Budapest Business Journal 2520

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BUSINESS JOURNAL BUDAPEST

VOL. 25. NUMBER 20

NOVEMBER 3 – NOVEMBER 16, 2017

SPECIAL REPORT

Real Estate Development SPECIAL REPORT

Market Talk: Good Results, Great Expectations Ten years after the start of a memorable and long-lasting crisis, the real estate market is now on the upward side of the roller coaster.

Only the labor shortage overshadows the historical optimism. 10 SPECIAL REPORT

Third Quarter Sees EUR 505 mln Invested The real estate investment market in Hungary is continuing to improve, with EUR 505 million invested into commercial real estate in Q3, pushing the year-to-date total to EUR 1.3 billion.12

Selling the SSCs to Gen Z

SOCIALITE

Hungarian Flowers and the Day of the Dead David Holzer investigates why social niceties, such as the giving of flowers, are so strong in Hungary, and in particular why the Day of the Dead celebrations are so widely embraced here.  29

NEWS

Competitiveness Endangered by Labor Shortage There are nearly 4.5 million people at work in Hungary, the unemployment level has sunk to a historical low of 4.1%, and wages keep rising. But competitiveness remains a problem. 3

N ES BUSI

S

Zoltán Szabó, the managing director of BT ROC Kft., has called on the SSC sector to come together in a joint effort to prevent the upcoming Generation Z from leaving the country en masse. 6 NEWS

Boatly Aims to Rock the Sharing Economy Boat Our new Startup Focus feature aims to turn the spotlight on ambitious new companies and ideas, starting with the Lake Balaton-based (for now) sharing economy operator Boatly. 4

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Budapest Business Journal | November 3 – November 16, 2017

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STATE MUST DO MORE TO BOOST SME PRODUCTIVITY

W

hen Prime Minister Viktor Orbán appointed György Matolcsy to the role of Governor of the National Bank of Hungary (MNB), there were more than a few raised eyebrows. The bank is a state organ, of that there is no doubt, but it is one that traditionally enjoys a degree of separation from government. The European Central Bank was just one influential body to worry that some of that independence was being eroded.

For the uninitiated, or those with short memories, Matolcsy was a deeply political appointment. He had served as Minister of Economy (2000-02) during the first Orbán cabinet and Minister of National Economy in the second (2010-13). He was the author of the hefty bank taxes imposed when Fidesz returned to power in 2010, and nationalized private pensions. He had been famously described by Orbán as his “right hand”.

The government, it seems fair to say, had regarded the previous governor, András Simor, as something of an arch enemy.

He had tried to oppose government policy, it had tried to squeeze him out of office by cutting his pay by 75%.

For the record, Matolcsy told CNBC in November 2013 that fears of political interference were groundless. “It hasn’t been happening so far and it will not happen,” he said. “We are strategy partners with the government – and with the European Central Bank. […] The central bank of Hungary is completely, 100% independent from the government.”

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I mention all of this as background, because the MNB has just published its first “Competitiveness Report”, which will become an annual snapshot of where Hungary is, and what it needs to do to improve. It apparently uses more than 100 indicators to assess competitiveness, and more than 90% of those are said to be objective. In other words, it becomes much harder to fudge the issues.

Much of what it says will come as little surprise to those who know the markets here well. It does trumpet government policy in laying the groundwork, but it also acknowledges that “further steps are needed in order to improve competitiveness”.

Not least among these is an urgent need to improve the productivity of the country’s SMEs. This is a problem across Central and Eastern Europe, but Hungary even scores poorly against its Visegrád peers (Czech Republic, Poland, and Slovakia), the bank says. It also pinpoints the need to do more about wage convergence and to free up labor reserves. The last is interesting, because Hungary has just reported record-low unemployment, as our story opposite details. For all that undoubted success, the Roma, women, the disabled and older people are all underrepresented in the workforce.

The report also makes it clear where the government should do more; it encourages enhancements in government efficiency (don’t we all?) and says the government can do most to boost productivity by creating a supportive business and regulatory environment, by further easing the burdens on enterprises and labor, and by reducing state bureaucracy.

As a business newspaper, of course we back those calls, not least the cutting of red tape. (We have lost count of the number of times politicians, of all stripes and colors, have stood up and promised to take a pair of shears to the red ribbon. It would be nice to see it actually happen, for once.) But it does seem interesting when the report comes, at least partially, from the PM’s former “right hand”.

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Budapest Business Journal | November 3 – November 16, 2017

News

///macroscope

Shortage of Workforce Endangers Competitiveness

There are nearly 4.5 million people working in Hungary, the unemployment level has sunk to a historical low of 4.1%, and wages keep rising. The record-breaking figures give the government reason to proudly spotlight the success of its unorthodox economic measures; however, even the government admits that in terms of competitiveness, Hungary has room for improvement.

ZSÓFIA CZIFRA

The average number of employed people

was

4,451,000,

some 60,000, or 1.4%, more in JulySeptember than the corresponding period a year earlier, the Central Statistics Office (KSH) has reported.

The employment rate increased in all groups: it went up by 1.6 percentage points to 68.7% for the 15-64 age group. The number of employed men increased by 2.2%, and their employment rate rose by 2.3 percentage points to 75.9%. The number of employed women increased only slightly, while their employment rate grew by 0.9 of a percentage point to 61.7%.

The employment rate among young people aged 15–24 years increased by 0.2 of a percentage point to 29.3%. The number of employed people in the “best working age”, i.e. the 25–54 age group, and in the older, 55–64 age group both

“In recent years, the macroeconomic fundamentals necessary for a turnaround in competitiveness consolidated in Hungary, but our report confirms the finding of international surveys that further steps are needed in order to improve competitiveness,” the report reads.

Further Steps

increased, with the employment rate rising to 84.2% in the former and 52.4% in the latter.

The level of employment of the population aged 15–64 increased in all of Hungary’s regions, the most significant growth being seen in Central Transdanubia.

The employment rate was highest in Central Hungary (72.5%), and lowest in Southern Transdanubia (63.6%).

At the same time, Hungary’s rolling average three-month jobless rate dropped to 4.1% in July-September 2017, from 4.2% in the previous three-month period, and 4.9% in the equivalent period of 2016.

The average number of unemployed was 189,000, some 38,000 fewer than a year earlier, according to a first release of data by KSH.

Favorable Trends

Since the government came to office in 2010, 741,000 more people have landed a job, of which 560,000 are in the private sector, Minister for National Economy Mihály Varga said, commenting on the KSH data, and attributing the success to the favorable economic trends and supportive government measures.

As a result of the six-year wage deal nailed last November, real wages have increased by more than 10% in 2017, and the number of people in employment has been rising robustly, at a pace unseen since the change in regime in 1989, Varga said.

This clearly proves that the wage deal

has been successful, it has had a positive effect on the labor market due to the fact that it has substantially raised smaller wages and it has reduced taxes payable by employers, Varga said.

The unemployment rate has fallen to a level unseen in the past

25 years,

and this has also been the result of measures such as the Job Protection Action, the Youth Guarantee Program and other government-initiated employment and economic activity incentives, the minister added.

While the government has good reasons to be proud of its achievements, as the figures seem to be prove the success of its unorthodox economic policy, there is still room for improvement, especially when it comes to competitiveness.

Hungary keeps underscoring in every regional comparison in terms of sporting a competitive business and economic environment.

Addressing the issue, the government set up its National Competitiveness Council last fall, and the National Bank of Hungary (MNB) has for the first time published a “Competitiveness Report”, an exercise that it will repeat on an annual basis in the future.

Consolidated Fundamentals

The MNB used more than 100 indicators to assess competitiveness, and more than 90% of them are said to be objective.

While noting that a turnaround in employment has taken place, the bank identifies several further steps in order to improve Hungary’s competitiveness. This includes improvements in productivity (especially among SMEs), wage convergence and the freeing of labor reserves. It also mentions that possible contributions from the expansion of nontypical forms of employment and the enhancement of government efficiency are also necessary.

Of the role of the state in the process, the MNB report says that the government can primarily contribute to productivity growth by creating a supportive business and regulatory environment, by further easing the burdens on enterprises and labor, as well as by the reduction in state bureaucracy.

The report also mentions the responsibility of the financial sector, noting that while companies’ financing possibilities have improved considerably in recent years, progress is needed in the fields of banking sector efficiency, operating costs and digitalization as well.

But one the greatest challenges the Hungarian economy faces, according to the MNB, is to ensure the adequate quantity and quality of available human capital.

Numbers to watch in the coming weeks On November 3, KSH will publish the number of construction permits in the first three quarters of the year.

This will be followed by the September retail trade data on November 7. A potentially exciting piece of macro data will be released a day later, when we’ll find out whether the good performance of industry in August continued into September. October consumer prices will come out on November 9. A day later, Fitch Ratings Inc. is scheduled to review Hungary’s sovereign rating.

4 | 1 News

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Budapest Business Journal | November 3 – November 16, 2017

Boatly to Rock Sharing Economy Boat Our new startup focus aims to turn the spotlight on ambitious new companies and ideas, starting with this Lake Balaton venture.

“And for users it doesn’t get more comfortable than this, since they can select and book their dream boat with just a few mouse clicks.”

The venture was launched with a selection of just six boats, but it became clear fast that demand would explode once word got out about the new service.

LEVENTE HÖRÖMPÖLI-TÓTH

With sailing gaining momentum nationwide, it was only a matter of time before a startup was ready to tap into the opportunity to ride the waves of growth of this trend.

The online platform of Boatly connects private and corporate boat owners with those who would like to rent a sail or motor Capacity Issues boat, with or without a captain, during “We quickly faced capacity problems, as their stay at Lake Balaton.

“Boatly is an amazing opportunity for owners demand outpaced our speed to register to make money during periods when they don’t boats in our system,” Deák explains. use their boats, through which maintenance “Therefore, our main task now is to boost costs can be cut,” founder Márton Deák tells their number further.”

Hiking the number of available boats the Budapest Business Journal.

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is made difficult by administrative and expense-related hurdles. Still, for now some

50 units

can be chosen from, with more in the pipeline.

As the founder explains, demand varies very much, so Boatly is in the comfortable position of being able to target different niches. Bigger groups of people seek larger units of more than 35 feet (10.6 meters), but mid-sized ones of up to 25 feet (7.6 meters) are also popular. Families would be best off with renting 18-feet (5.5 meter) powered boats, Deák says.

Interestingly, Boatly is no competitor to charter companies. In fact, it provides an extra sales platform for them, with charter companies now registering their boats to benefit early from the evolving market traction.

“The market potential is vast. Compared to its size, Balaton has way too few boats, counting around 3,000,” Deák estimates.

“Even Lake Fertő, on the Austrian border, has more than that.”

Considering the fact that ever more people seem to be getting into sailing, this provides ample room for boosting revenues. As far as further expansion is concerned, building a Europe-wide presence could be a realistic plan. A similar service exists only in France on the continent, so if the scheme proves viable, there is no reason to keep within the borders of landlocked Hungary.

“The word is spreading about Boatly, which was apparent at the latest boat show at Balaton,” Deák says. “Winter is expected to be rather quiet, but interest should pick up as early as April, since that is when many people start making arrangements to make their summer sailing dreams come true. We expect there will be more and more of them and that they will remember where to look for the right boat to get the most out of their money.”

If you know of a startup we should feature, email news@bbj.hu, including Startup Focus in the subject line.

GLOBÁLIS JELENLÉT, HELYI ELKÖTELEZETTSÉG

A sikeres cégvezeto ˝k folyamatosan keresik a leheto ˝ségeket vállalatuk továbbfejlesztésére. Vállalati kapcsolattartóink segítik Önöket a helyi kihívások megoldásában, és emellett hozzáférést biztosítanak a Citi páratlan globális hálózatához. Ily módon nyújtunk széles köru ˝ banki szolgáltatásokat a magyarországi vállalatoknak. A Citi több mint 200 éves tapasztalatára építve válaszolunk ügyfeleink változatos igényeire. Kiváló szakembereink, személyre szabott megoldásokkal támogatják Önöket üzleti céljaik elérésében, függetlenül attól, hogy ügyfeleik Magyarországon, Közép-Európában vagy a világ bármely más táján találhatók. www.citibank.hu

© 2017 Citigroup Inc. Citibank, N.A. Member FDIC. Citi, Citi and Arc Design and other marks used herein are service marks of Citigroup Inc. or its affiliates, used and registered throughout the world.

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Business

Generation Z Ready to Seek Fortune Abroad to remember that the SSC sector is in the position to keep pace with corporations based abroad, the BT boss said.

An overwhelming majority of people aged 14-25 in Hungary expects a lot more of their peers to work abroad than now within the next ten years, according to the latest survey.

Strong Advocates

LEVENTE HÖRÖMPÖLI-TÓTH

The SSC sector must, therefore, project a better image of itself to make the young believe that they could pursue an equally rewarding career in Hungary, warns one key player.

“In order to stay in the game for young employees, you need to have detailed information on their dreams and expectations,” argued Zoltán Szabó, managing director of British Telecommunications (BT) ROC Kft., revealing the findings of a survey commissioned by BT that specifically addressed the Hungarian members of Generation Z, that is those aged 14 to 25.

The purpose of the research, conducted

by Medián Institute, was to get an idea of how these young people, set to enter the labor market very soon, imagine their own career perspectives one decade from now.

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The overall picture shows that priorities held dear by the next generation of employees almost exactly overlap with what the shared service center sector is able to offer. However, awareness of that fact is still low. Only 21% of respondents said they know about the existence of SSCs at all, and it was clear to just 11% what they truly stand for.

Top Priorities

Salary and bonuses top the priority list of future professionals, together with job security, whereas the good reputation of the firm and CSR were found to be less important as a factor.

“What is rather alarming, though, is that women would be happy with 20% less money than men, even before appearing on the labor market,”

“We strongly advocate that it makes more sense to stay here and walk a rewarding career path than go to another country where only less prestigious jobs may be a realistic option,” Szabó warned.

Head of research at Medián Institute, László Beck further revealed some results about Generation Z’s online behavior and habits. Online news sites assume a primary role in serving as a source of information for the majority.

However, many don’t even surf those sites directly, but rather find snippets of information on social media platforms.

In other words, they mostly learn about important news as shared information, which means that the impact of friends and social influencers is huge, while the influence of parents in this regard is fading.

The survey also wanted to dig deeper Zoltán Szabó, managing into what exactly it is that this upcoming director of BT ROC Kft. generation does online. Chat services and social media sites carry the day. But text is highlighted Szabó. Simultaneously, not their main channel of communication; the majority of those surveyed believe in fact, longer texts are hardly ever posted. that the gender gap in terms of salaries Interestingly, only one in every three post should be closing gradually. a photo – two-thirds say they only check what friends post.

Still, the leading means of communication for the 14-25 age group “Mass emigration is a remains images, this is how they prefer to receive and share information and to massive problem; we are express themselves. urging the forming of a Questions were also posed for the survey coalition with other market about how much time is spent gazing at screens. Accordingly, the average players to turn the tide.” member of Generation Z has a screen time of some 6.5 hours per day, but within that, TV is of marginal importance. Not A key trend to note is that some 83% of surprisingly, 70% of that screen time is respondents think more people will be devoted to mobile phones and 25% to PCs, working outside the borders of Hungary respectively, with tablets ranking last at 2%. in ten years than now, and nearly one half of those surveyed say they are certain or likely to leave the country for working purposes. This indicates that those with the most competitive skills and knowledge are planning to depart, which will put the economy into a difficult position.

Findings also hint that Generation Z is typically convinced that their degree would be more sought-after in a foreign country than at home, and therefore it would be easier to land a job there.

“Mass emigration is a massive problem; we are urging the forming of a coalition with other market players to turn the tide,” Szabó noted.

Another worrisome phenomenon is that there is hardly any interest in vital professional fields such as medicine or pedagogy. Just 2% of respondents said they were planning on becoming a doctor, while 10% are considering studying to be a teacher.

László Beck, head of Although high wages have been research at Median Institute. indicated as crucial in general, it is key

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Budapest Business Journal | November 3 – November 16, 2017

WHO’S NEWS Italian Chamber Elects President Francesco Maria Mari has been elected president of the Italian Chamber of Commerce for Hungary (CCIU) by its executive council. He replaces Ferdinando Martignago, who’s mandate has expired.

In the past three years, Mari has filled every executive position at the CCIU: administration councillor, treasurer, vice president and, most recently, general secretary.

He is described as an entrepreneur who believes firmly in the mission of the chamber, that is to contribute in a concrete way for the development of the Italian businesses in Hungary.

Carrying on the work of Martignago, the new president has set three strategic priorities: expansion of the chamber’s presence both in Hungary and Italy territory; the development of networking opportunities; and, thirdly, tight collaboration with all elements of the “Sistema Italia” (the embassy, the Italian Trade Agency and the Italian Institute of Culture) “in order to offer the maximum support to the Italians who would like to do business in Hungary and to Hungarians who want to export in Italy”.

Mari, graduated in law and has a MBA from Bocconi University. He has more than 20 years’ experience in management, having worked for the likes of Saatchi & Saatchi, RAS Allianz, Banca Popolare Commercio & Industria and Gruppo Mediobanca. He also has 15 years’ experience in corporate startups in the services, web and telecoms sectors. He currently works in the real estate sector operating in Hungary, Italy and Spain.

Telenor Hungary’s HR Division Names Director

As of November 1, Judit Kiss will lead the HR Division of Telenor Hungary as new HR director.

Her predecessor, Zoltán Németh, is leaving the company after 15 years.

During her career, she spent more than 15 years in HR in various management, organizational development and executive coaching positions. She was HR Director of Shell Hungary.

Zoltán Németh will leave Telenor Hungary upon the expiry of his term as chief HR officer. He joined the company in 2002 and was appointed to his current role in 2012. Within Telenor Group, he was also CHRO of Telenor Montenegro for 18 months. He played a key role in developing Telenor Hungary’s HR strategy and employer profile.

“Our industry is in a state of constant transition which requires a high level

Do you know someone on the move? /// Send information to news@bbj.hu

of flexibility from us as an employer,” said Alexandra Reich, CEO of Telenor Hungary.

“I’m grateful to Zoltán for helping us become a competitive player in Hungary’s telecommunications market with his many years of hard work and experience.

I’m pleased that we can continue the work he started with such an outstanding and experienced professional as Judit.”

Vodafone Hungary Seeking CEO Alexandre Froment-Curtil, the CEO of the Hungarian unit of mobile telecom munications service provider Vodafone, will leave to become CEO of Vodafone Egypt in January 2018, the company has announced.

Froment-Curtil joined the Hungarian subsidiary of Vodafone in 2012 as deputy CEO for the retail business, and was appointed CEO last year.

Under his leadership, online news portal origo.hu cites the announcement as saying, the company’s primary objective has been to attain a high level of customer satisfaction through the introduction of innovative solutions and network improvements. Thanks to this, it adds, Vodafone’s results have improved on the domestic market and customer satisfaction is described as excellent.

Vodafone has started the process of selecting a successor, according to state news wire MTI.

István Pozsgay Joins CMS Budapest István Pozsgay, who brings more than 20 years of experience working as a commercial, transactional and regulatory legal professional in a multinational corporate environment at U.S.-based insurance companies in Hungary, has joined the Hungarian office of law firm CMS Cameron McKenna Nabarro Olswang LLP. Before joining CMS, Pozsgay was head of legal and data protection officer at MetLife Hungary and general counsel and compliance officer at AIG/ Alico Hungary, where he also gained experience in compliance and data protection matters.

“István’s work as a corporate counsel earned him an outstanding reputation on the market and a strong national and international network of key figures in the insurance sector, which will be an invaluable asset to us,” said Zsolt Okányi, CMS’s global head of dispute resolution and head of dispute resolution at CMS Budapest.

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INSIDE VIEW

INNOVATION

sponsored by

Insight

The Vimage team.

A Free Hand for Creativity

admits Czigler. Workshops, which have been taking place for a while now, will help in this process.

“We loved what Zoltán Takács, Telenor’s vice president in charge of innovation told us: they don’t want to force anything upon us, we are given a free hand to pick whatever we wish from among the tools provided by the program. We’re in deep water now, and it’s our turn to keep afloat,” says Czigler.

With its seven members, the Vimage team Finding Chemistry is unusually big for a startup, but size can The team quickly found chemistry be an asset at this stage. Overcapacity, with mentors Veronika Pistyur (Bridge Vimage was one of the best three which was typical before the acceleration Budapest) and Balázs Várkonyi (Extreme candidates shortlisted to participate program, is now a thing of the past; Digital), but it is undeniable that full-blown everybody is super-busy with bringing in this year’s acceleration scheme. marketing would make sense only after As Czigler notes, the concept of the project to the next stage. Telenor’s the app becomes available in Apple Store cinemagraphs fascinated him from early in-house staff network is certainly key as and Play Store. However, beta testing is on. However, it was also clear to him that it well in this regard, since it can be used for requires costly technology to produce it. So, already available for users interested in test purposes. the idea was to come up with a more widely cinemagraphs through Vimageapp.com.

Another key milestone might just be “Mentorship means a lot to us, but step accessible replacement. The strategy around the corner: Extreme Digital is shifted to target filters and different digital one should be to specifically determine planning to feature Vimage in its future in the first place what it is we don’t know,” marketing campaigns. features that are suited to boosting digital

The Vimage team say they are thrilled to be taking part in the second season of Telenor Accelerate, the corporate startup program run by Telenor Magyarország.

But they are also aware they are swimming in deep water now, and it is up to them to keep afloat.

“We have amazing support from Telenor, just as we had expected, and it is obvious they are trying to be helpful in any way possible. It will not be up to them whether we will succeed,” Zsolt Czigler tells the Budapest Business Journal of his first impressions gained in the program.

Czigler is a founder of Vimage, an app that allows users to make cinemagraphs, that is photos featuring animated movements, by using their smart phone.

communication, yet for the fraction of the costs associated with cinemagraphs.

Vimage relies on a freemium model, since experience shows that users opting for the free product share it extensively, which further increases visibility. On the other hand, paying customers are expected to come from corporate players who can use the solution in their newsletters or social media communications.

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Special Report Real Estate Development

Market Talk: Good Results, Great Expectations 10 EUR 505 mln Invested in Commercial Real Estate12 Developing a ‘Green and Livable’ Budapest13 Poised for Office Development Boom 14 Retail Development Ready to Take Off16

The real estate market is seeing increased activity on all fronts, with a lack of labor and large plots the only blots on the horizon.

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Budapest Business Journal | November 3 – November 16, 2017

Market Talk: Good Results, Great Expectations Ten years after the start of a memorable and long-lasting crisis, the real estate market is now on the upward side of the roller coaster.

Most economic and regulatory circumstances seem to benefit the sector, and it is basically only the labor shortage that overshadows the historical optimism.

ÁGNES VINKOVITS

Those who managed to survive what was, in almost all cases, the complete shutdown of property development projects in the past decade are now harvesting the fruits of their luck and endurance. The real estate sector is facing a favorable tenant demand environment where it is even difficult to build quick enough and big enough.

Budapest Business Journal. He expects the tendencies to carry on until the

middle of

2019.

However, as a result of the undersupply, if a renter is looking for a new large space right now, they might have to wait more than a year to find one. Indeed, most of the 350,000 square meters of offices now

“Lifestyle and customer experience are in the focus all the time,” he says.

Suppliers need to have a comprehensive integrated approach, Cuvin emphasizes, adding that it is not only the actual needs of the tenants but also the possible future functions of a building that a responsible developer has to keep in mind. “The whole life cycle of a building has to be taken into consideration as we build it for the future.”

“It is a novelty that renters have clear needs,” ConvergenCE’s Zeley points out, adding that previously tenants did not have much idea about the technological attributes of a building, but bad experiences have taught them what are the important details worth paying attention to.

“If you spend a couple of years at an office where all your colleagues fall asleep at three in the afternoon, you start thinking that there might be something about the oxygen supply of the room,” Zeley gives as an example.

significant advantage if developers and investors have a background of reliable constructors,” Árendás adds.

“Requirements are also rising, not only in terms of office size, but also in terms of office and service quality,” “One of the most notable challenges is in finding suitable providers who can supply the infrastructure for multiple customers,” IMMOFINANZ’s Nagy says of another problem. “When it comes to communication services, the issues can become complex,” he says, using connectivity, networks, data storage, security and processing as examples.

Dynamic Price Rises

Stefan Cuvin, TriGranit. being developed have already been rented in advance. “Pre-renting is definitely the direction the market goes in,” Zeley says.

“Investors have an undiminished enthusiasm and the residential market has gone through a very dynamic price increase due to the delayed investments of the past decade, the investment-oriented property purchases and the government’s certain steps to stimulate the demand.”

Undersupply is pushing the prices toward historical highs on both the office and the residential market. “Investors have an undiminished enthusiasm and the residential market has gone through a very dynamic price increase due to the delayed investments of the past decade, the investment-oriented property purchases and the government’s certain steps to stimulate the demand,” Gergely Árendás, managing director at Property Market says.

TriGranit’s Cuvin also welcomes the state initiative in reducing the VAT on newly built residential

buildings to

5%.

“It was a breath of fresh air,” he says.

However, the regulation is planned to lapse at the end of 2019 and market players would like to know now if it will be extended.

Yet, demands have increased not only for quantity but also for quality. Tenantcentered thinking is more important than ever, major market players interviewed by the BBJ agree.

Friendly Workplaces

“Requirements are also rising, not only in terms of office size, but also in terms of office and service quality,” country manager of IMMOFINANZ Viktor Nagy notes, adding that people are looking for friendly workplaces Viktor Nagy, IMMOFINANZ. which merge social and business functions. IMMOFINANZ’ myhive office concept, currently available The 8% vacancy rate leaves property at five different locations in Budapest, developers as well as asset managers aims to combine these by providing both busy and optimistic. “I’ve been huge community spaces and a wide in the business for 20 years by now, range of after-work events. but have never experienced such a TriGranit’s development director Stefan thing,” Csaba Zeley, director of asset Cuvin agrees about the need to provide management at ConvergenCE tells the more than just a place for people to work.

Gergely Árendás, Property Market.

Yet, developers still have some headaches. “The labor shortage is hurting,” Cuvin says, adding that a lot of qualified people were lost with the crisis who will not be coming back, as they are now working in other sectors or have found work abroad. The lack of workforce increases both the costs and the length of time of construction. “As such, it is a

Csaba Zeley, ConvergenCE. Despite these complaints, market players share a high degree of optimism.

TriGranit, for example, has 100,000 gross leasable area (GLA) in the process of starting, spread over the cities of Budapest, Bratislava, Katowice and Krakow.

“It is a pretty solid pipeline,” Cuvin acknowledges. Although he says he cannot name which project is closest to his heart (“you cannot pick a favorite child”), at the moment he is particularly enthusiastic about the Millennium Gardens project, which he says is a uniquely designed ten-story building with e-car chargers and a lots of green areas next to the Palace of Arts.

Property Market is developing BudaPart Gate office building and, in the framework of its mixed-use BudaPart project, two residential buildings. The development of the MOL Campus is also planned to kick off in the first half of 2018. “We see the future very positively,” Árendás confirms.

“There is a huge ‘hurray-optimism’ now,” Zeley agrees. However, instead of growing just for the sake of it, ConvergenCE says it prefers to keep its high-quality clientele and “give good office buildings to the city”. Many companies grow very big in good times and then vegetate for years without profit when the crisis comes, he explains. “We have different ambitions.”

www.bbj.hu

3

Budapest Business Journal | November 3 – November 16, 2017

Real Estate Development

///in brief

Penny Market Opens HUF 9 bln Logistics Center in Veszprém

Bridgestone Opens HUF 85 bln Factory

develop a dual vocational education system, Lepsényi said.

German-owned discount market chain Penny Market inaugurated a HUF 9 billion logistics center in Veszprém (115 km southwest of Budapest) on October 17, reported veol.hu. The logistics center is the company’s third in Hungary, and will serve the western part of the country. Penny Market executive manager Jens-Thilo Krieger said the greenfield investment, which is 26,500 sqm and can hold 15,000 pallets, created 150 workplaces and will significantly increase the capacity and flexibility of the company. The center will supply 59 shops, providing 28% of the logistics capacity of the company. Penny Market has 208 stores and more than 3,000 employees in Hungary. According to public records it had over HUF 190 bln sales revenue and HUF 488 million after-tax profit last year.

Knorr-Bremse Completes World’s Largest Factory for Railway Braking Systems

Győr-Gönyű Port on Danube Opens

Central and local government officials inaugurated the Győr-Gönyű port on the Danube on October 18, reported infogyor. hu. The facility received HUF 8 billion in state funding, and is now the largest intermodal port in the west of Hungary.

Five ship stands were constructed at the port, along with 2.2 km of industrial rail line, a 1.5 km road, a craneway and more than 620 sqm of buildings, József Németh, the head of the regional water directorate, said. In addition to operator Győr-Gönyű Kikötő Zrt., Germanowned thyssenkrupp and Wuppermann use the port. Last year, Győr-Gönyű Kikötő Zrt. and thyssenkrupp shipped almost 350,000 tons through the port.

Wuppermann, which is new to the port, expects to ship and receive an annual 500,000 tons.

CSABAcast Inaugurates HUF 5.6 bln Production Base

Germany’s Knorr-Bremse Rail Systems inaugurated its new production and training facilities in Budapest, built with the help of a HUF 153 million grant from the government, reported government news portal kormany.hu. The newly completed HUF 5 billion project makes Knorr-Bremse Rail Systems Hungary the world’s leading manufacturer and developer of railway braking systems, kormany.hu said. Minister of State for Economic Regulation István Lepsényi noted that it was important for the government that the majority of German enterprises had long-term plans for Hungary. Relations between Hungary and Knorr-Bremse are multifaceted: the company has been a strategic partner, was the first to join the government’s supplier development program and has also been active in joint efforts to ADVERTISEMENT

Special Report | 11

Automotive industry supplier CSABAcast Könnyűfémöntöde Kft. inaugurated a HUF 5.6 billion production base in the industrial park of Apc (70 km northeast of Budapest) on October 20, which will double production capacity and create 130 jobs, reported magyaridok.hu. Construction of the 17,000 sqm base was supported with a HUF 940 million government grant, state secretary of the Ministry of Foreign Affairs and Trade Levente Magyar said at the ceremony. In addition to the grant, CSABAcast can avail itself of almost HUF 1.9 bln in development tax credits in the coming years, said managing director Béla Hetzmann. The company’s revenue exceeded HUF 10 bln last year.

CSABAcast employs more than 400 people to turn out some eight million vehicle parts a year, of which 95% are exported.

Japanese tire maker Bridgestone inaugurated the HUF 85 billion capacity expansion of its plant in Tatabánya industrial park on October 25. The firm has doubled the size of the factory to 144,400 square meters, increased the number of employees by 500 to almost 1,100 people, and its production capacity to 3.6 million tires, according to a press release sent by Bridgestone. Prime Minister Viktor Orbán, who participated at the ceremony, said Hungary’s government had supported the investment with an almost HUF 2.4 bln grant. The development is not only significant for Bridgestone, but for the Hungarian economy as well. The plant now carries out significant R&D activity, which has resulted in Bridgestone deploying high added value activities and the development and production of DriveGuard, one of its most modern tires, to Hungary.

Kall Ingredients Kft. Opens HUF 45 bln Plant

Hungarian-owned food industry company Kall Ingredients inaugurated a HUF 45 billion isoglucose plant in Tiszapüspöki (135 km east of Budapest) on October 30, reported hvg.hu. László Kárpáti, the majority owner of Kall Ingredients, and Lőrinc Mészáros of Opus Global, a minority owner in the company were also present. (Opus Global announced on that day that it indirectly holds a stake conferring 6% of voting rights

in Kall Ingredients.) The Hungarian government awarded Kall Ingredients a HUF 9.2 bln grant for the project, which created almost 500 jobs.

MKB Bank and Eximbank provided HUF 30 bln in credit for the plant.

Eximbank estimates the plant could lift Hungary’s GDP by HUF 185 bln, Prime Minister Viktor Orbán said at the ceremony. The plant is expected to create 500 new jobs directly and 750 indirectly. It is expected to generate annual revenue of HUF 55 bln, turning 530,000 ton of maize into sweetener.

min

more time for myself since the concierge has been running my errands. my h i ve - o f f i ce s . co m

Vienna Warsaw Budapest Prague Bucharest A brand of IMMOFINANZ .

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www.bbj.hu

Budapest Business Journal | November 3 – November 16, 2017

Q3 Sees EUR 505 mln Invested in Commercial Real Estate DR. BERETHALMI PÉTER / PARTNER

WHAT IS THE FUTURE OF COMMERCIAL REAL ESTATE MARKET IN BUDAPEST?

The real estate investment market in Hungary is continuing to improve, with EUR 505 million invested into commercial real estate in the third-quarter of the year, pushing the year-to-date total to EUR 1.3 billion, according to figures released by JLL.

It does not seem hard to prognosticate the further growth of the market under the current circumstances but an outlook on the influential factors could be helpful before jumping into conclusions.

THE BOOM IS STILL NOT OVER? Shopping malls such as Polus and Campona were sold at the beginning of this year and the boom is probably far from over.

The sale of Aréna Plaza indicates that the tendency is still continuing and that the boom is not over. Office complexes like Millenium Towers, Váci Corner Offices, Eiffel Square Office Building and Váci Greens and Krisztina Palace were also sold, and a further transaction was realised when National Bank of Hungary sold Eiffel Palace to Corpus Sireo Real Estate – three years after acquiring it in 2014.

Nagy és Trócsányi assisted the MNB acquisition, which was well publicised. MNB

Interior of the 14,500 sqm Eiffel Palace, which recently changed hands for circa EUR 54 mln.

sold Eiffel Palace 19% higher price than it was bought for. Hungarian participants are driving the market at least their role has become inevitable. In a recent transaction West End Business Center offices were acquired by OTP real estate fund but we could list here several acquisitions by Erste Real Estate Fund and Diófa Real Estate Fund as well. According to experts, it is possible that the number of transactions will fall back slightly but the value of the transactions will increase which may support the healthy and balanced growth of the market. 2016 was the year of upswing but the future holds ongoing expansion and thus the 1,7 billion euro investment realised in 2016 in the Hungarian commercial real estate market will most likely be repeated or exceeded in 2017.

VACANCY RATES HITS ROCK BOTTOM - MARKET IS THRIVING As land has a limited amount, location is key for investors, since finding the hot spot is crucial even if the demand is high – causing record low vacancy rates. In case of such a historically low rate as it is lately, investors have promising prospects – as experts of Cushman & Wakefield have predicted that development activity continues to accelerate.

Based on the published analysis of BRF it can be stated that Budapest has committed renters, therefore has a tempting vacancy rate - decreasing from quarter to quarter nowadays, which does not seem to stop soon. South-Buda has 3.3% but the first place can be concerned with the expansion of the market since the current office stock (3.35 million sqm) will increase with 700.000 sqm new supply until 2019 based on the latest forecasts in Q3 (exceeding the expectations of Q1).

NAGY ÉS TRÓCSÁNYI – REAL ESTATE PRACTICE Real estate has been a core part of Nagy és Trócsányi's practice since the establishment of the firm and we are widely recognised for providing clients with the full spectrum of related services including: sale and purchase, lease encumbrances, real estate finance, real estate litigation, real estate transactions, greenfield development.

GARY J. MORRELL

“This year is in-line with 2016 when we recorded the disposal of more than one hundred buildings and the annual transaction volume reached EUR 1.7 bln.

This year has seen a lower number of lot transactions, but a higher average lot size,” commented Benjamin Perez-Ellischewitz, head of capital markets at JLL Hungary.

The largest transaction in the thirdquarter was the acquisition by the prolific South African investor, NEPI Rockcastle, of the 66,000 sqm Aréna Plaza for EUR 275 mln (as reported in the October 6 issue of the Budapest Business Journal).

This is the first entry by NEPI Rockcastle into the Hungarian market; the investor/ developer has already built a strong CEE retail portfolio in Croatia, Poland, Romania and Slovakia.

NEPI Rockcastle has also purchased a 22-hectare development plot adjacent to the Aréna Plaza for a potential extension of the project. The company has the policy of redeveloping and extending its purchases as a long-term investor.

Notable Deal

Another notable deal was the purchase by the Germany-based asset manager, Corpus Sireo of the 14,500 sqm Eiffel Palace for circa EUR 54 mln from the National Bank of Hungary (previously reported by the BBJ in the September 22 issue).

The classic turn-of-the-century building was redeveloped into a landmark office building by Horizon Development and subsequently sold to the central bank.

Corpus Sireo completed its first acquisition in Budapest in 2016 with the purchase of the Park Atrium office building.

“I think that the total investment volume for 2017 will be broadly in line with last year, which is about EUR 1.6 bln-1.7 bln,” said Tim O’Sullivan, head of capital markets at CBRE Hungary, who advised the vendors on the sale of Arena Plaza.

“In the first half of the year we traded

around

EUR 850 mln

and I would expect something similar for the second half of the year. To the best of my knowledge there are around ten transactions in due diligence, due to close between now and the yearend. These vary across all sectors – retail, office and industrial. So, I think that the final half of the year will be very busy,” O’Sullivan added.

He sees the market as being dominated

by Hungarian domestic equity and this is essentially tied up in three big funds – Diofa, Erste and OTP. Joining this group are international investors who tend to be the most active buyers of core, well leased, income-producing assets. For the more opportunistic assets this tends to be the more European (Austria, United Kingdom) and Israeli equity funds.

“I would argue that the market is split 50-50 between the core and opportunistic investors. So, we have a healthy mix between the two types of buyers,” O’Sullivan added.

JLL estimate prime office yields at 6% for office and shopping centers and 7.5% for logistics. This represents a 75% basis point differential for offices with Czech Republic.

www.bbj.hu

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Budapest Business Journal | November 3 – November 16, 2017

Special Report | 13

Developing a ‘Green and Livable’ Budapest More “green and livable quarters” are being developed in Budapest according to members of the Hungarian Green Building Council (HuGBC).

Agora Budapest by HB Reavis.

GARY J. MORRELL

The “Better Places for People Conference” explored the issue of eco-building from environmental, socio-economic and business perspectives. The one day event, attended by architects, developers, facility managers, building managers and green building professionals, discussed the opportunities of green and healthy developments with relation to interiors and the rehabilitation of city quarters. With regard to the residential sector the event considered the development of sustainable homes. A number of example developments were presented at the conference.

Hungarian company Futureal is constructing the Budapest One business park adjacent to the terminus of the Metro 4 line. The

45,000 sqm development

forms a key part of the redevelopment of a road, metro and rail transport hub.

In another development in the Váci corridor, HB Reavis’ latest mixed office, retail and services project is the 136,000 sqm Agora Budapest. Agora will eventually consist of five office buildings distributed around three public squares, which is

reflected in the name: the agora was a central public space in ancient Greek city-states.

The development has been designed by the London-based Make Architects and the Hungarian Finta Studio. The longterm, phased development project is scheduled for completion in 2023. The first 60,000 sqm phase will deliver the Agora Hub and Agora Tower buildings.

New City Quarter

The BudaPart development in south Buda, located in a park environment at the Kopaszi-gát (Kopasz Damn) on the banks

of the Danube, is described as a “new city quarter” on a 55-hectare development site with office, residential, retail and leisure and hotel components.

The master plan for the project was penned by Denmark’s Adept, an architectural and urban planning studio.

Anders Lonka, founding partner at Adept architects, defines the master plan as creating a mixed-use neighborhood with large public spaces and a diversity of streets in a city-style gradient.

“We have created diversified streets with open ground floors and a diversity in the height and look of the different apartment blocks. The site provides access to the waterfront with views of the river,” he said.

The event also considered the wider city, in which development is undertaken with issues relating to air quality and the transportation system. Mayor of Kaposvár Károly Szita presented plans for a sustainable approach in the urban development of the city with regard to public transportation, common area and water and sewage sytems.

“Obviously, the application of sustainable systems is more manageable in a smaller city than in the case of Budapest. The case has been made to make develop both Budapest and Kaposvár into what are defined as ‘smart’ cities in order to be more sustainable and livable environments,” said Pál Baross, director of the CEU campus redevelopment office and a former president of the HuGBC.

INSIDE VIEW

Promenade Gardens: an office building of sophisticated interiors Great architecture strives to make a clear visual connection between the exterior of a building and its interior spaces. This approach of utmost professionalism perfectly describes Promenade Gardens.

Horizon Development’s ongoing When it comes to the color scheme, sustainable premium Váci corridor office delicate pastels (beiges, browns, bronzes) development – Promenade Gardens – were selected to contribute to a balanced, celebrated its topping out last month, visually soothing environment that is with the structure of the LEED Gold/ made vivid and alive by the interior plant BREEAM Very Good dual certified building walls and green arrangements across having reached its complete height. The the space. The lobby of the A+ category exterior has thus reached its final shape, office building resembles 5-star hotel while the bronze-colored façade panels lobbies, with comfortable armchairs, are being lifted into place now, creating inviting social spaces, and even a café a detailed, symbolic pattern of organic where informal meetings can take place. leaves that will soon be backlit to give the The reception counter, the individually building an elegant glare at night. designed wallpaper pattern, the signage system or the elevator décor were all The architecture team behind the overall inspired by Nature, and refer back to the design carried over defining elements building’s name, Promenade Gardens. from the outside façade to the inside common areas: the hotel-style lobby; The real haven of the building is the the spacious, elegant reception; the Garden itself, with its water features and elevator cores; the corridors; and even the comfortable outside seating options landscaped, protected interior garden. to counterbalance all that fast-paced The wellbeing of future users has also energy of the Váci corridor, and to offer been at the forefront of architectural a piece of tranquility and intimacy to considerations for the 25,000 sqm large- tenants of Promenade Gardens, from scale office scheme. Workspaces will the Q4 2017 handover date. benefit from the abundance of natural light and increased amount of fresh air, optimized thermal comfort, as well as uniquely generous (3m+) internal heights that will contribute to ideal space www.promenadegardens.hu proportions on office premises.

Special Report

14 | 3

www.bbj.hu

Budapest Business Journal | November 3 – November 16, 2017

Budapest Poised for Office Development Boom Office development is on the up, with some consultancies tracing more than 400,000 sqm under construction and due to be delivered by the end of 2019.

GARY J. MORRELL

Despite that, tenants need to plan ahead in order to source quality, well located office space in a market with rising demand and the lowest vacancy on record.

The Budapest Research Forum (consisting of CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL and Robertson Hungary) put vacancy in the Budapest

office market at

7.6%

as of the end of the third-quarter, a record low in a market consisting of almost 2.7 million sqm of class “A” and “B” space.

Concerns have been voiced about possible oversupply, as new space for the next year set to exceed 300,000 sqm, bringing back memories of the bad old days of more than 25% vacancy in the recent past.

However, Orsolya Hegedűs, head of research and consultancy at Cushman & Wakefield, argues that the very low supply of an annual circa 60,000 sqm between 2011 and 2016 has resulted in a massive undersupply of quality stock.

Further, 70,000 sqm of the pipeline has been deferred until 2019, a significant amount is pre-leased and some stock is located in the periphery and is not, therefore, a direct competitor to Budapest stock. She estimates the “true” pipeline to be 175,000 sqm for both 2018 and 2019, which could be easily absorbed by the expected annual demand of around 150,000 sqm

BTS Deals

Wing is scheduled to complete the Ericsson research and design headquarters at the Nobel Prize Winners Research & Development Park, located on the Buda bank of the Danube, by yearend.

The 24,000 sqm LEED “Gold” accredited complex has been designed by Wing’s in-house studio, Aspectus Architect. Noah Steinberg, CEO & chairman of Wing, emphasizes the importance of built-to-suit (BTS) deals or a substantial pre-lease as a core part of Wing’s development strategy.

In another BTS HQ project, Wing is developing the 57,000 sqm base for Magyar

Artist’s rendering of the Agora Budapest development project by HB Reavis.

Telekom Group. The BREEAM “Very Good” accredited building was designed

by TIBA Architects Studio and is due to be completed in the second half of 2018.

In a reflection of growing confidence in the market, GTC, another established developer in Hungary and the wider region, is constructing the 22,000 sqm White House on Váci út. The project has been awarded LEED “Gold” pre-certification and incorporates a 100-year-old former factory that will create 2,000 sqm of office space. The Váci corridor is the most favored area for office development, with around 30% of total construction, followed by South Buda with around 22% according to CBRE. Hungary’s Futureal is set to deliver the twin-phased, 30,000 sqm Corvin 5 development at the Corvin Promenade (District VIII) urban rehabilitation

project in

2018.

In another speculative development, the company is constructing the Budapest One business park adjacent to the terminus of the Metro 4 line.

The 45,000 sqm development is part of the redevelopment of a road, metro and rail hub. In Váci út, the company is constructing the speculative Advance Tower that will deliver 11,000 sqm of BREEAM accredited space, designed by Mérték Architectural Studio Ltd. The leading CEE developer, Skanska, is developing the first 18,00 sqm phase of the dual-phased 35,000 sqm Mill Park in central Pest, which is almost fully prelet. The project is due to be completed in the third-quarter of 2018. The company is also planning a third phase of the

26,200 sqm LEED “Gold” accredited Nordic Light in Váci út. “We are currently looking to secure more developments sites in Budapest,” said Katarzyna Zawodna, business unit president at Skanska Commercial Development Europe.

Attracting Investor Interest

All pipeline projects are attracting the attention of investors, drawn by the track records of the likes of Skanska, Wing, Horizon Development, HB Reavis, GTC and Futureal, which have all developed fully leased office projects and subsequently sold them on. With positive fundamentals in the market, forward purchases are being concluded.

Horizon Development is developing the speculative 25,000 sqm Promenade Gardens on Váci út in partnership with the Hungarian Erste Open-ended Real Estate Fund. The project has been awarded both LEED “Gold” and BREEAM “Very Good” accreditation.

As confidence in the market grows, developers are undertaking more ambitious

“We have very optimistic pre-let expectations for both of our premium projects under development. Upon completion, we predict that both Promenade Gardens and Szervita Square will be around 80% let.” projects. In a major phased development in the Váci corridor, HB Reavis is constructing its latest office project, the 136,000 sqm Agora Budapest. Agora will eventually

consist of five office buildings distributed around three public squares.

Designed by the London-based Make Architects and the Hungarian Finta és Társai Építész Stúdió Kft., this longterm, phased development project is scheduled for completion in 2023. The first speculative phase of the development, Agora Hub and Agora Tower, will

deliver

60,000 sqm

of office, retail and service space, and is scheduled to complete by the summer of 2019. Jan Hubner, country CEO at HB Reavis Hungary, commented that further phases of the project will go ahead based on market demand.

The central District V currently has the highest rents, however there is a very limited supply of suitable development sites.

Horizon Development is due to complete the LEED “Platinum”-accredited mixed-use Szervita Square development, consisting of 15,000 sqm of office, residential and retail space in the historic center, in 2019.

“We have very optimistic pre-let expectations for both of our premium projects under development. Upon completion, we predict that both Promenade Gardens and Szervita Square will be around 80% let,” said Attila Kovács, managing partner at Horizon Development.

Barriers to development include a labor shortage and the cost of bank finance, which is forcing up development costs.

Interestingly, given the talk of an office boom, average rentals are not seen as sufficient for the development of possible landmark office centers in the view of some developers.

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Sok almából zamatos gyümölcslé lesz, édes lekvár, sütemény, befőtt, sokan sokféleképpen szeretik. A feldolgozás során azonban vannak olyan részek, melyeket nem használnak fel, hátramarad mint felesleg.

A Lediberg csoport felismerte, hogyan lehetne újrahasznosítani a feldolgozás során visszamaradt anyagokat, a héjat, rostokat, magokat, melyek az alapját képezik a szabadalmazott technológiának, mely során papírrá, illetve környezetbarát műbőrré alakítják mindezt.

Az Appeel kollekció ezzel az úttörő és előre mutató eljárással olyan exkluzív és magas minőségű termékpalettát kínál, melyben egyaránt megtalálhatók jegyzetfüzetek, noteszek, kulcstartók, mappák, tárcák, táskák, melyek mind egyediséget sugároznak.

Vidám színeikkel és mintájukkal viszszaadják mindazt, amit a gyümölcs „láthatottˮ: a természet ébredését, a forró nyári napot, az őszi naplementét.

AZ APPEEL TERMÉKEK M A G YA R O R S Z Á G I FORGALMAZÓJA A CHRONOS KIADÓ

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Special Report

www.bbj.hu

Budapest Business Journal | November 3 – November 16, 2017

INSIDE VIEW

Smart buildings will need smart data protection Dr. Tamás Balogh Attorney-at-law

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

SCHOENHERR HETÉNYI ATTORNEYS AT LAW

Imagine that as you arrive at the office in the morning, your phone connects to the building’s smart network system; it automatically detects that the battery of your electric car is low, and leads you to the nearest empty fast charging adapter in the garage.

Sounds like the future?

We already have all of the above technologies; they only need to be connected and synchronized.

T

he benefits of applying smart systems are obvious: they increase the user’s satisfaction. Smart systems also offer new options to decrease the energy consumption of the building and even to increase the efficiency of building operation. Users are seeking smart solutions, while developers are apparently ready to satisfy such an increase in demand.

Nevertheless, a substantial number of smart systems are already operating and collecting data about the users of buildings and monitoring the users’ activities. Existing technologies offer automated visitor management solutions that allow customers to be automatically greeted and notify the correct employee to provide the best service. Retailers monitor shopping habits of their customers and they may even offer them personalized discounts or marketing materials based on the above.

Considering the past few years’ growth, it is clear that smart systems are becoming increasingly popular and the use of these technologies will only evolve.

Nevertheless, smart building systems will only reach their full potential if the substantial volume of data collected is shared between multiple network users and devices connected to the same system. While many developers see only the opportunities in the introduction of these new technologies, there are also risks that need to be addressed before introducing new smart building systems.

Generally, smart building systems collecting and processing information

about their users should comply with the current data protection regulations.

One of the key elements of compliance is that collecting of personal data requires the free and informed consent of private individuals. If the operator of the smart system lacks the appropriate consent of users, it bears the risk of non-compliance with the data protection regulations.

Not only the consent of users is required, but they should also be informed of the exact data collected, the purpose of the data collection and it must also be clearly regulated with whom the data may be shared. According to our experience, as buildings are usually owned, used and operated by multiple parties, responsibilities are not clearly regulated among them. Even more importantly, the allocation of risks in the case of noncompliance is, in some cases, also not clearly regulated.

A further requirement is that any data collected shall be kept safe and secure.

To prevent unauthorized access of the data collected, operators must keep up with the latest technological developments and maintain their infrastructure. Security risks and vulnerabilities may not only be reduced by upgrading the technical background, but also by the proper training of the personnel involved in data handling. Training employees and introducing protocols about how to handle security breaches most effectively can also reduce the harm caused by an unauthorized access.

In light of the constant development and introduction of new smart building technologies, it should also be considered that less is, in some cases, more. Although it is appealing to use personal data that has already been collected by new systems for new objectives, it must be born in mind that the original consent of private individuals does not cover the new purpose of the data processing. Even if numerous smart systems are operating, collecting of personal data should be kept to the minimum. Otherwise, there is an increased risk that such data is not stored, processed and used in a proper way.

But why should these general principles be considered with utmost care when developing a new building with smart building systems, or applying new systems to an existing one? The new General Data Protection Regulation (GDPR) (Regulation (EU) 2016/679) enters into force on May 25, 2018, and amends the sanctioning system for non-compliance significantly.

In the case of non-compliance, a potential fine of up to EUR 20,000,000 or in the case of a company, up to 4% of the annual worldwide turnover of the preceding financial year, may be imposed, whichever is greater. Therefore, companies already using or intending to use smart building systems need to start to consider how to comply with the new data protection regulations.

www.schoenherr.eu

Retail Development Ready to Take Off Although consumer demand in Hungary is continuing to rise, with around 4% year-on-year growth in retail sales for H1, there has been no new shopping center deliveries in Budapest in recent years.

GARY J. MORRELL

The next delivery is not until late 2019, leaving Hungary with one of the lowest shopping center provisions in Europe; projects were put on hold due to concerns over economic issues and consequently consumer demand. However, market conditions are now regarded as appropriate for the delivery of new Budapest malls that would freshen the market. There is also

“A large number of international retailers, present on the local market, are in expansion mood, thanks to the strong economic environment; fashion, fashion accessories, cosmetics and the food and beverage category are very active at present.”

economic environment; fashion, fashion accessories, cosmetics and the food and beverage category are very active at present,” commented Viktória Szabó, head of retail at Cushman & Wakefield Hungary.

“Forecasts for the coming few years are still positive, even with a slightly more moderate speed of improvement.”

The next planned delivery will be the 53,000 sqm Etele Plaza by the Hungarian and CEE developer, Futureal. The complex is located adjacent to the 70,000 sqm Budapest One business park project, currently under construction at a transport focal point on the western edge of the city.

Futureal aims to create a business, service and leisure center on the

22-hectare site;

according to the company, an estimated 165,000 passengers pass through the transport hub daily.

Brownfield Development

significant development activity in prime high street retail in central Budapest.

The only recent large retail format delivery is a new 35,000 sqm IKEA store in the southern outskirts of Budapest. This is the third IKEA store in the Budapest area and one of the largest in the CEE region.

“A large number of international retailers, present on the local market, are in expansion mood, thanks to the strong

The complex, designed by Chapman Taylor, is scheduled for delivery in the fourth-quarter of 2019. The is essentially the second brownfield development project

by Futureal after the Corvin Promenade urban regeneration project. A start of construction for Etele Plaza is dependent on the conclusion of major preleases.

The other pipeline development, the 50,000 sqm ECE Aquincum by the German retail developer and shopping center operator, ECE, is located in the Óbuda area of Budapest, at another transport hub, and is not expected to deliver before 2021.

ECE has developed five shopping centers across Hungary in Budapest, Győr, Pécs, Debrecen and Szeged. In

The 44,000 sqm Mammut shopping center, which opened in May 1998, has been aquired

by Lone Star. It is said to have plans to refurbish and modernize the mall.

www.bbj.hu

3

Budapest Business Journal | November 3 – November 16, 2017

Budapest, the developer’s 68,000 sqm Árkád center, completed in 2002 and extended and renovated in 2013, is currently the largest shopping mall.

JLL put total modern shopping center stock in Budapest at

Special Report | 17

shopping centers and has plans to refurbish and modernize it. The Hungarian investor, Diófa Real Estate Fund, has purchased the rebranded Shopmark shopping center and plans to undertake extensive refurbishment. CPI has purchased the earlier generation Pólus Center and the Campona shopping center as part of a regional portfolio acquisition, and it, too, plans to undertake extensive makeovers.

Significant Activity

around

770,000 sqm,

low by European standards. The leading centers are generally considered to be the 47,000 sqm Allee, the 44,000 sqm Mammut, the 30,000 sqm MOM center, the 66,000 sqm Arena Plaza, the 45,000 sqm WestEnd City Centre and the 68,000 sqm Árkád center. These all have waiting lists for tenants and are, therefore, able to command the highest rents.

CBRE estimates prime Budapest shopping center rents at EUR 65-100 per sqm per month with prime Budapest high streets as high as EUR 130 per sqm per month. In response to market demand and lack of new supply, center managers and owners have undertaken extensive refurbishments and upgrades of existing retail centers.

Lone Star has acquired the Mammut center, one of the leading Budapest

The Budapest high street retail market is seeing significant activity. The major central retail areas consisting of Váci utca, Fashion Street and Andrássy út are all seeing development. In the central District V, the Mellow Mood Group is redeveloping the historic Párizsi Udvar (Paris Court, also known as the Parisi Udvar and the Brudern House) and is scheduled to deliver 2,000 sqm of retail space on two lower floors in addition to a five-star hotel.

Horizon Development is developing 1,100 sqm of retail space at Szervita tér (Szervita Square) in central Pest, due to be completed in 2019. “There is a large potential for high street growth and development. The stock could be refurbished and the ownership should be institutionalized. The segmented ownership structure is not in favor of large scale institutional investors, which is a bottleneck for investment activity,” commented Eva Sreter, head of retail at JLL Hungary.

There are currently no ongoing shopping center projects outside of the

The Corvin Plaza shopping center, part of Futureal’s brownfield Corvin Promenade urban regeneration project in District VIII. capital although developers are said to be exploring development possibilities in cities with populations of more than

100,000 people.

In terms of shopping center quality, Sreter sees room for improvement in terms of tenant mix, stock quality, smart devices and applications. Landlords should focus on increasing the presence of entertainment and social functions.

“With regard to the quality of shopping centers, the leading developments are regarded as being of a similar level to those in Western Europe, with an attractive tenant mix. A few of these, which were built as first-generation schemes – Mammut, Shopmark – are now working towards improvement. Owners of these schemes are investing into the refurbishment of these schemes, whilst trying to secure new brands as well,” concluded Szabó, of Cushman & Wakefield Hungary.

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18 | 3

www.bbj.hu

Budapest Business Journal | November 3 – November 16, 2017

Interior Environment Central to Office Development Interior design is regarded as an integral element of the design, development and operation of office buildings from the perspective of developers and building owners.

GARY J. MORRELL

Sustainability accredited and imaginatively designed office interiors are now seen as central to the performance of staff from the perspective of tenants as employees, and tenant retention from the view of building owners. Exterior and interior elements are increasingly integrated in the design, construction and property management phases of office development.

“Interior design has become a new area of expertise with regard to sustainable and green office development. The interior design and the well-being of employees is becoming a well-articulated part of the design process and is part of the marketing process as office building owners need to attract tenants,” commented Pál Baross, director of the CEU campus redevelopment office and a former president of the HuGBC. Interior issues now even have their own dedicated sustainability rating system.

HB Reavis, Skanska, Future and Horizon Development are all applying for the Well Building Standard (WELL) certification for their projects.

“The International Well Building Institute’s system examines a building’s impact on the human body, health and environment and rates them based on seven categories – air, water, nourishment, light, fitness, comfort and mind. Futureal has been committed to sustainability and thus when developing our office buildings, factors that improve employees’ health and well-being are of great importance, besides the environmental considerations and energy requirements,” said Futureal.

HB Reavis has applied for WELL certification for its Agora Budapest office development. quality air results in higher quality cognitive reactions from office staff, according to research.

Another feature is biophilia. According to András Schmidt, sustainability manager at Skanska Hungary, better air was recorded at desks located close to plants

led by the well-being of people. We are committed to human health and wellbeing, and it is important for us to build office buildings that serve the employees and the people living in the neighborhood in the longterm,” the company said.

“We are planning for WELL, BREEAM Communities (site scale) and New Construction (building) Certifications.

The WELL building standard focuses on enhancing people’s health and well-being through the built environment,” it added.

The WELL building standard was established in the United States in 2014 as a third-party interior sustainability accreditation system for multi-tenanted office buildings, in partnership with the LEED accreditation system.

“Both the facades and interiors were regarded as interconnected and intrinsic parts of the design. As is now the case with the commercial office market, sustainability elements and interior design WELL Counterpart were an intrinsic part of the A possible counterpart is the BREEAM In-Use accreditation. According to design and construction.” at the Nordic Light office project. Skanska has therefore emphasized the provision of greenery in its office projects.

In its latest Budapest project, HB Reavis has applied for WELL certification for the Agora Budapest office development.

“At HB Reavis, we think that it is not enough to create sustainable buildings anymore. The whole planning and design procedure is now

BREEAM, the health and well-being category of its assessments encourages the increased comfort, health and safety of building occupants, visitors and others within the vicinity. Issues in this section aim to enhance the quality of life in buildings by recognizing those that encourage a healthy and safe internal and external environment for occupants.

“The completely new WELL certification system from the U.S. is different from the

Staff Costs

The World Green Building Council (WGBC) calculates that staff constitute 90% of office business costs and therefore it is in the interests of employers to create the conditions that maintain and enhance the health and well-being of office occupants, who spend a large proportion of their time in their place of work.

The WGBC lists eight features of green office buildings: for example, thermal comfort and independent temperature controls increase overall productivity

35,000 sqm campus

by

3%.

Further, access to daylight in the office allows people to sleep comfortably at night, resulting in lower sick leave. Higher

green building certifications as it evaluates only the internal spaces and areas and their overall effects on the building users,” said Zsombor Barta, international BREEAM assessor and president of the Hungarian Green Building Council (HuGBC).

“It is important to mention that the WELL system also recommends and highlights the importance of gaining green building certification as well for a WELL certified project, as the asset’s overall sustainability can be only proved together with a thirdparty green building certification. The coexistence of these schemes is therefore very important and it is also important to understand how they support each other and increase sustainability on the real estate market,” Barta added.

Office designs are becoming more adventurous. For example, the Dealogic headquarters, designed by the Gábor Miklós Szőke studio, at Eiffel Square contains a classic tram that is used as a meeting place. The design won the “Office Design Award 2016” title at Iroda.hu’s Office of the Year awards.

Such designs reflect the efforts of designers and employers to create an environment that is conducive to changing work practices where staff spend less regular hours at work. The designer aims to provide green areas and an interesting environment that reflects a feeling of the industrial city and the classic transport system.

The designers of public buildings are also increasingly showing a concern for interior design. The BREEAM accredited Central European University (CEU) Campus redevelopment project, which will provide a central

The award-winning tram meeting place at the Dealogic headquarters.

across seven buildings providing a unified campus for the university, has been designed with interior issues in mind.

“Both the facades and interiors were regarded as interconnected and intrinsic parts of the design. As is now the case with the commercial office market, sustainability elements and interior design were an intrinsic part of the design and construction,” commented the designers of the project, Sheila O’Donnell and John Tuomey.

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THE RIGHT PROPERTY AT THE RIGHT PLACE

“Changing market dynamics challenge real estate developments” - Balázs Czifra, real estate investment director -

Diófa Asset Management has become a significant local investor in the past 5 years with over 300 million EUR invested in real estate.

With a rapid development period behind us, we continuously challenge ourselves to provide best in class services for our investors and clients.

In line with a strong investment focus, we are not only aiming to expand our current portfolio, but also to adapt to the changing market trends by repositioning several properties in order to provide stable, long-term growth.

Our current managed portfolio is over 600 million EUR worth asset value, which is to be increased via the highly efficient asset management and value-add investment strategy.

ALL ABOUT DIVERSIFICATION At Diófa Asset Management we thrive to manage a balanced and diversified real estate portfolio comprising office, retail and in-town logistics schemes, in order to minimise risk and maximise return for our investors.

Our asset management focus combined with in-house property management services provides us with workflow flexibility and a close contact to our tenants and business partners.

WELL-BEING DEVELOPMENT Office space requirements have changed remarkably in the past few years. The market now calls for different

types of office models, not only workstations but also community areas with green and more living spaces.

We keep up with the trends and are ready to invest into green solutions to modernize our office stock where needed. Having several tailor-made green buildings, we fine-tune the applied technologies and intend to add further bespoke, green properties to our portfolio and improve their well-being capabilities and offerings.

ATIPYCAL DEVELOPMENT We tend to proactively monitor new trends and tendencies and advisedly prepare for various market scenarios. Amongst other projects, we are planning to commence a development of a new phase, hence expand our in-town logistics centre, South Pest Business Park. We could either provide speculative building or tailor-made solution to enquiries related to e-commerce and supporting logistics needs.

Demand is dynamic, consequently vacancy levels are record-low in this sector.

We are committed to put energy and work in projects where we see and believe to add value and have an impact on the properties surrounding. This often requires finding new areas and creating trendy property solutions, just like the repositioning of an unused hotel in Southern Hungary. Possible uses are being assessed to come up with the highest and best use that the regenerated property and the local market conditions can support

V17, photo: Tamás Bujnovszky

“

“Whilst seemingly property market conditions are exceptional in all sectors, fundamentals need to be carefully looked at in conjunction with financial market tendencies. I still remember the period of 2008 - 2010, which is probably familiar to most of the active market players too. Our strategy is hence based on subtle analysis and forecasting in order to clearly match the long-term expectations of our institutional investor clients parallel to the shorter-term considerations of individual retail clients.”

Balázs Czifra

New brand on the retail market Diófa Asset Management purchased a first generation shopping centre Europark, which is going to be fully refurbished and redeveloped, to accommodate changing needs and serve as a premium mall in the area. With this project, we are the first one on the Budapest retail market who decided to completely refurbish an operating shopping centre.

Parallel to the planning and permitting phase, a new brand has been created, Shopmark –the new name- suits much better the revived concept.

“

22 | 3

Special Report

www.bbj.hu

Budapest Business Journal | November 3 – November 16, 2017

Limited Industrial Supply Hampers Market Growth With falling vacancy rates, there is a low supply of continuous logistics/light industrial space to meet demand.

As elsewhere in CEE, industrial developers prefer the more cautious built-to-suit (BTS) development option. But, in contrast to other industrial markets in the region, a commercial logistics market has not developed outside the capital.

Wing has purchased and renamed the Login Business Park, which has 8,000 sqm of development land.

GARY J. MORRELL

“Only 34,000 sqm of speculative warehouse space is expected to be delivered by the second-quarter of 2018, of which 50% is already pre-let,” said Cushman & Wakefield.

The Budapest Research Forum (consisting of CBRE, Colliers International, Cushman

& Wakefield, Eston International, JLL and Robertson Hungary) has traced 1.98 million sqm of modern industrial space in the Budapest area. Vacancy stands at a

low of

5.5%

and there are no existing logistics/industrial parks that offer 10,000 sqm plus contiguous spaces. The largest new lease was signed

in Prologis Park Budapest-Gyál for almost 20,000 sqm; Prologis is the biggest logistics park developer and operator in Hungary.

The lack of quality contiguous industrial space is hampering market growth.

There is a very low supply of speculative development as the top five developers, who own 68% of space, tend to opt for the more cautious BTS option according to Colliers International.

INSIDE VIEW

‘Exciting Time’ Brings Challenges and Opportunities Péter Takács Partner VLK CRESA

Hungary in general, and Budapest in particular, is going through “a very exiting period for the real estate entire market”, but renters will need to be strong in negotiating new leases or lease extensions, warns tenant representation specialist Péter Takács of VLK Cresa.

“What we referred to as a vacuum in construction seems to have come to an end in a lot of areas,” says VLK Cresa partner Takács. “All the development activity that was shelved at the time of the crisis, either because developers

Keep Calm and Carry on could not afford it, or the banks would not finance it, or there was no longer any tenant demand, seems to be coming “We advise out clients to remain calm.

Depending on when a lease extension onto the market at the same time,” he has to be made, buying time may not explains. be an option, but do what you can,” “Where we were looking at just Takács says.

100,000-200,000 sqm of new development coming to the market each year in Budapest, suddenly there is 300,000 expected in the “Where we were looking next 18 months.”

That suggests there will soon be far at just 100,000-200,000 sqm more options for clients to choose of new development from when it comes to selecting office space (an increasingly important part of coming to the market staff recruitment and retention) and yet, each year in Budapest, paradoxically, in a record-low vacancy environment, it is also causing real suddenly there headaches right now. Put bluntly, this is is 300,000 expected in peak season for landlords and owners. the next 18 months.”

“You can see that on the investment market a lot of buildings are changing hands; owners are developing or “Landlords or their agents will try and renovating, making sure they have full put pressure on you, tell you they have occupancy, and then looking to sell two or three other interested parties. on. It is a sure sign, when people are But at the end of the day, landlords will exiting the market, that they think it is approaching its peak, if not already at it.” always prefer to renegotiate an existing lease rather than take on a new tenant.”

So, what do you do if you are a tenant Partly that is down to simple economics whose lease is due for renewal now?

– even if the renegotiation includes Three or four years ago, vacancy rates some improvements or technical were at 20%; now they are at 6-7%. upgrades to the building, that is almost Finding space, especially large floor always cheaper than a complete build plans, has become much harder, as out for a new tenant – and partly it is a companies have expanded, taken on question of “better the devil you know”. more workers and sucked up much of “Tenants should also put themselves the supply.

on the market; let it be known they are looking for space and what their requirements are. Landlords want full occupancy, and will negotiate for it.

Even if you end up staying where you are, at least you will have created some kind of price competition.”

Thirdly, Takács says tenants should consider broadening their horizons, both in terms of geographical location and office building. Much more of the city is better connected now; there are alternative locations to South Buda.

And many of the second-generation buildings, five-ten years old, are on their second or third round of tenants, and undergoing major refits to bring them up-to-date. These, too, are worth considering, the specialist says.

The new office supply about to enter the market will be more expensive; the labor crisis has driven up wages, while inflation and demand has pushed up prices, and all of this is likely to be passed on. Again, this may make slightly older buildings more attractive.

“Our advice is simply to remember that there are always options; consider a wider range of possibilities and remember that change is good.”

VLK Cresa is a boutique commercial real estate firm whose main focus is on delivering best in class commercial real estate services solely to tenants.

www.bbj.hu

3

Budapest Business Journal | November 3 – November 16, 2017

“Increasing construction costs are slowing down speculative development, hence the Budapest stock is unable to keep up with

“The market has different fundamentals […] the Polish market is four times larger in terms of size and population, while Czech Republic has a great advantage over Hungary, due to its historically strong industrial background and its proximity to Germany. ” demand. In Budapest, the most active sector is contract logistics with an automotive and retail/FMCG background. E-commerce continues to soar, with the online retailers actively pursuing modern and well-located warehouse space – not only in Budapest but in countryside locations too,” said Gábor Halász-Csatári, head of industrial at Cushman & Wakefield Hungary.

Plan Ahead

Companies need to plan far ahead in the current low-availability market environment. Available space is taken up early in the development process. “The difference between BTS and speculative is a bit misleading nowadays, as most of the delivery is taken by tenants at the planning stage or during the construction phase. So, there is not as much typical speculative ADVERTISEMENT

construction as there was in the past.

The market is simply hot,” commented Ferdinand Hlobil, international partner and head of industrial in Central and Eastern European at Cushman & Wakefield.

The few speculative projects currently under construction and scheduled to deliver this year are largely pre-leased, and therefore tend not to appear on the market as leasable area.

In contrast to Czech Republic, Poland, Romania, and Slovakia, a functioning industrial market has not developed outside the capital in Hungary, and companies establishing light industrial facilities have tended to develop their own projects.

One problem with developing in regional cities is a shortage of skilled labor.

Cushman & Wakefield estimates total Western standard industrial stock in Poland at

around

12 million sqm;

these figures reflect the large number of industrial parks across Poland. Total industrial stock in Czech Republic stands at more than 6.6 million sqm in Prague and secondary cities.

“The Hungarian market has different fundamentals from these markets. When it comes to the Polish market, it is four times larger than the Hungarian in terms of size and population, while Czech Republic has

a great advantage over Hungary, due to its historically strong industrial background and its proximity to Germany. Therefore, these markets are rather multipolar, while the Hungarian market, from a developer perspective, is still quite unipolar, meaning it is mainly concentrated on Budapest and its surroundings,” said Tamás Beck, director, and head of industrial at Colliers international.

Competitive Advantage

This gives other Central European countries a competitive advantage over Hungary in attracting companies. “While in terms of logistics Hungary is top-heavy with Budapest, there are several countryside logistics hot-spots both in Czech Republic and Poland,” agrees Halász-Csatári.

“Activity is high in all Central European countries but the maturity of Czech and Poland combined with the sporadic industrial locations provide more stability and diversity which allow for more speculative development. As a result, it is difficult for new developers to enter the Hungarian market. The best [existing] products and land plots have already been transacted and with construction costs on a rise it is a challenge for developers with no experience in Hungary to win business.

We foresee more potential for entry once development costs stabilize as we expect continued high demand on the market,” Halász-Csatári added.

Colliers has traced growing demand for space outside of the capital, although an increase in construction and labor costs has caused the building time to increase to as long as eight months plus. Colliers says there is

Special Report | 23 interest in prepared greenfield sites around Győr, Tatabánya, Székesfehérvár and Miskolc.

Several projects are expected to commence in the near future. Wing has announced the construction of two speculative 14,000 sqm and 11,000 sqm phases of a double warehouse at the East Gate Business Park.

Handover of the first phase is scheduled for this year. The multi-sector developer is expanding its activity in the industrial sector.

Wing has also purchased the now renamed Login Business Park, which has 8,000 sqm of development land.

The Hungarian state-owned developer NIPUF (National Industry Park Management and Development Company) is

developing

23,000 sqm

of BTS space at Inpark, close to Páty. This reflects the identification by the state of the need for modern logistics and light industrial space. “Inpark was founded by the Hungarians state but operates as a classic property developer on a market basis,” NIPUF says on its website.

Outside of Budapest, the regional industrial developer and logistics park operator CTP has undertaken development of a 17,000 sqm extension for Rudolf Logistics at CTPark Tatabánya.

Construction is also ongoing on a 13,000 sqm factory for Dana at CTPark Győr.

www.bbj.hu

Special Report | 25

3

Budapest Business Journal | November 3 – November 16, 2017

Asset management companies

www.strabag-pfs.hu

  



–

–

–

100

–

–

poRtFolio diveRsiFiCation aCCoRding to oWneRsHip stRuCtuRe (%) –

top loCal exeCutive CFo maRketing diReCtoR

addRess pHone Fax email

100

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

lászló vágó Gyula Jászai Gábor Landi

1095 Budapest, Máriássy utca 7.

(1) 299-2150 (1) 210-0095 info@strabag-pfs.hu

–

– CPI Property Group (100)

mátyás gereben Kristóf Skwarek Bea Déri

1132 Budapest, Váci út 30.

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

gergely pados Zsuzsanna Kiss Orsolya Németh

1052 Budapest, Deák Ferenc utca 15.

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

oWned by Clients

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ConstRuCtion site

Hotel

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pRojeCt management

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poRtFolio, pRopeRty and Real estate management

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Infopark, Oktogon office building, Stefánia Park

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seRviCes oFFeRed in pRopeRty management

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total value oF pRopeRty managed in HungaRy in 2017 (HuF mln)

stRabag pRopeRty and FaCility seRviCes 15,326 1 ZRt.

net Revenue FRom asset management in 2016 (HuF mln)

Company Website

total net Revenue in 2016 (HuF mln)

Rank

Ranked by total net revenue

Cpi HungaRy kFt. www.cpigroup.hu

1,875

2

CusHman & WakeField 3 nemZetköZi ingatlan tanáCsadó kFt.

1,773

1,057

1,773

Balance Loft, BC30, Gateway, 155000 Airport City Logistic Park

Ÿ

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–

42.80 9.90 43.50 3.80

–

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

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60

10

30

–

–

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– (100)

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

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19

43

38

–

–

100

–

Wingholding Zrt. (99.90), other (0.10) –

noah m. steinberg – –

1095 Budapest, Máriássy utca 7.

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

1077 Budapest, Wesselényi utca 16.

(1) 479-6020 (1) 479-6029 office@ addvalgroup.com

1074 Budapest, Rákóczi út 70–72.

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

www.cushmanwakefield.hu

Wing ZRt. 4

www.wing.hu

1,184

Ÿ

Corvinus Egyetem Közgáz Campus és Studium Office building, Center, Máriássy Ház, 180000 Honvéd Hegyvidék Bevásárlóközpont, Agria Park, East Gate Business Park, MOM Park, WEBC

Ÿ

Ÿ

Central Udvar Office building, Corner 6 Business Center, Ausztria Ház, Üllő Airport Logistics Centre, Goodman Kecskeméti Logisztikai Központ

475

Bartók Ház, Canada Square, Capital Square, City Gate, Infopark A épülete, IP West, Millennium I, Millennium II, Millennium III, Millennium H, R70 Office Complex, Víziváros Office Center, Dunacenter shopping center

addval kFt.

www.addvalgroup.com

530

5

6

Ca immo HungaRy kFt. www.caimmo.com

455

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  

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–

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60

Ÿ

–

Ÿ

–

–

100

AddVal Kft. (100) –

Hubert mühringer Ágnes Horváth Rita Szabó

Ÿ

–

100

– CA Immobilien Anlagen AG (100)

ede gulyás – –

Ce land Holding kFt. 7 www.celand.hu

NR

ConveRgenCe

www.convergen-ce.com

gamma pRopeRties

NR kFt. www.gamma-am.hu

127

Ÿ

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Ÿ

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m7 Real estate

Duna Tower, Laurus



  

–

100

Ÿ

Rental, business and financial management, due dilligence

–

–

80.50 19.80

55

–

45

–

–

Ÿ

Ÿ

Ÿ

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

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

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

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Ÿ

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Office buildings: Blue Cube, Buda Center, City Center, Maros BC, Pódium, River Estates, Twin Office Center, Hotel: Budapest Marriott Hotel

  



–

–

–

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oWneRsHip (%) HungaRian non-HungaRian

oWned by Clients

poRtFolio diveRsiFiCation aCCoRding to oWneRsHip stRuCtuRe (%) oWn pRopeRty

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–

Rental, contact to tenants

Árpád Center, myhive Átrium Park, Central Business Center, Globe 3, myhive Thirteen (Globe), myhive Thirteen (Xenter), Optima A, myhive Greenpoint 7, myhive Haller Gardens, Office Campus, Szépvölgyii Business Park, 14 STOP SHOPs in Hungary



100

Hotel



Business planning and execution, value enhancement management, leasing concept for real estate rental, real estate control and supervision, contact to tentants, budget and controlling

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–

oFFiCe

–

Ÿ

  

–

industRial

–

Infopark D, Riverpark, Andrássy 93, Andrássy 100, K6, Merkur Palota, Art’otel



poRtFolio diveRsiFiCation aCCoRding to type oF pRopeRty managed (%)

Retail

otHeR

aCCounting seRviCes, ContRolling

pRojeCt management

ReCeivables management

tenant management

main pRopeRties managed in H1, 2017

Ÿ

www.immofinanz.com

NR HungaRy kFt. www.m7re.eu

seRviCes oFFeRed in pRopeRty management

Eiffel Tér Office building, Kálvin Square Office building, 100000 CityZen Offices, Baross 52 Office building

immoFinanZ seRviCes HungaRy kFt. NR

www.bbj.hu

Budapest Business Journal | November 3 – November 16, 2017

poRtFolio, pRopeRty and Real estate management

total value oF pRopeRty managed in HungaRy in 2017 (HuF mln)

Company Website

net Revenue FRom asset management in 2016 (HuF mln)

Special Report

total net Revenue in 2016 (HuF mln)

Rank

26 | 3

top loCal exeCutive CFo maRketing diReCtoR

NR

Ÿ

Ÿ



  

–

–

7

–

58

35

100

alan a. vincent – –

1134 Budapest, Váci út 37.

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

–

–

100

– Alan A. Vincent (100)

–

–

100

Individuals (100) –

tibor gasser – –

1093 Budapest, Közraktár utca 30.

(1) 382-7560 (1) 382-7570 office@gamma-am.hu

100

–

– Immofinanz AG (100)

viktor nagy Ottó Vörös –

1134 Budapest, Váci út 45.

(1) 236-0435 (1) 236-0436 offices_hu@ immofinanz.com

Ÿ

Ÿ

– M7 Real Estate Europe Limited (100)

balázs magyar – –

1146 Budapest, Hermina út 17.

(1) 848-0673 – info@m7re.cz

–

– CEE PropertyInvestment Immobilien GmbH (100)

katalin sermer Tímea Földi –

1051 Budapest, Bajcsy-Zsilinszky út 12.

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

–

– TPG Real Estate (100)

árpád török Agnieszka Turowska Dániel Pazsitzky

1132 Budapest, Váci út 30.

(1) 456-6200 (1) 456-6201 info@trigranit.com

–

100

tRigRanit

www.trigranit.com NR

Ÿ

Ÿ

Ÿ

Ÿ



  



–

63

–

37

–

1138 Budapest, Népfürdő utca 22.

(1) 785-4985 (1) 799-8879 info@celand.hu

Csaba széll Individuals (100) Anita Molnár-Széll – Zoltán Balla

s immo apm HungaRy kFt. www.simmoag.hu

addRess pHone Fax email

–

100

www.bbj.hu

Special Report | 27

3

Budapest Business Journal | November 3 – November 16, 2017

Real estate developers(1)

gRánit-pólus management zRt. www.granitpolus.com 1

4,822

FutuReal management 3,381 2 szolgáltató kFt. www.futureal.hu

3

budapesti ingatlan Hasznosítási és Fejlesztési nyRt.

2,585

  

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 

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–

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–

–

–

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–

–

Budapest One Business Park, Advance Tower, Corvin Technology & Science Park, Etele Plaza

–

Ÿ

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–

–

–

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–

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–

–



–

–

www.bif.hu

5

BN INgatlaNfejlesztő zRt. www.biggeorgeproperty.hu

1,457

 

–

  

–

–

Ÿ

–

Sasad Liget 3. ütem (2017 Q4), Sasad Liget 4. ütem (2018 Q4), Sasad Liget 5. ütem (2019 Q2), Sasad Liget 6.ütem (2019 Q4), Dagály Residence (2019 Q1), Elisabeth Residence (2019 Q1), Emerald Residence (2019 Q2), Németvölgyi Residence (2019), Broadway Residence (2017 Q4)

–

Bartók Udvar II. (1. fázis) - 4 Mrd, 2018 Q4, Tiszaújváros BTS raktárépület 3,4 Mrd, 2018 Q2

  

Magyar Telekom székház (50 bln Ft, 2018), Ericsson Ház (20 bln Ft, 2017), ibis Styles Budapest Airport Hotel (3.2 bln Ft, 2017), Skylight CITY (NA, 2017), East Gate Business Park b2-es hall (NA, 2017)

–





inFogRoup management kFt. 6

www.infogroup.hu

Wing zRt. 7

www.wing.hu

1,379(2)

1,184

  

 

–

–



  





–

–

–

–

–

 

–

–

–

–

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–

–

  



–

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–

–

–

–

 

–

–

–

–

Mill Park (2018)



–

  

–



–

gyula ágházi Zoltán Lehoczky Ernő Koncz

1062 Budapest, Váci út 3.

(1) 374-6500 (1) 374-6604 info@ granitpolus.com

Epam, KPMG, Nokia, P&G, Provident, Teva

Péter Futó (50) Gábor Futó (50) –

tibor tatár Pál Darida Tímea Frey

1082 Budapest, Futó utca 47–53.

(1) 266-2181 (1) 688-5499 office@futureal.hu

(100) –

kristóf berecz, julian tzvetkov, Firgyes Hárshegyi, judit bajnok, anna ungár – –

1033 Budapest, Polgár utca 8–10.

(1) 457-3860 (1) 367-2800 info@bif.hu

– CPI Property Group (100)

mátyás gereben Kristóf Skwarek Bea Déri

1132 Budapest, Váci út 30.

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

Corvin Promenade, Nokia Skypark (2016), Vision Towers (2015), Corvin Corner (2015), Corvin Towers (2010) Corvin ONE (2008)

Casrtum Ház, Flórián Udvar, Ü48, Harsánylejtő Kertváros 1. phase

Ÿ

–



Ÿ

Tibor Nagygyörgy (100) –

tibor nagygyörgy Dániel Gajdos Eszter Sallai

1023 Budapest, Lajos utca 28–32.

(1) 225-2525 (1) 225-2521 info@biggeorge.hu

–

Bartók Udvar, Polgár Ipari Park, Karcag Ipari Park, Tiszaújváros BTS Logisztikai Csarnok, Club Velence Lakóés Üdülőpark

Jabil, Toyota Tsusho, Sona, EUTAF, Tigra, Multicontact, Ness Hungary

Székely family (100) –

ádám székely Zsolt Pilhál Zsuzsanna Makkai

1115Budapest, Bartók Béla út 105–113.

(1) 481 4530 (1) 481 4530 info@infogroup.hu

–

E.ON HQ (2016), A66 office building (2015), East Gate Business Park F hall (2014), Hegyvidék Bevásárlóközpont (2012), Dél-pesti Üzleti Park F hall (2012), Allianz HQ (2010), Millenáris Office buildingak (2009), MTV HQ (2009), Corvinus Egyetem Közgáz Campus (2007)

Ÿ

Wingholding Zrt. (99.90), other (0.10) –

noah m. steinberg – –

1095 Budapest, Máriássy utca 7.

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

–

Nordic Light (2016), Green House (2012), Népliget Center (2010), Light Corner (2006), Science Park (2004), West End Business Center (2001), East West Business Center (1991)

Ÿ

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

marcin Łapiński – –

1134 Budapest, Kassák Lajos utca 19-25.

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





www.skanska.hu

915

Ÿ

Ÿ Ÿ

Bank Center (1995) Pólus City Center, Budapest (1996) WestEnd City Center, Budapest (1999) WestEnd Hilton Budapest City (2000) Nemzeti Színház (2002) Művészetek Palotája (2005) Atrium Mall, Arad, Románia (2008), Arena Centar Zágráb (2010)

Sasad Liget 1. ütem (2008), Sasad Liget 2. ütem (2010), Garibaldi Residence (2009), Audi Logistics (2014), Parkway Offices (2009), Europa Residential Garden (2005), Bécsi Corner (2009), Paris Mansion

skanska pRopeRty HungaRy kFt. 8

addRess pHone Fax email

 

www.cpigroup.hu

1,875

top loCal exeCutive CFo maRketing diReCtoR

majoR Clients in 2016

Balance Building (Budapest, 2015), Quadrio (Prága, 2014), Europeum (Budapest, CITI, Voda2011), Courtyard by Marfone, GM, riott (Budapest, 2010), Magyar Posta, Gateway (Budapest, Starschema, 2008), Airport City Interticket Logistic Park (Budapest, 2008), BC30 Office building (Budapest, 2007)

Cpi HungaRy kFt.

4

pReviously Completed ReFeRenCe pRojeCts, yeaR oF Completion

oWneRsHip (%) HungaRian non-HungaRian

asset management

Real estate bRokeRage

Condominium opeRation

built-to-suit development

Real estate utilization

Real estate investment

ConstRuCtion

pRojeCt management

poRtFolio management

aCtivities and seRviCes

FaCility management

publiC building

industRial

inFRastRuCtuRal

Residential

CommeRCial

oFFiCe

Company Website

total net Revenue in 2016 (HuF mln)

Rank

types oF investment

ongoing pRojeCts in HungaRy (invested value in HuF, expeCted yeaR oF Completion)

Ranked by total net revenue



Special Report

pReviously Completed ReFeRenCe pRojeCts, yeaR oF Completion

oWneRsHip (%) HungaRian non-HungaRian

asset management

Real estate bRokeRage

Condominium opeRation

built-to-suit development

Real estate utilization

Real estate investment

ConstRuCtion

pRojeCt management

poRtFolio management

aCtivities and seRviCes

FaCility management

publiC building

industRial

inFRastRuCtuRal

Residential

CommeRCial

Company Website

oFFiCe

total net Revenue in 2016 (HuF mln)

Rank

types oF investment

www.bbj.hu

Budapest Business Journal | November 3 – November 16, 2017

ongoing pRojeCts in HungaRy (invested value in HuF, expeCted yeaR oF Completion)

28 | 3

top loCal exeCutive CFo maRketing diReCtoR

Ÿ

(60) (40)

dr. gergely árendás Zita Dúl Henriett Kettinger

Ÿ

– STRABAG Real Estate GmbH (100)

majoR Clients in 2016

pRopeRty maRket Real estate development kFt. 9

www.propertymarket.hu

597

Re pRojeCt 10 development kFt.

www.residenceirodahaz.hu

atenoR gRoup 11 HungaRy kFt.

442

www.vacigreens.hu

ConveRgenCe NR

www.convergen-ce.com

NR

546

eCe pRojektmanagement budapest kFt.

Ÿ

Ÿ

   

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–

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–

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–

–

–

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–

–

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–

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–

–

–

–

BudaPart

Ÿ

Ÿ

Ÿ

Ÿ

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–

–

–

–

–

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–

www.goodman.com

Ÿ

–

–

–

–



–

HoRizon development kFt. www.horizondevelopment.hu NR

Ÿ

     

Ÿ

Promenade Gardens, 2017, Szervita Square Building, 2019, Buda Gardens, 2020

–

–

–

–



–



      

–

–

–

 

Eiffel tér office building (2010), City Point 9 Városi Logisztikai Központ (2010), Park One office building, Pozsony (2007), CityZen office building







NR

Ÿ



–

–

–



–

tRigRanit Fejlesztési kFt. NR

www.trigranit.com

WHite staR Real

NR estate kFt. www.whitestar-realestate.hu

Ÿ

Ÿ

 

–

–

–

–

Millennium Gardens, 2019

Ÿ

 

–

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–

–



–



–

–



–

stéphan sonneville, laurent Collier, sidney d.

– bens, William Atenor Group S.A. antoine (100) joseph V. lerinckx – – – Alan A. Vincent (100)

alan a. vincent – –

1138 Budapest, Váci út 117–119.

(1) 785-5208 – info@atenor.hu

1134 Budapest, Váci út 37.

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

–

Goodman Gyál Logistics Centre (2016)

 



Ÿ

1027 Budapest, Christiann Ganzutca 16.

Reichl, (1) 346-6400 johannes mayr (1) 346-6448 – julianna.marta@ – raiffeisenevolution. com

–

–

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–

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

Ÿ

1117 Budapest, Kopaszi gát 5.

(21) 221-0081 – iroda@ propertymarket.hu

Christoph augustin, michael Werner Interspar, Árkád 1. Budapest, Örs Media Markt, eckert, katrin vezér tere, 2002, Árkád teschner, Zara, H&M, 1106 Budapest, – Pécs, 2004, Árkád Győr, dr nóra kis- Örs vezér tere 25/A C&A, New ECE Projektman2006, Debrecen Fórum, marci, gergely Yorker, (1) 434-8200 agement GmbH & 2009, Árkád Szeged, lászló, Hervis, Müller, (1) 434-8207 Co. KG (100) 2011, Árkád 2. Budapest, györgyné Bershka, info@ece.hu Örs vezér tere, 2012 szilvásy Pull&Bear, Györgyné Stradivarius Szilvásy –

pRologis HungaRy www.prologiscee.com

Amfi Apartmanház, Budapest - 2003, Rumbach Center Office building, Budapest - 2008, Uniqa HQ, Budapest - 2009, Residence 1&2 office building, Budapest – 2010

Váci Greens B épület, 2016 Q1, Váci Greens C building, 2015, Váci Greens A building, 2013

www.ece.com

goodman HungaRy NR kFt.

BudaPart

 

addRess pHone Fax email



Eiffel Square office building (2010), Eiffel Palace office building (2014), Váci 1 (2016)

Prologis Park BudapestSziget, DC6 build-to suit, DC7 Speculative, DC7B és DC8 buildto-suit, Prologis Park Hegyeshalom DC1 extension

Ÿ

– Goodman Europe istván kerekes (Lux) S.á.r.l.

– (96.67)Goodman – Belgium N.V (3.33)

1123 Budapest, Alkotás utca 53.

(1) 336-2270 – info-hu@ goodman.com

Ÿ

Individuals (100) –

attila kovács – Ildikó Rézműves

1052 Budapest, Türr István utca 8.

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

Ÿ

– Real estate funds (100)

lászló kemenes – Marta Tesiorowska

1095 Budapest, Lechner Ödön fasor 7.

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

'K&H Bank headquarters (2011), Millennium Tower I. (2006), Millennium Tower II. (2008), Millen1132 Budapest, Árpád török nium Tower III. (2008), – Váci út 30.

Agnieszka Westend City Center ING, Aareal TPG Real Estate (1) 456-6200 Turowska (1999), Bonarka for Bank (100) (1) 456-6201 Dániel Pazsitzky Business building A-G, info@trigranit.com Kraków (2011-2017), Bonarka City Center, Kraków (2009), Lakeside park, Bratislava (2008) IP West office building (2009), The Quadrum AIG & office building (2008), Partners, Haller Kert office building 1117 Budapest, Heitman, GLL, (2008), Market Central Budafoki út 91–93.

– jános gárdai Immofinanz, Ferihegy retail park (1) 382-5100 White Star Real Marietta Biczó Corpus (2007), M1 Business (1) 382-5101 Edina Magó Sireo, DEKA Estate LLC (100) Park (2006), Airport info@whitestarImmobilien, Business Park (2004), realestate.hu Patrizia, Alkotás Point office Logicor building (2002), Infopark (1999)

NOTES (1) The list includes companies that are active in office, industrial, logistics or commercial real estate development. (2) Consolidated net revenue.

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

This list was compiled from responses to questionnaires received by October 31, 2017 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

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

4

www.bbj.hu

Socialite

Budapest Business Journal | November 3 – November 16, 2017

Hungarian Flowers and the Day of the Dead Fashions are changing too. “Traditionally, in Hungary, people didn’t put flowers in vases so much. They would buy floral arrangements that had already been created. Now people will even bring their own flowers to restaurants for celebrations and all the restaurants do is provide the vases.”

What about the Day of the Dead? “It’s as popular as ever. The closer we get to it, the harder it becomes to buy good material for wreaths. Everything has sold out.”

So why is the Day of the Dead so popular in Hungary?

Social niceties, such as the giving of flowers, are strong in Hungary, and tie in to other traditions like the Day of the Dead.

DAVID HOLZER

Crossing the metro station at Corvinnegyed in Budapest, on our way to meet a friend, my Hungarian partner said, “We should buy her a flower.”

The friend was a woman and it struck me as a little odd that my partner would buy flowers for another woman. “This is not strange in Hungary,” my partner said.

As is usually the case when we have this kind of conversation, there was the implication that the English are somehow a little less refined than the Hungarians.

The longer I live here, the more I think my partner may be right.

It seems to me social rituals count for more in Hungary than they do in many other European countries, certainly the United Kingdom. This is truer nowhere than when it comes to flowers, especially around the time of the Day of the Dead (Halottak napja), on November 2.

I still shudder when I remember buying Chrysanthemums for my partner a few days before the Day of the Dead, the first year we were together in Hungary. I had no idea that Chrysanthemums are pretty much the official death flower in this country.

Hungarian Flower Rituals

My journey into the world of Hungarian flower rituals began with Katja Shläfli.

Shläfli, who is Swiss, is the founder of Arioso Budapest, the splendid flower and lifestyle shop and café on Király utca in central Budapest.

“A friend suggested I open a flower shop here 15 years ago,” she told me, “and I realized there was a real opportunity to do something different from the usual, more chocolate-boxy flowers and arrangements you see in traditional Hungarian flower shops. From the beginning, I knew I had to be different. I had to offer more to the customer in terms of presentation and quality. People love to come into Arioso and choose exactly what they want in a beautiful environment.”

Although Shläfli began by bringing in flowers which she would have chosen for the, let’s say, more subdued Swiss market, she soon adapted her taste to fit that of Budapest. Today, she buys 80% of her flowers from Hungarian family growers who have begun to grow varieties specially for Arioso, including the subtle, green Alchemilla.

An Unlikely Social Gathering

Whole families will visit the graves of family members in Hungary on the Day of the Dead, lighting candles in remembrance.

Did Shläfli think there was something different about the Hungarian approach to giving flowers? “There are many flowergiving traditions,” she agreed. “Far more than in Switzerland. International Woman’s Day is a big deal and men often give flowers to the women in their family and work colleagues. There’s Teacher’s Day in May and parents also give flowers to their children at the end of the school year. This practice now starts as early as kindergarten.

People give flowers on name days. And, of course, there’s the Day of the Dead.”

Talking to Shläfli, I had the comforting sense that Hungary’s floral traditions were somehow sacrosanct. But when I spoke to my partner’s florist friend, Erzsébet, I discovered this wasn’t the case at all.

Changing Floral Ways

Erzsébet, who makes my partner’s wreaths, trained for many years to become a florist.

While she was still learning, she began teaching floristry to other students. According to Erzsébet, it took her ten years to become a flowermeister or, in her case, flowermeistress.

“In the old times,” Erzsébet said, “it was more popular to buy flowers in Hungary.

Traditionally, every family gave flowers on special occasions. Now, perhaps because good flowers have become more expensive, people often give chocolates instead. Also,

names are changing in Hungary. Not so long ago, flower shops knew that they could sell plenty of flowers on name days because we only had the traditional names – Mária, Katalin, Éva, and so on. Now that people are giving their children all kinds of names, flower shops can’t expect to do good business on name days in the way they used to.”

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My partner tells me that the reason the Day of the Dead became such an extraordinary event in Hungary has much to do with the Socialists. Because going to church was frowned upon, Hungarians poured all their innate mysticism into the Day of the Dead, which the authorities couldn’t stop.

This is why, in the week leading up to that day, Hungarian graveyards are every bit as weird and wonderful as those of Spain, Mexico and other Latino countries.

Despite that the fact that that Hungary is not overwhelmingly Catholic.

I’d say that the Day of the Dead allows all Hungarians to indulge in what I would call their cheerfully innate morbidness. For example, we take a photo of my partner at her father’s grave every year. Somewhere, apparently, there’s a photograph album of the whole family filled only with pictures taken at various graves over the years.

But even though it’s taken me some time to get used to the Hungarian way of death, I think it’s wonderful. There’s something deeply comforting about communing with the dead as if they were still present, especially in a wintry graveyard at twilight filled with gigantic floral arrangements, ornate wreaths and thousands of flickering candles.

30 | 4

Socialite

www.bbj.hu

Budapest Business Journal | November 3 – November 16, 2017

Fun, Funky Reds Find Their Place With a funky label or a fun story, or preferably both, and adhering to the “fresh is best and less can be more” school of winemaking, Hungarian vintners are beginning to fill an important gap on the local market – light yet vibrant reds of good quality that can be quaffed happily on their own and do not necessarily require serious food to prop the imbiber up.

ROB SMYTH

From Szekszárd, János Márkvárt excels at sealing freshness and fruitiness into the bottle, often with a delightful lightness of touch, which is totally the case with his Ezerötös Cuvée 2016 – a blend of Kékfrankos, Kadarka, Merlot and Zweigelt.

As the name describes, it not only costs HUF 1,500 (from Bortársaság), but the number also refers to the model of the Lada auto (known in Hungary as a “Zsiguli”) that Jáni takes visiting wine lovers around the vineyards in. The car is also cleverly

captured on the cartoon-like label.

Wines from Szekszárd are sometimes described as spicy and this one most certainly is with Christmas spices and black pepper notes to complement the juicy and abundant red fruit that is typical of the grapes that make up the blend. It has vibrant acidity and is on the lighter side in terms of tannins. In other words, it is made more to make your mouth water (and to entice you to pour another glass) than to coat your teeth.

From the same wine region, Heimann SXRD 2016 (Ft 2,200) was aged in large, used casks to preserve the fruit and to minimize the influence of oak, with the

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ultimate goal of making a “juicy, easydrinking Szekszárd wine”, in the words of Zoltán Heimann Jr. It is the second vintage of what has proved to be a very successful wine after its 2015 debut.

the latter, although the Cabernet Franc share has been upped a tad on the previous vintage. Its components closely resemble a Right Bank Bordeaux blend. One might expect wines from a monastery to veer towards the traditional, but this is cool and contemporary with the fruit factor upped to the max with only brief ageing in Hungarian barrels lending support rather than clouding out the delicious red and black fruit.

Young and Hipster Heimann

“The name is intended to be approachable and something that people are willing to drink on an average Thursday night, somewhat young and hipster, but still undeniably Heimann, as well as a way to help foreigners to pronounce Szekszárd,” says Heimann Jr. The main difference to the preceding vintage is that the amount of Cabernet Franc has been upped to 48% from the previous one-third, while Merlot and Kékfrankos have dropped back a bit to 26% and 23% respectively from around one-third each.

While “no fancy grapes” go into SXRD, they are fresh, from a good quality crop and with a lower alcohol level – I, for one, am more often happy to sip wines that don’t leave you “lightheaded” after one glass. This one is 13% in alcohol, which is about as low as good red wines get these days and Ezerötös has the same alcohol content.

SXRD 2016 also contains some 3% of the Heimanns’ own Sagrantino, the über tannic Umbrian grape that makes Sagrantino de Montefalco, which was used to bring some tannic tartness and a bit more body – this grape is so intense that even the effect of a few per cent can be felt. Incidentally, the Heimanns planted Sagrantino in Szekszárd on the recommendation of the late, great Tibor Gál, who served as chief winemaker at Tenuta dell’Ornellaia in Bolgheri and consulted in other parts of Italy.

Weightier (14.5% alcohol) but also smooth and slipping down a treat is Pannonhalmi Hemina Vörös 2016 (HUF 3,250) from the winery of the Monastery of Pannonhalma (Hemina is a reference to the measure of wine that monks are permitted to drink; a self-determined unit decided upon by the monks themselves.)

It is a blend of Merlot and Cabernet Franc, comprising more of the former than

Rustic Character

The pure primary fruit I recall on first tasting Bálint Losonci’s Nyitnikék 2016 (HUF 2,850), has been replaced by more of an earthy, rustic character that can still be very appealing. This unfiltered and unfined wine, a unique blend of spontaneously vat-fermented Kékfrankos and the rare Magyar frankos, from andesite and clay soils in the Mátra, with eight months of ageing in casks and made for early drinking, is certainly worth a taste before it runs out. Lonsonci also does white, and is set to release an exciting, bone dry and über fruity Riesling from 2016, which comes from Riesling clones driven in from Austria by Bálint himself.

Generally speaking, the 2017 vintage was looking set to be a stunner, until Mother Nature threw a wet spanner into the works.

Just about everything went right at all the key junctures of the vintage, until rains in mid- and late September conspired to rain on the otherwise perfect parade.

One Badacsony grower mentioned a straight 10-day period of rain in midSeptember, which served to take the gloss off the grapes and dilute the density. The recent heavy rains in October have also been putting a bit of a dampener on what otherwise looked to be a very strong vintage for sweet wines in Tokaj, with the desired noble rot in danger of turning into malign grey rot.

Nevertheless, quantity and quality appear to be well up across the red and white board compared to 2016, a vintage that was itself blighted by frost and hail.

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Budapest Business Journal | November 3 – November 16, 2017

Foundation Sees Fall in 1% tax Donations One of Hungary’s best-known children’s charities is having to appeal for more funds after the annual 1% personal income tax campaign left it markedly down on additional income compared to last year.

ROBIN MARSHALL

Every year Hungarian tax payers are able to donate 1% of their personal income tax to a charity of their choice, at no additional cost to themselves. To do so, however, they have to make their wishes known to the tax authority; if not, the 1% simply goes into the general state budget.

This year, the National Tax and Customs Administration (NAV) was, for the first time, filling in electronic tax returns, and that seems to have impacted the money going to charities.

Writing in its regular newsletter, the Magic Lamp Foundation (Csodalámpa Alapítvány) said that it has

received

HUF 12.5 million

through the 1% campaign in 2017, and thanked all its supporters. But it also noted: “Unfortunately, this amount is a HUF 3 million, or 20%, decrease compared to the previous year, which is a whopping 5% of our balance sheet total.”

Speaking exclusively to the Budapest Business Journal, founder Gábor Patzauer said he was sure that an “important reason” the tax

donations were down was due to NAV filling in the forms, without needing any interaction from the taxpayer to become official. But he thought that was not the sole cause.

“The second reason could also be that, because of some well published scandals in recent years, the general public distrusts the NGO sector. Most of those who have direct contact with – or are beneficiaries of – an NGO act, but the general public is passive. […] Actually, it is very sad that so many people do not care enough to give their 1% to a civil organisation; it does ‘cost’ nothing but time and a very little effort,” he explained.

The founder was keen not to blame NAV itself, pointing out that tax payers had the opportunity to checked their tax return through the “Ügyfélkapu” portal, where there was still a possibility to direct their 1% to an NGO of their choice. He estimates that the e-tax returns covered about 40% of all income tax declarations this year.

“For instance, in our case we ‘lost’ about 20% relative to last year (HUF 12 mln vs. HUF 15 mln in 2016) and about 600 taxpayers from the 2,900 in last year.”

Patzauer says the shortfall is, generally speaking, not unique to his foundation; the loss is about average for charities of the size of Csodalampa this year.

Online Campaign

Ironically, for the first time in 2017 the Magic Lamp Foundation had a dedicated online campaign using Facebook and Google Grants, which was managed on a

pro bono basis by a professional team.

“We even created a new, modern-looking home page at the start of the campaign.

Our presence in the social media generated some more homepage visits, but those did not realise in 1% donations. One of the causes could be that this year we distributed our presence evenly during the campaign. In 2016 our presence was matched to the peak periods of tax returns.”

It is important to note that some foundations earned about the same amount as last year or even actually grew their take; why isn’t always clear, but it could be a bigger marketing budget, an important social cause, or simply an NGO-name that attracts more interest. “The Board of Magic Lamp will analyse and act on this year’s experiences in order to fare better next year,” Patzauer said.

The Magic Lamp Foundation helps children between the ages of one and 18 suffering from a life-threatening disease by granting them a wish, and was set up after Patzauer and his wife lost their own eight-year-old daughter to cancer in 2003.

At the time of writing, the foundation had made another 196 wishes come true to date in 2017. “That brings us to

3,228

wishes granted

in total in the past 14 years, bringing joy, happiness, and hope to 3,228 sick kids.”

If you wish to make a donation to the foundation, you can do so through its website (csodalampa.hu/csodalampa/English).

PROMOTION

On the Hunt for Hungary’s Wine Treasures Wine enthusiasts, whether foreign or local, need no longer search for the ultimate tasting hub; Doblo Wine Bar provides them with the cream of the crop of Hungarian wines in a charming and – upon request – highly exclusive environment.

Though located in one of the top tourist areas in Budapest, Doblo Wine Bar doesn’t need to rely mainly on walk-ins.

Its reputation for hosting an extensive Hungarian wine selection in a unique atmosphere is generating enough wordof-mouth and repeat customers, while partner travel agencies constantly provide plenty of happy foreign guests.

The popularity of the place is based on a well-tested formula; keep a vast range of wine types and offer customized as well as carefully structured tasting menus to ease the embarras de richesses. Fourteen different packages are available to

choose from that feature red, white and rosé, but if you don’t wish to be restricted in any way, you are welcome to pick your favorite from a 150-strong stock.

“Our foreign guests often go with our ‘Hello Tourist’ menu that includes six different wines and, as any other menu of ours, fine finger food,” PR manager Adrienn Duka says. “Another hit is our eight-item deal that takes you on an even longer culinary journey.” The experience is boosted by a little presentation of the wine region and the wines concerned, as well as the technology applied to the make of wine. “This is part of the package, regardless of whether the order is placed by a single individual or a group of 50,” Duka adds.

Expertise is guaranteed by continuous training of the staff, with horizons widened by tasting samples from different vineries in the country. “Of course, the products of the leading wineries of Hungary are available here, but the point is to give room to emerging cellars as well,” Duka explains. This policy allows Doblo to strike a balance between the major wine regions and providing a platform for smaller winemakers. The latter regularly reach out to Doblo to have their products validated and to seek invaluable advice on how to improve quality.

The wine bar can host up to around 90 people, but those in search of privacy can also have their way. For starters, in the main room there is a gallery that provides the opportunity to be separated from the crowd. But if you head down to the

basement, there is a whole other world awaiting. A cozy tasting room for around 10-12 persons is primarily for those who keep their own bottles in their wine safes next door and wish to share a bottle in a select company. Such tastings are often coupled with meet-ups with winemakers.

There is also a members-only late-night piano bar down there, with a maximum capacity of 45-50. Access is restricted to guests with a Doblo annual membership, who have the privilege to enjoy a wide selection of premium cocktails. Many also opt for kosher pálinka specially made for Doblo. “Among our members there

are not only locals and expats living in Budapest; many people who frequent our capital only two or three times a year also find it worthwhile to join the club because of its exclusivity,” Duka notes.

In addition, a super-secret room also operates in the Doblo basement in true speak-easy fashion. This tasting room is for events only where up to 25 persons can have a taste of the finest whiskey, rum and cognac, subject to membership.

No photos or phones are allowed, though, as this is truly a place for seizing the moment in an exclusive environment.

And Doblo is great at providing it.