Entrerprise Communications

– Atenor Group S.A. (100)

Zoltån BorbÊly – –

1138 Budapest, VĂĄci Ăşt 117-119.

(1) 785-5208 – info@atenor.hu

Låszló Kemenes – – ProLogis B.V. (100) –

–

Âť

Âť

–

Sasad Liget LakĂłpark, I-II. Ăźtem (2008, 2012), BĂŠcsi Corner IrodahĂĄz (2009), Garibaldi ApartmanhĂĄz (2008)

Budapest Bank, NIKE, Vapiano, Audi, LEGO

Biggeorges 9DJ\RQNH]HOĹƒ Kft. (50), NV 9DJ\RQNH]HOĹƒ .IW (50) –

Istvån Hajnal – –

1023 Budapest, Lajos utca 28–32.

(1) 225-2525 (1) 225-2521 admin@ biggeorges-nv.hu

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Individuals (100) –

Attila KovĂĄcs – ,OGLNy 5p]PĹ?YHV

1054 Budapest, Szemere utca 17.

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

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

Blazej Ciesielczak – –

1024 Budapest, /|YĹƒKi] XWFD (1) 336-2270 (1) 336-2289 info-hu@goodman.com

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DĂĄniel Jellinek (Âť) Indotek UK. LLC (Âť)

Dåniel Jellinek – –

1148 Budapest, Kerepesi Ăşt 52.

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

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– Codic Hongrie S.A. (100)

Christophe Boving – –

1146 Budapest, Hermina Ăşt 17.

(1) 266-6000 (1) 266-6002 p.szilvasi@ codic.eu

9 9

Eiffel TĂŠr IrodahĂĄz (2010), City Point 9 City Logistics Center (2010), Park One IrodahĂĄz, Bratislava (2007)

Europa Capital, JP Morgan, KPMG

– Alan A. Vincent (100)

Alan A. Vincent – –

1062 Budapest, TerÊz kÜrút 55–57.

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

9

–

Corvin One (2008), Corvin Towers (2009)

Ringier, Garantiqa, P&G

PÊter Futó (50), Gåbor Futó (50) –

GĂĄbor FutĂł PĂĄl Darida PĂŠter Karai, Ă ron GĂśrĂśg

1082 Budapest, Futó utca 47–53.

(1) 266-2181 (1) 688-5499 RIĂ€FH# futureal.hu

9 9

VĂĄci1 Shopping Center (2011), PĂĄrisi Department Store (2009)

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/LVWHG ÀUP ) /LVWHG ÀUP )

Tamås Horgos – Zinaida Vojnår

1061 Budapest, AndrĂĄssy Ăşt 39.

(1) 880-7200 (1) 889-0574 hungary@ orcogroup.com

9

East-West Business Center (1991), West End Business Center (2001), Science Park (2004), Light Corner (2006), NĂŠpliget Center (2010), Green House (2012)

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

Zoltån Linczmayer – Melinda Kovåcs

1134 Budapest, KassĂĄk Lajos utca 19-25.

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

–

www.biggeorges-nv.hu

HORIZON DEVELOPMENT KFT. www.horizondevelopment.hu 53

13

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GOODMAN HUNGARY 14 KFT www.goodman.com/hu

15

INDOTEK ZRT. www.indotek.hu

CODIC HUNGARY KFT. 16 www.codic.eu

35

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29

Âť

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9 9 9

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–

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FUTUREAL NR

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ORCO PROPERTY NR GROUP HUNGARY

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www.futureal.hu

www.orco-realestate.com

9 9

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9 9 9

9 9 9

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Corvin SĂŠtĂĄnyCorvin Corner, Vision Towers

–

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9 9 9

9

–

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www.skanska.hu

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9 9

–

–

–

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Nordic Light, 2016

9

–

9

–

9

–

9

–

1095 Budapest, Lechner Ă–dĂśn fasor 7.

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

–

Eiffel TĂŠr irodahĂĄz (2010), Eiffel Palace irodahĂĄz (2014)

*RRGPDQ hOOĹƒ $LUSRUW Logistics Center I. ĂŠs Rossmann MagyarorII. Ăźtem (2009-2010), V]iJ .IW 2ULĂ DPH Goodman KecskemĂŠti Hungary Kft., HOPI Logistics Center HungĂĄria Kft. (2008), HOPI Logistics Center (2007)

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Krisztina Palace (2010)

WWW.BBJ.HU

26 3

Budapest Business Journal | October 31 – November 13, 2014

Asset management companies

www.simmoag.hu

7,663

7,583

Âť

28,544

30

100

–

9

–

–

–

–

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE FAX EMAIL

–

– CEE PropertyInvest Immobilien GmbH (100)

Katalin Sermer TĂ­mea FĂśldi DĂłra Dervadelin

1051 Budapest, %DMFV\ =VLOLQV]N\ Ăşt 12.

(1) 429-5050 (1) 429-5055 RIĂ€FH# simmoag.hu

–

– CPI Property Group (100)

Adrienn Lovro – –

1132 Budapest, 9iFL ~W (1) 225-6600 (1) 225-6601 KXQJDU\# FSLSJ FRP

– Cushman & :DNHÀHOG ,QF (100)

Gergely Pados =VX]VDQQD .LVV Orsolya NĂŠmeth

1052 Budapest, 'HiN )HUHQF XWFD (1) 268-1288 (1) 268-1289 LQIR EXGDSHVW# HXU FXVKZDNH FRP

à rpåd TÜrÜk *\XOD ÉJKi]L 'iQLHO 3D]VLW]N\

1062 Budapest, 9iFL ~W (1) 374-5600 (1) 374-5601 LQIR#WULJUDQLW FRP

Noah M. Steinberg – –

1095 Budapest, 0iULiVV\ XWFD (1) 451-4760 (1) 451-4289 LQIR#ZLQJ KX

RESTRUCTURING SERVICES

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COMPANY WEBSITE

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OWNERSHIP (%) HUNGARIAN NONHUNGARIAN

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210,000

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38,000

76,560,000 Euros

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Asset management, property management

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–

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80

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1077 Budapest, WesselĂŠnyi XWFD (1) 479-6020 (1) 479-6029 RIĂ€FH# DGGYDOJURXS FRP

(100) –

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1085 Budapest, .iOYLQ WpU (1) 785-4985 (1) 799-8879 LQIR#FHODQG KX

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Ede Gulyås – –

1074 Budapest, 5iNyF]L ~W ² (1) 501-2800 (1) 501-2801 RIÀFH# FDLPPR KX

Alan A. Vincent – –

1062 Budapest, 7HUp] N|U~W 55–57.

(1) 225-0912 (1) 375-0445 RIĂ€FH# FRQYHUJHQ FH FRP

Attila Madler – Tibor Gasser

1117 Budapest, Infopark sĂŠtĂĄny 1.

Infopark I (1) 382-7560 (1) 382-7570 RIĂ€FH# gammaproperties. hu

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BBJ

4 Socialite

Visit a cemetery on All Saints’ Day On the evening of November 1, cemeteries in Budapest and around the country become beautiful places to visit: families clear away any undergrowth around graves, bring flowers and leave behind candles that light up the gloom.

ANIKO FENYVESI

The occasion is officially called Mindenszentek Napja (All Saints’ Day), and it essentially started with the Roman Catholic holiday of All Saints’ Day, the traditional day for remembering saints. But in the case of Hungary it has gone secular and has been celebrated as a national holiday since 1989.

Even if you aren’t visiting a deceased relative you can get a glimpse of this rather unusual celebration. Kerepesi cemetery is Budapest’s best−known final resting ground and walking through it is like taking a walk through history.

Just past the main entrance, several dozen small headstones with communist stars carved on their tops are the graves of people who died defending Soviet

communism in 1956. Behind this is the plot for Soviet soldiers who died fighting in Budapest.

Further in, two impressive arcades with mausoleums contain the rich, and a few of the famous. The arcades end at the circular monument for Mór Jókai. Also here are the slightly outsized likenesses of actress Lujza Blaha and moody−looking poet Endre Ady. Sándor Deák, who compromised

with the Austrians to win some freedoms for Hungary rests in the very center of Kerepesi. The largest monument, however, is the Pantheon of the Workers’ Movement, with tall metal Socialist Realist statues of workers propping each other up.

Nearby is the red marble grave of a member of the workers’ movement, János Kádár, who became prime minister following the Uprising.

The Jewish cemetery is cut off from Kerepesi by a tall wall. The entrance, at Salgótarjáni út 6, is open Monday to Friday, Sunday 8 am−3 pm.

VIII. Fiumei út 16. Daily 7:30 am−5:30 pm.

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www.lapampa.hu • info@lapampa.hu • +361 354 1444

28

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4 Socialite

Budapest Business Journal | October 31 – November 13, 2014

Hungary plays host to Dutch culture The Embassy of the Kingdom of the Netherlands has compiled a series of events with a focus on Dutch culture in a Hungarian context. The showcase runs until the end of November and covers the gamut from art exhibits, to concerts, to lectures and workshops.

ADVERTISEMENT

WINE GALLERY FOR BEGINNERS AND EXPERTS

DISCOVER THE BEST OF HUNGARIAN WINE CULTURE IN ONE PLACE • taste before you buy • bachelor/ bachelorette party • individual tastings (no reservation needed) • guest visit • Christmas party • company apero • gift card • birthdays Suggested for:

ANIKO FENYVESI

The “DACS Hollandia, királyság!” program series, which kicked off in September and will close on November 30 (though some elements will have a longer run), features a selection of cultural events that puts the Netherlands in the spotlight while also offering a fresh perspective of the country’s art scene.

Programs range from the large−scale Rembrandt exhibit to a show by renowned Dutch photographer Erwin Olaf, as well as a handful of musical performances and art exhibits featuring collaborations with Hungarian artists.

The Dutch Ambassador to Hungary, Gajus Scheltema is excited about the program and feels such events are essential in creating a dialogue with Hungarians about Dutch culture. “We wanted to present the Netherlands in a very holistic way, mainly in the field of culture but not exclusively. We wanted to do something in visual arts, in performing arts, music and different mediums that would engage Hungarians,” Scheltema said.

The DACS exhibits were built around the framework of two key events. “We jumped at the chance of having a major exhibit at the Museum of Fine Arts as

Dutch Ambassador Gajus Scheltema

well as being invited to be the guest country at Design Week. We used these two important events as building blocks to develop our own programs further,” explained Scheltema.

The following shows take place over the next month and are listed in chronological order. Most events are free to attend. Visit www.dacs.hu for more information.

The Netherland’s star photographer Erwin Olaf will exhibit his works at MODEM (Baltazár Dezső tér 1, Debrecen) until February 1. The photographer’s use of elaborate props, makeup and costumes give his compositions a filmic, almost surreal

1052 Budapest, párizsi utca 4., •Tel.: +36 -1-235-0230 • www.cultivini.com

A casual way to taste wine

O

rganized wine tastings, where the expert chooses the vintages you will sample, can be interesting and informative, but sometimes you just want to explore on your own, without a formal structure for drinking. That’s why the system at the CultiVini, which offers a concept that’s new to Budapest, is so refreshing.

You buy a HUF 3,000 (~10 €) card and then use it in automated dispensers to purchase tastings of wine, by the quarter, half or full deciliter. The shop has about 60 wines on display at any time, all stored in special dispensers that keep the wine tasting as if its been freshly opened, and there is a relaxing space for sitting and chatting while you sip. A couple of wine experts are on hand, to make suggestions if you like, but you can also go it alone, picking from the bottles on display. The vintages, covering a broad price range, are all Hungarian and all very good. If you find one you like, you can buy a bottle of it from the shop. Groups can also reserve space, but the real charm here is the ability to drop in any day of the week for an impromptu tasting.

(1052 Budapest, Párizsi utca 4, cultivini.com and cultivini.hu)

WWW.BBJ.HU

4 Socialite

Budapest Business Journal | October 31 – November 13, 2014

29

ADVERTISEMENT

Photo: © Erwin Olaf courtesy of Galerie Wagner + Partner (Berlin)

LEARN THE ART OF CHOCOLATE AT SZAMOS

feel, while his subjects are often presented in a provocative way as a means of addressing taboo themes. Followers of fashion will be familiar with Olaf’s work for high−end fashion labels Louis Vuitton and Bottega Veneta. A selection of Olaf’s experimental films is also on view at MODEM. The group show Blind Stitch runs through to December 5, at Trapéz Gallery (V. Henszlmann Imre utca 3, www.trpz. hu) and features the works of Hungarian artist Csilla Klenyánszki and Dutch artist Femke Dekkers, both of whom work in hybrid mediums of photography.

Installations by artist Jay Tan, based in Rotterdam and London, also form part of the show.

Rembrandt and the Dutch Golden Age is currently on at the Museum of Fine Arts until February 15. This survey of 17th−century Dutch painting looks at the period referred to as the “Golden Age”. It features more than 170 works by 100 painters, 40 of which come from the museum’s own collection, while the remainder are on loan from a handful of renowned international museums.

Running alongside the main exhibit, ten Dutch masterpieces have been recreated as 3D tactile versions for the visually impaired. The contemporary component of the exhibit is presented in the form of a graphic novel of Rembrandt’s life, created by renowned Dutch cartoonist Typex and available for purchase at the museum shop.

The Spectrum of Ethereal takes place at the Trafó House of Contemporary Arts (IX Liliom utca 41, www.trafo.hu) from October 31 to December 7. The space will be transformed into an “expanded kaleidoscope” by three contemporary Dutch artists: Lotte Geeven, Anouk Kruithof and Saskia Noor van Imhoff, whose works all mix mediums from photography, to sculpture, to object− based art and installation.

Thought Sculpture, on from November 4 to 7 at the Trafó House of Contemporary Arts (IX Liliom utca 41, www.trafo.hu) was inspired by German Sculpture Josef Bueys’ social sculpture concept. The premise is to merge the academic components of the art lecture with the visual aspects of performance art. Featured artists include: Priscila Fernandes (PT), Núria Güell (SP), Hedwig Houben (NL), Sjoerd van Leeuwen (NL), Olof Olsson (DN), Francesco Pedraglio (IT), and Société Réaliste (FR/HU).

Riki Mijling and Andrew Leslie’s Local Time runs from November 4 to 26 at FLUX Gallery (IX. Lónyai utca 31). The Parallel Foundation invited the artists to spend one month in Budapest and explore the concept of concrete, non−objective art movements.

Rembrandt self portrait; Erwin Olaf Dawn of the Mother, above

Dutch sculptor Mijling works in corten steel (weathering steel) and metal while Austria’s Leslie uses various mediums to depict his geometric abstractions.

Choreographer Jefta van Dinther (NL/ SE), lighting designer Minna Tiikkainen (FIN/NL) and sound designer David Kiers (NL) present GRIND at the Trafó House of Contemporary Arts (IX Liliom utca 41, www.trafo.hu) on November 5 at 8 PM. The trio’s aim is to alter the viewer’s perception by seamlessly merging dance, light and sound.

Traces explores the works of six Dutch and Hungarian artists whose medium is photography and film. Photographers Pier Pennings and Gábor Kerekes will show at Art9 Gallery (IX. Ráday utca 47) from November 7 to 28, while Zsolt Asztalos and Johan Nieuwenhuize show at neighboring Gallery IX from November 7−20. Filmmaker Gerco de Ruijter will screen his animated film CROPS with music by Michel Banabila at Gallery IX. The new media installation Forgotten Islands by the Dutch duo Persijn Broersen and Margit Lukács comes to Budapest’s Higgs Field Art Gallery (V. Hercegprímás utca 11, www.higgs.hu) from November 14−December 31 following a showing at the Biennale of Sydney.

Literary scholar Prof Ernst van Alphen will give a lecture on the imaginative tendencies of Holocaust remembrance while also offering a Dutch perspective. The lecture will take on November 27, at 6 PM, at the Holocaust Memorial Center (IX. Páva utca 39, www.hdke.hu).

DACS will officially close on November 30 with a concert at A38 (XII. Petőfi bridge, Buda side) by Dutch bands Knarsetand, who play a mix of drum ’n’ bass, klezmer and ska, and My Baby, who perform funky bluesy rock.

F

ew can resist the luxurious taste and texture of chocolate, and now you can learn how to make your very own decadent confections at the Szamos Chocolate School in Budapest. During the weeks leading up to Christmas, classes are offered almost every day, and cover such topics as the manufacture of creamy truffles, marzipan filled bonbons and delicately flavored chocolate bars. Szamos also offers a sugar free chocolate-making course for the health conscious while the little ones can take part in the chocolate school for kids. Team building sessions are available for groups of up to 20 people.

Locally produced artisanal chocolates are growing in popularity and although Szamos’ chocolate confections are quite renowned, it’s their signature marzipan paste that put them on the sweets map. This all began with an eager confectioner of Serbian heritage, Mladen Szavits, later Mátyás Szamos, who trained at some of the most recognized cake shops in Budapest with some of the country’s most esteemed confectioners before going off on his own. He began by producing marzipan decorations in mass quantities first with the help of his family and later in a factory setting. Nowadays, Szamos’ grandchildren run the business, which also includes a large network of cake shops.

During the three-hour courses, which are held at their Váci utca Szamos

Gourmet House, the school’s master chocolatiers will guide students through the various stages of chocolate production, from tempering chocolate on large marble slabs, to pouring it into intricate molds or preparing the creamy centers that fill these irresistible confections.

Students are invited to participate in the creative process, which involves the use of both traditional and modern tools and equipment.

Course capacity is limited in order to allow participants ample opportunity to learn the skills of the trade as well as taste the goods along the way. Upon completion, students will receive a personalized Chocolate School certificate and get to take home their confections in fancy packaging. The recipes, which are taken from the renowned Szamos collection, are also included in the registration fee.

Other classes in the series include marzipan cake decoration and the preparation of traditional Hungarian sweets, as well as demystifying the ever-popular macaroon. Be sure to sign up early as courses are filling up fast.

Visit www.csokoladeiskola.hu for more information, or call: +36 30 233 3412.

1052 Budapest, Váci street 1.

Phone: +36 30 570 5973 www.szamosmarcipan.hu www.csokoladeiskola.hu www.facebook.com/SzamosGourmetHaz

30

WWW.BBJ.HU

4 Socialite

Budapest Business Journal | October 31 – November 13, 2014

BOOK REVIEW

WHO'S NEWS

Bad Banks

Do you know someone on the move?

Send information in English to research@bbj.hu

This is the story of how the economic crisis continues to haunt us, and why the unchecked recklessness of some banks is still a threat to our financial future.

Alex Brummer is an award−winning financial journalist with inside knowledge of all the major players in global banking. His book, “Bad Banks”, is a gripping account of the problems and scandals that continue to bedevil the world banking system some seven years after the credit crunch began.

It follows the fortunes and misfortunes of individual banks, from RBS to Lloyds, dissecting each British, American and European scandal that has occurred over the last ten years. It exposes instances of misselling, money laundering, interest rate fixing and incompetence, and considers the bigger picture: how the failings of the world banking system are threatening to undermine our future economic security.

Brummer says it would be a mistake to think that the economic crisis began in 2007 and ended in 2009 – the period when it was at its most acute. Over the past six years, regulators and policy makers have made efforts to stabilize and reform the banking system in the UK, the U.S. and Europe, but

Name DÁVID IMRE Current company/ position NOERR / ATTORNEY-AT-LAW

as a result of this process, “skeletons have tumbled out of the cupboard”. “Bad Banks” aims to air out these skeletons, and to trace the battles – many of them ongoing – that have taken place since the crisis unfolded.

Both insightful and alarming, “Bad Banks” is an account of institutions once renowned for their probity, but now all too often the epitome of incompetence, and worse.

BAD BANKS.

by Alex Brummer Published by Random House Business Books ISBN 9781847941138 Available to order through www.hungaropress.hu

Name JUDIT SZŰCS Current company/ position MICROSOFT MAGYARORSZÁG / PR HEAD

Dávid Imre recently joined Noerr as a senior attorney-at-law and is now heading up its restructuring practice advising multinational investors in corporate restructuring and transactions. Imre has more than 12 years of broad-based experience having worked in a range of industry sectors for international law firms as well as major corporations in Hungary. He joins Noerr at a time, which is described by Zoltán Nádasdy, Office Head, “when an increasing number of clients are embarking on corporate restructuring, which requires sophisticated legal advice in optimizing business operations as part of post-crisis recovery. We are good at that both locally and regionally.”

As of October 1 Judit Szűcs was appointed to the role of PR Head of Microsoft Magyarország, being responsible for the renewed communication strategy of the company, PR communications, communications inside the firm, social media marketing and CSR. “I am really enthusiastic about my job at Microsoft, which is facing an exciting era. My nomination is an honor and also a great challenge for me to be part of it.”

Name ÁKOS BORUZS Current company/position AVON MAGYARORSZÁG / DIGITAL MANAGER

Ákos Boruzs has been appointed a Digital Manager at AVON Magyarország, being responsible for the coordination of the digital activities of the region’s Pannónia Csoport including Hungary, Bosnia Heczegovina, Croatia and Slovenia. His duties involve marketing, sales, IT, business intelligence, key account management, web technologies and development of AVON’s online order platform. He is taking the place of Veronika Tóth, who is now working as the firm’s Marketing Communications Manager.

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C A T E R I N G

G E R B E AU D G O U R M E T CAT E R I N G B E AU T I F U L E V E N T V E N U E For over a century and a half, Gerbeaud Café has been located in the heart of downtown Budapest. The glass-roofed Atrium in the central courtyard of the building is our most popular events hall. Modern crystal chandeliers and silk curtains make the interior all the more extraordinary. The Atrium is an exceptional location for your event, especially at Christmastime when Vörösmarty Square is in full splendour; with the lights of the Christmas Market and the aroma of hot wine, it is transformed into a magical place. If you would prefer to enjoy dishes prepared in one of Hungary’s finest kitchens at a location designated by you, the Gerbeaud Gourmet Catering team would be delighted to bring them to you.

Gerbeaud Gourmet Catering 1051 Budapest, Vörösmarty tér 7-8., Tel: (+36 1) 429-9000 sales@gerbeaud.hu, www.gerbeaud.hu

WWW.BBJ.HU

Budapest Business Journal | October 31 – November 13, 2014

Restaurants FINE

4 Socialite

31

This is an extract from Fine Restaurants, the Budapest Business Journal’s Restaurant Guide 2014 (www.facebook.com/fine. restaurants). To order your copy of the publication, which costs HUF 2,990, send an email including contact details to Andrea Bognár, bognar.a@amedia.hu

LOU LOU RESTAURANT When Lou Lou, a legendary top gastronomic bistro in downtown Budapest, closed its doors in 2009, the capital lost one of its most characteristic and popular restaurants. Lou Lou was ahead of its time, showing the way...

Lou Lou re-opened in November 2013 and is now ready to introduce to a new generation the everlasting name behind a genuine idea. Lou Lou is a top bistro where the menu matches the secrets of classic French cuisine with the Hungarian range of flavors, with the final result turning out refined, light and inimitable!

Address of restaurant: 1061 Budapest, Székely Mihály utca 2. · Telephone number: +36 (1) 877−6202 · Telephone number for reservations: +36 (1) 877−6202 E−mail address: loulou@lou−lou.hu · Website address: www.lou−lou.hu · Name of manager: Károly Rudits · Name of chef: Attila Nagwy · Opening hours: Monday−Friday: 12:00–15:00 / 18:30–23:00 · Number of seating places: 44 · Year of establisment: 1996−2009 / 2013 ADVERTISEMENT

RIVER ESTATES 1134 Váci út 35.

BLUE CUBE

TWIN OFFICE CENTER

1138 Váci út 182.

1135 Szegedi út 35-37.

MAROS UTCA BUSINESS CENTER 1122 Maros u. 19-21.

PÓDIUM 1065 Nagymező u. 44.

BUDA CENTER

HOTEL MARRIOTT*****

CITY CENTER

1016 Hegyalja út 7-13.

1052 Apáczai Csere János u. 4.

1051 Bajcsy-Zs. út 12.

Prime location offices and a five-star hotel in Budapest +36 1 429 50 50 www.simmoag.hu

Grounded in reality.