Budapest Business Journal 2817 by Business Publishing Services Kft.

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

HUF 1,390 | €5 | $6 | £4

BUSINESS JOURNAL BUDAPEST

VOL. 28. NUMBER 17

SEPTEMBER 18 – OCTOBER 1, 2020

SPECIAL REPORT

Green Business

SPECIAL REPORT

Businesses Must go Green Today to Have a Future Tomorrow The time for businesses, especially smalland medium-sized companies, to think about a shift to renewable energy is here. Industry insiders tell the Budapest Business Journal that adopting green energy now may be the very key to staying on the market in in a decade’s time. 10 SPECIAL REPORT

COVID Underscores Sustainability Issues Sustainability issues have become key elements of the planning, construction and management of office and, increasingly, other commercial properties. 14

SOCIALITE

A Limited Wine Festival for a Special Vintage The Budapest Wine Festival, in the grounds of Buda Castle, has always been something of a “back to school” event. Thankfully, it could go ahead this year, albeit with reduced capacity, bringing refreshing cheer to wine lovers amid balmy temperatures. 35

Brand Building in Strange Times NEWS

Analysts: Industrial Production to Pick up by Yearend It seems that the second wave of COVID is here, while the economy is still suffering from the symptoms of the spring lockdown. Market experts are optimistic, though, expecting that industry will catch up by the end of the year. 3

S FOCU

Florian Naegele, CEO of Penny Market in Hungary, talks about how the German retailer coped with the COVID crisis, its plans for a second wave, and how its goals to widen its local product base, grow the brand and attract new customers remain on track.31 BUSINESS

Growth Curve Thru 2030 to be Defined by AI Strategy Hungary’s AI Strategy has been revealed. The aim is to set the data economy in motion, with large-scale educational programs and widespread social awareness to boost growth in the upcoming decade. 6

News

2|1 BBJ

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL CONTRIBUTORS: Zsófia Czifra, Kester Eddy,

Bence Gaál, Gergely Herpai, David Holzer, Christian Keszthelyi, Gary J. Morrell, Nicholas Pongratz, Ekaterina Sidorina, Robert Smyth, Zsófia Végh. LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES:

Should be submitted in English to news@bbj.hu LAYOUT: Zsolt Pataki PUBLISHER: Business Publishing Services Kft. CEO: Tamás Botka ADVERTISING: AMS Services Kft. CEO: Balázs Román SALES: sales@bbj.hu

CIRCULATION AND SUBSCRIPTIONS: circulation@bbj.hu

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

What We Stand For: The Budapest Business Journal aspires to be the most trusted newspaper in Hungary. We believe that managers should work on behalf of their shareholders. We believe that among the most important contributions a government can make to society is improving the business and investment climate so that its citizens may realize their full potential. The Budapest Business Journal, HU ISSN 1216-7304, is published bi-weekly on Friday, registration No. 0109069462. It is distributed by HungaroPress. Reproduction or use without permission of editorial or graphic content in any manner is prohibited. ©2017 BUSINESS MEDIA SERVICES LLC with all rights reserved.

BBJ-PARTNERS

VISIT US ONLINE: WWW.BBJ.HU ADVERTISEMENT

SUSTAINABILITY AND THE RETURN OF COMMERCE As a species, we are as greedy as we are fecund. We have a tendency towards wanting more, sooner. In moderation and isolation, those can be useful traits, the sort of impulses that drive innovation and progress. But we generally lack the ability to limit ourselves to moderation (oh, look, there’s that greedy gene again) and in any case, we do not live in isolation. Some have been linking the circumstances that led to the outbreak of the coronavirus pandemic with profound questions around the sustainability of the way we chose to live on earth: our constant demand for more products, more land, more convenience at almost any price. If you discount conspiracy theories about COVID-19 being a creation released (whether intentionally or by accident) from a Chinese lab, it is possible it isn’t new at all, simply unencountered, until habitat displacement pushed the bats carrying it out of the forests and into our towns. It seems like a good time, therefore, to look a little more deeply at green business issues in Hungary. Here, too, COVID-19 and the way we work and live are linked. For several years, Hungary’s office buildings have been exclusively built to ever stricter green accreditation standards. But do we really need them at all? Will the realization we can work from home quite adequately render them surplus to requirements? Or will we still need offices (as one developer and one local head of a major multinational company have both separately told me), if only as a meeting point, a resource center and place for team building and creative interaction? It is too soon to definitively answer those questions right now, but you will find plenty of food for thought inside, and not just about office life. We also offer you, for example,

the seemingly counterintuitive argument that one measure of success for the ongoing campaign to repopulate the Danube with sturgeon will be the return of commercial fishing, albeit on a sustainable level. The return of commerce is something we all look forward to, and surely no nation more so than Germany, which took over the rotating Presidency of the Council of the European Union on July 1. According to the website of #EU2020DE, the mission statement for its six-month occupation of the hot seat is a desire to see the EU “emerge from the current crisis stronger, more united and with a new sense of solidarity.” I think we can all say “Amen” to that. Germany has always been a major player in Hungary’s post-communist economic recovery, a fact based largely on simple geography and initial cost advantages. But there was also an element of gratitude for the role Hungary played in letting East Germans through its borders as the Iron Curtain crumbled, and further back as a place where West and East Germans could meet on the shores of Lake Balaton. Political relations between Budapest and Berlin might well be frostier nowadays, but there is still plenty of bilateral trade (COVID aside). Since 2014, the Hungarian Investment Promotion Agency has negotiated 123 German projects, worth EUR 6.6 billion in FDI volume, and creating 28,000 jobs. As HIPA tells us inside, there are now some 300,000 Hungarians employed in around 6,000 German-owned firms. A good time then, to check in with investors such as Penny Market and Lufthansa Technik and, indeed, the German chamber, celebrating 100 years since the founding of its predecessor body. Robin Marshall Editor-in-chief

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

News///macroscope

Analysts: Industrial Production to Pick up by Yearend

It seems that the second wave of the novel coronavirus pandemic is here, while the economy is still suffering from the symptoms of the spring lockdown, as July’s industrial figures show. Market experts are optimistic, though, expecting that industry will catch up by the end of the year.

ZSÓFIA CZIFRA

Analysts are expecting a great improvement in the August industrial output, after July data shows that Hungary’s industrial production fell back by 8.1% on a yearly basis. The degree of fall was 28.8 percentage points less than the nadir of April, according to the second estimate issued by the Central Statistical Office (KSH). Based on working-day adjusted data, production dropped by 7.7%. The effects of the altered economic processes caused by the coronavirus epidemic were still perceptible in this period. Industrial output in July, according to both seasonally and working-day adjusted indices, was 7.2% above the level of the previous month, and grew by 46% compared to April. Within industry, production fell by 8% in manufacturing, representing the decisive weight of 96%, and by 31% in the much less significant mining and quarrying sector. The output of the energy industry (electricity, gas, steam and airconditioning supply) declined by 4.1%. For the period January-July, industrial output dropped by an annual 12.1%. According to analysts, industrial production has been gradually recovering from its April low point.

Significant Potential

ING Bank senior analyst Péter Virovácz says that Hungary’s economic

Number of Deaths Caused by New Coronavirus Infection in Hungary

August

September Source:

performance is continuing to improve and emphasized that the industrial sector still has significant potential. Production volume is down at a level similar to that of the second half of 2017, he noted. The usual summer shutdowns took place in some factories in July, which could explain why KSH is still reporting an output drop in the vehicle manufacturing segment, he added. In August, production could fall further thanks to continuing temporary stops at factories. The biggest question is how might possible temporary shutdowns, due to the strong spread of the virus, affect supply chains in Europe, he said. As he noted that the volume of new orders is encouraging, so if everything goes well, industry will reach pre-crisis level by the end of the year. Dávid Németh, senior analyst at K&H Bank, projects that industrial production is gradually recovering from a low point in April, when lockdown measures halted most production. Although the pace of recovery has slowed a little, data might have been affected by high base effects. According to him, things are still uncertain due to the pandemic and it is not clear what effect it will have on exports and how domestic consumption could step in to support lower foreign demand. Industrial output for the year could be down by a single digit number, he cautions, but growth could start again in 2021.

Delayed Consumption

The recovery is likely to continue in the coming months, although demand will only liven gradually, due to lower wages and cautious consumers, says Takarékbank chief analyst Gergely Suppan. Later, on the other hand, delayed consumption will show, therefore industrial output will gradually pick up in the rest of the year. But if there is a more severe second wave of the pandemic, it will surely slow down the recovery process, Suppan warns; however, due to the better preparedness of the healthcare sector, he does not expect further lockdowns. ADVERTISEMENT

He said industrial production could fall this year by around 7% but in 2021, because of the low base affect, it could rise by 13-14%. For April 2021, he forecasts a growth rate of as high as 60% as production plummeted this year in April. Orsolya Nyeste, head analyst at Erste Bank, says the July data was actually a positive surprise for her, as she had calculated with a 9.5% working-day adjusted setback, rather than the 7.7% decline KSH reported. She thinks that industrial output further improved in August, but she also drew attention to uncertainties in the longer run, as the economic damage the second wave might cause are as yet unknown known. Dániel Molnár, macroeconomics analyst at research institute Századvég Gazdaságkutató, also expected a steeper decline in July, and he also noted that the latest data shows a gradual recovery after the low-point of April. He also said there are an increase in orders in manufacturing in Germany, which is a good sign for the Hungarian industry. According to him, industrial production might be on the rise in the rest of the year, although he also named the second wave of the pandemic as a risk factor.

Numbers to Watch in the Coming Weeks On September 29, KSH will publish detailed data on the labor market, as unemployment and employment figures of the June-August period will come out. The next day, January-July earnings data will be released, while export and import activities in July will come into attention on October 2.

4|1

News

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

WHO’S NEWS

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

Tymofiyiva to Helm ALD Automotive Magyarország As of September 1, Olena Tymofiyiva took over the position of CEO of ALD Automotive Magyarország Kft., a provider of fleet management and leasing solutions. 1ST DISTRICT

2ND DISTRICT

288 SQM – 5 ROOMS, CORVIN SQUARE

53 SQM – 2 ROOMS, PALÁNTA STREET

61 SQM – 2 ROOMS, BUDAKESZI STREET

At the bottom of the Castle Hill, in one of the historical areas of Budapest, this baroque style villa house built in the 18th century has 380 sqm of lot and many make over possibilities.

Near Vérhalom Square, within a small condominium in good condition, this very quiet, recently renovated apartment has private gas heating and 8 sqm of terrace with access to the garden.

This very sunny, well divided, garden facing apartment has 2 balconies and it is situated within a new condominium with elevator. Parking space possibility.

390.000.000 HUF

59.900.000 HUF

65.900.000HUF

+36.70.365.0827

+36.70.376.4138

The expert has nearly 15 years of experience in IT and software development. Between 2006 and 2009, he worked as a Java developer for R&R Software, before joining UNIQA Raiffeisen Software Service SRL as software development technical lead. In 2014, he joined IT-Services Hungary, working in a similar position. “With the arrival of Péter Fehérvári, Talk-a-bot took a serious step towards satisfying the higher needs of the most important markets of the chatbot sector: the bank system, and manufacturers with a high headcount,” says Talk-a-bot CEO Ákos Deliága.

Cordia Group Appoints Chief Financial Officer Olena Tymofiyiva 2ND DISTRICT

2ND DISTRICT

122 SQM – 3 ROOMS, SZÁSZ KÁROLY STREET

106 SQM – 4 ROOMS, PASARÉT

372 SQM – 7 ROOMS, BUDAKESZI

Near Millenáris Park, this street facing apartment in very good condition has separate rooms and private gas heating. It is situated within a condominium with elevator.

In a very nice villa house, this spacious and sunny duplex apartment has a living room with open kitchen, 3 separate bedrooms, bathroom, large balcony and parking space in the garden.

In a quiet and green area, this two-storey, luxury detached house has an outdoor swimming pool with outdoor shower, barbecue area and garage. All the furniture is for sale for requests.

84.900.000 HUF

99.900.000HUF

265.000.000HUF

+36.70.365.0827

3RD DISTRICT

+36.70.376.4138

3RD DISTRICT

+36.70.376.4138

3RD DISTRICT

44 SQM – 2 ROOMS, MÁTYÁSHEGY

58 SQM - 2 ROOMS, LESTYÁN STREET

611 SQM – 18 ROOMS, RÓMAIFÜRDŐ

Next to the Kiscelli forest, this cozy apartment in good condition benefits of direct access to the common garden (100sqm) and it is situated within a well-maintained condominium.

In a new built condominium, this bright and quiet, street facing apartment in good condition benefits of 2 separate rooms, balcony (6 sqm) and storage space.

In a new built, luxury, wellness residential park with swimming pool and well-kept garden, loft style apartments for sale with terraces and panoramic view over the Danube.

35.900.000 HUF

42.900.000 HUF

476.250.000 HUF

+36.20.419.8070

5TH DISTRICT

+36.20.419.8070

5TH DISTRICT

+36.20.419.8070

5TH DISTRICT

95 SQM – 3 ROOMS, PÁRIZSI STREET

140 SQM – 4 ROOMS, BALATON STREET

113 SQM – 4 ROOMS, SAS STREET

In the centre of the city, within an elegant, modern, Bauhaus style building, this high floor apartment is facing over a pedestrian street and benefits of two balconies.

This completely renovated, very bright, well divided, high floor, luxury apartment has 2 bathrooms and a 14 sqm of balcony with a view over the Danube.

New built, luxury apartments for sale with huge terraces and fascinating view over the St. Stephen’s Basilica, in the centre of the city.

89.000.000 HUF

174.900.000 HUF

195.000.000 HUF

+36.30.886.1014

6TH DISTRICT

+36.30.886.1014

7TH DISTRICT

+36.30.886.1014

7TH DISTRICT

141 SQM – 3 ROOMS, ANDRÁSSY BOULEVARD

51 SQM – 2 ROOMS, WESSELÉNYI STREET

74 SQM – 3 ROOMS, RÁKÓCZI STREET

Beautiful panorama over the Kodály körönd, this high floor, spacious apartment, that needs renovation, is situated within a Neo-Renaissance style building. The building is under renovation.

This renovated, sunny apartment has private gas heating and is situated within a period building, close to the University of Veterinary Medicine. Excellent investment opportunity.

Between Blaha Lujza Square and Keleti railway station, this apartment in good condition has living room, two separate bedrooms and balcony. It is located close to the Erkel Theatre.

220.000.000 HUF

39.900.000 HUF

49.900.000 HUF

+36.70.365.0825

13TH DISTRICT

+36.70.365.0825

13TH DISTRICT

130 SQM – 5 ROOMS, VISEGRÁDI STREET

242 SQM – 5 ROOMS, ST. ISTVÁN PARK

In the quiet part of the district, this apartment has a spacious and very bright room at the moment but it can be easily converted to a 2 room property as well.

In the centre of the district, this very bright and spacious apartment benefits of two entrances, so it can be easily converted to two 65 sqm properties as well. Excellent investment opportunity.

Breathtaking panorama over the Danube this renovated, luxury, top floor duplex apartment has 146 sqm of terrace, a private gym and 2 parking spaces. Art Nouveau style building.

31.900.000 HUF

90.170.000 HUF

565.000.000 HUF

+36.70.414.7759

CTO Announced at Talk-a-bot Chatbot services provider Talk-abot has announced the appointment of Péter Fehérvári as its new chief technology officer (CTO).

+36.70.365.0825

40 SQM – 1 ROOM, RÖNTGEN STREET

+36.70.414.7759

Previously CEO in Bulgaria, she replaces Klaudija Časar Torkar who led the Hungarian ALD team from 2018. The latter will carry on her career at the firm as CEO in ALD Belgium. Tymofiyiva began her career at ALD Automotive in Ukraine in 2006. In 2009, she became CEO and was also made head of IT and projects in 2017. She was appointed CEO of ALD Automotive in Bulgaria in 2018. She holds a Master’s degree in business administration from the Kyiv-Mohyla Business School. “I am convinced that with Klaudija and Olena’s expertise and experience, they will be great assets to continue the successful growth of our operations in Belgium and Hungary,” says Tim Albertsen, CEO of ALD. “Our aim is to accelerate ALD’s strategic development throughout the group in the mobility sector where the company is ideally positioned to benefit from structural trends and our leading positions in Belgium and Hungary will enable us to meet our clients’ evolving mobility needs.” ALD Automotive Magyarország became one of the major players of the Hungarian market, following the acquisition of MKB Euroleasing in 2016, serving large corporates and SMEs with a fleet of 15,576 vehicles (as at the end of 2019).

Péter Fehérvári

+36.70.414.7759

GRUPPO T.F.M. KFT. 1068 BUDAPEST, KIRÁLY U. 102. EACH AGENCY INDEPENDENTLY OWNED AND OPERATED. • THESE OFFERS ARE VALID, TILL THE APARTMENTS ARE SOLD. • THESE INFORMATION DO NOT CONSTITUTE A CONTRACTUAL ELEMENT.

Fehérvári will be responsible for directing development processes and providing quality control. He will also be heading the company’s R&D activities.

Property developer Cordia Group has announced the appointment of Péter Bódis as its new chief financial officer (CFO), replacing Tomasz Łapiński. Bódis has more than 20 years of experience in capital markets and investment fund management in international organizations. Between 2011 and 2018, as vice president of the management board, he was responsible for asset management at Pioneer Pekao Investment Management S.A., the oldest and largest mutual fund manager in the Polish market with more than EUR 5 billion assets under management.

Péter Bódis Prior to that, he spent eight years at Pioneer Investments’ Vienna office, managing investment funds dedicated to Eastern Europe. He started his career in 1997 at Creditanstalt Securities’ asset management department in Budapest. The group’s new CFO earned his master’s degree in finance in 1998 from the Budapest University of Economic Sciences. He holds the title of Chartered Financial Analyst and speaks five languages (English, German, Polish, Russian, plus his native Hungarian). “During my career I have become acquainted with CEE markets and economies, specifically the Polish and Hungarian markets, which are of key importance to Cordia now. This experience will allow me to effectively manage the group’s finances. I’m excited to join in a very intensive expansion phase with lots of challenges,” said Bódis. Łapiński, who had acted as Cordia Group’s CFO since December 2017 noted, “I have decided to join the private equity sector as a partner and it will be a completely new chapter of my career. At the same time, I remain in connection with Cordia as a member of Polnord’s supervisory board.”

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

Infections Rise Three-fold With the number of active coronavirus infections increasing more than threefold from the when our last issue was published on September 4, rising by 2,817 persons to 9,653, at the time this issue went to print, it seems safe to say the second wave has hit Hungary. NICHOLAS PONGRATZ

The skyrocketing figures may be connected to the fact that in the past month and a half, the number of reports of violations of epidemiological regulations has quadrupled, according to data provided by the National Police Headquarters. This shows that people are becoming less compliant with the measures taken against the spread of the infection, and the presence of police officers may be necessary to enforce them, says the President of the Independent Trade Union of Commercial Workers (KDFSZ) Csaba Bubenkó. In light of this, the government has imposed stricter regulations regarding mask-wearing in public places. On September 12, the government decided on sanctions for failing to comply with rules on mask-wearing in shops, instituting fines for violators and the shops themselves for a first

offense, a warning for the shop in the case of a second offense, and ultimately a closure of the shop for a third offense. Last week, the Municipality of Budapest ordered that passengers not wearing a mask on routes operated by Budapest Transport Center (BKK) be

fined

HUF 8,000

by BKK inspectors, in addition to being excluded from the trip. This was extended to include social institutions, such as elderly homes and homeless shelters, and cultural institutions, such as museums, libraries, archives, and cinemas. This week, the measure was extended further to concerts and circus performances, as well as in the enclosed spaces of similar institutions and condominium assemblies, with an administrative fine of HUF 15,000 if violators are unable to pay the HUF 8,000 fine on the spot. MÁV-Start and Volánbusz

News | 5

Coronavirus ///roundup have also issued a similar statement warning passengers will be removed for failure to properly wear a mask, with fines ranging from HUF 10,000-50,000.

Crowd Avoidance

The health benefits for all of mask wearing were underscored by the National Center for Public Health (NNK), which has issued a statement that if 80% of the population wore masks covering their mouth and nose in public, the number of infections would be reduced by a tenth. The NNK is also discouraging attending large-scale events, whether or not they are allowed by law, particularly where there are many people in an enclosed space with poor ventilation, where the disease spreads most rapidly. Dr. János Szlávik, chief infectologist of the Szent László Hospital, noted that the disease likely spreads most rapidly amongst

young people because they are frequently less symptomatic and may therefore be less compliant in taking measures to prevent the spread of the disease. Regarding financial developments in the ongoing situation, the government has begun negotiations with the Hungarian Banking Association about the possible extension of the moratorium on repayments beyond its expected expiration at the end of the year, according to Gergely Gulyás, the head of the Prime Minister’s Office. Whether or not they reach such an agreement, borrowers in vulnerable income positions will require a “targeted, temporary and transparent” solution said Gergely Fábián, a managing director at the National Bank of Hungary (MNB), at a conference organized by portfolio.hu. The MNB has also instructed Hungarian banks to extend the suspension on dividend payments until January 1, 2021.

Correction: Our article “Huawei: A Tool in a Playbook?”, published in the September 4 issue, incorrectly stated that “The Chinese company has released Mate 40, the last mobile device equipped with Kirin, the Huawei chipsets”. In fact, Mate 40 is due for release later this fall. Huawei’s PR company has also asked us to stress that Ren Zhengfei was a telecommunications engineer in the Army, so it would not be true to say that he had no technological experience prior to founding Huawei. We apologize for the error.

E X C E L L E N C E

I N

H E A L T H C A R E

7/8 Széchenyi Square 1051 Budapest Tel.: +36 1 377 6737 www.drrose.hu

TREATMENT & RECOVERY IN THE LAP OF LUXURY Dr. Rose Private Hospital works with leading physicians who are accomplished experts in their profession. Whether you come for a check-up or a treatment, book a consultation without any waiting time in more than 40 medical ﬁelds to cover all your needs. Dr. Rose Private Hospital oﬀers comprehensive, premium quality healthcare services with state-of-the-art medical equipment, in an exclusive setting right in the heart of Budapest.

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

Business

Moonshot Projects

Growth Curve Thru 2030 to be Defined by Newly Revealed AI Strategy Following collaboration between the Ministry for Innovation and Technology and the Artificial Intelligence Coalition, a 250-member strong stakeholder forum run by the Digital Success Program, Hungary’s AI Strategy has been now revealed. The aim is to set the data economy in motion, with large-scale educational programs and widespread social awareness to boost growth in the upcoming decade.

AI Coalition President Roland Jakab (left) and Minister for Innovation and Technology László Palkovics. Photo by Zoltán Iró, Ministry of Innovation and Technology will set up the institutional framework and coordinate strategic management. To lay the groundwork for data-driven governance, a data analysis competence center will be established via a cooperation agreement between the University of Debrecen and NAVÜ that has been commissioned to analyze public records. For the sake of supporting R&D, as well as the widespread adoption of best practice, the national High-Performance Computing (HPC) infrastructure and ecosystem will continue to be upgraded, an essential factor for high level innovation activities.

High Speed

BÁLINT SZŐNYI

15%

and 26%, respectively. To achieve that, the data economy needs to be set in motion, for which the National Data Capital Agency (NAVÜ) and Neumann Nonprofit Kft.

Accordingly, an HPC facility of five petaflops should be up and running in Debrecen by 2022 (a petaflop is a measure of a computer's processing speed and is the equivalent of quadrillion (thousand trillion) floating point operations per second (FLOPS) or 1,000 teraflops).

“Simultaneously, we are setting up data marketplaces on the new web page of the local AI ecosystem, ai-hungary.com so that stakeholders of the economy can use anonymized, not person-related public records for their own purposes and they can trade data among one another. This way secondary data use can become a matter based on an informed decision in both the private and the public sector,” added Palkovics. A crucial precondition to boost SME efficiency is to ensure that a forprofit approach is applied in ever more research. Hence the establishment of the AI National Lab headed by the Institute for Science and Control (SZTAKI) that is meant to mainly facilitate applied research activities. So-called “use-cases” (a methodology used in system analysis to identify, clarify and organize system requirements) will be incentivized by the AI Innovation Center.

On the way to an AI-ready Workforce Hungary’s AI Strategy puts a large emphasis on education as a cornerstone to create an AI-ready workforce. Consequently, an AI Academy has been launched that gathers tech-related learning opportunities and serves as a knowledge hub. As AI Coalition President Roland Jakab tells the Budapest Business Journal, not only employees but also employers need to be prepared for the AI transformation, and to embrace new working methods and use-cases.

“Our flagship initiative is the AI Challenge, under which we aim at making up to one million Hungarians familiar with AI and getting at least one 100,000 people to complete a basic course on the topic. Apart from that, we will launch a number of courses at the secondary and higher education level. Offering relevant adult training programs that are meant to help reskill the workforce is also on the agenda,” highlights Jakab.

In another major pillar of the AI Strategy, so-called transformative programs are foreseen. These are moonshot projects that gear up the economy and society for tech disruption. They include autonomous driving, customer service automation, climatedriven agriculture, energy systems based on renewables, personal assistants in healthcare, and a “data wallet” that takes the rights of citizens to selfmanagement over their own records to a whole new level. From the industrial perspective, manufacturing, healthcare, agriculture and transportation/logistics may be the segments where Hungary has the best shot at a winning edge in the global AI race. Accordingly, those sectors are now on the government’s official short list for areas where the state could gain the best results in allocating research capacities up till 2030.

“After one and a half years of work by stakeholders representing industry, academia and the administration, the government has adopted Hungary’s AI Strategy, thanks to which we can emerge as winners from the technology disruptions that alter all segments of our lives.” The strategy will never be successful if not connected to a large-scale awareness campaign. As step one, web portal ai-hungary.com has been launched as a single point to gather all the information related to AI transformation. That is just the prelude to a nationwide communications effort, though, that aims to educate citizens and the corporate world about the importance of AI adoption. The package of measures, including related projects and the institutional framework, is expected to cost HUF 170 billion through to 2030. Additional expenses are bound to be incurred by companies to adopt or develop use-cases.

An official Hungarian AI syllabus should be available by the end of this year, whilst select foreign courses are recommended on the AI Hungary website. This way individuals and corporates alike can have a single source of information about reskilling, and companies can also learn firsthand about the latest solutions to optimize their working processes. And what does the future hold? If things go as planned, AI-driven personalized learning paths should guide us all to enjoy ever more satisfying careers sooner than you think.

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

PRESENTED CONTENT

Business | 7

Suzuki Motor Corporation now celebrates it s 10 0 th anniver s ar y.

From Loom Manufacturing to a World Automotive Brand

Based on Shunzo’s concept, Suzuki launched its Power Free moped in 1952, followed by ever more powerful motorcycles. Soon afterwards, the company, which in the meantime had been renamed Suzuki Motor Corporation, built its first mini-car in 1955, drawing on its experience gained in the field of motorcycles. With the iconic Suzulight family car, driving became available to a wider range of consumers than ever before. And the development of the group’s marine engine business can be linked to algae fishing. Looking to accelerating algae harvesting gave Suzuki the idea to power boats with an outboard engine and thus it built the first water-cooled 5.5-horsepower boat engine in the 1960s.

Affordable Hybrid Autos

3D printers, LED bulbs, the internet, computers, space flight, microwave ovens, mobile phones, television: These are just a few of the life changing technical innovations of the last 100 years still shaping our daily routine. It is often difficult to keep up with the dynamically changing everyday life, and as a company it is especially challenging to stay up-to-date, winning customers with relevant, valuable products that serve current needs at all times. Experience, as well as results, show that 100-year-old Suzuki accomplishes this challenge successfully. What is more, due to its site in Esztergom, the company and the brand are also a little Hungarian. The Hungarian experts of Magyar Suzuki have already produced more than 3.5 million cars, which can be found on roads all over the world, thus Hungary can be rightfully proud of this performance too. On the occasion of its centenary, Zsuzsanna Bonnár-Csonka, head of corporate communications at Magyar Suzuki Corporation, spoke with the Budapest Business Journal about how one of the world’s largest car companies came to life from the work of a young Japanese dreamer.

Field of Dreams Being the child of a Japanese textile weaving family, Michio Suzuki, founder of Suzuki Motor Corporation, spent a lot of time in the cotton fields, pondering

how he could make his mother’s job easier. Thoughts were followed by deeds, and the young man created his first pedal-powered loom at the age of 22, which could weave in several colors and patterns that were unique at the time. By the age of 30, Michio already employed 60 people at his plant. The company, known as Suzuki Loom Manufacturing after 1920, soon became one of the largest loom factories in Japan.

From Spinning Wheel to 2 and Then Four Wheels Shunzo, the son of Michio, is associated with the company’s first major innovation and profile change. The young man asked the company’s engineers to design a motor-powered bicycle that could easily be used by anyone, even in the strong headwinds frequent in the region.

In 100 years, Suzuki has grown from a small loom maker to an international automotive company. Today, the group operates in 210 countries; it manufactures cars, motorcycles, boat engines and quads for countries all around the world. From the very beginning, all of Suzuki’s innovations sought to create valuable products at an affordable price that make everyday life easier for as many people as possible. Vehicle manufacturing cannot exist without innovation. In this spirit, the Suzuki Group has entered a new era of production, placing sustainable mobility at the heart of its innovation activities over the next 100 years. Our goal is to produce the next generations of hybrid and environmentally conscious cars in the usual high quality and cost-effective way, so that we can sell them at a consumer price that not only the audience of luxury products can afford. It was a significant step for Magyar Suzuki on this path that in December 2019 we started series production of hybrid vehicles at our plant in Esztergom. It is a challenge and a responsibility for us at the same time, as our mission is to reach out to a wide range of people and promote sustainable mobility.

For more information, see: globalsuzuki.com/100th/

8|2

Business

www.bbj.hu

Budapest Business Journal | September 18 â&#x20AC;&#x201C; October 1, 2020

Does COVID-19 Help Large Corporations and Tech Firms Squeeze out SMEs?

06-Jan-2020 09-Jan-2020 14-Jan-2020 17-Jan-2020 23-Jan-2020 28-Jan-2020 31-Jan-2020 05-Feb-2020 10-Feb-2020 13-Feb-2020 19-Feb-2020 24-Feb-2020 27-Feb-2020 03-Mar-2020 06-Mar-2020 11-Mar-2020 16-Mar-2020 19-Mar-2020 24-Mar-2020 27-Mar-2020 01-Apr-2020 06-Apr-2020 09-Apr-2020 15-Apr-2020 20-Apr-2020 23-Apr-2020 28-Apr-2020 01-May-2020 06-May-2020 11-May-2020 14-May-2020 19-May-2020 22-May-2020 28-May-2020 02-Jun-2020 05-Jun-2020 10-Jun-2020 15-Jun-2020 18-Jun-2020 23-Jun-2020 26-Jun-2020 01-Jul-2020 07-Jul-2020 10-Jul-2020 15-Jul-2020 20-Jul-2020 23-Jul-2020 28-Jul-2020 31-Jul-2020 05-Aug-2020 10-Aug-2020 13-Aug-2020 18-Aug-2020 21-Aug-2020 26-Aug-2020 31-Aug-2020 03-Sep-2020 09-Sep-2020

What about the proposition that COVID-19 has given an advantage to large companies and technology firms, and that these have taken market share from smaller ADVERTISEMENT

possible advantages are listed below, not necessarily in order of importance: 50 (a) Larger companies have greater access to capital and technology. The 40 mountains of cash at companies like 30 Apple and Microsoft are legendary. They have also resorted to far more 20 raising of fresh debt and equity, hence are in a much more liquid position. 10 See my recent column on this subject, 0 Corporate Debt Market During COVID-19 Pandemic, in the June 5 -10 issue of the Budapest Business Journal. -20 (b) There are usually more diversified, both in terms of products/services as -30 well as geography; should COVID-19 -40 hit a segment particularly hard, large companies may still derive cash flow -50 from other segments. (c) Large companies have usually invested more in branding than smaller companies, .SPX .DJI .NDX .RUT .W5000 hence typically tend to engender trust. Source: https://eikon.thomsonreuters.com/index.html Trust seems to be at a premium during the pandemic. A higher degree of trust may also play a role in helping larger companies hire the best employees. enterprises? While there are obviously before COVID: In the United States, (d) As a response to COVID-19, supply large companies that have suffered between 1995 and 2013, the percentage of chains are showing a tendency to (Carnival Cruise Lines, for example), employees working for firms with 10,000 become flatter. Larger companies are might the general proposition of larger or more employees increased from 24% to cutting back on outsourcing, reducing companies taking market share hold true? 28%, according to www.bloomberg.com. In the number of links in the supply chain, It seems that this kind of trend towards Europe, between 2011 and 2017, the share which tends to affect smaller firms. large companies was already the case of employment in firms with 250 or more (e) It is often possible to do more online employees rose from 32.8% with larger companies, and they to often have more automated internal processes, allowing them to attract more clients and serve them with more according to EU statistical body Eurostat. resilience, according to nytimes.com Might COVID-19 further accelerate this trend? (f) The ft.com says there seems to be This article looks at the evidence, evidence that larger corporations are cutting transversally across all sectors, for better able to obtain state assistance. whether large companies are doing better The SME Response or squeezing out small- and mid-sized enterprises. First, we will look at the macro A small company is like a motorboat, evidence. Next, we will look at the possible compared to a large multinational, which might be compared to an aircraft carrier. The reasons for this. Finally, we will discuss what small companies might do to augment advantage of the motorboat is that it can turn on a dime, an aircraft carrier might be stable, their own market share. but is much more difficult to maneuver. The Macro Evidence In theory, smaller corporations should In the United States, it is evident that take advantage of their ability to be more the Nasdaq NDX (representing large flexible, creative and responsive. They are corporations), the DOW Jones DJI (the in closer touch with local conditions. Many largest 200 publicly listed companies), and restaurants survived the pandemic by the S&P 500 SPX (increasingly dominated expanding into food delivery, for example, by five high tech stocks) have performed while many of those who failed to evolve vastly better than the Russell 2000 RUT, went bankrupt. Those small corporations which represents the smaller publicly listed that can identify new opportunities companies across America. appropriate to the environment, and take In Europe, fortunately for smaller advantage of them, will survive and prosper. companies, there has be less of a divergence. Smaller companies would also be well This may, however, have more to do more with advised to consider examining their capital the sector mix of companies in the index. structure. Is it optimized to respond to the risk of a prolonged pandemic? Is there The Advantage enough capital for the company to reinvent According to marketing experts such as itself, take advantage of new opportunities, salesbenchmarkindex.com, market share or simply to survive the pandemic? The among competitors tends to be much more pandemic, in many ways, accelerates the stable in good economic times, when the rate of change in the business world. economy is growing. A shrinking economy or an economy in Les Nemethy is CEO of Euro-Phoenix crisis is where the sheep tend to be separated (www.europhoenix.com), a Central from the goats. Stronger companies steal a European corporate finance firm, lead on weaker companies. Market shares author of Business Exit Planning tend to change much more rapidly. (www.businessexitplanningbook.com) So what might be some of the and a former president of the American advantages that larger companies Chamber of Commerce in Hungary. have over smaller companies? Several

Comparison of Stock Indices in the U.S.

It is clear that COVID19 is creating winners and losers in the world today, although there seem to be more losers than winners, says Les Nemethy. Online retailers, for example, are massively gaining market share at the expense of physical stores. Shopping plaza outlets and main street retailers are dropping like flies, while Amazon hires hundreds of thousands of workers.

The Corporate Finance Column

BUDAPEST

CLIMATE SUMMIT

09 OCT 2020

BUY A TICKET

AND PLANT A TREE!

34.8%,

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

Business | 9

Business Services Join Forces to Promote Sector The American Chamber of Commerce, supported by the Hungarian Investment Promotion Agency, has launched what the parties call an “unprecedented” cooperation project with 24 representatives of the business services sector (BSS) to promote the industry within the country. BBJ STAFF

The goal of the project is to make what is described on the HIPA website as “dynamically growing industry” even more popular and with increased recognition among Hungarian youngsters through joint communication and branding. The initiative was announced at a COVIDcompliant press breakfast at the Marriott Hotel Budapest on September 9.

Left to right: Zoltán Szabó, Farkas Bársony and Róbert Ésik at the press conference. Photo by Lázár Todoroff The business services sector has become one of the flagship industries of the Hungarian economy in recent decades. HIPA says there are now about 120 business service centers in the country, offering longterm and interesting career perspectives to more than 55,000 employees. Although every eighth Hungarian employee is engaged in the sector, market players feel its recognition still needs improvement. Zoltán Szabó, general manager of BT and a board member of AmCham told the press briefing “A survey, conducted by our company, on what expectations Generation Z holds toward work has found that youngsters have a positive opinion of the business services sector; however, the majority of the respondents have little knowledge of the industry itself.” That survey had in part been a catalyst for an initiative back in 2018, “to start a cooperative venture with our rivals in the industry, which in the past two years has grown into the largestscope sector-based cooperation in Hungary, all started with a small working group,” he explained.

Common Communication

The partners involved pursue a common communication activity for positioning the industry, and jointly take part in various university and career orientation events. In addition, relationships are built with educational institutions, student associations and teachers. The aim is to make sure that students, parents and teachers all have enough information to take account of the sector when choosing a career. “The Hungarian business services sector is one of the most developed and most mature of its kind in the region,” said Róbert Ésik, CEO of HIPA at the press conference. “Despite the economic slowdown caused by the pandemic, four significant investment decisions were made in the first half of 2020 for Hungary in favor of this industry, creating more than 1,100 new jobs in the coming period.” Ésik said his organization welcomed AmCham’s BSS initiative. “It enhances the sector’s awareness and recognition, thus promoting talent retention and the

attraction of new investments. In the framework of this professional cooperation between HIPA and AmCham BSS, a joint industrial survey has been launched, whose findings will be disclosed at our sectorbased annual event, Business Services Hungary, on November 25,” he added. “AmCham has been representing the business interests of various U.S.-based, international and domestic companies in Hungary for 30 years. Representation of interests is a key pillar of our activities, just like continuous dialogue with the government,” said AmCham president Farkas Bársony. He added that 7.5% of the chamber’s members are drawn from the business services sector, which “further strengthens us in our conviction to give room to this special collaboration and work together with the government in making proposals for the business and regulatory environment of the sector.”

BSS Partner Firms AGCO Hungary, Albemarle Hungary, ALDI International IT Services, Avis Budget Group, BlackRock, BP, BT, Celanese, Citi, Corning, CPL Integrated Services, Diageo, Docler Holding, Eaton Business Service Center, ExxonMobil, F.Hoffmann-La Roche, IBM ISSC, Lexmark, National Instruments, Randstad Hungary, Tata Consultancy Services, TESCOBST, ThermoFisher Scientific and Unisys.

Quality Private Care in 60 Medical Fields at RMC The Budapest Business Journal talks with Dr. Gyula Csermely about the care and medical services Rózsakert Medical Center (RMC) has to offer for locals and expats alike. BENCE GAÁL

BBJ: How did the story of the medical center begin? Gyula Csermely: Some 20 years ago, I founded a private OB-GYN practice in Rózsakert Shopping Center, which expanded into a private healthcare center over the years, thanks to the involvement of investors and doctor colleagues coming from the United States. The center, which now hosts more than 100 doctors, including nine who are U.S.trained, covering 60 medical fields, was one of the first private providers on the Hungarian healthcare market. Last year, Medlife, which is Romania’s largest private healthcare provider, became RMC’s majority partner, meaning that we became a part of one of the CEE region’s biggest service holdings. Currently, I am one of the leading doctors of the Fetal Medical Center within RMC. I believe that the focus of the service should be the patient, not the doctor, meaning a service built on partnership, making the patients take an active part in their own medical care.

BBJ: What are some of the medical specialties RMC has to offer? GyCs: We provide a full spectrum of outpatient care and same-day outpatient procedures on a total area of 1,000 sqm. Our operating room for sameday surgeries has state-of-the-art equipment, and patients can take a rest in our comfortable recovery rooms after undergoing a procedure. Also, our outstandingly qualified doctors have experience abroad; they participate in regular trainings, and present and publish worldwide, almost without exception. We treat our patients based on the latest, evidence-based international guidelines. The modern, cutting-edge technology and laboratories at RMC allows us to utilize a range of diagnostic methods, such as x-ray, mammography, ultrasound, ECG stress test, and endoscopy. We have three unique specialties: the RMC Center for Pediatrics, with a team of 19 physicians representing 13 pediatric subspecialties; the RMC Fetal Medicine Center, where we offer fetal screening exams during early and midpregnancy, including fetal heart exams;

Gyula Csermely and the RMC DentArt Dental Center, where we take care of both the health of the teeth and the beauty of the smile during every single dental treatment we perform. BBJ: What is the RMC’s philosophy in treating patients? GyCs: It is our priority to focus on our patients as a whole (not only on symptoms), since this complex view enables better medical care. We aim to be a long-term partner to our patients in medicine and health maintenance, as well. In addition to the highest quality professional care, what is necessary for this is attention, enough time, and a patientphysician relationship based on partnership and trust. We have a high number of

patients from the expat community in Hungary, going back long years. BBJ: How does the RMC Smart Clinic mobile app work? GyCs: We launched it in June 2020, enhancing our range of services with a new innovative solution. Our patients can now receive additional help in managing their healthcare. Just by pressing a few buttons they can make an appointment for any of our specialties and, among other things, also view their medical records. With this app we are giving our patients the opportunity to take their healthcare into their own hands and manage any related administration. With just a few taps of a button you can access almost all of RMC’s medical services.

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

Special Report Green Business

Businesses Must Shift to Green Today to Have a Future Tomorrow The time for businesses, especially small- and mediumsized companies, to think about a shift to renewable energy is here. Industry insiders tell the Budapest Business Journal that adopting green energy now may be the key to staying on the market in a decade’s time. CHRISTIAN KESZTHELYI

The coronavirus lockdown forced us into a completely different way of living our life. Some of that learning must be directed towards better planning in the future, says Károly Kovács, project leader of GreenTech Zalaegerszeg Green Energy and Sustainability Conference. “COVID-19 has been a good reminder for this: What are the things that are absolutely necessary to handle in person, riding around in the cities in our cars,” he tells the Budapest Business Journal. “Becoming more mindful of our actions during this period can help encourage a greener mindset, so we care more for our environment and each other,” Kovács adds. This increased mindfulness needs more attention. “The pandemic situation raised our awareness of the vulnerability of our environmental and economical ecosystem. This is a great opportunity to change the traditional business models to sustainable, innovative and carbonneutral business strategies,” Lóránt Riesz, project development lead for PANNON Pro Innovations Ltd., argues. But sustainability is seen as being costly, especially for an SME in a period when survival is the number one priority as it works through the economic effects of the pandemic. Furthermore, ROI can take years.

“When we talk about SMEs, and this is particularly true for the ones operating outside the capital, given the lack of resources, both financial and human, changing to sustainable solutions is difficult. However, what we see is that if there is willingness on the owners’ side; they make steps in their abilities towards green energy,” Kovács of GreenTech notes. And at least some of those steps can be relatively straightforward.

Simple Measures

“There are a number of simple measures that could make any SME operate in a more sustainable manner at no significant extra cost. Single use plastics, or unsustainable packaging materials are still widely used in the SME sector, although there are available affordable alternatives,” says Katalin Cseh, a Momentum party Member of the European Parliament, and vice-chair of the Renew Europe Group. It is also worth remarking that the European Union is banning single use plastics

pay more for a product, just because it’s green, they punish those that aren’t those that aren’t by boycotting them,” Riesz says. This is also true for employees and business partners. Today, sustainability is believed to be a secret to long-term success and maximizing profits. Some experts say that building a business model on traditional, linear and fossil dependent processes risks the competitiveness of a company. “Sustainability is also an opportunity to engage customers in a non-traditional way and position an SME as an innovative and sustainable brand,” Riesz insists.

2021.

Companies will have to comply. “Installing smart plugs and outlets, as well as acquiring a smart meter is a quick and easy way to monitor your energy data real time as well as your monthly consumption,” Cseh adds. She believes that once companies realize how much energy they consume, it will make sense for them to cut back on energy use, depending on the season and the timing of the daily peaks of consumption. Doing so may help change minds.

Katalin Cseh When it comes to renewable energy, Hungary is chiefly dominated by photovoltaic, or PV, systems in which solar panels use insolation for generating electricity. “Most international investors are eager to compete on upcoming tenders, however if Hungary doesn’t want to lose its competitive advantage it must eliminate constraints of PPAs [Power Purchase Agreements, contracts to buy power from a renewable generator] too,” István Pócs, business development director at PANNON Green Power Ltd., tells the BBJ.

Lóránt Riesz is that if you are receiving a subsidy through tender from the state, you don’t need to pay the Robin Hood tax. However, if you don’t ask for any subsidy, you will pay,” he says. Hungary’s process of businesses going greener lags behind companies in Western Europe. Firms need to act quickly as customers increasingly expect them to become more sustainable. “For instance, those SMEs that are working actively to mitigate or offset their carbon footprint will attract more customers as the sustainability principle is fast becoming a guiding factor in how we live,” MEP Cseh says. “Going greener will also facilitate innovation, and innovation is good for business,” she adds. A sustainable company may simply do better business today through an improved image in the eyes of its clientele. But in the mid-term, sustainability could be a necessity. “Those companies who do not start becoming greener in the short-term, considering the pace of their own industries in this regard, in the middleterm will be in a difficult competitive position,” Kovács insists.

Legal Barrier

Károly Kovács If they have not started yet, mindsets will need to change very soon. Why? “Customer demand is changing; an increased number of people are looking for sustainable, green and climate-friendly products. Even if they do not necessarily

“For major players, the minimum capacity size is 50 MW, but this is the maximum limit of the tender. So larger projects with fully market backed PPAs, which are the cheapest solutions for consumers too, should be approaching us rapidly, by their very nature. However, actual legislation negatively discriminates against PPAs,” Pócs adds. “A Robin Hood tax, which originally targeted large fossil producers in the energy sector, but excluded green producers through their subsidies, is still in force. The crazy situation though

István Pócs Companies who miss out on the sustainability bandwagon today, may need to close shutters in five to 10 years, trumped by greener peers and EU regulations.

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

Special Report | 11

Locational Factors Increasingly Central to Sustainability Development in Budapest brings in environmental issues, relating to the city as a business and commercial center, and locational issues such the look and feel of the city, architecture, air quality, the provision of green and public areas and, of particular importance in the pandemic environment, transportation and the ease of access by public transport or cycle. GARY J. MORRELL

With regards to location, the LEED accreditation system assesses projects on the basis of development density and connectivity, brownfield redevelopment, alternative transportation (public transport access, bicycle storage and changing facilities, electric car parking and charging facilities), protection and restoration of habitat and maximum open space provision. Alternative system BREEAM has the stated aim of enhancing the social value of a project in a given area while mitigating its environmental impact. It awards points for encouraging “better access to sustainable means of transportation for building users. Issues focus on the access of public transport and other alternative transportation solutions that supply reductions in car journeys and therefore reduce congestion and CO2 emissions over the life of a building.” Budapest has a number of business districts throughout the city, although no one defined central business district. Therefore, locational issues are an important part of the planning processes and, given the nature of the city, business complexes are expected to integrate into their surroundings by offering services, public squares and green areas that provide a mutual benefit to both the development itself and the surrounding areas. “With regard to the development of, for example, an office project, the most important factors are seen as the proximity and variety of public transport, the different amenities within walking distance, the business nature of the district and also accessible green areas nearby,” comments Edina Hornok, head of sustainability at DVM group.

human experience without compromising the environment and applies new ways of creating space in a busy environment. A landscaped garden the size of nine tennis courts provides a place for office users and the local community to connect with nature and adds open space useable for work, meetings or breakfast, while rainwater is used to irrigate the

20 trees

and more than 1,100 bushes.” Developers working with designers need to combine aesthetic issues, the contribution to, and impact on, the city in addition to meeting tenant demand.

Agora Budapest When it comes to transportation links, “the most favorable is a metro within

400 meters

[of the project], however other fixed track modes of transportation are also advantageous,” she adds. From the demand side, tenants and staff require offices that have direct public transportation access and are integrated into the urban infrastructure. At the same time, city authorities are looking to for developments that improve the economic environment, provides employment opportunities and upgrades an area.

Improving Design

Developers are reacting to these demands by improving the architectural design of projects that are located within the urban environment with proximity to residential areas and direct public transport links. Unsurprisingly, COVID-19 is seen as having had a disruptive impact on the way we live and move around and on the city, and society as a whole. “This economic disruption will continue to be felt for some time. All the safety measures will become an integral part of our everyday life in the short-term and some elements will likely to stay with us for the long-term, as well,” says Valter Kalaus, managing director of Cresa Hungary. “As a result, it is likely that changes to infrastructure, public transport, and public health measures will be introduced in case something similar happens again and to reduce infectious disease transmission. Cities will continue to thrive on the opportunities for work and play, and on the endless variety of available goods and services; however, from now on we have to think more holistically about cities as complex ecosystems,” he adds. Asked how city and national governments promote and facilitate the sustainable development of the city and alleviate the health crisis, DVM’s Hornok argues that Budapest should maximize the quality of life for the inhabitants, and find

a balance between pursuing growth and building local resilience. Alleviating factors such as improving the cycling infrastructure and limiting car traffic at central areas can, at the same time, offer positive effects on carbon emissions too.

Livable Neighborhoods

Providing more livable, walkable neighborhoods, and quality green areas enhances the emotional and psychological wellbeing of inhabitants, and also helps improve air quality, which is a key factor in the fight against the pandemic. An affordable, low-carbon public transport system is also an indispensable part of any sustainable city; however with the current health crisis, it can work only with the implementation of specific safety measures. Developers are looking to source plots in locations with direct metro, tram and road links, although those are becoming more difficult and expensive to find and new development areas are emerging. Talking about the recently completed the LEED and WELL accredited Nordic Light trio by Skanska in Váci út, major Hungarian architects Paulinyi & Partners describe how the project “prioritizes the

“It is likely that changes to infrastructure, public transport, and public health measures will be introduced in case something similar happens again and to reduce infectious disease transmission. Cities will continue to thrive on the opportunities for work and play, and on the endless variety of available goods and services; however, from now on we have to think more holistically about cities as complex ecosystems.” “Architects and urban planners are the minds who hold the big picture of the city development and longer term goals. We are ultimately creating the built environment for future generations and should bear in mind that it is a long lasting thing. It is a responsible function. We have to be strong partners to developers and lead them towards creating a livable – and not just economically, but environmentally – and socially sustainable city,” concludes Ida Kiss, head of design at DVM group.

New Buda office project by Atenor.

12 | 3

Special Report

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

Giving Back to Nature: Restocking the Danube With Sturgeon We take a look at the concerted efforts to boost sturgeon numbers in the Hungarian stretch of the Danube, with the ultimate conservation prize, counterintuitively, a return to commercial fishing. KESTER EDDY

László Berzi-Nagy gets ready to release a sterlet.

Lucrative Catch

The box on the trailer looks plain, important for migratory fish species,” utilitarian and rather uninteresting as it László Berzi-Nagy, assistant research is maneuvered down the slipway towards fellow at the Hungarian Institute for the Danube river. The location is Baja, Fisheries and Aquaculture (NAIK-HAKI). southern Hungary, and the trailer stops Indeed, this restocking, part of an a few yards from the water. A team of six EU-backed, so-called MEASURES project, men open it: inside, 460 juvenile sterlet, is only the latest in a long-line of efforts the smallest species of sturgeon, have that began during the late communist era one, short journey to make before they are and has seen some released into the wild. Having checked the temperatures of sterlet both river and tank water, the men move in total introduced into the Hungarian quickly, scooping the young fish out of the section of the Danube since 1988. big tank in nets, transferring them into Such operations typically involve buckets, about a dozen at a time, before cooperation between research institutes, releasing them into the river. fishing associations and academics, while At first, some look confused, barely in some cases Hungarian fish farms moving in their new found freedom. and regional angling associations have Others turn belly up, and appear at risk of voluntarily restocked sterlet without dying. But after no more than a minute or recording the number of fish involved. so, sometimes helped by human hand, all In the May project, the sterlet, all about successfully swim off into deeper water. All one year old and weighing around half are tagged for later identification if caught. This scene, observed in mid-May this year, a kilogram, were bred and raised by the Aquaculture Institute. But, the layman was the latest chapter in a long-running might ask, why are such large numbers of effort to restock the Danube with sturgeon species in Hungary, Bulgaria and Romania. fish seemingly needed? “These restockings are intended Dramatic Decline to strengthen the native sturgeon The decline in both sturgeon numbers populations in the Danube region, and species in the Danube has been supporting the unity of the ecological “dramatic”, says Jutta Jahrl, project green-corridor, and is especially

“I’m sure you know what crazy amount they pay for caviar at the moment. It only comes from aquaculture, but fortunately in the U.S. they are getting close to the situation where they can start harvesting wild sturgeon again in a very limited and controlled way. We really hope that we live long enough to see that in the Danube as well,”

Image Stoyan Mihov/WWF

210,000

manager and sturgeon specialist at the World Wildlife Fund (WWF) in Vienna. “There used to be six species of sturgeon in the Danube, with the [much coveted] beluga even migrating into Germany, although this was not common. Two are now extinct, leaving only four species, and of these, only the sterlet is normally found in the middle and upper Danube,” Jahrl says. In terms of fish catches, the numbers paint an even bleaker picture. Reports of sharp reductions of beluga sturgeon date from as early as the 16th century. Recent records, however, are truly shocking: Romania, for example, saw a catch of 1,144 tonnes in 1940 reduced to less than eight tonnes

Sterlet Fact Box Sterlet (Acipenser ruthenus) may be the smallest species of sturgeon, but the fish can still live for up to 25 years, grow to a meter in length and weigh 16 kg. Today, it is the most widely distributed sturgeon in the

Danube River basin. The average reproductive age is comparably low, at about seven to eight years. The sterlet is a bottom feeder, living on crustaceans, worms and insect larvae. Its meat is highly prized in Russia and Ukraine.

“Unfortunately there is this huge construction of the Iron Gates dams 860 km up river [from the Black Sea] between Romania and Serbia, This has been blocking the migration route since the 1970s,” laments Jahrl. This blockage means that the three species that used to reach Hungary for spawning, beluga, Russian and stellate sturgeon, have since been restricted to the lower Danube. It has left the middle section (including Hungary) with only sterlet as a stable population, as these do not migrate, living their entire lives in freshwater. But even though sterlet are the smallest species of sturgeon, usually grown for their meat rather than their caviar, fish stocks still suffer from poaching, and the sterlet remains “vulnerable” in the Danube, according to the WWF. True, after years of campaigning by WWF, it is now generally illegal to fish for sturgeon in Hungary and along much of the course of the Danube. However, with beluga caviar selling at GBP 370 for a 30g tin at Harrods in London (that’s around EUR 14,000 per kilogram) it is easy to see why the authorities downstream of the Iron Gates have regular, sometimes violent encounters with organized poaching gangs.

1995.

That’s a reduction of 99.3%. The causes are several and complex, but the construction of the Iron Gates dam system on the joint RomanianSerbian section of the Danube, along with poaching and unsustainable fishing loom large in the list.

Even with sterlet caviar selling at “only” EUR 275 for 250g, or EUR 1,100 per kilo, on Latvian website shopmottra.com, Hungary’s fish represent a lucrative, if illegal, catch. With successful restocking, could commercial fishing for sturgeon in the Danube ever become a viable proposition? “That, actually, is our goal,” says Jahrl. “Sturgeon used to be a real source of income. Twenty years ago, Romania and Bulgaria were in the top 10 of caviar exporters. It was an important economic sector.” Restoring commercial fishing in a sustainable way would in practice mean the protection of the species, she argues, pointing to the United States, as an example. “I’m sure you know what crazy amount they pay for caviar at the moment. It only comes from aquaculture, but fortunately in the U.S. they are getting close to the situation where they can start harvesting wild sturgeon again in a very limited and controlled way. We really hope that we live long enough to see that in the Danube as well,” she says. Meanwhile, with no further releases planned for this year, László Berzi-Nagy is planning to conduct a survey of the sterlet population in the Danube this fall, using a so-called “electric fishing” system to ensure the fish can be returned to the river unharmed. Despite poachers, loss of spawning habitat through dredging and gravel extraction, pollution and predatory birds, he reckons the survival rate of the fish is

around

80%,

particularly if allowed to grow for a year before release. Asked how he feels after completing the sterlet release, Berzi-Nagy replies: “It’s a very peaceful moment to rear these fish and return them to the water. This is a rare occasion when humanity doesn’t take, but gives to nature, and in this matter, I find it respectful.”

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

News///in brief Green

MNB Publishes Proposals for Environmentally Sustainable Economic Growth Following consultation with civil organizations and environmental protection experts, the National Bank of Hungary (MNB) has published a collection of proposals and initiatives it has taken to promote environmentally sustainable economic growth, according to a report by state news wire MTI. The central bank put out a call for proposals in March 2020 and collected

responses from 18 NGOs, environmental scientists, climate protection and energy experts, it says. Recommendations for “green taxation” measures included modifying taxes on vehicles and transportation that would improve air quality, lowering taxes for investments improving the energy efficiency of homes, extending carbon taxing system, raising environmental charges and fees and reclassifying green energy production by farmers as part of the agricultural sector to unlock financial incentives.

The MNB noted that a significant portion of the proposals raised in the civil consultation fall outside its competence but the central bank promised to forward proposals to the relevant ministries, and by publishing the proposals, it wants to contribute to professional discussions and public thinking on the topics.

Coca-Cola Hungary Reduces Shrink Foil Usage Coca-Cola Hungary reduced the amount of shrink foil used in the delivery of glass products to hotel, restaurant and catering (HoReCa) units by 36%, according to a press release sent to the Budapest Business Journal. Coca-Cola Hungary says that the packaging innovation is an important stage for the company to pursue a circular economy and to achieve its World Without Waste vision.

Government Launches HUF 36 bln Green Bus Program Hungary’s government has launched a program to fund purchases of electric buses with HUF 36 billion over 10 years, according to state news agency MTI. Minister of Innovation and Technology László Palkovics said one aim of the Green Bus Program is to strengthen the local bus industry, raising the level of domesticallyproduced vehicles to 60% or more. So far, eight Hungarian and foreign bus

makers have applied to be certified suppliers to the program, he added. State Secretary for Energy and Climate Policy Péter Kaderják said a tender for deliveries of HUF 4.2 bln of buses under the program for the period 2020-2021 would be called on October 15. The government recently issued a resolution requiring municipalities with more than 25,000 residents to procure only emission-free buses from 2022.

Special Report | 13 The circle of collecting and recycling packaging materials is the most efficient way to manage packaging waste, and the company says it is optimizing its processes according to this, and is striving to reduce its environmental footprint through resource efficiency and packaging innovations. Thanks to the reduced use of stretch film, another 3.75 tons less waste is generated annually at Coca-Cola Hungary’s depots and wholesale partners, and new foil is made from the foil waste.

EV Subsidy Increasing by HUF 882 mln The government’s HUF 5 billion fund for the purchase of electric vehicles proved such a success that it will increase the budget by approximately HUF 882 million, so that all applications properly submitted can receive support, Minister for Innovation and Technology László Palkovics has said, according to origo.hu. In addition to individual customers, businesses have also shown a strong interest in purchasing environmentallyfriendly vehicles, the minister added. Thanks to the additional resources, more than 2,000 electric vehicles can be procured. According to Palkovics, 662 private individuals applied for support; 738 companies, including 294 taxi or car passenger transport companies, also submitted applications for the purchase of an EV. Due to the success of the fund, a second round of funding is now thought highly likely.

PRESENTED CONTENT

Safety, Service, Flexibility key to Successful Future Offices It has become fashionable to suggest the COVID-19 lockdown and the rise of home office has consigned the office as we know it to the dustbin of history. Máriusz Várnai, CEO of Diófa Ingatlankezelő Kft., says the future will be more nuanced than that, though it will undoubtedly bring change. ROBIN MARSHALL

One complicating factor is that we have not yet finished with this crisis. Broadly speaking, we know that today is not the same as yesterday, but we cannot yet be sure what tomorrow will be like. “In the long-term, the way we use offices will change,” says Várnai, who heads the facility management and property management unit of the Diófa Alapkezelő fund management company. In the near term, building use will likely be shaped by the clients themselves. It may have been unprecedented, but the start of the lockdown was the easy part: get the tenants safely out of the building, and then effectively put it to sleep to control costs. When and how (and how many) tenants return is much more complicated.

Much of it has to do with good communication. “We have been telling the tenants what we are doing to make the buildings safe, introducing ‘keep your distance’ signage, hand sanitizers in front of the building and in public spaces, introducing deep cleaning, without creating a sense of panic.” Naturally, Várnai’s PM and FM teams did plenty of brainstorming about what was required to reopen offices, but part of the process also involved accessing networks of contacts internationally to learn from best practices. At the height of the lockdown, Diófa’s offices were virtually 100% vacant. How full they are now depends, in part, on the tenant mix for each individual building. “We have sites where 80% of the tenants are international, and these tend to follow practices drawn up by the HQ in

Máriusz Várnai the mother company. One of the biggest tenants is planning not to bring all its people in until the beginning of next year, for example.” Depending on tenant mix, Várnai estimates office vacancy at between 30-50%.

Office Evolution

Looking further ahead, how we use those offices will evolve, the CEO believes, but they are far from destined to become extinct.

“We will still need offices to meet, to collaborate, to brain storm, but the balance will change. We now know there can be real productivity benefits from working from home, but also if we work two days home office there will be real benefits for the environment.” He thinks a split of three days in the office, two days at home is a very possible development. For a company such as Diófa Ingatlankezelő Kft., staff and tenant safety are clearly the number one priority, but business itself is a balancing act between what the tenants demand on one side, and what the fund investors, both institutional and private, are looking for on the other. The sweet spot lies somewhere in the middle, where the interests of both parties intersect. A well-run office with good services is popular with tenants, who stay longer and secure income for the fund. There are rumors on the market of major multinationals wanting to give office space back, though Diófa has received no such request, Várnai says. He believes landlords will be able more competitive by offering so called “swing areas”, space that can be rented by the hour or week as requested, perhaps so the same number of employees can gather safely in a bigger room. The next steps are likely to be less contact with building staff, and the wide spread use of easy to clean touch screen technology. Várnai argues that the ability “to bring services into the building” so employees can keep things local and do not have to travel into the city will also be key. One thing is for sure, the pandemic has alerted us to the need to live our lives differently. “These viruses will be around, if not COVID then flu or something else. We will have to live with this; we have to be prepared.”

14 | 3

Special Report

www.bbj.hu

Budapest Business Journal | September 18 â&#x20AC;&#x201C; October 1, 2020

Photo by Halfpoint/Shutterstock

Market Talk: COVID-related Concerns Underscore Real Estate Sustainability Issues

Sustainability issues have become key elements of the planning, construction and management of office and, increasingly, other commercial properties.

These issues have been given further emphasis by the impact of the coronavirus on office and social behavior and associated health concerns in the workplace and wider urban environment. From a locational perspective, direct access to public and alternative transportation modes are now a primary requirement for any commercial or business development.

GARY J. MORRELL

This is in large part due to market pressures, with sustainability demands being made by tenants, who are concerned with staff wellbeing, productivity and retention. Further, developers and building owners increasingly need to adhere to international and national sustainability regulations regarding energy usage, construction materials and CO 2 emissions and the working environment at construction sites.

Nikolett PĂźschl

The Budapest Business Journal approached several prominent company managers in the real estate industry to comment on what they see as the impact of sustainability on the industry. Sustainability in the COVID-19 environment is further evolving and getting more and more attention, together with the importance of health and safety and contactless technical solutions. Currently, the main focus is on building machinery, especially the air handling systems, which should at the same time be the most energy saving possible, while 100% free of mixing fresh and used air. In new built buildings this is something which already exists. For example, in all Atenor projects, these kind of systems were already installed, which is now very helpful. No property can be constructed from home office, and our sector is doing the same hard work, day-by-day; we are here and will survive. Of course we and all of our subcontractors are working according to the highest level of virus safe regulations. We already have many impacts of the virus which are changing our daily personal life and working culture. Remote as well as flexible working is not taboo anymore; of course, it really depends on the actual profile of the company whether it means an advantage or disadvantage.

It is necessary to operate properties much more consciously and with greater care, because certain kinds of consumption have increased due to the coronavirus; for example, more litter, chemicals and disinfectants are needed.

Nikolett PĂźschl Leasing and development director Atenor Hungary

If buildings are not fully utilized, the consumption of central equipment can be curbed, which will help meet sustainability

Attila Madler

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

objectives. It all depends on whether user habits have changed permanently, in other words, whether the occupancy of the properties will be lower. Within the LEED rating system, a “safety first” credit group has been introduced, through which ratings can consider the operational measures that have been taken to prevent and limit infection. In the case of BREEAM, COVID was considered to the extent that, in order to ensure distance, the certifier does not go in person to inspect everything, but authorizes a suitable person (for example a construction manager) to carry out the on-site inspection and bases the certification on his statement. In the work environment, in furniture and interior design, greater distance and more ventilated equipment will be the guiding factor.

if the sector does not reinvent itself, it will contribute to increasing the pace of the climate crisis.

to the restrained lifestyle, and how significantly CO 2 emissions dropped during the pandemic.

Valter Kalaus Managing director Cresa Hungary

Attila Madler Asset management director CPI Hungary In the long-term, commercial real estate will most likely remain an attractive asset class as it continues to offer good riskadjusted returns when correlated to other asset classes. Investor appetite in certain segments of the market will remain as they are or might even rise, and sustainability is ready to play a significant role. Asset owners and investors will probably struggle to mitigate the risks deriving from tenants’ and users’ rising demands for safe and efficient buildings.

Special Report | 15

Valter Kalaus Many real estate investors are not ready yet to take the sustainable and digital leaps needed to make properties safer and healthier, even though the debate about sustainability is becoming increasingly urgent in many sectors, including real estate. Yields and returns for energy-intensive buildings will decrease soon, not just due to increasing regulatory pressures or to different working practices that, in part, will outlive the crisis, but rather because

Although the sustainability standards, especially WELL, already had a strong focus on healthy indoor environment, this topic is now expected to get more emphasis within the certification systems. These organizations have created new guidance that puts hygiene and the safety of workers at the heart of planning: Besides creating flexible layouts and wider spaces for less people, they promote the application of durable materials for heavy cleaning, increased maintenance and cleaning of mechanical systems, creating health screening spots, and applying smart technologies to make contactless offices and to collect space utilization data. Construction sites also have to be sized differently and the work has to be phased. The certification systems put great emphasis on the communication of the safety measures within the buildings and at construction sites, by implementing signage and promoting policies, training and mental support for the employees. Studies show that most people think climate issues are as serious as coronavirus, and the restart of economy can be a good opportunity to boost low-carbon industries, especially after experiencing how quickly nature reacted

Tibor Massányi Another concern is that, according to different studies, high levels of pollution can adversely affect the outcome of coronavirus, therefore addressing air quality issues is crucial. Tibor Massányi Managing partner DVM group

Péter I’m glad working in an office park where community building and environmental consciousness does matter. “

“

#tenantwellbeing #greenpark #communityarea

We care about you.

www.cpigroup.hu We care about you image_fekvő_BBJ.indd 1

2020. 09. 08. 14:30:51

16 | 3

Special Report

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

Developers Need to Adapt Post-coronavirus Sustainability accreditation from an independent, third-party organization such as the U.K.-based BREEAM, the U.S.based LEED and, increasingly, WELL, is now the norm for development in the Hungarian and Central European office markets and, increasingly, in other market sectors such as logistics. GARY J. MORRELL

essentially become part of the same process and property management concerns are also now part of building design. “Developments without sustainable solutions are not competitive on the market, as the tenants always consider this issue when they move into a new building. Our company is responsible for the PM and FM of our own developments. Sustainability is an inevitable part of the PM and FM teams’ work,” says Edina Hornok, head of sustainability at the Hungarian architects, interior designers and construction consultants, DVM group. Regional developer Skanska, active across the Central Europe, has sustainable design and office management policies across its portfolio that are aimed at reacting to the post-coronavirus environment. The company is working with its own architects and an epidemiologist. Nordic Light Trio This brings in issues regarding the requirements of staff and the working environment and usage of space, the use of energy and CO 2 emissions, construction materials and relationship to the wider urban environment and community. These issues are integrated into the design and concept of a project in reaction to environmental concerns, market

pressures and now the need for preventing the spread of viruses and the necessity of adapting to changing working practices and use of space. Despite questions over the financial viability of development, office and logistics projects are going ahead. With developers striving to deliver ever more highly specified and sustainable office complexes, interior and exterior design has

Rethinking Design

According to Andrei Ivan, sustainability and innovations director at Skanska, the aim is to identify areas that will balance safety, sustainability and feasibility to rethink the design of offices spaces with regard to possible future pandemic risks; cooperation between the owner, property managers and tenants is crucial, he says. Regional industrial developers and park operators are now developing sustainability accredited and more highly specified projects in reaction to changing tenant demands.

New ZOE 100% ELECTRIC

It’s time to make the switch. Up to 395 km* on a single charge. 100% electric experience: silent start, dynamic acceleration, peaceful driving. Style with even more character. *The 395 km electric range is valid for New Renault ZOE R110 Z.E. 50 model version in blended mode with the new (WLTP) test procedure. New Renault ZOE R110 Z.E. 50 mixed consumption: 169 Wh/km, 0 l/km; CO2 emission: 0 g/km. The fuel consumption and CO2 emission data were determined using the WLTP test procedure as specified in Commission Regulation (EU) 2017/1151. Visit www.renault.com/wltp for more information. Specific fuel consumption and CO2 emission data for your new passenger car can be found in the fuel economy leaflet, which is available free of charge at all points of sale and from the Consumer Protection Authority. Actual car consumption may differ from these figures depending on driving style, vehicle load, weather conditions and route selection. Vehicle availability, specifications and technical solutions, as well as trim levels may vary by country and can be modified at any time. The figures given are indicative and do not constitute an offer. For more details, contact the Renault Dealerships! The pictures shown are for illustration purposes only.

renault.hu

REN20_EMOBILITY-ZOE-Budapest Business Journal BBJ_252x158.indd 1

2020. 09. 14. 18:08

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

Prologis, for example, has five BREEAM accredited buildings in Hungary. Four buildings at Prologis Park BudapestSziget have been awarded BREEAM “Good” accreditation. Prologis Park Budapest-Harbor provides a 30% reduction in heating costs, LED lighting and large skylights cut electricity consumption

45%

and it also has electric car charging facilities and direct public transport links. “The unfavorable ratio of cost to potential benefits of space usage discouraged shortterm occupiers, while developers, due to the intense market competition, were clearly more focused on price rivalry,” comments Cushman & Wakefield in its survey “How Sustainability has Made its way into Industrial Spaces.” “Environmentally-friendly facilities with above-market specifications were

not popular for many years. Fortunately, such solutions have gradually gained in importance, largely on account of real savings to tenants and developers, and far lower operational costs of such buildings. Sustainable solutions are simply cost effective,” the survey continues. The entire CTP portfolio, consisting of almost 300 buildings in six CEE countries including Hungary, have received BREEAM “In-Use” certification, and four buildings have been awarded an “Excellent” rating.

Science-based

“Last year, CTP was the first in the industry to enter into a collaboration agreement for the implementation of the BREEAM “In-Use” international certification for its entire industrial portfolio. This is a sciencebased sustainability certificate that allows quick comparison of the performance of assets across territories,” said CTP. Further sustainability issues bring in the concept of “circularity” and the

Sustainability Registered Office Buildings in CEE (August 2020) COUNTRY

BREEAM

LEED

WELL

Czech

344

Hungary

144

Romania

223

Poland

873

196

4+8*

Slovakia

*pre-certified

Source: Hungarian Green Building Council (HuGBC)

Certified sustainable premium office and retail spaces available in downtown Budapest

DE V E LO P E D

www.szervita.com

Special Report | 17

Prologis Park Budapest-Harbor. use of recyclable materials in development and construction and the need to cut CO 2 emissions. “To achieve our goal of a climate-neutral building, besides other highly efficient and sustainable solutions, we are going to replace structural elements from concrete to timber. Wood has amazing qualities,” says Alexandra Tomášková, executive vice-president of operations for Hungary and the Czech Republic at Skanska Commercial Development Europe. “One of the best, especially in the current context of accelerating climate change, is the fact that the material has a very low carbon footprint. Wood not only stores CO 2 , it can also be re-used when the lifecycle of the building is over. The use of wood is a part of an ongoing natural lifecycle,” she adds.

Skanska has made a global commitment to a climate target of net-zero carbon emissions

2045,

with a 50% reduction by 2030. Together, building and construction are responsible for 39% of all carbon emissions in the world, with operational emissions (from energy used to heat, cool and light buildings) accounting for 28%, according to Skanska. The BREEAM “Very Good” accredited, EUR 31 million Balance Hall office development was completed at the turn of the year and forms part of the 35,000 sqm Balance Office Park with a 95% occupancy according to CPI.

20 | 3

Special Report

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

COVID and Climate Change Point in Similar Direction market. Smaller and more individual spaces are frequently requested by tenants on the one hand, but also bigger and more spacious areas for more people. This is a challenge which the sector has to address somehow.

The Budapest Business Journal speaks with Zsombor Barta, president of the Hungarian Green Business Council (HuGBC) and director of sustainability at Tomlin about the current challenges facing the industry.

BBJ: How will PM/FM systems need to be adapted? ZsB: Increased health and safety standards and increased operation and maintenance procedures require a systematic FM/ PM approach and new capacities are also needed to meet these new and increased expectations. Also, new measurements, tests and a control mechanism are expected to come, because a high level of transparency can increase confidence and trust, which is definitely needed to gain back normality. BBJ: How can office development, management and investment be financially viable in the new environment? ZsB: Only if they address the above mentioned issues and if they are willing to invest in new and alternative approaches. A transparent sustainability strategy could be one important step, but also investment in different new technologies is an important factor.

GARY J. MORRELL

BBJ: How would you define sustainability in the coronavirus environment and what are the challenges that real estate faces? Zsombor Barta: You can see two major opinions when it comes to sustainability and coronavirus. One says that sustainability is currently not in the focus anymore, as coronavirus and its mitigation measures and the connected negative financial effects dominate the markets. The other opinion says that the pandemic situation showcased how important sustainability is, and the situation and our future can be only tackled if this is taken even more seriously. My view is the same: I think the pandemic is not only a big challenge but also a chance to transform our societies and economies towards a more robust sustainable way. The real estate sector is also affected heavily. New ideas, alternative solutions and sustainable business solutions are the only way to mitigate the challenges and to future-proof the sector. BBJ: How are BREEAM, LEED and WELL enhancing these elements in their accreditation systems? ZsB: All of the internationally wellestablished green building certification schemes have incorporated holistic ideas of sustainability, therefore they are a great tool to follow. Further, all of these schemes already have a so-called Health and Wellbeing section included within their requirements. This has become highly important. All of the scheme operators quickly reacted to the pandemic and highlighted their health and safety requirements. As the WELL system is the one providing a framework especially for the interior environment, this scheme has probably become the most relevant requirement related to a healthy and safe internal environment. BBJ: What will be the impact of the virus on the city and the working and living environment? ZsB: The working environment is changing drastically; that has also had a huge effect on commercial real estate, especially offices and retail spaces. Working from home (WFH) is becoming a standard and

BBJ: How are office and retail tenant specifications changing? ZsB: Tenants would like to increase flexibility. This relates to the lease contracts, leasing times and periods, to the leased and communal spaces as well.

Zsombor Barta not a privilege as it was before. Public transport is being seen as a transportation mode with higher risks for virus contamination, therefore commuting and transportation habits are also dramatically changing. Individual (alternative) transport options become more popular; cities must react to this and promote for example car or bike sharing systems, designate new and safe transport lines etc. Because of the above, more people will WFH, less are then commuting and online retail is having another boost, which, on the other hand, has a huge effect on traditional retail. All of this effects real estate heavily as well and developers and owners must react to it. BBJ: How will it impact office, retail, industrial and hotel development? ZsB: Nobody can say exactly how the commercial real estate sector will be impacted, but everybody agrees the impact will be huge. I think we will soon see totally new and innovative real estate concepts on the market, for example combining office developments with residential or transforming classical office spaces to spacious and safe meeting places. We will see what the future brings, but the pandemic will definitely change this sector. BBJ: How does transportation need to be developed and improved? ZsB: Public transportation systems are more risky than individual transportation. Therefore, the major focus should be on the further development and promotion of alternative individual transport options.

Car, bike, motorbike, e-bike sharing systems are a good alternative, although often relatively expensive. Bikes are a cost effective and efficient transportation mode, which should definitely be supported more. Further, trains will probably become again more popular, as the excellent European network could also be also for longer distances with individual cabins or for overnight journeys. BBJ: How will the situation impact the architectural and interior design of commercial property? ZsB: This is also something which is currently under development, but what we can see is that health and safety features will definitely dominate near future developments. This has an effect on the building engineering systems (e.g. increased ventilation and filtration capacities), interior spaces (more individual spaces instead of small and overcrowded rooms) and more and new technologies (such as automatic doors, elevators, taps, etc. to avoid physical contact with the equipment). BBJ: What are the current priorities of building owners with regard to office interiors and how will office practice change? ZsB: Currently, the owners of commercial assets are trying to survey this pandemic situation without losing their tenants; therefore, they are often offering many benefits and discount options. In the future, more flexible solutions will be required and this also requires new products on the

BBJ: How are concerns with regard to coronavirus and climate change interconnected? ZsB: The current global pandemic is directly connected to an unsustainable way of living and to unsustainable societies as well. The rapid global spread of the virus was only possible because the unsustainable circumstances were optimal for that. Climate change and the destruction of natural capital is an even bigger catastrophe for mankind than this current pandemic situation. The current situation is only a delicate foretaste for what will happen if we do not take climate change and environmental protection seriously and if we do not change our societies to a more sustainable way immediately. There is no time to wait or to discuss when and how it should happen. Experts and scientists have developed several beneficial options and scenarios for several decades already for how we simply have to live. This definitely requires a change in our individual life habits, but if we understand the benefits and importance in order to do so, we can have a much healthier and more livable time here on mother earth. There is no option “B” as there is also no planet “B” and the alarming signs are already ringing; we have to understand and take the alarms seriously and change immediately. The good news is that there are several sustainable alternatives and nobody has to go back to the medieval ages. Currently, our societies and we as individuals spend a huge amount of money to support unsustainable solutions; we have just to switch and support real sustainable alternatives and to live with less. This will help a lot and our climate targets can be achieved much faster than with conventional systems.

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

PRESENTED CONTENT

Special Report | 21

Building and operating a facility involves an astounding array of tasks, ranging from monitoring to quantity and costs estimate, from work sustainability assessment to construction management, maintenance and disposal. Tungsram, a global innovative brand headquartered in Hungary, has teamed up with a domestic start-up to provide a range of smart solutions in facility management. BBJ STAFF

Budapest-based Tungsram, one of Hungary’s leading multinational companies with a professional track record spanning more than 120 years, has recognized that the modern age calls for constant reform and renewal. Initially founded in 1896, Tungsram served as one of the fundamental pillars of the second industrial revolution and it was a key player of promoting and developing electric lighting. After parting ways with General Electric in 2018, Tungsram Group set out on a path of expanding its portfolio of products and services by tapping into cutting-edge industries such as smart city solutions and indoor farming. The purchase of a majority stake in ArchiFM, a Hungarian start-up that has carved a niche for itself as a leading force in facility management on the domestic market, was an integral part of the Tunsgram’s strategy to strengthen its foothold in this future-proof sector.

Tapping into the Future

Tungsram acquired cutting-edge facility management software developer ArchiFM last August and the subsidiary that owns ArchiFM became Tungsram Innovative Solutions.

Image by arleksey/Shutterstock

Future-proof Facility Management

“ArchiFM perfectly matches the smart product portfolio of Tungsram Edge, a division of Tunsgram that specializes in innovative smart products and services,” explained Ferenc Pongrácz, general manager of innovation at Tungsram. “It is a world class facility management software that all of our customers will fall for.” ArchiFM’s software is integrated with ArchiCAD, one of the most popular pieces of building design software, and rapid facility surveying software OrthoGraph, another one-of-a-kind building surveying software. The complex system allows all information to be instantly transferred to the ArchiFM database. The software features all necessary functions that are essential when managing large property portfolios and offers additional perks along with modules that can be customized for individual needs. Based on the concept of building information modelling (BIM) technology, the solutions provided by ArchiFM simplify, optimize, and digitalize property and facility management processes, thus making them more cost efficient. The ArchiFM system renders facility management smoother and more efficient by allowing real-time access to vast amounts of data, lowering operational costs and providing the means to environmentally friendly and economical operation. The system is compatible with other existing but isolated solutions and eliminates time spent unnecessarily by offering more efficient workflows. As a testament to the uniquely valuable nature of its solutions, ArchiFM boasts an impressive portfolio of clients, including the University of Pécs, Penny Market, the Hungarian National Bank, Fesenius Medical Care, DOME Facility Services Group, B+N Referencia Zrt., Hörmann Hungária, Puskás Aréna and the National Healthcare Service Center.

The Power of BIM

BIM, the latest evolution of the building industry, links people, technology and processes to improve outcomes in building and construction. It’s an intelligent 3D model-based process that gives architecture, engineering and construction professionals the insight and tools to more

efficiently plan, design, construct, and manage buildings and infrastructure. The technology helps streamline time and cost, and improve efficiency in all types of constructions, including skyscrapers, hospitals, office and residential buildings. BIM isn’t just a 3D model; it also contains vast amounts of information that make up the project, as well as the process of exchanging that information with other parties involved. Whereas previous workflows relied on multiple file formats and disconnected processes that quickly fall out of sync, BIM workflows allow for a much more dynamic and synchronized approach to project management. The software is used by a vast array of customers, ranging from individuals to businesses and government agencies to plan, design, construct, operate and maintain buildings and diverse physical infrastructures, such as water, electricity, communication utilities, roads, railways, bridges, ports and tunnels.

this development, as ArchiFM can store work processes consisting of the steps of a recommended sanitation process in a hotel. In addition to the work process template, the results are also stored in the system. To put it simply, guests can check when their room was last cleaned and sanitized and how,” Hrobár explains. The power of vast amounts of data stored in a facility management system is spectacular. Hrobár mentions the example of the National Healthcare Service Center (ÁEEK-ETNY), which is one of the company’s clients. The center is capable of overseeing more than 250 sites across the country with ArchiFM and stores data for nearly 2,700 buildings. “If authorities decide that hospitals in the country need to be repainted, we can say exactly how many square meters of wall need a new coat of paint in which hospitals at the touch of a few buttons on a keyboard,” the executive notes. ArchiFM is working on developing energy management functionalities over the next 12 months, driven by the conviction that a predictive approach supported by artificial intelligence and machine learning could be put to tremendous use in this field.

Ambitious Plans

The acquisition of ArchiFM was the first step of what Tungsram sees as a long journey. “We are actively seeking new business areas so that we can put to use our extensive business network and accumulated professional expertise to identify additional revenue streams. ArchiFM has been the first in what the company plans to be a series of acquisitions in the future,” Pongrácz says.

Cost Reduction and Improved Efficiency

The ArchiFM software offers two key modules that focus on property management and facility management, says Péter Hrobár, general manager at Tungsram Innovative Solutions. Property management involves the work processes related to owning and letting real estate, the management of all related contracts as well as other financial aspects concerning a property. The facility management module is centered on cost reduction and efficiency improvement and includes solutions ranging from cleaning services to preventive or even predictive equipment maintenance. The latter essentially means that maintenance is not there to fix the equipment when it breaks down but rather to never let it break down in the first place. In a bid to tackle the challenges presented by the coronavirus epidemic, the latest version of the ArchiFM system developed over the past year adds a new aspect to the system’s functionalities by supporting sanitation services and solutions. “Our clients in the hospitality industry, for instance, can make excellent use of

Péter Hrobár After doubling ArchiFM’s revenue over the past year, the focus is now to further strengthen the company’s foothold on the international market, especially in the Middle East and Southeast Asia, by making use of the Tungsram sales network present in more than 100 countries. This would considerably expand the company’s global presence, which at present includes several western European countries, the United States, Japan and South Africa. In addition, the diverse portfolio of clients in Hungary, including schools, universities, hospital, shopping malls, hospitality establishments, and the large projects that are already in the pipeline, are set to help the company weather the storm triggered by the pandemic.

22 | 3

Special Report

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

Interior Design Taking on Greater Emphasis Despite the lockdown and debates over the very future of the office markets, developers are moving ahead with complexes are now delivering projects that were initiated in the pre-virus period. GARY J. MORRELL

Developers and designers have been creating interiors that reflect the changing sustainability-related demands of tenants and staff and now need to further adapt the design to meet new requirements due to the COVID-19 pandemic. The largest supply of modern office space in the region is recorded in Warsaw with 5.6 million sqm and Budapest and Prague at 3.7 million sqm. “One of the key findings is that people would like to continue working from home at least one or two times per week after COVID-19 has settled down. We believe it is important to test a range of scenarios to be prepared to rebalance and right size of the workplace at the right moment,” recent research by Colliers finds. Hubert Abt, CEO of the leading serviced office space provider New Work, which currently operates in Hungary, the Czech Republic and Poland, says that companies are organizing office use based on a rotation model, possibly using the office one to two days a week. Further, it is currently SMEs that are taking up space at New Work serviced offices, as staff at multinationals have still not returned. SMEs need to use the office as they do not have the luxury of working from home. Further, in the postCOVID environment that requires social distancing, a work station will increase to

around

10 sqm.

“The reality is that almost all office occupiers are likely to need less space in the medium term. Occupiers will

Balance Hall not only become cost conscious, but they will emerge with a greater sense of responsibility for the work force. They will ask for flexible terms and one stop shop supply for their needs. Technical equipment, meeting and conference facility management will represent the standard,” Abt believes. “We have social distancing and sanitary and hygienic measurements and our business centers operated every day during the lockdown. We do not see the corporates coming back and when asked they say possibly they will return at end of the year or the middle of next year. Nobody knows. We need to organize an office based on 10 sqm for a work station; before it was 5 sqm per work station,” he adds.

Interior Focus

Edina Hornok, head of sustainability consultancy at DVM group, says interiors are coming more into focus. “Although the sustainability standards, especially WELL, already had a strong focus on a healthy indoor environment, now this topic is expected to get more emphasis within the certification systems,” she argues. “These organizations create new guidance that put hygiene and the safety

of workers at the heart of planning: besides creating flexible layouts and wider spaces for less people, they promote the application of durable materials for heavy cleaning, increased maintenance and cleaning of mechanical systems, creating health screening spots, and applying smart technologies to make contactless offices and to collect space utilization data,” Hornok explains. One recent office delivery was the BREEAM Very Good accredited Balance Hall by CPI. “Under the conscious building concept, we offer a high-quality tenant experience in Balance Hall with its innovative and optimum office spaces, coupled with smart building operations based on energy awareness,” comments Mátyás Gereben, managing director for Hungary at CPI. “Although our day-to day lives have been transformed by the COVID-19 crisis, we do believe that the domestic office market relies on firm fundamentals that will bring about an upswing in the rental market once the pandemic is over,” he adds. Valter Kalaus, managing director of tenant advisory firm Cresa Hungary, points out that the office market is seeing what amount to fundamental changes. “The key considerations now are infection control as it pertains to people assembly, building wellness, and technology. The space usage, but also the materials will need to change to live up to expectations and fulfill the new requirements. The whole idea of work and workplace is being transformed. Developers and designers of office buildings now face enormous challenges in what they should provide to organizations and end-users to regain their confidence and satisfy their new needs,” he outlines.

Layouts Changing

Cresa

“Office layouts are changing again to create smaller and more controllable units and areas and to develop multi-purpose spaces by using different materials and ideas. Many companies are opting to use special

furniture systems or plants instead of walls for spatial boundaries, and some are treating the structure itself as a finish, thus eliminating additional materials that might cause health hazards and even reducing costs by doing so,” he adds. Skanska Hungary have delivered the third and final part of the Nordic Light Trio; the complex will be the first WELL-certified project by Skanska in Hungary and is also aiming for LEED “Gold” certification. “Nordic Light Trio was designed and built to offer qualitative characteristics to benefit the body and mind. Bicycle parking, showers and lockers for bikers along with a multifunctional public garden and green terraces encourage physical activities as well as opportunities for relaxation and boosting energy throughout the working day,” says Alexandra Tomášková, executive vice president of operations for Hungary and the Czech Republic. Issues related to the coronavirus are seen as changing work practices and therefore building management, along with climate change. “As these habits are changing, the rising demand for safer, healthier and more sustainable buildings will lead the market while also determining the speed at which this industry can revolutionize itself,” reports DVM group. “The physical crisis of pandemics and climate change are somewhat interconnected, and real estate sustainability is increasingly being impacted by these crises. Real estate investors should first seize the moment to decarbonize their portfolio and make their operations sustainable; for example, by digitalizing their assets and services for tenants and building users,” says the provider of integrated building services. “In order to provide safety and health checks on spaces or to monitor consumption, and thus levels of CO2 emissions, technology can support sophisticated approaches to measuring and assessing sustainability other than purely healthrelated risks/opportunities,” DVM concludes.

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

Special Report | 23

Green Office Buildings CuRRently leasaBle OffiCe spaCe (sqm) minimum lease teRms (yeaRs)

aveRaGe mOnthly Rent On auGust 1, 2020 (euRO/sqm) aveRaGe mOnthly seRviCe ChaRGe On auGust 1, 2020 (euRO/sqm)

yeaR estaBlished

sOlaR COlleCtOR BiCyCle stORaGe puBliC tRanspORtatiOn OWn seWaGe manaGement independent pOWeR supply eneRGy effiCienCy pROGRam natuRal ventilatiOn dayliGht and mOtiOn sensORs lOCal ReCyClinG GRey WateR Reuse ev/hyBRid CaR ChaRGeRs inteRnal yaRd With paRk GReen ROOf planninG phase staGe Of final phase GReen CeRtifiClassifiCatiOn Of existinG BuildinG CatiOn RatinG

nO. Of levels aveRaGe level size (sqm)

CuRRent majOR tenants

66,946 71,860

9 2,600

15,756 5

15–16 1,000 HUF

–

– ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ –

–

– ✓ ✓ –

Real estate aGenCy(ies) OR aGent(s)

OWneRship (%) hunGaRian nOn-hunGaRian

GReen seRviCes

Result Of validatiOn (BReeam)

COmpany WeBsite

net OffiCe spaCe (sqm) tOtal GROss BuildinG aRea (sqm)

Rank

Ranked by net office space (sqm)

addRess phOne email

BREEAM Excellent, Access4You

Cushman & Wakefield, CBRE

Hungária Greens Kft. (100) –

1087 Budapest, Hungária körút 30. (1) 785-5208 info@atenor.hu

– ✓ ✓ ✓ ✓ – ✓ ✓ ✓ A A A

BREEAM Very Good

–

Futureal (100) –

1112 Budapest, Boldizsár utca 1–3. (1) 266-2181 info@futurealgroup.com

✓ ✓ ✓ – ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ A A A

LEED Gold

(100) –

2051 Biatorbágy, Sasbérc út 1. (1) 382-7560, (70) 370-6666 office@gamma-am.hu

BREEAM Excellent

JLL, hungary@ eu.jll.com, Cushman & Wakefield, liberty@ cushwake. com

Gladiátor VII. Ingatlan Befektetési Alap (100) –

1097 Budapest, Könyves Kálmán körút 32. (1) 451 4760 sales@wing.hu

BREEAM Very Good

Colliers, CBRE

aRéna Business Campus

www.arenabusinesscampus.hu 1

Budapest One

66,582 108,041

8 7,000

9,832 5

A A

tópaRk Be my City

55,000 200,000

4 Max 48

12–13.9

www.futurealgroup.com/hu

gamma-am.hu

–

– ✓

liBeRty iROdaház

38,316 40,361

9 4,800

40,361 5

15 3.90

–

– ✓ ✓ – ✓ ✓ ✓ ✓ ✓ – ✓ ✓ –

millennium GaRdens

37,000 74,844

11 3,650

37,000 5

A A

2018

– ✓ ✓ ✓ ✓ ✓ – ✓ ✓ – ✓ – ✓ ✓ –

CenteR pOint

36,916 40,873

9 5,600

– 5

14 4

www.wing.hu

www.millenniumgardens.hu

www.gtc.hu

GateWay OffiCe paRk www.gatewaybc.hu, www.cpipgroup.hu 7

2,572 5

2004/ Exxon-Mobil, – ✓ ✓ ✓ – ✓ ✓ ✓ ✓ – ✓ ✓ – 2006 Honeywell, Ecolab

AmRest, Atmedia, Centrade, Chiesi, CPI Hungary, KRKA, Magyar 12.50–14.5 2008 Posta, Mortoff, 1,200 HUF NSC, Orange, Orbico, Prémium Pénztárak, Samsung

35,900 50,800

9 1,500

32,000 38,000

9 A

31,200 38,669

9 4,500

2,075 5

30,315 50,026

A A

– ✓ ✓ – ✓ – ✓ ✓ ✓ –

–

– ✓ –

–

1095 Budapest, – Lechner Ödön fasor 10/B Revetas Capital (1) 456-6200 (100) leasing@trigranit.com

–

– ✓ LEED Gold

–

A A

1139 Budapest, Váci út 81. (1) 412-3680 leasing@gtc.hu

–

– ✓

BREEAM Very Good

–

– CPI Property Group (100)

1138 Budapest, Dunavirág utca 2–6. (1) 225-6600 hungary@cpipg.com

BREEAM in use Excellent

Cushman & Wakefield

– CA IMMO (100)

1133 Budapest, Váci út 76. (1) 501-2800 office@caimmo.hu

BREEAM Very Good

JLL, Robertson

– Immofinanz AG (100)

1134 Budapest, Váci út 45. (1) 236-0435 mail@immofinanz.com

–

Erste Nyíltvégű Ingatlan Befektetési Alap (100) –

1095 Budapest, Soroksári út 44. (1) 920-2193 erstealapkezelo@ erstealapkezelo.hu

Capital squaRe

www.caimmo.com, www.capitalsquare.hu 8

14.50–15.5 1,550 HUF

–

Albemarle, Regus, A A A A A A A A A A A A A A A A Ferrero

myhive átRium paRk

www.myhive-offices.com/hu 9

13-17 2009 1,250 HUF

– ✓ ✓ –

– ✓ ✓ – ✓ – ✓ – ✓ –

2018

✓ ✓ ✓ –

– ✓ –

mill paRk

Bank CenteR

30,041 52,184

10 700-1400

685 5

23 4.60

1996

MKIK, BorsodChem, AFFIDEA, BÉT

duna tOWeR

29,800 31,500

16 850

1,700 5

16–17 4.20

2006

IBM, Huawei, MetLife, TMF Group

28,520 34,217

8 4,000

13,923 5

www.millpark.hu

www.bankcenter.hu

www.dunatower.hu

– ✓ ✓ ✓ ✓ – ✓ –

– ✓ ✓ ✓ – ✓ ✓ ✓ ✓ –

www.myhive-offices.com/hu

14.5-17 2009 1,250 HUF

– ✓ ✓ –

–

– ✓

BREEAM Very Good

Avestus Real Estate

– (100)

1054 Budapest, Szabadság tér 7. (1) 302-9010 anett.eles@ bankcenter.hu

– ✓ –

–

– ✓

BREEAM Very Good

Cushman & Wakefield

A A

1138 Budapest, Népfürdő utca 22. (1) 412-3680 leasing@gtc.hu

– IMMOFINANZ AG (100)

1095 Budapest, Soroksári út 30–34. (1) 236-0435 mail@immofinanz.com

✓ ✓ ✓ – ✓ ✓ – ✓ ✓ – ✓ –

myhive halleR GaRdens 13

– ✓

– ✓ – ✓ – ✓ ✓ ✓ –

BREEAM JLL, Cushman – ✓ Very Good; & Wakefield Access4you

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

Real estate aGenCy(ies) OR aGent(s)

OWneRship (%) hunGaRian nOn-hunGaRian

CuRRent majOR tenants

Result Of validatiOn (BReeam)

GReen seRviCes

yeaR estaBlished

aveRaGe mOnthly Rent On auGust 1, 2020 (euRO/sqm) aveRaGe mOnthly seRviCe ChaRGe On auGust 1, 2020 (euRO/sqm)

CuRRently leasaBle OffiCe spaCe (sqm) minimum lease teRms (yeaRs)

COmpany WeBsite

nO. Of levels aveRaGe level size (sqm)

Special Report net OffiCe spaCe (sqm) tOtal GROss BuildinG aRea (sqm)

Rank

24 | 3

addRess phOne email

–

LEED Gold

–

– CA IMMO (100)

1117 Budapest, Budafoki út 91–93. (1) 501-2800 office@caimmo.hu

– ✓ ✓ – ✓ ✓ – ✓ ✓ –

–

– ✓

BREEAM Very Good in Use

CBRE

– Woodpecker Acquisitions (100)

ip West

www.caimmo.com www.ipwest.hu 14

26,500 30,100

8 A

A A

14.50–15 2009 1,765 HUF

Siemens, British Telecom, Transcom

1117 Budapest, Irinyi József utca 4–20. (1) 374-3040 office.hungary@cbre.com 1097 Budapest, Könyves Kálmán körút 11. – balazs.szecsy@cbre.com

sCienCe paRk

26,102 29,498

7 1,910

– 5

A A

2002

népliGet CenteR

26,000 28,800

8 900

5,096 5

A A

2010

Keszthelyi Holding, Philips, Studio✓ ✓ ✓ – Inex, Volánbusz

– ✓ ✓ ✓ ✓ – ✓ ✓ –

–

– ✓

BREEAM Very Good

Cushman & Wakefield

– MCAP Global Finance (100)

–

– ✓

BREEAM Excellent

Cushman & Wakefield Kft.

– (100)

1113 Budapest, Bocskai út 134–146. (1) 888-0395 gabor.kertesz@cbre.com

BREEAM Excellent

–

OTP Prime Ingatlanbefektetési Alap (100) –

1138 Budapest, Bence utca 1. (1) 336-0900 alapkezelo@ otpingatlanalap.hu 1092 Budapest, Köztelek utca 6. (1) 501-2800 office@caimmo.hu

www.sciencepark.hu

www.nepligetcenter.com

dOROttya udvaR www.dorottya.net

váCi GReens B épület 18 www.vacigreens.hu

25,977 29,073

4 6,250

1,475 5

12.50 4.20

2002

Viacom CBS, KUKA Hungary, Shell, Reckitt Benckiser, LeasePlan, Grand Vision

24,770 25,303

– 5

A A

2016

24,000 26,000

9 A

23,749 27,390

A A

–

✓ ✓ ✓ –

23,311

A A

2017

23,305 25,053

8 3,200

6,861 5

23,000 37,300

7 2,500–4000

16,000 5

14.50– 15.95 3.30

2019

22,500 42,000

8 3,400

9,500 5

15.50 4.10

2004

21,525 23,445

8 3,700

14,761 5

21,047 33,000

8 2,882

A A

20,539 25,100

500 5

20,404 21,574

– ✓ ✓ –

–

– ✓ –

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ –

–

– ✓

LEED Gold

Cushman & Wakefield

– CA IMMO (100)

– ✓ ✓ ✓ ✓ – ✓ ✓ ✓ ✓ –

–

BREEAM Very Good

–

(100) –

– ✓ ✓ ✓ ✓ ✓ – ✓ ✓ ✓ ✓ ✓ – ✓ –

–

BREEAM Very Good, LEED Gold

–

Erste Nyíltvégű Ingatlan Befektetési Alap (100) –

City Gate

www.caimmo.com, www.citygate.hu 19

CORvin teChnOlOGy

20 paRk 1-2 www.futurealgroup.com

pROmenade GaRdens

www.promenadegardens.hu

15.50–16 1999 1,770 HUF

IBM, TresorIT

1082 Budapest, Bókay utca (1) 266-2181 office@futureal.hu 1133 Budapest, Váci út 80. (1) 920-2193 erstealapkezelo@ erstealapkezelo.hu

váCi GReens f épület www.vacigreens.hu

BaRtók udvaR ii. www.bartokudvar.hu

17-18 2020 1,000 HUF

– ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ –

–

– ✓

BREEAM Excellent

Cushman & Wakefield, CBRE

City Tower Kft. (100) –

1139 Budapest, Fiastyúk utca 4–8. (1) 785-5208 info@atenor.hu

NAK, Multisoft, In– ✓ ✓ ✓ ✓ ✓ ✓ – ✓ – ✓ ✓ – nobyte, Infogroup

–

– ✓

BREEAM Very Good

–

Infogroup Csoport (100) –

1115 Budapest, Bartók Béla út 105-113. (1) 481-4530 info@infogroup.hu

Sanofi, Intrum Justitia, Adecco, Bonduelle, NN

paRk atRium

www.parkatrium.hu

ING, Deloitte

– ✓ ✓ – ✓ ✓ ✓ – ✓ – ✓ ✓ –

–

– ✓

LEED Gold for Commercial Interiors

Horizon Development

– (100)

1068 Budapest, Dózsa György út 84/B (1) 473-1209 leasing@ horizondevelopment.hu

– ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ –

–

– ✓

BREEAM Excellent

Cushman & Wakefield, CBRE

City Tower Kft. (100) –

1138 Budapest, Váci út 129–133. (1) 785-5208 info@atenor.hu

2014

– ✓ ✓ –

–

– ✓ ✓ ✓ A A

–

– ✓

BREEAM Excellent

–

Váci Corner Offices Kft. (100) –

1138 Budapest, Váci út 144–150. (1) 580-2280 info@vacicorneroffices.hu

16–17.5 4

2002

Bayer, Eclipse, Euronet, Hold Alapkezelő, Medicover, NuSkin, Signal

White Star Real Estate Kft.

Torony Ingatlan Befektetési Alap (100) –

1123 Budapest, Alkotás utca 50. (1) 382-5100 ingatlan@ diofaalapkezelo.hu

A A

–

LEED Gold

CBRE

A A

1134 Budapest, Váci út 47. (1) 374-3040 –

váCi GReens e épület www.vacigreens.hu

váCi CORneR OffiCes www.vacicorneroffices.hu

17-18 2020 1,000 HUF

alkOtás pOint

www.alkotaspoint.hu 27

White hOuse

www.whitehousebudapest.hu

3–5

– ✓ ✓ – ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ A A A

www.bbj.hu

A A

–

A A

1998

– ✓ ✓ –

–

– ✓ ✓ ✓ –

A A

2019

– ✓ ✓ –

–

19,656 21,923

8 2,740

– 5

A A

nORdiC liGht 33

19,629 19,668

A A

2016

18,920 19,981

A A

–

18,920 20,035

– 5

A A

2015

– ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ – ✓ ✓ –

–

– ✓

18,700 19,000

10 A

A A

12.50–13 2002 1,500 HUF

RiveR estates

20,245 30,141

10 2,700

OffiCe GaRden iv

19,663 21,200

–

www.simmoag.hu

www.officegarden.hu

CuRRent majOR tenants

–

– ✓ –

–

– ✓

– ✓ – ✓ ✓ –

–

Erste Nyíltvégű Ingatlan Befektetési Alap (100) –

BREEAM Very Good

–

– S IMMO AG (100)

LEED Gold

–

(100) –

1117 Budapest, Alíz utca 3. (1) 327-2050 office@robertson.hu

A A

1123 Budapest, Alkotás utca 55–61. (70) 451-2589 szajlai.ipacs.andrea@ wfacility.hu

Result Of validatiOn (BReeam)

yeaR estaBlished

GReen seRviCes

OWneRship (%) hunGaRian nOn-hunGaRian

20,312 25,178

Special Report | 25

Real estate aGenCy(ies) OR aGent(s)

visiOn tOWeRs 29

aveRaGe mOnthly Rent On auGust 1, 2020 (euRO/sqm) aveRaGe mOnthly seRviCe ChaRGe On auGust 1, 2020 (euRO/sqm)

CuRRently leasaBle OffiCe spaCe (sqm) minimum lease teRms (yeaRs) A

COmpany WeBsite

net OffiCe spaCe (sqm) tOtal GROss BuildinG aRea (sqm)

Rank

nO. Of levels aveRaGe level size (sqm)

Budapest Business Journal | September 18 – October 1, 2020

hillside OffiCes

www.hillsideoffices.hu

–

advanCe tOWeR i-ii

váCi GReens C épület

www.erstealapkezelo.hu

www.vacigreens.hu

2018

– ✓ ✓ – ✓ – ✓ ✓ ✓ – ✓ – ✓ –

✓ ✓ ✓ –

– ✓ ✓ ✓ ✓ ✓ ✓ A A

– ✓ LEED Gold W-Facility Kft.

1134 Budapest, Váci út 29–31. (1) 920-2161 erstealapkezelo@ erstealapkezelo.hu 1134 Budapest, Váci út 35. (1) 429-5050 office@simmoag.hu

1133 Budapest, Váci út 96–98. (1) 920-2161 erstealapkezelo@ erstealapkezelo.hu 1134 Budapest, Váci út 43. (1) 920 2161 erstealapkezelo@ erstealapkezelo.hu 1138 Budapest, Bence utca 3. – info@zfpinvest.com

Pre-LEED Gold

–

BREEAM Very Good, WELL Előmínősítés

Eston Zrt.

BREEAM Excellent

–

– ZFP Realitní Fond (100)

BREEAM in use Very Good

Cushman & Wakefield

– CA IMMO (100)

1074 Budapest, Rákóczi út 70–72. (1) 501-2800 office@caimmo.hu

BREEAM Excellent

A A

1062 Budapest, Teréz körút 55–57. (1) 785-4985 info@celand.hu

– (100)

1117 Budapest, Gábor Dénes utca 2. (30) 822-5466 tarroe@wing.hu

Cushman & Wakefield

– CA IMMO (100)

1095 Budapest, Lechner Ödön fasor 8. (1) 501-2800 office@caimmo.hu

–

Erste Nyíltvégű Ingatlan Befektetési Alap (100) –

1123 Budapest, Nagyenyed utca 8–14. (1) 920-2161 erstealapkezelo@ erstealapkezelo.hu

Cushman & Wakefield Kft., ESTON International Kft.,

BudaPart Auratus Kft. (100) –

1117 Budapest, Dombóvári út 27. (1) 241-0080 sales@budapart.hu

BREEAM Very good

(100) –

–

BREEAM

–

– Codic Group (100)

– ✓ –

KPMG Global Services, Sykes, – ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ – ✓ ✓ ✓ ✓ – Bunge, Thermo Services (Hungary)

Erste Nyíltvégű Ingatlan Befektetési Alap (100) – Erste Nyíltvégű Euró Ingatlan Befektetési Alap (100) –

addRess phOne email

–

R70 OffiCe COmplex www.r70.hu, www.caimmo.com 36

eiffel téR iROdaház www.eiffelter.hu

18,500 23,500

7 3,200

– 5

A A

2008

– ✓ ✓ –

– ✓ ✓ ✓ ✓ – ✓ ✓ –

–

– ✓

infOpaRk d épület

18,500

A A

2007

– ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ A A A A

–

– ✓ LEED Silver

18,000 21,000

16.50–17 2008 1,700 HUF

kRisztina palaCe 40

17,856 30,001

–

BREEAM – ✓ in Use Very Good

www.wing.hu

millennium tOWeR iii www.millennium-towers.hu, www.caimmo.com

–

A A

1999

– ✓ ✓ –

– ✓ ✓ ✓ ✓ –

–

BREEAM in Use Very Good

BudapaRt Gate

www.budapartgate.hu 41

15.5018.50 2020 1,300 HUF

17,638 20,092

12 2,400

4,132 5

17,400 18,400

6 A

A A

– ✓ ✓ – ✓ ✓ ✓ – ✓ – ✓ ✓ ✓ – ✓ ✓ LEED GOLD

–

– ✓ ✓ –

– ✓ ✓ ✓ ✓ – ✓ –

Buda squaRe

GReen COuRt OffiCe

17,250 18,500

8 1,367

6,162 5

17.50 3.80

– ✓ ✓ –

–

maRGit palaCe

17,047 19,227

5+ A

A A

2005

– ✓ ✓ –

– ✓ ✓ ✓ ✓ –

– ✓ –

–

– ✓

BREEAM Very good

(100) –

17,000 30,000

LEED Gold

–

– CA IMMO (100)

–

www.greencourtoffice.hu

www.margitpalace.com

–

– ✓

– ✓ ✓ ✓ ✓ ✓ ✓ – ✓ –

1036 Budapest, Lajos utca 48–66. (1) 266-9441 info@adventum.hu 1134 Budapest, Dózsa György út 142–144. (1) 266-6000 info.hungary@codic.eu 1027 Budapest, Henger utca 2. (1) 266-9441 info@adventum.hu

BaRtók ház

www.caimmo.com, www.bartok-haz.hu 45

14–14.5 2003 1,300 HUF

HP, Novartis

1114 Budapest, Bartók Béla út 43–47. (1) 501-2800 office@caimmo.hu

Special Report

www.bbj.hu

16,922 18,500

6 A

A A

16,582 19,755

7 3,100

13,450 5

16,352 17,867

16,300 18,800

7 A

16,100 17,300

6 2,500

1,100 5

14.50–15.5 3.60

–

15,693 24,803

A A

2013

15,635 17,721

A A

15,500 18,300

10 2,500

– 5

14,600 16,882

7 2,500

14,600 5

17,000 18,600

Real estate aGenCy(ies) OR aGent(s)

OWneRship (%) hunGaRian nOn-hunGaRian

CuRRent majOR tenants

Result Of validatiOn (BReeam)

GReen seRviCes

yeaR estaBlished

aveRaGe mOnthly Rent On auGust 1, 2020 (euRO/sqm) aveRaGe mOnthly seRviCe ChaRGe On auGust 1, 2020 (euRO/sqm)

CuRRently leasaBle OffiCe spaCe (sqm) minimum lease teRms (yeaRs)

Budapest Business Journal | September 18 – October 1, 2020

nO. Of levels aveRaGe level size (sqm)

COmpany WeBsite

net OffiCe spaCe (sqm) tOtal GROss BuildinG aRea (sqm)

Rank

26 | 3

addRess phOne email

BREEAM in Use Very Good

Cushman & Wakefield

– CA IMMO (100)

1093 Budapest, Lechner Ödön fasor 6. (1) 501-2800 office@caimmo.hu

– ✓ ✓ –

–

– ✓ – ✓ ✓ –

–

LEED Gold

–

GRT Group (100) –

1117 Budapest, Alíz utca 4. (1) 382-7020 grtgroup@grtgroup.hu

–

Cushman & Wakefield Kft., ESTON International Kft.,

Bpart Aspius Kft. (100) –

1117 Budapest, Dombóvári út 26. (1) 241-0080 sales@budapart.hu

millennium tOWeR ii

www.millennium-towers.hu, www.caimmo.com 45

OffiCe GaRden iii www.officegarden.hu

16.50–17 2008 1,950 HUF

A A

2017

Nestlé, KLM

BudapaRt City

www.budapartcity.hu 48

CORvin One

www.futurealgroup.com

16.5019.50 2021 1,400 HUF

A A

–

– ✓ ✓ – ✓ ✓ ✓ – ✓ – ✓ ✓ ✓ ✓ –

–

✓ ✓ ✓ –

– ✓ ✓ ✓ ✓ – ✓ ✓ ✓ –

– ✓

BREEAM Very Good

–

(100) –

1082 Budapest, Futó utca 47–53. (1) 266-2181 office@futureal.hu

– CA IMMO (100)

1095 Budapest, Lechner Ödön fasor 6. (1) 501-2800 office@caimmo.com

millennium tOWeR i

www.millennium-towers.hu, www.caimmo.com 50

BREEAM in Use Very Good

Cushman & Wakefield

Lufthansa Systems, EIT, National – ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ – Instruments, 3M

–

– ✓

LEED Silver, A4Y

–

– ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ – ✓ ✓ –

–

– ✓

BREEAM Excellent

–

VG 117 Ingatlankezelő Kft. (100) –

1138 Budapest, Váci út 117–119. – –

–

– ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ – ✓ ✓ – ✓ –

–

BREEAM Excellent

Cushman & Wakefield, Robertson

SkyGreen Buildings Kft. (100) –

1138 Budapest, Váci út 121–127. – –

2012

Avis Budget Group, MSCI, Isys-On, ABRS Holding

– ✓

LEED Platinum

–

Torony Ingatlan Befektetési Alap (100) –

1134 Budapest, Kassák Lajos utca 19. (1) 888-4120 ingatlan@ diofaalapkezelo.hu

–

Cushman & Wakefield Kft., ESTON International Kft.,

Kopaszi Gát Kft. (100) –

1117 Budapest, Hengermalom út 70. (1) 241-0080 sales@budapart.hu

Horizon Development

– (100)

1055 Budapest, Bajcsy-Zsilinszky út 78. (1) 473-1209 leasing@ horizondevelopment.hu

Cushman & Wakefield, Eston

Bécsi Greens Kft. (100) –

1034 Budapest, Bécsi út 68. (1) 785-5208 info@atenor.hu

–

Gladiátor I. Ingatlan Befektetési Alap (100) –

–

Erste Ingatlan Kft. (100) –

16.50–17 2006 1,980 HUF

Cognizant, Vodafone

infOpaRk e épület www.diofaalapkezelo.hu 51

váCi GReens a épület

váCi GReens d épület

www.vacigreens.hu

Magyar Posta 1117 Budapest, Takarék Ingatlan Neumann János utca 1/E Befektetési Alap (1) 888-4120 (100) ingatlan@ – diofaalapkezelo.hu

GReen hOuse

www.diofaalapkezelo.hu 54

1,160 HUF

✓ ✓ ✓ –

– ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ –

BudapaRt haRBOR www.budapart.hu 55

14.5016.50 2021 1,400 HUF

eiffel palaCe

www.eiffelpalace.hu

– ✓ ✓ – ✓ ✓ ✓ – ✓ – ✓ ✓ ✓ ✓ –

Apple, PwC, CBRE, British Chamber of Commerce, St. 2013 Andrea Restaurant, ✓ ✓ ✓ – Wax in the City, Eiffel Bistro, Eiffel Esthetics, Eiffel Conference Center

–

BREEAM – ✓ Very Good, LEED Gold

14,500 32,000

8 1,600

20–22 4

14,490 15,504

4 4,000

14,490 5

20 1,000 HUF

–

– ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ – ✓ –

–

BREEAM Excellent, Access4 You

skyliGht City 58

14,459 20,305

8 A

A A

2004

13,858 27,000

6–7 1,150

630 5

11.50 3.50

2011

– ✓ ✓ ✓ ✓ ✓ ✓ A A

–

ROseville

www.roseville.hu

www.skylightcity.hu

lauRus iROdaházak www.laurusoffices.hu

– ✓ ✓ – ✓ – ✓ – ✓ – ✓ ✓ –

– ✓ ✓ –

–

BREEAM – ✓ in Use Very Good

– ✓ ✓ ✓ ✓ –

– ✓ –

1134 Budapest, Róbert Károly körút 54–58. (1) 451-4280 – 1103 Budapest, Kőér utca 2/A (1) 268-4300 info@ersteingatlan.hu

www.bbj.hu

CuRRently leasaBle OffiCe spaCe (sqm) minimum lease teRms (yeaRs)

aveRaGe mOnthly Rent On auGust 1, 2020 (euRO/sqm) aveRaGe mOnthly seRviCe ChaRGe On auGust 1, 2020 (euRO/sqm)

13,650 13,730

5 4,000

250 5

14.50–15.5 1,350 HUF

13,600 15,402

8 2,000

223 5

16 2003 1,200 HUF

13,000 65,000

4 A

A A

13,000 14,600

14.50–15 1,575

12,997 27,537

8 2,300

3,880 5

12,680 27,000

8 A

A A

11,840 18,000

11 1,638

– 5

11,500 15,000

nO. Of levels aveRaGe level size (sqm)

Special Report | 27

OWneRship (%) hunGaRian nOn-hunGaRian

addRess phOne email

LEED Gold

–

Magyar Posta Takarék Ingatlan Befektetési Alap (100) –

1117 Budapest, Neumann János utca 1. (1) 888-4120 ingatlan@ diofaalapkezelo.hu

– ✓

–

CBRE

– IMMOFINANZ AG (100)

1075 Budapest, Kéthly Anna tér 1. (1) 236-0435 mail@immofinanz.com

–

A A

2220 Vecsés, Lőrinci út 59–61. – –

LEED Gold

–

– CA IMMO (100)

1027 Budapest, Kapás utca 6–12. (1) 501-2800 office@caimmo.hu

– ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ –

–

BREEAM Very Good

–

– CPI Property Group (100)

1139 Budapest, Váci út 99. (1) 225-6600 hungary@cpipg.com

BREEAM Excellent

–

(100) –

1118 Budapest, Rétköz utca 5. (1) 309-0909 info@budawest.net

BREEAM Very Good

–

Torony Ingatlanbefektetési Alap (100) –

1134 Budapest, Váci út 17. (1) 888-4120 ingatlan@ diofaalapkezelo.hu

–

BREEAM Very Good

–

– Codic International S.A. (100)

1132 Budapest, Váci út 48/E-F (1) 266-6000 info.hungary@codic.eu

– ✓

BREEAM Very Good

ConvergenCE

– KGAL (100)

1134 Budapest, Váci út 37. (1) 225-0912 bzadori@ convergen-ce.com

A A

1133 Budapest, Véső utca 7. (1) 382-9100 property@skanska.hu

LEED Gold

Cushman & Wakefield

– CA IMMO (100)

1095 Budapest, Lechner Ödön fasor 9. (1) 501-2800 office@caimmo.hu

– (100)

CuRRent majOR tenants

–

IBM, ZF Hungária, ITelligence

– ✓ ✓ –

– ✓ ✓ – ✓ –

– ✓ –

– ✓ ✓ –

–

– ✓ – ✓ –

–

2004

– ✓ ✓ –

–

– ✓ – ✓ –

–

2004

Bird&Bird, HiVentures

Result Of validatiOn (BReeam)

Real estate aGenCy(ies) OR aGent(s)

GReen seRviCes

yeaR estaBlished

COmpany WeBsite

net OffiCe spaCe (sqm) tOtal GROss BuildinG aRea (sqm)

Rank

Budapest Business Journal | September 18 – October 1, 2020

infOpaRk a épület www.diofaalapkezelo.hu 60

myhive GReenpOint 7

www.myhive-offices.com/hu 61

euROpOlis paRk

62 Budapest aeROzOne –

víziváROs OffiCe CenteR 62

www.vizivaros.eu, www.caimmo.com

BalanCe hall

www.balancehall.hu 64

BudaWest iROdaház www.budawest.net

14.80–16 2019 1,390 HUF

– ✓ ✓ –

2010

– ✓ ✓ – ✓ ✓ ✓ ✓ ✓ – ✓ ✓ –

–

A A

✓ ✓ ✓ –

– ✓ –

A A

2006

– ✓ ✓ – ✓ ✓ ✓ ✓ ✓ A A A A ✓ –

11,474 12,338

9 1,450

– 5

A A

Cargill, DKÜ, Doktor24, Friesland 1996 Campina, Invitel, – ✓ ✓ – ✓ ✓ ✓ ✓ ✓ – ✓ – ODD, OTIS, Tech Mahindra

10,300 24,870

7 2,200

A A

10,000 12,300

9,965

– ✓

v17

www.v17.hu 66

v48

www.v48.hu

–

✓ ✓ – ✓ ✓ –

Cityzen OffiCes

www.cityzenirodahaz.hu 68

nORdiC liGht tRiO www.skanska.hu

–

✓ ✓ A A ✓ A A ✓ A ✓ ✓ A

– ✓ –

16.50–17 2011 1,885 HUF

K&H, Oracle

168 5

14.50–14.9 2009 3.90

9,469 15,290

5 2,290

– 5

A A

9,400 14,450

10 999

1,180 5

13.50–14.5 1,460 HUF

millennium tOWeR "h" épület 70

www.millennium-towers.hu, www.caimmo.com

RiveRpaRk iROdák

71 www.riverpark.hu, www.gamma-am.hu 72

Blue CuBe

www.simmoag.hu

2002

– ✓ ✓ –

–

– ✓ ✓ ✓ A ✓ ✓ A A A A

– ✓ ✓ –

–

– ✓ ✓ ✓ –

– ✓ –

–

– ✓

BREEAM Very Good

–

– S IMMO AG (100)

Advisesoft, AMEX, Brendon, Carrier, Euler Hermes, – ✓ ✓ – ✓ – ✓ ✓ ✓ – Homemedical, Interticket, Mall.hu, Opus, Starschema

– ✓ –

–

– ✓

BREEAM Very Good

–

– CPI Property Group (100)

1093 Budapest, Közraktár utca 30–32. (1) 382-7560 office@gamma-am.hu 1138 Budapest, Váci út 182. (1) 429-5050 office@simmoag.hu

BalanCe BuildinG

www.balancebuilding.hu 73

–

1139 Budapest, Váci út 99. (1) 225-6600 hungary@cpipg.com

– 5

OWneRship (%) hunGaRian nOn-hunGaRian

9 1,100

Real estate aGenCy(ies) OR aGent(s)

8,850 9,382

CuRRent majOR tenants

Result Of validatiOn (BReeam)

– 5

5 2,000

GReen seRviCes

yeaR estaBlished

8,900 10,351

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

aveRaGe mOnthly Rent On auGust 1, 2020 (euRO/sqm) aveRaGe mOnthly seRviCe ChaRGe On auGust 1, 2020 (euRO/sqm)

CuRRently leasaBle OffiCe spaCe (sqm) minimum lease teRms (yeaRs)

COmpany WeBsite

nO. Of levels aveRaGe level size (sqm)

Special Report net OffiCe spaCe (sqm) tOtal GROss BuildinG aRea (sqm)

Rank

28 | 3

addRess phOne email

–

– ✓

BREEAM Very Good

–

– IMMOFINANZ AG (100)

1037 Budapest, Szépvölgyi út 35–37. (1) 236-0435 mail@immofinanz.com

szépvölGyi Business paRk 74

www.immofinanz.com

11.5-12.5 2004 1,200 HUF

kálvin squaRe

www.kalvinsquare.hu 75

kinnaRps hOuse

www.kinnarpshouse.hu

–

– ✓ ✓ ✓ –

– ✓ –

AEGON Mo., Alpiq Csepeli, Alpiq Energy, DBK, 2004 – ✓ ✓ – GEOX, Philip Morris, Safeguard, Wolf Theiss Faludi

–

– ✓

BREEAM Very good

ConvergenCE

– KGAL (100)

1085 Budapest, Kálvin tér 12. (1) 225-0912 bzadori@ convergen-ce.com

–

– ✓

BREEAM Very Good

ConvergenCE

CBC Ingatlanfejlesztő Kft. (100) –

1027 Budapest, Horvát utca 12-24. (1) 225-0912 bzadori@ convergen-ce.com

–

– Kinnarps I Falköping AB (100)

1133 Budapest, Váci út 92. (1) 237-1251 recepcio@kinnarps.hu

LEED Platinum

Horizon Development

(100) –

1052 Budapest, Szervita tér 8. (1) 473-1209 leasing@h orizondevelopment.hu

Eston International Zrt.

Gladiátor III Ingatlan Befektetési Alap (100) –

1143 Budapest, Gizella út 51-57. (1) 451-4760 info@wing.hu

– ✓ ✓ ✓ ✓ – ✓ –

8,793 9,538

8 1,300

1,034 5

A A

Adria Port, Bázis Office Center, BFK, BuildEXT, 1996 Magyar Konyha – ✓ ✓ ✓ – ✓ ✓ ✓ ✓ – ✓ ✓ – Magazin, NN Biztosító, Salzgitter Mannesmann

7,947 9,018

8 1,127

– –

2006

Kinnarps Hungary Kft., Rail Cargo Hungaria Zrt.

7,800 25,000

7 1,850

4,000 10

24–25

2020

Spaces

www.zengardenoffices.hu

– ✓ ✓ –

A A

zenGaRden

– ✓ ✓ –

– ✓ ✓ ✓ ✓ –

–

– ✓ A A A

szeRvita squaRe BuildinG www.szervita.com 78

Gizella lOft

7,627 8,167

7 1,000

3,000 5

12.90 3.50

–

TÜV Rheinland

liGet CenteR

7,170 11,200

5 A

A A

2002

6,500 7,325

4 1,560

1,530 5

13.5 1,350 HUF

–

BVTechnology, Colonnade, Magic Tools, Megadrive, USN

www.gizellaloft.hu

www.ligetcenter.hu

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ A A

– ✓ ✓ –

–

– ✓ – ✓ – ✓ ✓ –

– ✓ –

–

BREEAM – ✓ in Use Very Good

–

Propwin Kft. (100) –

1068 Budapest, Dózsa György út 84/A (1) 451-4760 agnes.kantor@cbre.com

– ✓ ✓ – ✓ – ✓ ✓ ✓ – ✓ ✓ –

–

– ✓

BREEAM Very Good

–

– CPI Property Group (100)

1139 Budapest, Váci út 99. (1) 225-6600 hungary@cpipg.com

–

BREEAM in Use, LEED Horizon – ✓ Gold for Development commercial interiors

– (100)

1052 Budapest, Deák Ferenc utca 5. (1) 473-1209 leasing@ horizondevelopment.hu

White Star Real Estate Kft.

Erste Ingatlan Alap (100) –

2220 Vecsés, Lincoln út 1. (1) 920-2193 erstealapkezelo@ erstealapkezelo.hu

–

(100) –

1082 Budapest, Futó utca 31–33. (1) 266-2181 office@futureal.hu

–

ConvergenCE

Árpád Office Building Kft. (100) –

1133 Budapest, Árbóc utca 6. (1) 225-0912 bzadori@ convergen-ce.com

– CA IMMO (100)

1027 Budapest, Ganz utca 16. (1) 501-2800 office@caimmo.hu

–

– ✓ –

–

BalanCe lOft

www.balanceloft.hu 81

váCi 1

www.vaci1.hu 82

5,700 13,800

the quadRum 83

www.erstealapkezelo.hu

CORvin CORneR

www.futurealgroup.com

– 5

A A

5,390 13,704

5 900

2,021 3

10–12 4.20

5,364 6,122

A A

Cushman & Wakefield, DVM group, H&M, 2016 Horizon Develop- – ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ – ment, Mastercard, Ostermann, OTP, Play’n GO

5,227 5,517

6 900

589 5

4,800 5,000

6 A

4,663 6,407

6 800

4,663 5

A A

–

2008

KEF, Secops, Somfy, TRUMPF

– ✓ ✓ –

–

2014

– ✓ ✓ –

– ✓ ✓ ✓ ✓ – ✓ ✓ ✓ ✓ –

1994

AG Mamas, Aurum, Billingo, CCE Hungary, DWP, Eurorisk, Fürgefutár.hu, SVEA, VS-Faktor

áRpád CenteR

www.arpadcenter.hu

–

– ✓ ✓ ✓ –

– ✓ – ✓ –

BREEAM – 'Very Good'

–

BREEAM Very Good

– ✓ ✓ ✓ – ✓ ✓ – ✓ –

– ✓ –

–

– ✓

LEED Gold

–

– ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ –

–

DGNB GOLD Certificate

CBRE

Canada squaRe www.caimmo.com 86

alphaGOn

www.alphagon.hu

14.50–15 2004 1,650 HUF

14.50 3

Canadian embassy

Alphagon 1117 Budapest, Ingatlanfejlesztő Dombóvári út 9. Kft. (100) (1) 374-3040 – office.hungary@cbre.com

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

Country Focus Germany

Photo by vladm/Shutterstock

HIPA: Good Relations Underpin German Investments The Hungarian Investment Promotion Agency (HIPA) gives the Budapest Business Journal an overview of the significant breadth and depth of German FDI in the country. BBJ STAFF

BBJ: How important is German FDI to the Hungarian economy, where does it stand in the international table? HIPA: Historically, Germany is by far the largest investor in Hungary in terms of foreign direct investments. The stock of FDI from Germany amounts to approximately EUR 20 billion, which accounts for more than 25% of total FDI stock in Hungary. Examining the job creation effect of FDI projects, we can conclude that Hungary continues to be one of the world leaders. Based on the IBM-PLI Global Location Trends 2019 report, our country is placed 16th globally based on the number of jobs created through FDI projects, with more than 19,000 new positions, and ranks fifth in the world based on newly created jobs per million inhabitants. On the basis of this report, Hungary has performed well in all primary categories. Among other things one, of our significant achievements is that Hungary has become the third largest target market of German investors. BBJ: How many jobs have been created by German companies? HIPA: The number of German-related FDI projects negotiated by HIPA between 2014 and H1 2020 was 123, representing an FDI volume of EUR 6.6 billion and creating almost 28,000 jobs. There are currently 6,000 German-owned enterprises in Hungary employing around 300,000 people. BBJ: We all know about the importance of German automotive companies. What other sectors are represented? HIPA: According to IBM-PLI data, in the automotive industry, Hungary is the fourth most important investment location of the world after the United States, Mexico, and China. Another important fact is that Hungary is the fifth most popular destination country in the electronics sector and, based on research & development projects, the ninth globally.

With regard to the sectoral distribution of those 123 German projects negotiated by HIPA, the automotive sector ranks first, while business services and machinery are also among the top sectors. BBJ: How are the trends changing. Are you seeing more R&D jobs being created, for example? HIPA: Analyzing the results of the previous years, we can see the most important trends are the strengthening of the electromobility sector, as well as the increasing number of high valueadded projects in the services industry. Furthermore, the competitiveness of the Hungarian investment environment is well illustrated by the fact that the 101 investments of 2019 can be linked to 21 different countries and take place in 20 different sectors. The proportion of projects of high added value continued to grow in 2020 among the projects managed by HIPA. This trend is further reinforced by the success of new incentive forms introduced from January 2017. As a result, the number of successful R&D-related projects has reached 39, creating 1,800 new jobs in the last three and a half year. In its latest report, IBM-PLI also analyzed the national economic added value of the created jobs, where Hungary – stepping five places up from the previous survey –reached 11th place globally, getting ahead of inter alia Germany, the United States, and South Korea. BBJ: Do you see the likelihood of further German companies choosing Hungary? Which sectors are growing? HIPA: Due to the existing good relationship between the two countries, Germany is the most important economic partner of Hungary, which is also reflected by the projects managed by HIPA. Our objective is to make the Hungarian investment environment even more

attractive, and, in addition to the “Made in Hungary” projects, to increase the proportion of “Invented in Hungary” investments that generate higher added value, and to promote the investments of companies using modern industrial technologies. Modern technologies represented and established by German companies and their quality-oriented business policy are consistent with all these aspirations. We see additional opportunities in the processing industry. The newest unit in BMW Group’s European production network is being built in Debrecen and the factory will be a benchmark in the automotive industry for digitalization, sustainability and adaptability. Top technologies will make it possible to flexibly manufacture premium cars with conventional combustion engines and electric motors on the same production line. It is unique in the CEE region, and even on a global level, that the three premium German car producers, Audi, BMW Group and Mercedes-Benz (which designate the path and raise

123

German projects negotiated by HIPA (2014H1 2020)

the standards for other key automotive industry players) are at the same time represented in one country. This will stimulate further suppliers to locate their facilities close to these OEMs; in the meantime, these prestigious benchmarks might encourage other sectors to extend their presence to our region. BBJ: Is there anything else to add? HIPA: The key elements of Hungary’s value proposition are: a skilled labor force; competitive cost levels; highly developed infrastructure; and an investment-friendly tax environment. Hungary’s long-term economic strategy heavily builds on investment promotion be it by foreign or Hungarian companies, especially in the manufacturing sectors. The Government’s Competitiveness Council (where HIPA has a seat) is in a constant dialogue with the major stakeholders of the Hungarian economy with the aim of continuously improving the legislative background and also ensuring that the required labor force is available through the vocational school system.

28,000 EUR 6.6 bln FDI volume (2014H1 2020)

jobs created (2014H1 2020)

6,000

Total of German-owned business in Hungary

300,000 Hungarians employed in Germanowned firms to date

30 | 4

Focus

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

Lufthansa Technik Budapest Pilots way Thru COVID Crisis If the human cost of the COVID-19 pandemic is best illustrated by the now iconic medical face mask, the economic impact of the lockdown is perhaps best represented by the images of lines of aircraft parked on airport runways. You’ll see just that at Budapest Ferenc Liszt International, but ironically it still represents a hopeful outlook. BBJ STAFF

Speak to Matthias Gruber, CEO of Lufthansa Technik Budapest (LTB) and you soon realize that even at rest, aircraft are expensive and complex items. It can be “parked” for up to three months and still be regarded as “alive”, more or less ready to go. Anything longer than that and it is classified as storage. “That means it falls asleep. The windows are covered up, the batteries removed, the engines covered and conserved, and all the holes in the airframe closed,” Gruber tells the Budapest Business Journal in an exclusive interview. “We like to say it is being kept in sleeping mode. This is not stand-by anymore, but of course we can technically wake up every aircraft within a few days” A stored plane in sleep is no more left alone than a patient in an intensive care unit. Inspections and checks are performed every seven, 15 and 30 days. The wheels are turned to prevent deformation and to ensure they do not seize up, any built up moisture is removed. Aircraft are ventilated and operational system tests like flight control, hydraulics and air-conditioning have to be carried out. At this time of year in particular, when thunderstorms and higher winds are more common, ballast weight is added as required to keep the planes safely stored outdoors, in place. There are currently 37 planes “stored” on a disused taxiway at Budapest Airport, another three at LTB’s facility at Debrecen Airport. The vast majority are from LTB’s parent company Lufthansa Group (whose most famous member is the airline of the same name, though it includes other carriers) and were flown in from Germany after lockdown started.

Record Number

“At first it was planned that more than 40 aircraft would be delivered from Germany. “Due to developments in aviation shortly

before the summer, when more aircraft began flying again, we now have 40 here. We do not know how it will be in the next few months, because travel bans like there are now for Hungary influence the business of the airlines, but we hope that the grounded aircraft might be back in operation soon,” Gruber says. Even 40 aircraft, though, is a record number for LTB. Initially, the aircraft were left where they had landed, parked along runways around the world as airlines were grounded and airports were forced to close. Once air travel began again, however limited, airports needed that space back and airlines needed to move these planes around. The basic deciding factors are cost of storage and the technical background to look after these valuable pieces of equipment. Hungary offers a competitive maintenance contract, at no loss of technical support. The customers know the planes can be reactivated in Budapest when needed, and any maintenance issues found can be dealt with to get them back in the air. It provides some work for LTB and also benefits the airport, which can collect storage fees. “We had to make some quick decisions and find a new business opportunity in the chaos in order to secure the future of the company. In consequence it is a win-win situation: we generated some workload for LTB during this crisis. The airlines were able to store their aircraft safely and the airport utilizes available space.” Getting the aircraft to Budapest was a logistical challenge, to say the least. The crews that flew them in were immediately isolated and checked for COVID symptoms. Once cleared, if there was no scheduled return flights, they were put on dedicated buses and taken to the Austrian border, thence to Vienna and from there, once they could find a flight, back on to Germany. It required close cooperation between the airlines, LTB, airport operator Budapest Airport, and the authorities. Gruber is full of praise for this community, describing a supportive “aviation family.”

Kurzarbeit Support

He also has praise for the support offered by the government, and especially its kurzarbeit or short-time working scheme. Gruber says accessing the money was complex, involving the HR department in

putting together a 7,200-page submission, but LTB was one of the first to take up the three-month package, which covered an element of staff wages from May until the end of July. “This was really helpful,” he acknowledges. “We achieved that people got governmental support, and we were able to reduce the working time. With this support, different business opportunities and further innovative measures, we could get through this crisis. To be honest, we weren´t profitable, but we were able to handle this situation in a proper way so that we did not have to lay off people or completely disrupt the company.”

Matthias Gruber Keeping staff was the number one priority, the CEO says. The company is committed to ensure the livelihood of its employees and their families. From a business perspective, this is also critical, since it can take five to eight years to reach the highest “B1” qualification for an aircraft engineer. That is a lot of investment in terms of time, effort and money. When Gruber joined LTB in May 2019, it was a challenge to find and train enough aircraft engineers to keep up with the workload. On the one hand he doesn’t want to lose what he

has; on the other, he wants to be able to hit the ground running and take all opportunities possible once something like normalcy does return. Staff were encouraged to take their holidays in August, but now virtually all 450 employees are back fulltime. September sees the start of the winter season, where more maintenance work is usually performed. Gruber estimates LTB will be back to 90% utilization though the winter. That said, the market is sure to face further upheaval. “We think our yield will drop significantly next year, because the market will change: less airlines, less aircraft. A lot of airlines are changing to younger fleets, which means less maintenance. That doesn’t affect Budapest, but it is an example: the four-engine aircraft will go and airlines will focus on more efficient twin engine aircrafts.” More than that, air traffic has been at a virtual standstill for six months. The maintenance demanded every few thousand miles flown has been reduced greatly. “These maintenance tasks must happen in the future, but they are postponed. That might mean that some maintenance organizations will disappear, or maybe not, nobody knows. There definitely is a change; it will be a buyers’ market. That is what we are preparing for now. To get rid of processes we do not need, to reevaluate what is really necessary, what creats value for us and what the future customer needs will be.” Although this seems unsettling, Gruber and his team are trying to make the best of the situation. “We are planning ahead, involving our staff to lead the company to new successes!” It is just the latest step in what has been an unprecedented period. “To be honest, I think nobody has experienced anything like this. You cannot be prepared for such an impact. But CEOs and managers around the globe will be better, because they have learned how to handle such a crisis. I strongly believe that we will be able to cope with the upcoming challenges and strengthen our competitive position on the global aircraft MRO [maintenance, repair, overhaul] market.”

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

Focus | 31

Strengthening Brand and Team in ‘Strange Times’ Penny Market Hungary, a member of the REWE Group, now has more than 4,700 staff and 223 stores in Hungary. When Florian Naegele was appointed CEO in October 2018, he was charged with growing the brand in the country. He talks to the Budapest Business Journal about managing that amid the not insignificant challenge of COVID-19. ROBIN MARSHALL

BBJ: What were the greatest challenges in running the stores during the state of emergency? Florian Naegele: At the onset we had a great challenge in securing the quantities needed in a situation where there was a sudden, great increase in the demand for certain products, like non-perishable goods, and a huge decrease for others, like luxury items and fresh products. There were large peaks, some days we had a more than 70% increase in turnover. Another great challenge was the purchase of the protective gear for our employees, and disinfecting equipment and materials, in order to have our shops fully functioning in the safest possible way. BBJ: How challenging was managing the logistics side? FN: The borders were closed for many weeks and the supply chain from abroad was significantly interrupted. We had trucks from other countries waiting for clearance at the borders for days. We have never experienced such a situation. The border closing was also problematic for purchasing protective items in order to ensure the smooth operation of the shops. Delivery times increased by several weeks, as these items were coming from abroad, and some materials and products were in short supply. The purchasing prices of some protective items, like those of safety masks or cleaning supplies, became 2-3 times higher. The price of disinfectants increased by about 50%. Normal trading practices changed and we had to pay ridiculous amounts for some items.

Florian Naegele However, it was needed and we wanted to offer the safest possible shopping environment for our customers and employees, so we invested huge amounts into plexiglass shields at the cashiers and also at the bakery stands and have installed hygiene stations at the entrances of all our 223 shops. BBJ: What did you learn during the crisis that surprised you most? FN: We realized how important it is to have a bigger quantity of our own local stocks, in case of a temporary supply chain trouble. One of the advantages of being part of an international retail group is that we can help each other. As the virus started much earlier in Italy, we could see what was happening there and could learn from their experiences. I am very proud of our team, seeing the cohesion, the perseverance, and the mutual search for solutions within our collective. This is the biggest learning moment for me: we fought together facing such great difficulties that nobody could even imagine would happen in our life. These are very strange times, and I am very thankful to our team for working together in such an exemplary way. We are stronger now as team than we ever were before. BBJ: Will measures such as the “sneeze shields” around tills be permanent? FN: We think that there is a huge need for the customer to feel safe in the stores. Therefore, the protective plexiglass will remain at the cashiers, and we are implementing some new equipment for our bakery shelves in order to increase hygiene and security for customers. BBJ: Are shopping habits changing? Are you seeing more demand for online shopping? FN: People are more careful with their purchases and buy only when they really need something. Price sensitivity has significantly increased. Customers prefer private label products and we have noticed a shift towards packaged – thus considered safer – products. Customers now buy more products for home cooking and baking than earlier. The importance of some categories, related to spending time at home, became much more significant.

Customers consider it highly important to feel safe in the shops, so they monitor what measures each shop has taken and is taking to protect against viruses. We do everything to make sure that our stores are always clean and our staff complies with all the valid regulations. Online shopping is becoming more significant. In Hungary, people are still a bit hesitant to shop online, especially the older generations. They prefer to come and shop in person, to choose the goods on their own. So we need to make sure that we can offer them safe shopping and an enjoyable experience, even if it is shorter now, than prior to the crisis. It is also clear that paying by bankcard will become favored over paying with cash. It is good for us as well; closing the shopping is somewhat faster. We suspect that the Christmas will be somewhat different this year. It will not be the case when people have plenty of money for expensive gifts and huge food shopping bills. We think that they will focus on the necessities, they will be looking for good value deals and not luxury items. BBJ: What plans are you making for a second wave? FN: Unfortunately, we are already in the second wave. The infection numbers are rising every day and we see from our experience as well, that customers are behaving differently than a few weeks ago. Luckily, we have created sufficient stocks of the protective equipment and disinfectants, so we are well prepared. We have added some new elements to our business continuity plan. The protective items that were used in the first wave have all remained in the stores. On top of what we did earlier, we have prepared a list of employees who can be mobile and so work anywhere in the country. They will be the employees who will help to operate in different locations and serve our customers in a troubled store in case of any infection. Based on the experience of the first wave, we assemble pallets of the most needed “crisis” products, those that were most purchased during the first wave, which we will be able to deliver quickly to stores in the event of a panic buying outbreak.

BBJ: When you were appointed, one of the targets was growing the brand in Hungary. How has that been affected by the pandemic, and how long do you think it will take to get back on track? FN: I would say, even with the pandemic, we are on track. In March and April, we had to focus more on ensuring the proper functioning of the supply chain. However, after that we could luckily return more or less to a normal way of operation and continue with our planned customer activities and promotions. The summer was almost normal. We launched a new Hungarian products campaign, where we communicate the fact that Penny has a very good partner base and we support the Hungarian economy. I can say that Penny has been a well established brand. We are working on further strengthening it. Our customer base has grown; we managed to attract new target groups to the brand. We have grown the younger customer base as well, and we have a high share of very loyal consumers. We also have a larger team; we have more than 4,700 employees. We have improved the management structure and were awarded the Reliable Employer award from the German-Hungarian Chamber of Industry and Commerce. We did not have to let any of our employees go, but the opposite happened: we managed to hire some truly remarkable colleagues. For Penny Market, Corporate Social Responsibility is a priority. We remain active in this field. Our new CSR partner is the National Emergency Services Foundation (OMSZA), whom we decided to support seeing the need of the help of such professionals in a healthcare crisis. Another goal for me was to improve our performance from the sustainability point of view. Here I can also say that we are doing very well. Even during the crisis, we managed to continue with some investments and improvement to become an ever more sustainably conscious company. BBJ: What are the future plans for Penny Market in Hungary? FN: To strengthen the brand image, improve perception of the brand, make it more widely known, and gain new target groups by doing so. We plan to focus on the whole Hungarian population, offering them a pleasant and safe shopping experience with the best value for money assortment possible. Serious efforts have been placed into maintaining our status as a reliable employer. We aim to grow our team and improve their performance through developmental programs. Our campaign will continue to further strengthen cooperation with Hungarian producers and suppliers nationwide. In terms of SCR and sustainability, our support for the Children with Cancer Foundation, with OMSZA, and with the support of many local schools and nurseries will all continue. We also support the Hungarian Food Bank on a monthly basis, and this too will carry on. Putting more emphasis on sustainability is another key area. We see this as an important topic that big corporations need to pay more attention to.

32 | 4

Focus

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

German Chamber Eyes Prudent Optimism On August 6, the GermanHungarian Chamber for Industry and Commerce celebrated the 100th anniversary of the establishment of its predecessor organization, the GermanHungarian Chamber of Commerce in Budapest. The basic principles laid down back then, independence, bilateral relations and a practical approach, are still being pursued in the 21st century. BBJ STAFF

For years, Germany has been Hungary’s most important commercial partner, far ahead of other partners (at least until the emergence of South Korea last year). In 2019, the United States ranked 14th in Hungarian imports, and 12th in Hungarian exports; altogether, the Hungarian-German merchandise trade volume was more than tenfold than that of Hungarian-U.S. trade. No wonder then, that besides close political cooperation between the two countries, a proactive commercial organization is needed to sustain the impetus in bilateral German-Hungarian commercial relations. That organization is the German-Hungarian Chamber for Industry and Commerce (DUIHK). While the inauguration of the chamber in 1920 may seem far distant, it was not the first of its kind. That honor goes to the German Chamber of Commerce established in Brussels

1894.

Such organizations thus have long experience in catalyzing exchanges and investments. DUIHK aims at being a bridge between German and Hungarian business, but also seeks to act as a channel to the Hungarian government. The chamber is part of an international organization, says András Sávos, its current president. “The network is present in almost 100 countries and with 140 offices around the

András Sávos world. It is very important to understand that DUIHK and the whole network are not traditional lobby organizations,” Sávos explains. The international association of chambers facilitates access to markets and provides various services, like consultancy in legal and tax issues. “What we are especially proud of is that we have a professional institution offering training and education in several areas,” Sávos tells the Budapest Business Journal.

Intense Cooperation

During the last few months, DUIHK has been in very intense cooperation with decision making institutions, acting as a link between the government and companies, Sávos explains. For example, DUIHK participated in all the weekly discussions that have been going on between the government and the business sphere in Hungary since the outbreak of the coronavirus pandemic. Talk about German companies doing business in Hungary, and the ones that come most easily to mind are the big players like Mercedes, Audi or BMW, but in all, DUIHK has more than

900

member companies.

“Most of them are not even large enterprises. More than three quarters are small- and medium-sized businesses. So, our activity largely concentrates on supporting these companies. We have members from basically all sectors of the economy, machine production, logistics, pharma, food industry and many others,” Sávos says. And support was needed a-plenty this year. As soon as the pandemic started, communication with the member companies intensified. DUIHK says it collected a huge number of requests and transmitted them to the government.

“We, the staff at DUIHK gave a lot of thought to how we can structure the problems raised by our members and what our proposals and recommendations should be to the government,” the president says. “One of our major accomplishments was the implementation of the German kurzarbeit [short time working] model in Hungary, based on a DUIHK recommendation. We received a lot of feedback from members that this measure has been a tremendous help for them. Even now we have an ongoing dialogue with the government regarding the regulations for those working in home office,” Sávos says. Of course, in such extreme situations it is impossible to achieve an ideal solution for 100% of the member companies, the president added. The most difficult problem companies encountered in the past months was losing markets. Once gone, these cannot be recaptured immediately, but there are solutions to ease the burden of missing revenue. For small companies, that might mean paying lower rental fees, for larger companies, maintaining production on a significantly narrowed market, ideally without laying off employees. Kurzarbeit was an important measure to this end, Sávos notes.

Complementary Roles

Besides being president of the chamber, Sávos is also managing director at Knorr-Bremse Rail Systems Budapest. How can one cope with two such high profile positions in such a difficult business environment? The roles actually complement each other, Sávos explains. “Being the managing director of a large company greatly helps my work as president of DUIHK, since I have to solve very specific problems day by day, similarly to those that our members are forwarding to us as a chamber,” he says.

“I have to say that my company is in a privileged position, as our business in the rail industry has barely been affected by the COVID pandemic. The volume of orders is stable, basically unchanged from last year. The challenge for us, contrary to other companies, was rather to fulfil the large amount of orders, that is, to go at full speed ahead, so to speak. We expect the same level of orders, or even more, for next year,” Sávos adds. One important publication released every year by DUIHK is its annual survey on the business outlook. The is usually conducted in February and

2020,

just before the pandemic pushed the economy into a crisis, it was again ready to go to print. But then everything changed and all prospects instantly evaporated. “So, there was no point in publishing the report. What we did instead was to continuously survey our members, every two weeks, trying to figure out their status and future outlooks. Soon we will survey our members again and we hope to gather a lot of information about their order volumes, future prospect, how they perceive the effects of the pandemic,” Sávos says. As for the confidence index among member companies, this is very different, depending on the sector. “The automotive industry shows cautious optimism. As for tourism and others in the service industry, we see everything except optimism. In most sectors we see signs of prudent optimism, but much depends on what and how health measures will be implemented, how they will impact the economy and, most important, will there be a vaccine available in a few months or not. A lot depends on this,” Sávos concludes.

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

With an increasingly global economy, the coronavirusinspired tagline of “We are all in this together” rings true with the breaking down of supply chains and the lack of tourism due to grounded flights. It seems even more so for Hungary and Germany, whose economies are intertwined and rely on each other heavily. CHRISTIAN KESZTHELYI

Businesses surveyed by the GermanHungarian Chamber of Industry and Commerce (DUIHK) in the second half of 2019 were cautious about the economy. The increasing number of negative opinions signaled an economic slowdown, but not a halt. DUIHK president András Sávos, speaking when the findings were published in November 2019, underlined that their comments should be viewed against the backdrop of the slowing of previously fast growth. Then, in the early months of the new year, the coronavirus arrived to Europe and factories shuttered doors. As German automobile and automotive component manufacturing are an important engine of the Hungarian economy, the two countries have suffered together with the sudden break applied to their economies. Tourism is another vertical that received a heavy blow. In early June, Minister for Innovation and Technology László Palkovics and Parliamentary State Secretary Thomas Bareiß from the German Federal Ministry of Economic Affairs and Energy held online talks on restarting tourism. The two ministers agreed that Germany is one of the most important sources for Hungarian tourism, with German visitor numbers were

20%

in recent years. Expecting self-organized trips after the pandemic, the ministers had hopes of a renewed expansion in the sector. The number of guest nights increasing by 60% from 2010 to 2019, last year the tourism industry’s weight in the country’s

Photo by Hamik/Shutterstock

German-Hungarian Automotive, Tourism Sectors Need Quick Restart

overall GDP exceeded 10%. Out of the 31.3 million guest nights spent in Hungary, more than 624,000 German tourists spent two million nights in the country, with 179 routes from major German cities. Given such a weight, Hungarian-German tourism relations clearly need to be restored.

Automotive Recovery

Considering the significance of the automotive industry for both the countries, the two ministers also called for the quick recovery of the sector, tagging its reboot as a priority post-COVID-19. “In the interests of preserving jobs, it may be worth considering the more rational scheduling of the introduction of the strict environmental requirements being imposed with relation to the sector’s participants,” Palkovics said. The Hungarian innovation minister, during an earlier online meeting with German Minister for Economic Affairs and Energy Peter Altmaier in May, had touted Central Europe as a solution to help Germany shorten its supply chains, given geographical proximity and high competitiveness. Altmaier has also previously talked about the shortening of supply chains and supplier diversification, proposing the bringing back of some capacities from Asia to Europe. “Based on the experience of recent months, in the interests of shortening their supply chains German enterprises could be searching to an even greater extent for Central European opportunities, and accordingly could also be tightening their Hungarian relations,” Palkovics said. A press release by his ministry noted that total foreign trade flow by the Visegrád Four countries (the Czech Republic, Hungary, Poland and Slovakia),

EUR 300 billion

exceeded German-Chinese and GermanAmerican trade flow by almost 50%. Nevertheless, in terms of foreign direct investments, Germany saw the emergence

of a major rival last year. Speaking at an event announcing the investment of Samyang Biopharm in Hungary, Minister of Foreign Affairs and Trade Péter Szijjártó said South Korea had overtaken Germany in terms of FDI. “2019 was the first year in which German investors did not bring the most investments, and South Korean enterprises took over first place,” the foreign minister said as cited by state news agency MTI. Last year, Korean firms invested over USD 2.5 billion, making up 48% of total investment in Hungary, which will lead to the creation of more than 4,500 jobs, the minister added.

Uncertain Future

What the future holds is hard to see. The United Kingdom fell into recession in early August as April-June GDP fell 20.4%. The economic outlook is grim globally, and in the European Union too. Assuming no further restrictions are introduced due to the second wave (and

Focus | 33

possibly subsequent recurring waves until a vaccination starts to control the virus) Germany’s GDP is foreseen as returning to pre-coronavirus levels by the beginning of 2022, according to German Economic Institute (IW), a private economic research institute. IW expects German GDP to fall 6.25% this year and

4.5%

in 2021. The research institute noted that nothing had dragged down the German economy in the past seven decades as much as the repercussions of COVID-19. The summer brought a sliver of a silverlining, and state aid and the construction industry started lifting up the economy.

“Based on the experience of recent months, in the interests of shortening their supply chains German enterprises could be searching to an even greater extent for Central European opportunities, and accordingly could also be tightening their Hungarian relations.” Summer brought a fraction of sunshine to the Germany-dominated Hungarian automotive industry, too. Daimler’s first hybrid automobile, a silver Mercedes Benz CLA 250 e Coupe, rolled out of the factory in Kecskemét, driven by innovation minister Palkovics, to mark the start of serial production of two plug-in hybrid models: the CLA 250 e Coupe and the CLA 250 e Shooting Brake. The plant had been closed for more than a month, like its peers in Hungary, due to the lockdown to help contain the spread of coronavirus. Given that the German manufacturer’s Kecskemét base employs more than 4,400 people and turned out 190,000 vehicles in 2019, both the Hungarian and German economies need to see those “silver arrow” cars moving en masse again.

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

Socialite

BBJ: Your packaging is very different from Scitec’s. It’s become subtler and more modern. Why’s that? BL: We realized we could reach an even wider audience if we focused more on lifestyle than just on hardcore gym people who work out every day. The idea is that if you have a goal with your body, we have a solution. We’ve been working on this for the past four to five years.

The U.S.-born Hungarian Supplementary Success Story

BBJ: How did you arrive at that logic? BL: A combination of listening to our customers, knowing our market well and following our intuition. Let’s call it calculated intuition. Now we’re attempting to predict what will happen in the next one to two years.

When I first started coming to Hungary around five years ago, I was struck by the fact that most young men had arms the size of my legs. I became used to seeing enormous tubs of whey-based protein supplements on display in Hungarian homes next to the coffee.

BBJ: And what do you think will happen? BL: We believe a healthy body will always be trendy, whether someone works out in the gym, runs or does yoga. We’ll always be there to support people who want to do something for their health and their body, look good and stay young. BBJ: Your sales have tripled since 2013. Why is that? BL: The main reason is that we have really good people. We’re all enthusiastic about what we’re doing, which translates into constant growth on all channels. BBJ: Some 70% of your products are sold outside Hungary. Has it been tough to get a foothold in Western markets? Is that why you put USA at the end of your name? BL: When we started to import BioTechUSA, all of our products were owned and manufactured in the U.S. After we switched to making our own products in 2014 in our own factory, we no longer needed to make anything in the States. But some of our raw materials still come from there.

DAVID HOLZER

BBJ: Can we look at the science? Your products are certified by a number of bodies. BL: Our products are 100% backed up by the European Food Safety Authority (EFSA). This governs what we are and aren’t allowed to say. They’re also FDA certified and Halal.

Then I started spotting the same BioTechUSA name I saw on many of those tubs on an ever-growing array of protein bars at my local bio shop. I began eating protein bars myself, usually for breakfast before a yoga class. Like the millions of people who’ve discovered protein bars, I like the convenience, the idea that I’m eating something healthy and not just a candy bar and also, as the flavor has improved, the taste. Since my choice of bar has become BioTechUSA, I was curious to find out more about the company. It began when Ferenc and Katalin Lévai started importing gym machines from the Ukraine in 1992. They then set up between 100 and 150 gyms across Hungary. The logical next step was to offer protein concentrates, fat burners and vitamins in the bars of the gyms. Photo by Everything You Need/Shutterstock

Bálint Lévai At first Ferenc and Katalin imported the MLO and BioTechUSA brands from the United States. Initially, the BioTechUSA brand was owned by the American Williamson family. When the family business went bankrupt, the Lévais took over the brand in 1999. From 2004, the company has focused solely on dietary supplements. The first franchise store in its Europe-wide network opened in 2005. Since 2014, the company has manufactured most of its products at its logistics center in Szada (about 29 km northeast of Budapest, near Gödöllő). There are currently around 800 product variations, including vegan, gluten and lactose free varieties, and these are distributed to around 70 countries. Today, BioTechUSA employees more than 900 people. Annual sales have tripled: In 2018, they were HUF 23.4 billion (around USD 77.5 million). BioTechUSA has also built its own offices in Óbuda, on the Buda side of the city.

It was here that I met with Bálint Lévai, the CEO of what is still a familyrun company. BBJ: Bálint, your father Ferenc launched the company at a time when he says bodybuilding was forbidden fruit in Hungary. What did he mean by that? Bálint Lévai: It’s a sport about looks and it’s easy to misjudge people who look very muscular. In the beginning, there were very few people who looked like that. I think he meant it was just something so new people said “I don’t want to look like that”, or thought it must be unhealthy. BBJ: That’s certainly changed. What has driven the health and beauty industry in Hungary? BL: The main thing is the work done by us and our competitor Scitec. Our fierce competition and marketing strategies have developed the market in Hungary and shaped the way people want to look.

BBJ: And how scientific is your product development? BL: Lots of different areas stimulate product development. It’s a combination of initiative and reaction. The marketing team is always putting new ideas on the table. Our sales team knows the market and can spot where there’s a hole in our product line. So that’s reactive. Our product development team constantly checks out our competitors’ products. Also reactive. Once we have a new idea, we look into the ingredients we need and figure out where best to source them from; proteins come from Europe and the U.S. Our quality assurance team obtains samples and categorizes them. We get a price for the few ingredients that meet our standards, which are very tough. The best price for the best quality wins. BBJ: Everyone here seems healthy and in good shape. Do you all use BioTechUSA products? BL: I do. Everybody does. We know what goes into our products and we trust them.

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

Socialite | 35

ROBERT SMYTH

This year’s 29th festival, dubbed as “Limited” by the organizers, who also humorously referred to its “very special vintage”, took up just one of the outer courtyards of the Buda Castle, but producers made the most of the reduced space with single stands often representing a whole region and quite effectively too, with a spread of representative wines to choose from. With a maximum of 400 guests and 100 staff on the site at any one time, and visits divided into two four-hour blocks, one in the afternoon and the other in the evening, there was plenty to keep the palate occupied for the duration of the session. “We had to do something this year,” Zoltán Zilai, the general director of Magyar Szőlő- és Borkultúra Nonprofit Kft., the company that organizes the wine festival, told me as we wandered around, taking in the bijou but beautiful festival that occupied Hunyadi udvar from September 10-13. (Incidentally, this year’s edition of the company’s Rosalia festival was earlier canceled due to COVID-19.) Magyar Szőlő- és Borkultúra is also the team behind Vinagora, Hungary’s only international wine competition, and it had a stand at the wine fair devoted to its medal-winning wines.

‘Fresh and Cool’

It may taste like a copy-paste from New Zealand’s Marlborough region, the New World home of the Sauvignon Blanc grape variety, and likely involves the clever and very deliberate use of cultured yeasts, with pronounced gooseberry and cat pee aromas surging forth, but Paulus Borház’ “Fresh and Cool” Sauvignon Blanc 2019, from Mór, is cracking value at HUF 1,190 (from paulusborhaz.hu), and very crispy and thirst-quenching to boot, totally living

up to the two English-language adjectives splashed across the label. It won a silver medal at Vinagora. Pécs University’s Research Institute for Viticulture and Oenology is renowned for its work with lesser-known varieties, saving ancient grapes and developing new clones of Hungarian classics like Kadarka, but it also dabbles with French grapes like Cabernet Sauvignon, Merlot and Chardonnay. Its Summa Cabernet Sauvignon 2017, which won a gold medal at Vinagora, is classy and balanced with fabulously integrated oak, silky tannins, juicy black fruit and a nice touch of spiciness. Look out for this wine soon at pannonborbolt. hu under the long name of PTE Szőlészeti és Borászati Kutatóintézet. For an ultrarare variety from the research organization, check out its Csókaszőlő 2019 (HUF 2,890). Meanwhile, the Pannonhalma wine region, previously only well-known for the prestigious and ever-consistent Pannonhalmi Főpatság (archabbey) winery, continues to press on with a band of smaller producers who are also ably capturing the aromatic elegance and angular acidity of this region of just 650 hectares, making it Hungary’s second smallest. While Hungary is generally considered a bit warm for the Riesling grape (Rajnai rizling in Hungarian, literally Rhine Riesling, which differentiates it from the unrelated Olaszrizling), it is considered to be Pannonhalma’s calling card (good examples can also be found around Lake Balaton).

Varietally Pure

Barbaczi’s Rajnai rizling 2019, which comes from the village of Győrújbarát, is varietally pure with citrus fruit, especially lime, and Granny Smith apple oozing from the glass, and has Riesling’s zesty acidity in abundance. It’s too young for the classic petrol or paraffin note to have established itself yet – indeed it could even be considered a fault in such a youthful wine – but there’s that synthetic scent you get when you open a fresh tin of tennis balls that can be found in many good Rieslings,

suggesting that an oily outcome awaits (HUF 1,990 from borkell.hu). Petrol notes put in a solid appearance in two other Pannonhalma Rieslings: Balázs Hangyál’s Esperes 2015 and Cseri’s Rajnai rizling Selection 2015, both of which had plenty of petrol, but also importantly a good helping of fruit to give the wine a broad palate. The region is not only about Riesling, though. Barbacz Chardonnay 2019 (HUF 1,990), is a tad more aromatic than most Chardonnays, with a honeyed, floral note, with the grape variety’s linear acidity driving the wine forward smoothly and steadily on the palate. Pannonhalma is a magical place to tour with its rolling hills and wine cellars resembling hobbit-like dwellings from Middle Earth in the village of Nyúl, with the imposing hill-top archabbey of Pannonhalma visible for many miles around. Borpromo.hu runs tours for 8-10 people around the region’s main cellars starting from the nearby city of Győr, with the next occasion being November 6-8. Not just a white wine and rosé region, it is also capable of excellent reds, such as those from Pannonhalmi Főpatság, especially the Merlot and Cabernet Franc

blend of Infusio, which typically sells out soon after its release. The 2017 is still available from the winery for HUF 8,950 a bottle or HUF 18,500 for a magnum. Indeed, it is genuinely difficult to find older vintages of Hungarian wines, unless they happen to be Tokaji Aszú for example, which anyway takes years to come of age. Egri Bikavér is a wine style that could do with time for the different varieties that it is composed from to integrate and take the wine in its own unique direction. Often just as it’s getting interesting, it’s sold out. A nice problem to have for the wineries, but the test of most great wines is how they hold themselves together with the passing of time. At the Eger stand, it was great to taste a 2012 Bikavér from Bence Dula, Egri Hegybíró Bora Egri Bikavér 2012. It’s a blend of Kékfrankos, Cabernet Sauvignon, Merlot, Cabernet Franc and Blauburger, and spent a whopping five years in old, large oak barrels, Although it needs a good chance to breathe, it is now long and complex with spicy and mature tobacco notes, but still with a good dollop of black and red fruit, and is most probably just hitting its peak. It costs HUF 3,200 a bottle from Dulabor.hu Photo by Zsolt Szigetváry/Budapest Wine Festival

The Budapest Wine Festival, set in the resplendent grounds of Buda Castle, has always been something of a “back to school” event on the local wine calendar. Thankfully, it could go ahead this year, albeit with reduced capacity, bringing refreshing cheer to wine lovers amid balmy temperatures.

Photo by Zsolt Szigetváry/Budapest Wine Festival

A Limited Wine Festival for a Special Vintage