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BUSINESS JOURNAL BUDAPEST

VOL. 29. NUMBER 15

JULY 30 – SEPTEMBER 9, 2021

SPECIAL REPORT Logistics

SPECIAL REPORT

Unprecedented Industrial, Logistical Demand Many analysts see the industrial and logistics market in Hungary as the sector in the most favorable post-pandemic position, with Hungary having the lowest vacancy rate in the Central European region. 14 COUNTRY FOCUS

S. Korea Looking to Next Gen Investments in Hungary South Korea’s Ambassador Park Chul-Min sat down with us to discuss the bilateral relationship. Links were formally established in 1988; the past six years have seen 32 major Korean companies make investments in Hungary, with more likely to follow them. 11

Building on the Logistical Boom

SOCIALITE

Aromatic Whites and Vibrant Rosés for Summertime Sipping Hungary is blessed with several light, airy, aromatic grape varieties that many might overlook in cooler conditions, but which can be a refreshing joy as temperatures soar and bigger wines fall flat. Hungary is also a strong producer of rosés, as Robert Smyth reports. 27

NEWS

MNB Pledges Further Tightening After Rate Hike

IAL S PEC

R E PO

E-commerce and the automotive sector are driving booing growth in the logistics market, Dávid Huszlicska, country head of CTP Hungary, tells us. He praises Debrecen as the model for developing secondary cities and predicts the first 100,000 sqm project “is coming.” 18

The National Bank of Hungary raised its key rate to 1.2% at its latest ratesetting meeting, with the 30-basispoint raise higher than expectated. The MNB says it will continue its tightening cycle, taking monthly steps, as long as inflation risks persist. 3

BUSINESS

Is the Period of low Inflation Confined to History? Writing exclusively for the BBJ, Elliott Auckland, chief economist for the Budapestbased International Investment Bank, gives his overview of where we are and where we may be heading. 10

2|1

News

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Budapest Business Journal | July 30 – September 9, 2021

BBJ

THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL CONTRIBUTORS: Kálmán Béres, Zsófia Czifra,

DOG DAYS, CUCUMBERS, AND SUMMER HOLIDAYS

Kester Eddy, Bence Gaál, David Holzer, Christian Keszthelyi, Gary J. Morrell, Nicholas Pongratz, Gergely Sebestyén, Robert Smyth, Bálint Szőnyi, Zsófia Végh. LISTS: BBJ Research (research@bbj.hu)

We are not yet in August, but already it feels like the dog days of summer. It’s not just the oppressive heat; it’s the lack of availability. CEOs are either on holiday, working extra hours to clear the decks to go on holiday, or their PAs are on holiday. Cucumber season (uborka szezon), the period when the stories dry up and long, slow news days run into one another with slothful monotony, is well and truly with us. Actually, I’ve not seen an article on cucumbers yet, but there was one about watermelons; provided you are not attempting to make a dressing, it comes to the same thing. In short, it feels an awful lot like the summer holiday season is upon us, which probably makes it a good thing that this is our last print issue of the Budapest Business Journal until September 10 as the paper takes its traditional annual August break. Not that work stops, you understand. The website and the newsletters continue to be updated every weekday (although finding the material to do so becomes harder). We are working on the Expat CEO Gala, which, following a COVID-enforced break of 16 months, was bumped from its usual January slot but will make its comeback on September 24. And there are several publications that we are either working on right now or doing the preparatory groundwork for work to start in earnest. That said, time will be found among the management and staff for holidays, staggered across late July and through August. And because not even all of that makes life interesting enough, we will be moving editorial offices.

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We are not going very far in truth, all the way from Building “A” of the Madách Trade Center to Building “B,” but it is still a move and a chance to go through old files and throw out the unwanted clutter accumulated over the past five years. When I started out in journalism in 1986, we were promised computers were on the way. They arrived within a few years, at which point we were told this was the dawn of the paperless office. I can confirm that it has not yet risen above the horizon, and that paper is still very much with us. What has materialized, however, is our latest publication, Top Real Estate Executives, the latest addition to our “Top” brand, which introduces some of the leading personalities behind various business sectors. If you are a subscriber to the print issue of the Budapest Business Journal, you will have received a free copy of Top Real Estate with this issue. If not, you can buy a copy through our website. Either way, consider it our summer light reading gift to you. Whether you are running the gauntlet of testing and tracing and the general jeopardy that is a foreign holiday this year or taking a staycation (and if you are, David Holzer has some Budapest suggestions in his Socialite piece in this issue), I do hope you get to go somewhere nice, where you can relax and recharge for a few days or weeks. We all look forward to reconnecting with you in the fall. Robin Marshall Editor-in-chief

Why Support the BBJ?

• Value Creation. We have a nearly 30-year history of supporting the development of diversity and sustainability in Hungary’s economy. The fact that we have been a trusted business voice for so long, indeed we were the first English-language publication when we launched back on November 9, 1992, itself has value. • Crisis Management. We have all lived through a once-in-a-century pandemic. But we also face an existential threat through climate change and operate in a period where disruptive technologies offer threats and opportunities. Now, more than ever, factual business reporting is vital to good decision-making. For more information visit budapestbusinessjournal.com

Photo by Tamás Kovács / MTI

• Community Building. Whether it is the Budapest Business Journal itself, the Expat CEO award, the Expat CEO gala, the Top Expat CEOs in Hungary publication, or the new Expat CEO Boardroom meeting, we are serious about doing our part to bind this community together.

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• Independence. The BBJ’s journalism is dedicated to reporting fact, not politics, and isn’t reliant on advertising from the government of the day, whoever that might be.

THEN & NOW

In the black and white picture from the Fortepan public archive, László Papp is shown fixing a car at the corner of Lehel utca and Dévai utca in 1949, one year after he won his first Olympics gold medal in boxing at the 1948 London Olympics. He would later bag two more gold medals in 1952 and 1956. In the color photo, from left, Evelyn Verrasztó, Zsuzsanna Jakabos, and Laura Veres, of the Hungarian 4x200-meter freestyle relay swim team, gather after qualifying for the finals on July 28, 2021, at the Tokyo Olympics.

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Budapest Business Journal | July 30 – September 9, 2021

News///macroscope

Central Bank Pledges Further Tightening After Rate Hike

The National Bank of Hungary (MNB) raised its key rate to 1.2% at its latest rate-setting meeting, with the 30-basis-point raise higher than expectated. The central bank said it would continue the tightening cycle, taking monthly steps, as long as inflation risks persist. ZSÓFIA CZIFRA

As anticipated, the Monetary Council of the MNB decided to raise the base rate by 30 basis points to 1.2% at its rate-setting meeting on July 27. The central bank also raised the overnight deposit rate to 0.25% from -0.05%, increased the one-week collateralized loan rate to 2.15% from 1.85%, and pledged to end repo (repurchase agreement) tenders. The central bank promised to take “firm steps” in the coming months to combat inflation, which accelerated to 5.3% in June, the highest in the European Union. The bank had already increased the base rate by

basis points

to 0.9% on June 22. Previously, the MNB’s base rate had been on hold at 0.6% since July 2020. “The Monetary Council will continue to raise interest rates until the inflation outlook stabilizes in a sustainable manner near the central bank target and inflation risks are under control,”

The central bank “has confirmed its shift to policy orthodoxy and a complete turnaround on the dovish-hawkish scale,” international newswire Bloomberg cites Marek Drimal, an economist at Societe Generale SA in London, as saying. “The forint should reflect this tectonic change and strengthen once global sentiment and liquidity conditions improve,” Drimal added. Tuesday’s move by the MNB was indicative for the next step, deputy governor Virág explained, adding that policymakers plan to assess the impact of the tightening in September.

MNB deputy governor Barnabás Virág says the Monetary Council was united in its decision to raise the key rate by 30 basis points. Photo by MTI / János Bugány. MNB deputy governor Barnabás Virág said in a statement following the ratesetting meeting. “The Monetary Council was united today in taking a firm step, which will be decisive for the continuation of the rate cycle,” Virág said. “Our goal remains to achieve price stability as soon as possible.”

No Surprise

The move came as no surprise and was in line with analysts’ expectations. Inflation has remained above 5% for some time now, Századvég analyst Dániel Molnár pointed out; however, the extent of the council’s move was questionable, he added. Molnár thinks that the MNB’s decision might strengthen the forint, although inflation in the short term is caused by the low base rate of oil prices and the restarting of the economy; therefore, the current rate hike decision is more likely to shape inflation in the medium term. When base effects are eliminated and imbalances in demand and supply phased out, the acceleration of the inflation rate might slow; however, further steps are needed from the central bank, Molnár said. He expects that the MNB will continue the tightening process in September. Inflation in June was higher than expected, and inflationary pressure also intensified, Takarékbank head analyst

Gergely Suppan comments, reflecting on the possible reasons behind the scale of the MNB’s rate rise. According to him, previous messages from the MNB had already hinted at the move. Suppan expects the base rate to

reach

1.5%

by the end of the year, but the tightening cycle might continue into early 2022, raising the key rate to 1.75%. He believes further rate hikes will be necessitated due to the mounting inflationary pressure. “The prices of services and raw materials have significantly grown, and higher salaries, due to the lack of workforce, might also lead to a higher inflation,” Suppan added.

Exceeding Expectations

The 30 basis-point raise exceeded market expectations, Equilor analyst Zoltán Varga said. He also expects inflation to accelerate in the coming months; however, as base effects gradually phase out, inflationary pressure might ease in the third quarter of the year. Varga recalled that the central bank expects inflation to return below the tolerance band by

early

2022,

and by the middle of next year, inflation could be stable, according to the MNB’s expectations.

“The Monetary Council will continue to raise interest rates until the inflation outlook stabilizes in a sustainable manner near the central bank target and inflation risks are under control. The […] council was united today in taking a firm step, which will be decisive for the continuation of the rate cycle. Our goal remains to achieve price stability as soon as possible.” The rate hike saw the Hungarian forint gain more than half a percent and rebound from three-month lows immediately after the decision on July 27. However, the next day the currency had slid 0.08% at the time of writing to trade at 359.30 against the euro as disputes between the government and the European Union over the recovery funds kept it under pressure.

Numbers to Watch in the Coming Weeks Despite of August being the traditional summer vacation month, the macroeconomics calendar is pretty crowded in the upcoming weeks. On July 30, the Central Statistical Office (KSH) publishes May earnings data. On August 4, June retail trade figures will be out. Two days later, on August 6, the KSH reveals how the Hungarian industry performed in June; the first reading will be followed by a second on August 12. On August 10, July consumer price index will be released.

4|1

News

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Budapest Business Journal | July 30 – September 9, 2021

Gov’t Mulls Compulsory Vaccination for Some Jobs With nearly 64% of the population inoculated against the coronavirus, Hungary’s vaccination rollout has been the secondfastest in the European Union, according to conservative daily Magyar Nemzet (Hungarian Nation). As of July 28, some 5,605,713 people had been vaccinated in Hungary. The rates for the older population are relatively high, while those for younger Hungarians are hovering around the 50% mark. NICHOLAS PONGRATZ

As the vaccine rollout expands to the youngest generations, the government is weighing whether inoculation against the coronavirus should be mandatory for some occupations in which getting a jab is “more than a matter of one’s own

Coronavirus ///roundup

Uptake of the COVID-19 vaccine among Hungary’s seniors has been high. From August 1, booster shots should be available for those whose second jab was more than four months ago. Photo by Rido / Shutterstock.com responsibility,” as Gergely Gulyás, the head of the Prime Minister’s Office, put it at a weekly press briefing on July 15. Although there are provisions in the constitution on people exercising responsibility for themselves, Gulyás said the question of requiring COVID vaccination in certain professional situations, such as in the healthcare sector, must be considered. Additionally, the government has decided that, from August 1, it will allow booster shots for people who had their second jab of the vaccine more than four months ago, Prime Minister Viktor Orbán said in his weekly interview on Kossuth Rádió on July 16. Meanwhile, the delivery of COVID vaccines to Hungary continues

according to schedule, with a pair of weekly shipments of 260,000 doses of the Pfizer-BioNTech vaccine arriving over the past two weeks. The latest arrival raises total deliveries of the Comirnaty vaccine to Hungary to about 6.9 million doses.

Flush With Vaccines

Indeed, Hungary is so flush with vaccines, relative to their need in the vaccination rollout, that the country has been donating, lending, and selling its excess volumes. For instance, on July 16, Hungary delivered another 200,000 of the Pfizer-BioNTech jabs it is loaning to the Czech Republic. Hungary had already lent 140,950 of the vaccines to its neighbor earlier in

the summer. Austria, Hungary, and Slovenia made a joint pledge in April to supply the Czech Republic with COVID vaccines after the country’s order volume from Brussels was reduced following a redistribution compromise. Hungary also sold 200,000 doses of the AstraZeneca COVID vaccine to Portugal, at cost, Minister of Foreign Affairs and Trade Péter Szijjártó said at a joint press conference with his Portuguese counterpart Augusto Santos Silva in Lisbon. Szijjártó noted that Hungary has lent or donated 1.35 million jabs to eight countries, including three in the EU. As vaccination spreads across Europe, travel documentation is naturally the next occupation on people’s minds. With the recent addition of Uzbekistan, Hungary has now reached a mutual agreement of accepting COVID immunity certificates with 20 countries. These countries include Albania, Bahrein, Croatia, Cyprus, the Czech Republic, Georgia, Kazakhstan, Moldova, Mongolia, Montenegro, Morocco, North Macedonia, Romania, San Marino, Serbia, Slovakia, Slovenia, Turkey, and Ukraine. Hungary is also now allowing Russian tourists vaccinated against the coronavirus into the country, Szijjártó said in a message posted on Facebook. He explained that the measure was reached on a principle of reciprocity, noting that Russia’s government had decided a few weeks earlier to start issuing visas to Hungarians for business and recreational travel on the condition they produce a negative PCR test. Prior to this, only Russian business travelers were being allowed into Hungary.

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Budapest Business Journal | July 30 – September 9, 2021

Investment Rebound Expected This Year With a substantial amount of capital looking for a home, investors are certainly considering Hungary; it is seen as an attractive investment destination by investors, with a significant yield premium on Western Europe and regional peers Poland and the Czech Republic.

10%

on 2020. The deal pipeline for the rest of the year remains strong and somewhat more diversified across sectors, yet offices are set to remain the backbone of the investment market over the near- to medium-term. Looking into next year, we expect more large ticket transactions to come to market,” he adds.

Domestically Driven

Looking at the split between domestic and foreign investors, activity in the first half-year was driven predominantly by domestic or Hungarian-owned companies. Together, these accounted for 85% of the total volume, according to CBRE. There has been a growing trend over the past

months

GARY J. MORRELL

“Our 2021 volume forecast is in the range of EUR 1.3 billion-1.4 bln, marking a considerable rebound from the EUR 1 bln registered in 2020 – however, still down on the EUR 1.7 bln in 2019,” says Gábor Borbély, director of business research and development at CBRE Hungary. “In the first half-year, we counted circa EUR 550 million, up

News | 5

The Green Heart office building was part of a EUR 267.6 million deal signed by Hungarian real estate investor Indotek Group to purchase 11 office buildings in five business parks from GTC in New Belgrade, a prime business district in Serbia’s capital. Despite the attractions of Hungary, a significant gap remains between this market and Poland and the Czech Republic when it comes to investor preferences, and this has not changed according to CBRE. “Based on volume, Hungary remains third after Poland and the Czech Republic in the region; in this sense, there is no change. However, there was stronger liquidity in the first half-year in Hungary, probably due to the earlier relaxation of business restrictions,” Borbély notes.

“While Czech and Polish volume contracted compared to the first halfyear, Hungarian volume was boosted by large domestic purchases earlier this year. These Central European markets have different characteristics and fit different investment strategies; investors are well aware of these differences. Although there is clearly some overlap in the purchasers’ pool of these countries, Hungary is attractive to more opportunistic, yield-driven buyers, as compared to the Czech Republic,” he comments.

or so for domestic investors to look beyond Hungary for assets as they look to diversify their growing asset base. The most notable examples have taken place in Poland, with Wing’s majority acquisition of Echo Investment, Futureal’s purchase of Polnord, and Optima’s majority investment in GTC S.A. Elsewhere, Futureal’s subsidiary, Cordia, has purchased the developer Blackswan in the United Kingdom. Most recently, Indotek Group acquired a sizeable office portfolio (122,175 sqm gross leasable area) in Belgrade from GTC, and Adventum International announced the purchase of a dominant office asset in Bucharest. There is also known interest from some of the above parties to expand beyond CEE, looking as far afield as Italy and the Iberian Peninsula, according to CBRE’s Borbély. Offices remain the most liquid asset class in Hungary, likely matching or potentially even exceeding pre-COVID investment activity. Prime yields for office and logistics assets are at or below their pre-COVID benchmarks at 5.25% and 6.75%, respectively. The office sector remains closest to equilibrium, with a healthy supply and demand for quality products. Investor demand for industrial assets, on the other hand, far outstrips the somewhat limited number of developments for sale, CBRE concludes.

Top Legal

EXECUTIVES In Hungary

2021 The most influential legal executives in the Hungarian economy

The Top Legal Executives magazine is a special annual publication of the Budapest Business Journal. It forms part of our “Top” brand, and is a sister publication to Top Expat CEOs in Hungary. Like Top Expat CEOs, the magazine has a focus on people rather than policy. It presents the profiles of the most influential legal executives working in the Hungarian economy, focusing on outstanding achievements and how the Hungarian legal market is developing. Those profiles of Hungary’s top “legal eagles” are set against a review of how the Hungarian legal system operates, including the functioning of the Curia (the Supreme Court of Hungary) and the Constitutional Court, as well as the Budapest and national bar associations, among other things.

Why Should I Subscribe? • Provides an essential overview of how Hungary’s legal system operates. • Get an insight into the biggest cases of 2020, and likely legal developments in 2021. • Get to know the personalities behind the legal business. • Read personal accounts from the country’s top lawyers, detailing how they got into law in the first place and what prompted their choice of specialty.

Please forward your subscription request to: circulation@bbj.hu, or order your copy in the webshop at bbj.hu

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Budapest Business Journal | July 30 – September 9, 2021

Business

Bland Title Belies Thought-Provoking, if Depressingly Ominous, Contents

2019

Tsuneo Morita’s recently published book has received next to no public acclaim: it should be compulsory reading for students of politics and economics in Hungary, Central Europe, and beyond. KESTER EDDY

In 2017, Poland experienced 1,556 strikes, more than neighboring Germany, at 1,170, and vastly more than the United Kingdom at 79. Meanwhile, in Hungary that year, workers downed tools a mere five times, the Czechs just twice. In May 2018, 11,237 patients, paid-up members of the Hungarian National Health system, needed cataract surgery. They had an expected waiting time of 92 days, although the 76,225 people who had undergone the operation the previous year had only hung around half that time. The number of illegal border crossings into Europe’s Schengen zone totaled 72,437 in 2012. By 2015, this number had increased by a

factor of

to hit 1.822 million. What might link and provide context to these three sets of very disparate statistics? Professor Tsuneo Morita has had a very good try at this, and much more, in his recently published book “Political Economy and the Sociology of System Transformation.” It is a bland title that belies its thoughtprovoking, if depressingly ominous, contents. A native of Japan, Morita first sallied into the Soviet Union and Central and Eastern Europe in 1968 as an English interpreter for a large Japanese delegation. As fate would have it, he’s since spent 33 years in Hungary, working variously as an economic attache for the embassy of Japan, an adviser at the Nomura Research Institute, and as Senior Adviser to software developer Tateyama R&D Europe. Thus, for more than half his professional life, he has been watching the vast changes across the region in general, and Hungary in particular, first

or style blip, this is a delight to read, most especially for a Hungarophile. Morita brings to life, for example, the name of István Bibó (the hallowed “patron saint” of Fidesz in the party’s formative years) with a delightful summary of the political scientist, sociologist, and expert on the philosophy of law taking up just one page. He describes how, for example, that Bibó “hid in the basement of the Budapest Protestant Seminary until the war ended” after his detention by the Nazi authorities in October 1944? The author assembles many such insights and observations up to modern times: thus, there is an analysis of the “Borkai sex-scandal”

Tsuneo Morita hand. The experiences and contacts he has made along the way make this book a rich mixture of academic insight, leavened at times by examples of human ingenuity and brilliance, though more frequently by incompetence, vanity, foible, and outright greed.

Absenteeism

Who would know, for example, that when Panasonic built a factory in Plzen, in the Czech Republic in 1998, that the company suffered an absentee rate of over 30%? Or indeed that in Hungary, such rates, at least when he was chairman of the Japanese Chamber of Commerce, though better than the Panasonic case, were still in the range of 15-20%. These business-crippling numbers were, and to some extent still are, he argues, aided by generous sick-leave conditions and what he terms “the guest worker phenomenon,” whereby employees of multinationals feel alienated from their employer and more like expatriate workers in their own country. Indeed, Morita, though once an advocate of foreign direct investment, reveals he is today highly skeptical of its ultimate efficacy in solving the country’s economic needs, particularly in the manufacturing sector, which he effectively comes to dismiss as a ‘screwdriver economy’ - though he does not use the term. (In this, however, he ignores the rise of research and development activity increasingly undertaken by foreign investors in Hungary. Your

correspondent, for example, interviewed engineers working on self-driving car technology with Robert Bosch in Budapest as early as 2008.) But if foreign investors are not all they are made out to be, for Morita governing politicians and their advisers are an even more caustic influence on the long-term development of the Hungarian economy. Morita savages the rise of what he terms the “treasurized economy” in Hungary, whereby domestic companies rely more on state contracts and subsidies obtained through political connections rather than developing high-quality goods and services that fulfill customer needs both at home and abroad. “I stipulate that an economy in which public orders and subsidies from central and local governments determine the success or failure of a business is neither a market nor a capitalist economy, but a ‘treasurized economy.’ The treasurization of the national economy is a special phenomenon born in a small country in Central Eastern Europe,” he intones, later lamenting that it is a trap and “not easy to get out of this vicious circle.”

when a video emerged of Zsolt Borkai, mayor of Győr, cavorting with Croatian women on-board a luxury yacht in the Adriatic. (Politicians and professionals associated with all parties come in for lashings from Morita, but he’s particularly strong on the Fideszdominated years since 2010. He is, however, sympathetic to the government regarding the 2015 “migration crisis.”) Sadly, this otherwise excellent read is marred by one glaring factual error, I suspect probably originating from a translation mistake. On page 107, Morita alleges that András Simor, the then governor of the Hungarian central bank, “was forced to resign after the establishment of the Fidesz government when it was revealed that he had assets in Cyprus (2010).” This is patently false. While there was undoubtedly enormous pressure from the moment Fidesz took power on Simor to resign, there was no evidence that these assets had been accumulated through other than legal means. (Simor had been a well-paid professional all his life; indeed Morita states that in 2009, Simor’s official monthly salary as MNB governor was HUF 8.1 million (EUR 40,000), hardly a pauper’s income, even in Western Europe.) Simor did not resign but remained at his post until the end of his designated mandate at the beginning of March 2013. This error apart, Morita’s tome is a fascinating read, and his insights and conclusions will hopefully inspire more research that will further help Englishspeaking readers better understand the complex political, financial, and sociological changes that swept through Soviet-dominated Europe in the last decade of the 20th century. The author told this correspondent that after publishing the Japanese version in March last year, he had no intention of producing an English edition. “My Japanese colleagues recommended this,” he said. We are fortunate that Morita has such wise compatriots.

Treasure-trove

The book is a treasure trove of postwar political history, with a variety of statistical information (for example, a summary of general election results since 1990, pp 200) plus background context and anecdotal narrative otherwise difficult to find, if not wholly unavailable in English. Invariably, despite the odd syntactical

“Political Economy and the Sociology of System Transformation; Thirty Years of Social Change in Central Europe,” 380 pages, is available from the Balassi Kiado, Budapest, Hollán Ernő u. 33, 1136 balassikiado.hu/2-konyveink

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Budapest Business Journal | July 30 – September 9, 2021

The Impact of COVID on FDI Flows in CEE

The Economist: Business Environment Scores of the EU 11 (Compares 2013-2017 data with 2018-2022.)

Bulgaria Croatia Czech Republic Estonia Hungary Latvia Lithuania Poland Romania Slovakia Slovenia EU11 Emerging Asia Latin America

2013- 2018% 2017 2022 change 6.3 6.6 5.2 5.9 6.3 6.9 7.3

7.5

3.5

7.4 6.7 6.4 6.5 7.0 6.1 6.9 6.7 6.5

7.6 7.0 6.6 6.9 7.3 6.8 7.3 6.9 6.9

2.0 4.3 4.2 6.4 5.0 10.2 6.4 2.9 6.1

6.4

6.7

4.9

6.6

6.9

5.5

Source: The Economist Intelligence Unit

The Corporate Finance Column

German, U.S., and Chinese FDI into CEE (Most recent available year of data for each, EUR mln.)

35000

China

30000

Germany (2018)

US (2019)

25000 20000 15000

thanks to their proximity to Western European markets, relatively developed infrastructure, political stability, lower taxes, and a generally welleducated workforce. EU membership compensates for the smallness of many domestic markets. As a result of these advantages, FDI penetration in the EU11, as measured by the stock of inward FDI as a percentage of GDP at the end of 2016,

averaged

10000

52.5%.

5000

That compares to 24.5% for emerging Asia and 42.4% for Latin America. It is apparent that, except for Serbia, the level of Chinese investment in CEE is minor compared to that from Germany, which constitutes the lion’s share, and also from U.S. investment. There is a correlation between low FDI and low GDP growth in the region. Despite massive government stimulus, on a global scale and was comparable most Visegrad Four countries had GDP to the effects of the GFC. In Central and Eastern Europe, FDI fell declines in 2020 that matched those of by 58% in the first half of 2020 compared the GFC. While Poland had the least bad to H1 2019, as the coronavirus pandemic economic growth at -2.7%, the others and lockdowns curbed economic activity, were in the vicinity of -5%. Given the decline of FDI and GDP the intellinews.com website reports. growth in 2020, the fragility of the M&A was also poor in 2020, with 1,705 economic recovery, and the possibility deals counted in CEE worth a combined of a fourth wave of COVID-19 in CEE, total of USD 60.8 bln. improving FDI levels in 2021 is a critical This represents a 12.9% decline in the element of the recovery in the region number of deals and a 16% decline in and remains a significant risk factor to deal value compared to 2019. Despite GDP growth moving forward. While a solid fourth quarter in 2020 and we might hope that domestic capital CEE putting in a more robust M&A performance than most other parts of the formation might assist GDP growth in Central and Eastern Europe, the region world, this represents the worst annual M&A performance in more than a decade, remains dependent on foreign capital in the short- to medium-term. according to the CMS Emerging Europe M&A Report 2020-2021.

l Re and pu H blic un g Ro a r y m a S l n ia ov a B u k ia lg ar C r ia oa S l t ia ov en i Se a r Li b t h ia ua n E s ia to ni La a N tv or ia th M B ac & H ed on i M Alb a on an te ia ne gr o

Foreign Direct Investment has an enormous impact on the economic performance of developing economies. Les Nemethy and François Lesegretain look at recent patterns of FDI flow in emerging markets from Central Europe.

Business | 7

The World Bank defines FDI as a category of cross-border investment associated with a resident in one economy having control or a significant degree of influence on the management of an enterprise that is resident in another economy, according to the data help desk of worldbank.org. FDI encompasses both trans-border M&A and organic growth by foreignowned companies. According to the United Nations Conference on Trade and Development website, unctad.org, global FDI fell from approximately USD 1.5 trillion in 2019

USD 859 billion

in 2020. This is the lowest level since 2005 and almost 20% lower than the 2009 trough after the Global Financial Crisis (GFC). While the majority of this decline may be attributable to COVID-19, U.S.Chinese tensions have also contributed. The decline in FDI was significantly sharper than the fall in gross domestic product and trade, unctad.org says. In 2020, the impact of COVID-19 was very significant on FDI inflows

Still Attractive

The FDI decline was caused by the pandemic and not a diminution in the investment attractiveness of the CEE region. The 11 CEE countries (EU11) each improved their attractiveness as a destination for foreign investment,

Les Nemethy is CEO of Euro-Phoenix Financial Advisers Ltd. (www.europhoenix.com), a Central European corporate finance firm. He is a former World Banker, author of Business Exit Planning (www.businessexitplanningbook.com) and a past president of the American Chamber of Commerce in Hungary.

Top Healthcare Executives in Hungary 2021 A behind-the-scenes look at some of the most influential Healthcare Executives in Hungary, their leadership, philosophies and successes. Top Healtcare Executives in Hungary 2021 is a Budapest Business Journal publication Please forward your subscription request to: circulation@bbj.hu, or order your copy in the webshop at www.budapestbusinessjournal.com

• Provides an essential overview of how Hungary’s healthcare market operates. • Get an insight into the most significant developments in 2020, and a look at what is in store for 2021. • Get to know the key personalities in the Hungarian healthcare sector. • Read personal accounts from the country’s top healthcare executives detailing how they got into the business and some of their proudest achievements, among other things.

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WHO’S NEWS

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

Entrepreneur Joins Hungarian Bankholding An internationally recognized expert in digital banking, Balázs Vinnai will join the team of Hungarian Bankholding Ltd. as the chief advisor to the chairman and member of the executive body on July 15. Vinnai will be responsible for managing the digital transformation of Budapest Bank, MKB Bank, and Takarékbank. His primary focus will be on creating digital channels that provide a novel customer experience, finding business opportunities offered by technology, and strengthening the ability to adapt to a rapidly changing business environment.

Balázs Vinnai Hungarian Bankholding Ltd. announced its five-year strategy for the merger of Budapest Bank, MKB Bank, and Takarékbank in March 2021. The key element is for the bank to become the most modern financial service provider in Hungary. Vinna was the founder of IND Group, which focuses on digital banking products and web applications. After 16 years of growth, the company was acquired in 2014 by London-based Misys. He continued his career as vice president of Digital Channels of the fintech-focused multinational company, and later as digital manager and global vice president of its successor company, Finastra. The expert is also the founder of BnL Growth Partners, a private equity and smart money consulting firm operating in the fintech sector, and Codecool, a leading programming school in Central and Eastern Europe. Since 2018, he has been an investor and chairman of W.UP, a financial software developer and digital banking sales company. Since 2020, he also holds the position of chairman of the board of the IVSZ - Alliance for the Digital Economy. “Through the Hungarian Bankholding, it is possible to build a digital success story unique not only in Hungary but also in the region. Building on my international

experience in the digital banking sector, I can significantly help the most talented technology and business professionals of today and tomorrow to achieve this inspiring goal,” said Vinnai.

Financial Director Named at Heineken Hungária Rachel Averill is to succeed Alena Mazanikova as the head of the financial department at Heineken Hungária on August 1. The new financial director has moved to Budapest from Singapore. For the past three years, she worked as a business controller participating in strategic projects and supporting business partnership capabilities in the financial community. She played a crucial role in maintaining business continuity during the pandemic. Prior to her Singapore assignment, she held various leadership positions at Heineken Malaysia and Diageo, a leading alcoholic beverage company headquartered in the United Kingdom. She will move to Budapest with her husband and two children. “Heineken Hungária has an extensive partner network in Hungary which is evident from the fact that it procures two-thirds of its raw materials in production locally,” she said. “As the financial director, I would like to bring in youthful new dynamics and further enhance the business partnerships of Heineken Hungária. I look forward to contributing to the fulfillment of business goals during the post-pandemic economic recovery,” she said.

CEU Elects 1st Woman Rector, President The Board of Trustees of the Central European University (CEU) has announced Shalini Randeria as the sixth president and rector of the university. She will be the first woman to take up the role since the university was founded 30 years ago. The appointment follows an international search process conducted by a search committee of trustees, faculty, and staff in consultation with the university senate. Photo by Stefanie Moshammer

8|2

Shalini Randeria

American-born Indian anthropologist Randeria is the rector of the Institute for Human Sciences (IWM) in Vienna, Professor of Social Anthropology and Sociology at the Graduate Institute of International and Development Studies (IHEID) in Geneva, as well as the director of the Albert Hirschman Center on Democracy at the IHEID. She has published widely on the anthropology of globalization, law, the state, and social movements. A German speaker, she previously served on CEU’s Board of Trustees. Chairman of the board Leon Botstein said, “CEU rightly expects much of its president and rector: wisdom, intelligence, courage, energy, and academic leadership of the highest caliber. Having firsthand knowledge of Shalini as a trustee on our board, I know she brings with her all these qualities and more.” Paying tribute to Michael Ignatieff, who steps down at the end of July, Botstein praised his leadership, Rachel Averill “which has led CEU to prominence, defended its commitment to excellence and academic freedom, “We have just entered our new and placed the university in such a life in Budapest, but I already think strong position in Vienna.” we will really enjoy spending our In accepting the post, Randeria weekends at Margaret Island. As a said, “I am deeply honored and look family, we love outdoor sports and greatly forward to joining the CEU activities such as hiking, cycling, community and working together running, skiing and gardening,” with its faculty, staff, and students, Averill added. and its worldwide alumni network, Mazanikova is to continue her to further the mission of CEU and career with a new challenge at to give it a new home in Vienna, Heineken as project manager for the city which has welcomed the the European region. university so enthusiastically.”

2 E.ON Energie Romania Builds 221 kWp PV Plant

EU Forest Management Strategy Angers Agriculture Ministry The European Commission has published a new EU forest management strategy for the period until 2030, against which the Hungarian Ministry of Agriculture has raised substantial objections, according to business daily Világgazdaság (Global Economy). The new EU forestry strategy will contribute to the goal of reducing greenhouse gas emissions in the EU by at least 55% by 2030 and achieving climate neutrality by 2050, the European Commission said. However, Minister of Agriculture István Nagy insists the aspirations included in the new strategy effectively mean that the European Commission wants to make forest management impossible by ignoring the opinions of the member states and the European Parliament. He believes the document ignores the social and economic role of forests and represents a distorted approach that is not in line with the principle of sustainability and the circular economy.

Hell Energy Raises HUF 68 bln From Green Bond Hungarian soft drink maker Hell Energy raised HUF 68 billion at an auction of corporate green bonds issued under the Bond Funding for Growth Scheme (BGS) of the National Bank of Hungary on July 26, according to auction results posted on the website of the Budapest Stock Exchange. The company had offered HUF 67 bln of the 10-year bonds with a 3% coupon; bids reached HUF 76 bln. The average yield was 2.8%, 28 basis points over mid-swaps.

MNB Launching new Green Home Loan Program From October The MNB has announced a new loan program from October, according to business daily Világgazdaság (Global Economy). The Green Home Program offers home loans at a maximum interest rate of 2.5% to all those who would build a high-energy, at least “BB”-rated, house or buy a new property. The scheme will create even more favorable conditions for purchasing a new home, the MNB says. The Green Home Program offers loans of up to HUF 70 million, which can be taken out for a maximum term of 25 years. The interest rate is fixed over the entire period, making it more favorable than available market loans.

Regional Roundup Austria’s Enery Buys 71-MW Czech Solar Portfolio

E.ON Energie Romania, a unit of German energy utility E.ON, said on July 26 that it has built a 221.76 kilowatt-peak (kWp) solar power plant worth EUR 245,000 (USD 295,000) for local roof systems manufacturer Wetterbest, part of Ireland-based Kingspan Group. News portal SeeNews reported that the project would generate 269.78 MWh (megawatt-hour) of electricity per year. The photovoltaic (PV) plant, featuring 792 PV panels mounted at Wetterbest’s plant in Baicoi (80 km northwest of Bucharest), will meet around 33% of its annual energy needs and help reduce CO2 emissions by 77 tonnes per year.

Vienna-based renewable energy company Enery Development GmbH has acquired a Filkab Solar Building 71-MW (megawatt) portfolio of operational 8-MW PV Plant in Bulgaria solar farms in the Czech Republic from funds managed by CEE Equity Partners Bulgarian renewable energy company Filkab Solar, part of local electrical Ltd. for an undisclosed sum. The so-called equipment manufacturer Filkab, has Energy 21 portfolio comprises 36 solar started construction of a EUR 4.5 photovoltaic (PV) plants, many of them located in the Moravia and Bohemia regions, million (USD 5.3 mln) solar park with 8 MW (megawatt) capacity near the city Enery said. Enery will merge the Energy of Plovdiv (144 km southeast of Sofia), 21 portfolio with its existing PV capacity in local media reported. The investor is a the Czech Republic, which generates 21 MW across six solar farms. The Austrian manufacturing company based in the town of Asenovgrad, in the Plovdiv firm now owns 45 operational PV plants region, which will use the electricity across Central and Eastern Europe. generated by the photovoltaic (PV) facility for its own needs, Capital.bg reported last Czech Gov’t, ČEZ to Agree week. The site has already obtained all on EV Battery Plant of the necessary permits. Construction The Czech government is close to is due to be completed at the end of this backing a USD 2 billion-plus electric year, Atanas Tanchev, executive director vehicle battery gigafactory. The of Filkab, was quoted as saying. government approved the text of a memorandum on July 26 to be signed Fintel, MK Group to Build with majority state-owned utility ČEZ, Agrivoltaic Plant in Serbia Industry Minister Karel Havlicek said. Fintel Energija, the Serbian subsidiary Citing a government document it had of Italy’s Fintel Energia Group, and seen, Czech state news agency ČTK said diversified holding MK Group, plan to investment in the initial phase of the invest EUR 340 million (USD 400 mln) gigafactory would total at least CZK 52 bln (USD 2.4 bln). It added that ČEZ was to construct an agrivoltaic plant in Kula (139 km northwest of Belgrade. The prepared to become an investor in the plant, named Agrosolar Kula, will be project, as well as an energy and lithium launched in April 2022 and will produce supplier. Havlicek said on Twitter that 832 GWh (gigawatt-hours) of electricity the factory could create 2,300 new jobs. annually, enough to cover the energy demand of about 200,000 households,

EBRD, Ukraine Boost Low-carbon Hydrogen

The European Bank for Reconstruction and Development (EBRD) and the Gas Transmission System Operator of Ukraine (LLC Gas TSO of Ukraine) are joining forces to promote the development and use of hydrogen in Ukraine, the EBRD announced. The partners have signed an agreement to formalize their cooperation on low-carbon hydrogen and develop hydrogen supply chains. The EBRD and LLC Gas TSO of Ukraine previously signed a memorandum of understanding (MoU) in April 2020 to provide a general framework for improving the environment for sustainable energy investments in Ukraine and reducing greenhouse gas emissions and air pollution. The EBRD recently launched a study on the potential for developing different segments of the hydrogen supply chain across many of the economies where it invests, including Ukraine.

Business | 9

MK Group said. In the initial phase, the plant will cover 700 hectares of land in Kula, divided into seven zones for various organic crops, with solar panels installed in regular rows covering one-third of the total area, MK Group noted. Agrivoltaics is a relatively new science that enables the simultaneous production of crops and energy from sunlight on the same surface.

Pierer, Maxcom Form E-bicyle JV Bulgarian bicycle manufacturer Maxcom and Austrian motorcycle producer Pierer Group have formed a 50-50 joint venture to invest more than BGN 60 million (EUR 30.7 mln) in building an electric bicycle factory, Bulgaria’s Economy Ministry said. The plant will cover 13.1 hectares in Trakia Economic Zone near Bulgaria’s second-largest city of Plovdiv (144 km southeast from the capital, Sofia) and create 1,000 new jobs in the region, SeeNews reported. In a separate statement, Pierer Mobility AG said Maxcom is already a supplier of Pierer E-Bikes GmbH, part of the Pierer Group. “The total investment volume is EUR 40 mln,” Pierer added.

Polish Wind, Solar Firm Onde Raises EUR 97 mln in IPO Polish wind and solar contractor Onde was listed on the Warsaw Stock Exchange on July 19 after completing an initial public offering and raising PLN 444.5 million (EUR 96.7 mln), reported energy portal Renewables Now. Onde, the renewables-focused unit of Polish construction group Erbud SA, sold both new and existing stock at the maximum offering price of PLN 26 (EUR 5.68) apiece. This valued the company at PLN 1.43 billion (EUR 312.4 mln). Onde will build the plants and then sell them to investors. So far, the company has taken on wind and solar projects with a combined capacity of nearly 3 GW (gigawatts). The company generated PLN 586.3 mln in revenues in 2020, up by 54% year-on-year, and recorded a 116% surge in earnings before interest, tax, depreciation, and amortization to PLN 46.2 mln. Photo by PopTika / Shutterstock.com

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Is the Period of low Inflation Confined to History? disinflationary force that China was in the equation, I think traditional forms of understanding inflation, such as the Phillips Curve, will return.

In an exclusive “think piece” for the Budapest Business Journal, Elliott Auckland, chief economist for the Budapestbased International Investment Bank, gives his overview of where we are and where we may be heading.

Historically Normal

As a result, by the end of 2022, we will begin to see inflationary pressure build on the back of solid and coordinated economic growth that will require global policymakers to tighten monetary policy somewhat. Here, I want to caveat that I do not foresee something too extreme; rather, a return to what has been historically normal, with a 10 Year U.S. Treasury yield returning to somewhere in the 3% to 4% range by late 2022 to early 2023. Meanwhile, in Europe, 10 Year Bonds moving towards 1% in the same time frame will head

towards

ELLIOTT AUCKLAND

Elliott Auckland

Last year, we put out economic forecasts for our EU-5 member states (Bulgaria, the Czech Republic, Hungary, Romania, and Slovakia), which we forecasted on average a 6% contraction in 2020, followed by a 3.8% recovery in 2021. Today, we are looking far more optimistically at the region following the 4.7% contraction in 2020 and the now expected 4.9% recovery in 2021. We are particularly positive about the prospects of the Slovakian, Romanian, and Hungarian economies in 2021, all of whom could post growth of 5% this year. Moving to 2022, we expect the economic recovery to pick up steam as economies will be fully open without any COVID closures, consumers will be spending built-up savings, and strong global growth will push up export demand. We are forecasting 4.7% growth for the region in 2022, which would potentially put it on track for a “V-shaped” recovery (returning to its pre-COVID growth trajectory

2024-2025).

For the most part, those statistics are better than almost all of the developed world, notably better than the EU average, as the theme of economic convergence continues. Many countries globally are now seeing inflation in the 4% to 6% range (despite global central banks targeting 2% to 4%). There is currently an extensive economic debate about the current and expected path of inflation, specifically, whether this inflation is transitory or part of something bigger.

Dramatic Increase

The inflationary argument points to current data points such as the headline inflation, metals prices, food prices,

as well as a dramatic increase in the number of corporates mentioning inflationary costs (for instance, Berkshire Hathaway or Starbucks) or rising wages in the face of tight labor markets (such as McDonalds).

“I don’t believe we will see another wave of globalization and, in particular, of Chinese production flooding the world with low-cost goods.” More structurally, there has been a focus on extremely accommodative monetary policy ( both the record low interest rates and the traditionally unconventional QE programs), coupled with extremely accommodative monetary policy, which will take many economies above their output potential. On top of that, there has been much focus on supply chain costs, either due to disruption in the semi-conductor industry, shipping issues, or simply tightening labor markets in the Far East. The central bankers’ response to that is that inflation is transitory. The main drivers of it are related to individual supply chain issues that will be resolved (for example, used car prices have shot up dramatically as a result of limited auto-production in the face of a microchip shortage), or because of the one-off effect of re-opening the economy, which is causing a sharp uptick

in prices of services such as airline tickets and entertainment. This argument is particularly strong when one assesses year-onyear data given the low base effect of companies cutting prices during the pandemic’s peak. Structurally speaking, many economists expect the same deflationary trends, which occurred pre-COVID to occur post-COVID. Specifically, that demographics will continue to put downward pressure on inflation (due to limited consumption and excess savings) mixed with continued cheap supply from global supply chains as the world continues to become more integrated, and, finally, technological advancement will ensure the cost of goods fall (from microchips to the cost of energy). So, where do I sit on this debate? Structurally, I think that the days of extremely low inflation are now behind us globally. That is predominately because I don’t believe we will see another wave of globalization and, in particular, of Chinese production flooding the world with low-cost goods. Once you remove the enormous

by 2024. The shift on the long end of the curve will be quite large compared to where we are today and what investors, corporates, and consumers have gotten used to. Central banks, as such, will have a very challenging task of moving us calmly to a new inflation and interest rate reality. Specifically in the Eastern European region, inflationary forces will likely gather pace earlier than in Western Europe and at a similar time as the United States and other faster-growing economies close to a “V-shaped” recovery. The two big risks thus on the horizon are that as inflation and interest rates begin to even moderately rise globally, there are some pockets of disruption (whether that be on a geographic or sectoral level), or, alternatively, that central banks are too stubborn in recognizing the new global inflationary dynamics and react too late, thus causing inflation and growth to over-run. While we need to be conservative and cautious about claiming victory over COVID by the end of this year, we have to be prepared for the next phase of the economic cycle, which I think is a positive one, one of accelerating growth ( both locally and globally). That will present new challenges and opportunities for us all, particularly in a world of higher inflation and interest rates.

Bio Box As well as being chief economist for IIB, Elliott Auckland is in charge of the bank’s work with credit rating agencies (S&P, Moody’s, Fitch, and ACRA) and runs financial modeling and business planning, which covers the bank’s medium to long-term financial plan. Prior to joining IIB, Auckland worked for THS Partners

(now GAM Asset Management) as a buy-side analyst focused on European banks and consumer goods companies. Auckland has a dual degree in economics and history from Oxford University, specializing in Eastern European economies. He speaks English, Russian, and French and is currently learning Spanish.

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Country Focus South Korea

South Korea Looking to Next Generation Investments in Hungary

With diplomatic ties established in 1988, investments by the Republic of Korea (RoK) in the Hungarian economy grew to EUR 3.1 billion by 2019. Some 32 major South Korean companies have made investments in Hungary over the past six years, according to Minister of Foreign Affairs and Trade, Péter Szijjártó, generating a more than 20% increase in bilateral trade turnover in 2020 and ranking the country as one of most significant foreign investors in Hungary. South Korean Ambassador Park Chul-Min sat down with the Budapest Business Journal to discuss the relationship.

Park Chul-Min philosophies stressing the importance of harmony and balance. We are also heavily rooted in Confucianism, which stresses the significance of authority and faith. Modern Korean families do their utmost to send their children to higher education institutions and, in return, these children stay very loyal to their parents. A sense of fair competition and creativity is also a powerful locomotive for the sound development of our society, especially from the young generation.

BBJ: What makes the Republic of Korea a cultural superpower? PC-M: In Korea, we share a special ÉVA KASZAP common emotion which we call heung, meaning “joy,” “excitement,” and BBJ: The Republic of Korea reported “entertainment.” Every Korean person 1.6% economic growth for Q1 2021. has a unique heung, and it is their What is the ‘recipe’ of your success? source of creativity, openness, and Park Chul-Min: In general, every Korean adaptivity. Cultural diversification in government, regardless of its political Korea started around 1990, and it gave stance, has always put great emphasis birth to many cultural phenomena such on economic growth and development. as K-drama, K-pop, and Hallyu (the This year, for instance, our government Korean Wave). One of the best examples is targeting 4% GDP growth. Until now, of our cultural export is Korean movies. Korea has achieved seamless economic Over the recent years, several new films growth except for only three occasions. have been released and received big First, during the oil crisis in 1980 (-0.99%), awards, for instance, “Parasites,” a black then in 1998 (-5.1%), and in 2020 (-1%) comedy thriller, and “Minari,” a new because of COVID-19. Korea has ranked movie. I am sure you have heard a lot as the world’s most innovative country in about BTS, the Bangtan Boys, a seventhe Bloomberg Innovation Index for five member South Korean boys’ band. They years in a row. We also rank in the global currently have four top hits on the top five for the R&D index and Economic Billboard Global 200 chart, more than Complex index, respectively. any other band before. South Korea’s annual export of cultural products BBJ: How does South Korea balance exceeded USD 11 bln last year, and the innovation and tradition? number of active Hallyu fans reached PC-M: Our society successfully 100 million. All this has a great boost combines tradition and modernity as on tourism to Korea and a very positive Korea is based on oriental and Eastern impact on consumer goods export.

BBJ: Why was Hungary the first country South Korea established diplomatic ties with from the old Eastern bloc in 1989? PC-M: Right after the collapse of the communist regime in Hungary, our administration rolled out its new diplomatic policy, the so-called Northern Policy, to reach out globally and diversify our diplomatic relations. First and utmost, the Hungarian reforms were in line with our foreign policy. And soon after Hungary, other countries like Bulgaria, Russia, and China also moved to establish diplomatic relations with us. The establishment of diplomatic ties with Hungary played a catalytic role in this process. BBJ: The economic relationship of the two countries is characterized by solid development. What are the main fields of cooperation? PC-M: The first Korean companies investing in Hungary were Samsung, Hanon Systems, and Hankook Tire. Samsung Electronics opened its first unit in Hungary in 1989, followed by Hanon Systems in 1990, and Hankook Tire in 2005. In cooperation with local authorities, they plan to expand further by re-investment in high valueadded activities such as advanced manufacturing or engineering. The second-generation Korean companies in Hungary are mainly greenfield investments covering the EV batteries sector, in line with the EU’s green, digital, and net-zero policies. At the same time, Korea is looking for a new investment chapter in Hungary in the medical and pharmaceutical fields. The frontrunners are Samyang Biopharm and Celltrion. We are also planning to set up

global supply chains and new R&D centers in Hungary, and we also plan to maximize our potentials in ESG investments. Bilateral trade is also on the right track as the trade turnover increased by more than 20% last year, reaching USD 3.6 bln. EV battery manufacturing firm, SK Innovation, is to open its third EUR 2.1 bln plant in Iváncsa (22 km south of Budapest), and in the future, this will be followed by Samsung SDI with the first stage of an additional investment of EUR 700 mln in Hungary. The capacity of the existing SK Innovation plant is 17.5 GWh, while the new plant is expected to generate some 30 GWh, increasing the company’s total to 50 GWh. Cumulative investment from South Korea was EUR 3.1 bln according to the statistics of the National Bank of Hungary, but based on figures by Korean companies, it is at least two times more, around EUR 6 bln. BBJ: What is the primary motivating factor for Korean companies to invest in Hungary? PC-M: Hungary is an attractive place for business and an investment-friendly environment. Due to its geographical position, it can serve as an excellent gateway to the EU, and it is also a logistic hub. Its main advantages are its highquality workforce, relatively reasonable prices, and a strong industrial structure. So far, South Korea has received active support from the Hungarian government in the form of considerable state and EU subsidies. Corporate taxes are low, bureaucratic barriers are fewer, and procedures have become more simplified. BBJ: Are there any cultural links or similarities between Hungary and South Korea? PC-M: Oh, definitely, quite a few. Let’s mention the great Korean composer, Ahn Eak-tai, who composed our national anthem. He studied music at Zoltán Kodály’s institute, and I think this is a very special link. But there are similarities too: both nations have a strong respect for seniors, we are both warm-hearted people, and we both consider the community’s interest first. We both like spicy food, write our family name first, follow the same order when writing the date, and use the pentatonic scale in music. At this point, I’d like to mention that the Korean Cultural Center, which opened in 2012, now has a new director and, marking the KCC’s 10th anniversary, we are to have various joint programs in partnership with the Opera House and the Liszt Academy. I think Hungarian people are also doing a great job in keeping up traditions. Our cultural relations are very strong, but I intend to deepen these ties even further. As a Korean saying goes: “If you want to go faster, you will go alone, but if you want to go far, you had better go together.”

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Focus

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From Soviet Tank Base to Lithium-ion Battery Factory Anyone heading west on Route 1 from the Danube town of Komárom in 1989 would have passed a large Soviet military base, its many tanks largely obscured behind lines of strategically planted trees. Three decades later, the trees remain, but the vista behind them is dominated by a gleaming array of modern manufacturing plants, stretching back 300 meters and over a kilometer in length. KESTER EDDY

The scene is as symbolic as any of how Hungary has transformed into and beyond the new millennium. It ends with two of the largest units on the site, both owned by the South Korean SK Innovation Group, housing state-of-the-art lines built to produce lithium-ion batteries to power a new generation of electric vehicles. Work on SK Battery Hungary, SK Innovation’s first production plant in Europe, began in 2018; it started mass production in the first quarter of 2020. Representing an investment of EUR 313 million, it has the capacity to produce 7.5 GWh of cells annually, enough to power 250,000 electric vehicles, according to the company’s website. The following is an edited interview for the Budapest Business Journal with László Ludman, human resources development and public relations manager with SK Battery Hungary. BBJ: In your website PR video, you state that Komárom is your first “nonKorean” site. Can you give the three top reasons for choosing Hungary? László Ludman: The top reasons are the proximity of European car manufacturing sites, the availability of a well-trained workforce, and the support from central and local governments, which included a state subsidy, a cash grant. [Ludman was unable to provide details of the grant, but Hungarian media cited Trade and Foreign Minister Péter Szijjártó as saying Hungary

SK Battery Hungary Kft. (SKBH) Data Investment & Status

Company name

Place

Initial investment amount

Production capa & Number of lines

Plant area

Headcount

1st Site (Operational)

SK Battery Hungary Kft. (SKBH)

Komárom

HUF 97.5 billion (EUR 313 million)

7.5 GWh / year 5 production lines

95,527 m2

1,400 (current)

SK Battery Manufacturing Kft.* Komárom (SKBM)

HUF 239 billion (EUR 756 million)

10.2 GWh / year 6 production lines

130,075 m2

Current: 600 Plan:1,500

HUF 681 billion (EUR 1.8 billion)

30 GWh / year

2,500 (plan)

2nd Site (Test production) 3rd Site (Under preparation)

SK Battery Hungary Kft. (SKBH)

Iváncsa

* A separate legal entity, a subsidiary of SK Innovation

had provided a subsidy of HUF 8.2 billion (EUR 26.3 mln at the time) towards the project at the ground-breaking ceremony in March 2018. This represents 8.4% of the total investment value.] BBJ: What is the current headcount at your Komárom plant? The Hungarian labor market was already tight when you began your investment, and even after the pandemic, unemployment is low; the government even boasts about this. How difficult has it been for you to find and train the workforce you need? LL: The current headcount is 1,400. Although initially we expected difficulties due to the Komárom, Tatabánya, and Győr region’s low unemployment rates, thanks to the attractive wages and benefits offered by the company, together with the clean, modern work environment, recruitment has been successful. More than 90% of employees live within 50 kilometers. BBJ: Komárom is only a bridge length away from Slovakia, across the Danube. How many of your current workforce are Slovak citizens? And your factory is not within walking distance of Komárom. Do you provide transport to help ferry workers to the plant? LL: Approximately 20% of the workforce are Slovak citizens. We provide a free bus transfer service for employees. There are seven routes for daily office staff and 18 for shift workers. BBJ: From where do you source the raw materials needed for Lithium-ion batteries? How secure are your supply lines? Are these materials particularly hazardous? LL: Suppliers are Asian or European companies with secured supply lines. We have the benefits of more and more material suppliers launching operations in Hungary, following those investing in the battery manufacturing business. There are only a few hazardous materials used, and obviously, we follow very strict health and safety regulations.

BBJ: Where do your batteries go after manufacture, and what forms of transport do you use? LL: Our main clients are the Hyundai Motor Company and Daimler Group. Battery cells are forwarded by road to the OEMs [original equipment manufacturers, the automakers]

dealing with know-how and safety rules at the production site. And as part of ‘Open Discussion’ and ‘Mutual Respect,’ part of SK Innovation’s management philosophies, we have held a number of workshops to help people understand each other’s cultures. In addition, we believe that the reason SKBH has been able to operate its plant stably so far is because each member, regardless of nationality, has been responsible for their duties and has consistently accomplished achievements. BBJ: Referring back to the first question, have your reasons for choosing Komarom been justified? LL: Our reasons for choosing Komárom have been absolutely justified. One visible evidence [of that] being the second plant, SK Battery Manufacturing Kft. “next door.” This will have an annual capacity of 10.2 GWh. Construction work has been completed, and test production is currently ongoing, with mass production expected to start in the first quarter of 2022. And at SK Battery Hungary, we reached the 2020 production targets.

László Ludman or sub-contractors where battery cells are put/arranged in battery modules and/or battery packs that are already ready for installation into electric vehicles. BBJ: I’m sure Korean culture, including work culture, is very different from that in Europe in general and Hungary in particular. “Culture shock” sounds like a hackneyed term, but what have been the most significant culture shocks that you’ve experienced, and how have you reacted to these? LL: In the work environment, Hungarian and Korean members experience difficulties due to language and cultural differences. But we didn’t have enough [surprising] experiences to call it a ‘culture shock.’ SKBH is committed to narrowing the differences by researching various communication channels. For example, we publish a monthly in-house magazine

BBJ: You had not even got the Komárom plant in full production before you decided to establish an even bigger plant in Iváncsa, 25 miles southwest of Budapest. How is this project progressing? LL: Currently, we are in the preconstruction preparation phase with piling ongoing. Construction works are scheduled to start soon, very probably this July. The Iváncsa project, valued at HUF 681 billion, that’s EUR 1.8 bln, is the largest ever greenfield investment in Hungary, and SK Innovation’s largest European factory unit, with a production capacity of 30GWh, creating 2,500 new jobs. According to the company’s strategic plan, it strives to achieve 125 GWh of production capacity by 2025, a significant part of which will be provided by the Hungarian plants. Considering 70 kWh average power output and 400 km effective range per vehicle, the factory at Iváncsa will provide for the production of 430,000 electric cars annually.

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Budapest Business Journal | July 30 – September 9, 2021

Photo by Roman Zaiets / Shutterstock.com

Special Report Logistics

The logistics and industrial segment of the Hungarian real estate market is booming, driven by the growth in e-commerce and the automobile sector. As a result, it is drawing in new developers and investors.

Unprecedented Industrial and Logistical Demand Growing

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Sustainability Accreditation Becoming the Norm for Logistics Space 15 Developers Drawn to Booming Logistics Sector 16 Logistics News in Brief

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Logistics Listis

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Special Report

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Budapest Business Journal | July 30 – September 9, 2021

Unprecedented Industrial and Logistical Demand Growing Many analysts see the industrial and logistics market in Hungary as the sector in the most favorable postpandemic position; the growth in e-commerce will significantly increase demand along with the continued development of the automotive industry across the country. GARY J. MORRELL

Demand is strong, with Hungary having the lowest vacancy rate in the Central European region. However, analysts say more speculative development is necessary for further market growth, particularly in provincial cities. “The Hungarian industrial market is extremely active; a trend started about 12 months ago for logistics in the Budapest market and the past six months for industrial/manufacturing in the countryside,” comments Tamás Beck, director of industrial agency at Colliers Hungary. “Developers are keen to secure development plots in the Budapest suburban areas and at city logistics locations; several hundred hectares were traded in the past

There are few, if any, existing logistics buildings with more than 5,000 sqm of available contiguous industrial space; the overall vacancy rate is 2.6%. Even so, some argue Hungary is underperforming in comparison with other major Central European markets. The Czech Republic, a similarly sized country, has more than nine million sqm of class “A” industrial space across the country with a vacancy rate of 3.6%, according to JLL. Gábor Halász-Csatári, partner and head of industrial agency at Cushman & Wakefield, believes that Budapest is in a similarly strong position to Prague but says Hungary lacks the regional development in secondary cities found in the Czech Republic.

Burgeoning Stock

There is currently around 400,000 sqm of industrial and logistics space planned or under construction in Hungary, due to be delivered in the next 18 months. A large portion of this volume is already pre-let. The number represents nearly 20% of the existing market and, therefore, Hungary is recording a massive increase in stock volume in a condensed period. That indicates that the market still carries a lot of growth potential, according to Cushman & Wakefield. CBRE has traced more than 300,000 sqm of industrial space under development due for completion in the greater Budapest area, more than

50% of which

is already committed. With regard to development strategies in the current high demand and low vacancy climate, developers tend to construct built-to-suit (BTS) facilities with additional speculative elements.

12-16 months.

There is an increasing number of planned and ongoing speculative/ prelease developments, and the number of requirements exceeding 10,00020,000 sqm in size is also increasing; this seems to be a new trend in our market,” Beck adds. Total modern industrial stock in the Budapest area stands at more than 2.4 million sqm according to the Budapest Research Forum (the BRF, consisting of CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL, and Robertson Hungary).

Companies establishing light industrial facilities have often tended to develop their own facilities rather than buy or lease them from

10 years,

the more tenant investment is needed, and the more complicated the fit-out is. “Given the unparalleled demand for a developer. The automotive sector has industrial development sites, the biggest been a critical player in the industrial sector in the regions outside the capital, challenge right now is finding well-located, with production and component centers adequately sized plots that are ready for development,” Halász-Csatári says. in the cities of Győr, Kecskemét, “New and established developers Debrecen, and Esztergom. have begun building land banks and, as a result, most good locations have already been picked up. In many cases, vendors enjoyed fierce competition amongst multiple potential buyers; however, prices have not yet escalated to a level where developers would be less active,” Cushman & Wakefield’s head of industrial agency says. “Permitting and construction are just as straightforward as before; with a competent team in place, a new industrial project could be realized in 10-12 months from permitting to handover,” Halász-Csatári adds. With buoyant demand and development indicators, the industrial and logistics market is regarded as an attractive investment destination, according to Kevin Turpin, director of Gábor Halász-Csatári CEE research at Colliers International. Activity is limited by a low supply of quality assets and the high price “Speculative developments have expectations of vendors. Much of the finally come back to the market, with a product is tied up with long-term players good prelease rate; we expect that these who are not likely to sell anytime soon. opportunities will generate new interest Even so, the sector is now seen as the and might encourage existing tenants second only to offices. to expand at a new location or even to have more locations at the same time,” Beck believes. “Developers are keen to “It is also a positive sign that we have speculative, ongoing secure development plots developments in the countryside in the Budapest suburban too, with foreseeable handover dates, which makes tenant’s planning a lot areas and at city logistics easier,” he adds. locations; several hundred “The city logistics sector has very few existing options to offer, and there hectares were traded in the are limited ongoing developments. past 12-16 months. There The main reason for this is the low number of potential city location plots is an increasing number suitable for immediate construction, of planned and ongoing combined with extremely high plot speculative/prelease prices,” Beck adds. Halász-Csatári argues that, in general, developments, and the logistics schemes have high pre-let number of requirements rates as they are BTS, but there are now planned projects registered that will exceeding 10,000-20,000 sqm offer more speculative space for several in size is also increasing; smaller tenants.

Chicken and Egg

Tamás Beck

of five years today; however, this could go up to seven or even

In a somewhat “chicken and egg” relationship, speculative development is driven by demand, but there is a need for an increase in that demand to allow the market room to grow. Development schedules tend to be between 8-12 months, provided that the site is ready for development and has, or is in the process of obtaining, a building permit. Tenant-specific improvements to a standard specification do not necessarily prolong the development process by much. Contract lengths are for a minimum

this seems to be a new trend in our market.”

“I am happy to say that we are experiencing an overall positive sentiment in the market. Furthermore, over two years, we have seen a record low level of vacancy rate in Hungary. In the last six months, there has been unprecedented development activity in the country as well. Generally, there is more supply on the market, drawing new players to the industry,” concludes Zsuszsanna Hunyadi, leasing director at Prologis Hungary.

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Budapest Business Journal | July 30 – September 9, 2021

Sustainability Accreditation Becoming the Norm for Logistics Space Logistical/industrial park developers and operators are creating more sustainability accredited and highly specified projects in response to changing tenant demands and environmental regulations.

idea is an outside gym, about which you will hear more later,” she says. “Sustainability is very important to our customers and us. They are even ready to invest more, together with us, to be more energy-sufficient and sustainable. Many of our customers took advantage of our LED Essentials program to have their lighting system upgraded with a modern motion and daylight censoring LED lighting system.” Hunyadi says Prologis’ Hungarian portfolio has LED lighting

85%

GARY J. MORRELL

Leading national and international industrial park developers and operators are also seeking thirdparty sustainability accreditation from organizations such as BREEAM and LEED as tenants are looking to save on utility costs. More than that, tenants also recognize that staff well-being, green areas, changing facilities for cyclists, and electric charging units all factor into attracting and keeping employees. Developers equally need to be coronavirus-compliant and reduce the carbon footprint of their projects. In this sense, parallels can be drawn with the evolution of office development to address market needs and environmental requirements to produce sustainable, well-designed, and highly specified products. “For years, we have been following our crisis-proof strategy to be present and develop on key markets; we are not only developers but long-term owners and managers of our properties,” comments Zsuzsanna Hunyadi, leasing director at Prologis Hungary. “Our industrial real estate expertise spans real estate operations, development services, and sustainable development. We are taking care of our customers’ needs, their growth, as well as the local communities. Customer satisfaction has always been a top priority for us, to offer more than just a warehouse building,” Hunyadi adds. Another developer, CTP, is developing according to BREEAM in-use “Excellent” criteria for buildings across its Central European portfolio. Further, the company is emphasizing energy efficiency and the use of solar panels, according to Dávid Huszlicska, country head of CTP Hungary. (For more on this, see page 18.)

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Carbon Neutral

“Currently, CTP is being evaluated to determine if its operations are already carbon-neutral, which is CTP’s objective for 2021 throughout the geographies where it operates,” said Jan-Evert Post, head of funding and investor relations at CTP. Panattoni, now active in Hungary, has achieved BREEAM “Outstanding” accreditation for its park in Cheb in the Czech Republic and BREEAM “Excellent” accreditation for 65,000 sqm of space at Panattoni Park Poznán West Gate in Poland. The company says it aims to achieve emission neutrality for all its buildings

2025

and for BREEAM accreditation for the 6.3 million sqm of space it holds in its portfolio across eight countries. Built-to-suit (BTS) projects encourage an initial dialogue with tenants from the earliest stages. This enables more energy-efficient

of its buildings. By mid-2022, all its facilities in Budapest will be equipped with LED lighting. “These common investments with customers were made just in the past two years. A solar program is next on our list. Buildings built 10-15 years ago have to pick up the competition with new developments when it comes to sustainability,” she adds. In addition to attractive rents and flexible terms, tenants expect industrial parks to offer a comprehensive services package, above and beyond warehousing functions. To meet these expectations, modern, environmentally CTPark Budapest East Üllő. friendly, and energy-efficient facilities will provide internet of things (IoT) and smart solutions, and recreational space to be developed that provides and community services that support savings for companies in the longer the tenants’ recruitment and talent term. It also offers helpful general management activities. feedback to the developers. “All of our new buildings will be “Based on panel discussions and BREEAM-certified, sustainable, and dialogue with customers, two years ago, serve state-of-the-art community needs we decided that our new standard of and expectations,” says Rudolf Nemes, clear height would be 12 meters,” says managing director at HelloParks. Hunyadi from Prologis Hungary. Developers also face challenges “In the upcoming years, due to in bringing forward projects in an automation, process standardization, increasingly competitive and demanding and capacity efficacy, we will offer the market. These range from labor and ideal space for customers to succeed and material availability and costs to optimize their storage,” she argues. sourcing plots with direct road and “Employee well-being is another public transport links that enable a priority when it comes to day-to-day life comfortable commute for staff. in our parks. We are proud to have our “The main challenge at the moment is PARKlife concept, with two five-a-side the increase in hard-costs due to raw football fields and recreation areas in material shortage, limited production Gyál and Harbor,” Hunyadi explains. capacities, and an increase of demand,” confirms Nemes. “Furthermore, it might Family Days seem there is endless land to acquire, but “Customers even use these spaces ready-to-go plots are hard to find. Based for company family days; we hold on our experience, permitting is not football tournaments yearly and seek an issue as long as there is a common ideas to provide a better working understanding and support from the environment in our parks. Our recent local municipalities,” he adds.

CTPark Budapest West.

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Special Report

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Budapest Business Journal | July 30 – September 9, 2021

Developers Drawn to Booming Logistics Sector In a very positive environment for the logistics and industrial market, developers who have traditionally been active in other sectors, such as office and retail, are now undertaking industrial projects. HelloParks

GARY J. MORRELL

They are drawn by the Budapest agglomeration, but also Hungarian provincial cities and even the possibilities of a regional Central European role. Further, regional industrial developers and investors who have not been

active in Hungary are showing interest in extending their activities to the country. “The COVID pandemic brought the logistics sector into the global spotlight. Indeed, we see that COVID has had no negative effects on the Hungarian industrial and logistics market, proven by the record high demand and tight vacancy levels

measured during 2020,” says Gábor Halász-Csatári, head of industrial at Cushman & Wakefield Hungary. “We see that the accelerated shift to e-commerce together with a forecasted improved level of consumption will fuel current demand levels even further. There is a very healthy speculative and semi-speculative pipeline in Budapest; new market players along with

those who have an established portfolio are as active as ever,” he adds. The Czech-based developer CTP claims it is the largest industrial park owner and developer in Hungary, with

around

600,000 sqm

of almost fully let space. By the close of 2021, it plans to have 750,000 sqm

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Development of East Gate PRO in North Budapest Starts Wing, a major player on the Budapest logistics market, is launching the second phase of its highly popular East Gate Business Park project. The development of East Gate PRO will start with the construction of two new halls with an area of over 20,000 sqm. Wing, the owner and developer of the park, has been active on the Hungarian industrial property market for more than 20 years and has unique expertise in customized and complex hall solutions. The construction of the new warehouse complex, on a plot on the opposite side of Fóti út, follows the great success of East Gate Business Park and Login Business Park and responds to growing market demand. Several international corporations have their Hungarian or regional center in East Gate Industrial Park, and five of the 50 largest Hungarian companies also have facilities here. The first two halls of East Gate PRO are scheduled to be completed in Q2 2022; three additional halls are planned on the site.

East Gate Business Park by Wing. Occupants have flexibility when ESFR sprinkler system, access control selecting hall type and size, which allows with license plate recognition, a security for customized arrangements in the camera system, and a cross-docking buildings. Future tenants are engaged function in buildings C1 and C2. in the project from the design phase, Massive Surge participating in the creation of custom architectural and interior design solutions, “Recently there has been a massive surge in e-commerce, followed by an increasing so meeting rooms and community spaces demand for industrial and logistics can be created according to their needs, properties, as we have seen it at East Gate and their corporate visual identity can and Login Business Park, which led us also be displayed. to start the East Gate PRO development,” In addition to hall developments for says György Mucsi, Wing’s deputy CEO logistics, warehousing, and production for industrial properties. “Wing has purposes, there will be office and service been present on the industrial real estate functions available, too. The new halls market for more than 20 years. It has will offer spaces of various sizes, with collected unique professional know-how several loading options in the units and a possibility of expansion. The high-quality, in the field of custom-made warehouse logistics and production/assembly hall modern buildings at East Gate PRO will solutions,” Mucsi adds. provide engineering services such as an

East Gate PRO, situated at the junction of the M0 and M3 motorways in a livable, people-oriented, landscaped environment, is a mere 20 minutes from the city center and has a bus stop at the entrance. In addition to the great location, the development has many other benefits and offers customized, complex solutions. The modern buildings can be used for storage and production and are also suitable for quality offices, customized head offices, and headquarters. The protection of the environment is a priority for Wing, so the halls at East Gate PRO will have BREEAM certification and will offer eco-friendly and health-conscious solutions and smart services. Eco-friendly, easyto-clean building materials with no harmful components will be used in the hall development project. To facilitate sustainable operation, selective waste management and energy-efficient solutions will be available in the industrial park. Wing is committed to health promotion, so contactless switches will be installed in the common bathrooms in the buildings of the development. Every part of the office will have windows that open, which will allow for a continuous flow of fresh air, and the office spaces can be divided in several ways according to the tenants’ needs, with one-person workstations or areas for 50-person meetings.

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Budapest Business Journal | July 30 – September 9, 2021

across the country, rising to one million by the end of 2022. The company has eight projects under construction in the Budapest area, and also Debrecen (232 km east of Budapest), Győr (121 km west of the capital), and Szeged (175 km southeast). Of the 235,000 sqm currently under construction, 60% is pre-let; from the 322,000 sqm of upcoming pipeline projects, 9% is already spoken for. It is the potential offered by this sort of market that has attracted the originally U.S.-based Panattoni, which has now opened an office in Hungary and already secured two projects in the Budapest area. A prominent developer across the Central and Eastern European region, it had been a notable absence in the Hungarian market. The newcomer thus joins other regional industrial developers and park operators such as CTP, Prologis, and VGP, in addition to national operators like ConvergenCE, CPI, HelloParks, the National Industrial Park Operator and Developer (NIPÜF), and Wing. All are active in this increasingly attractive market sector.

New Trends

“As with other countries in the region, the global pandemic has had little impact on the Hungarian real estate warehouse and industrial sector. The country is also set to benefit from new trends that were strongly evident last year, including the growth of e-commerce,” explains Robert Dobrzycki, CEO of Panattoni. He says the country could also benefit from the fact that many Asian companies are looking for alternative locations for warehouses and production plants since many automotive companies are now located in the country. “In addition to that, Chinese finance is being used for the construction and modernization of a high-speed railway between Budapest and Belgrade, which will connect the Balkans with a special transport route to the now Chinese-owned Piraeus seaport in ADVERTISEMENT

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Athens. Upon the completion of this project, the country will be in a strong position to be able to compete with major logistics hubs across Europe,” Dobrzycki adds. Prologis, meanwhile, has completed a land acquisition for the development of 60,000 sqm of space on a

13-hectare site

at Prologis Park Budapest-Sziget in the Szigetszentmiklós area in south Buda. “Our key focus is on the greater Budapest area,” says Máté Szoboszlay, director of capital deployment at Prologis Hungary. The developer has 630,000 sqm of industrial space in five fully-let parks. The Hungarian developer and asset manager ConvergenCE has also moved into the industrial market with the preparations for a ready-

“The rapid development of e-commerce and the relocation of production capacities have started a new trend of establishing regional EU centers. We are constantly exploring further expansion opportunities in the Budapest agglomeration as well as the catchment area of large rural cities.” made product in Tárnok (26 km by road from central Budapest, at the junction of the M7 motorway). The firm says construction of an 8,000 sqm logistics or light industrial facility can be started immediately once a tenant has been sourced. The newly established Hungarian industrial developer HelloParks, a member of the Futureal Group, is continuing its expansion with the development of HelloParks Maglód, 30 km east of the Hungarian capital.

Prologis Park Budapest-Harbor. The first 46,000 sqm facility is being built on a 46-hectare site. The EUR 40 million industrial and logistics center has the capacity for a total area of 193,000 sqm of BREEAM-accredited space. This follows the start of development at HelloParks Fót on a 76-hectare site adjacent to the M0 highway, providing the potential for 330,000 sqm of warehouse and industrial space.

When it comes to development outside the capital, the state-owned NIPÜF has a development land bank covering most secondary cities across Hungary. The company says it aims to deliver logistics parks in areas not currently provided for by the market and has around 20 parks in strategic locations across the country. NIPÜF has completed its latest warehouse development in the Pécs industrial park (238 km southwest of Budapest), a long-term lease for an 11,000 sqm facility. The total area of logistics space developed by NIPÜF nationwide

Highly Competitive

“HelloParks aims to increase Hungary’s regional competitiveness with highly competitive and efficient mega parks that also focuses on sustainability,” comments Rudolf Nemes, CEO of HelloParks. “HelloParks aims to become one of the key players in the dynamically growing industrial and logistics market, first in Hungary and later in the region. The rapid development of e-commerce and the relocation of production capacities have started a new trend of establishing regional EU centers. We are constantly exploring further expansion opportunities in the Budapest agglomeration as well as the catchment area of large rural cities,” Nemes adds.

168,000 sqm.

Another European-wide logistics and industrial park developer and operator, VGP, has undertaken construction of its second park in Győr, the VGP Park Győr Béta. Building B will deliver 30,00037,000 sqm of spaces with canopies, delivered according to demand. VGP describes Győr as a logistics hub, close to the M4 motorway connecting with Vienna and Bratislava. This is the fifth VGP development in Hungary. It has a 21,000 sqm speculative logistics park in Kecskemét (92 km southeast), and a new project in the Budapest region is due to start in the second half of the year, according to Karen Huybrechts, head of marketing at VGP.

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Special Report

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Budapest Business Journal | July 30 – September 9, 2021

CTP: Bigger Logistics Developments on the Way The European developer CTP is now the most significant industrial park owner/occupier in Hungary, according to the company. Its portfolio of 660,000 sqm of gross leasable area (GLA) is almost entirely leased. By yearend, the plan is to have 750,000 sqm of space across the country, rising to one million by the end of 2022. GARY J. MORRELL

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a number of new companies to enter these cities. These regional cities are growing in importance, but they are still not where they should be, although Debrecen is a good example of how to do things. There is still a very large untapped potential in these hubs. BBJ: Do you see more speculative development? How critical is this for market growth? DH: Hungary does need more product in what is a very overheated market. We do see speculative development activity, which is absolutely justified. We still have a long way to go before the market cools down.

Dávid Huszlicska CTP currently has eight projects under The firm is a top-five industrial construction in the Budapest area and property developer and manager in provincial cities such as Győr, Debrecen, Europe, and the largest in the CEE region, Szeged, Komárom, and Tatabánya. holding a total portfolio of more than 6.3 Of the 235,000 sqm currently under million sqm GLA. The group says it is construction, 60% is pre-let; work of a continuing to gain market share aims to further 322,000 sqm of pipeline is due have 10 million sqm by 2023. to start in the near future. The entire portfolio is BREEAM certified and is on track to be verified carbon neutral in 2021. The Budapest Business Journal spoke with Dávid Huszlicska, country head of CTP Hungary, about its operations here and the future of the logistics and industrial market.

Every day on the Roads; Always on new Roads with Raben Established in 1931, Raben Group is a leading European logistics operator offering comprehensive transport, shipping, and logistics services. The group has more than 150 branches in 13 European countries, from the Baltics to the Balkans. It manages approximately 1.2 million sqm of warehouse capacity and sends more than 8,500 trucks out on the roads every day. Raben puts a strong emphasis on groupage transport, where several clients share the cargo capacity of a single vehicle, making it one of the most costeffective and most sustainable solutions. To strengthen its market position further, the group recently started to identify new transport connections between regional depots, apart from central hubs. This approach aims at a higher level of decentralization while enabling faster deliveries due to fewer loading and unloading operations. By better utilizing transport capacities, the company can take advantage of synergies in its systems, reducing costs and emissions. It is a favorable choice for customers and an important element of the group’s strategy. The Hungarian business unit of the group, Raben Trans European Hungary, has five depots throughout the country: Debrecen, Dunaharaszti, Győr, and Pécs. This year the company started operations in two new state-of-the-art, energyefficient warehouses as well. One of

these is also located in Dunaharaszti. The 30,000-sqm property offers temperature-controlled areas divided into three zones; therefore, it is suitable for most clients from the food industry and the FMCG sector. The new warehouse in Pécs comprises nearly 11,000 sqm of storage space and is an integral part of Raben’s nationwide network of depots. Marking its 90th anniversary, Raben Group is devoting 2021 to sustainability by organizing a unique series called the eco2way tour. Colleagues from all over Europe introduce 20 places that are at risk due to climate change. As a gift for present and future generations, the company will launch an online vote in September, where clients and the wider public can select one of three environmental initiatives. Raben will provide financial support to the winning project, thus contributing to a better, greener future.

BBJ: How do you see the Hungarian industrial market developing in the post-COVID environment? Dávid Huszlicska: Companies with a presence in the region are nearshoring by bringing stock or production closer, rather than have it in a place where the supply chain [potentially] causes a risk. Existing companies are growing, but we also see many new players coming in. Just as the industrial market has new developers, we are also seeing new tenants. We have seen strong growth in e-commerce and, at the same time, a parallel increase in the automotive sector. BBJ: How do you see your role as a CEE and nationwide logistics/ industrial park developer? DH: Our tenant retention rate in Hungary is 100%, and on a group level, our overall retention rate is more than 95%. We are flexible regarding requirements from both a technical and locational perspective. In Central Europe, we are active in capital cities, in the vicinity of capital cities, and in the countryside. The Hungarian market is very heavily Budapest-biased as perhaps logistically, many companies prefer to stay on the [M0] ring road in and around Budapest. There are a lot of companies that see the possibility of going to the countryside; we could see this [increasingly] happening thanks to local government support to enable

BBJ: What are the main challenges facing plot sourcing, permitting, construction, and development process? DH: Land is available in abundance, but timing is a big question as some land takes a year or two to bring to development status. So, timing is a challenge. So is the availability of construction materials and labor. The average development period is 12 months. This consists of three months of permitting and design and a ninemonth construction period. We have streamlined our processes, and our last three buildings have been handed over before the deadline. BBJ: How are tenant requirements changing, and to what extent are sustainability and sustainability accreditation a central part of this? DH: Tenants are getting used to the fact that their nuances or requirements should and can be handled by the developer. From our side, we are have always been a partner with our tenants, and we do any type of fit-out that the tenant requires. We use BREEAM in-use “Excellent” for our new buildings. These are more expensive to develop, though not enough to be of major concern to tenants. We always discuss the cost of occupancy with tenants and potential tenants, and one of the things we do is a breakdown of how energy efficient our buildings are. We plan to use solar panels increasingly in our portfolio. I think that size-wise, we will see larger requirements and [therefore] some bigger buildings coming up. We have not seen 100,000 sqm projects in Hungary yet, but they are coming. Currently, our average deal size is between 10,000 sqm and 25,000 sqm. We have a 46,000 sqm deal that we did a couple of weeks ago. BBJ: Would you say that industrial is the investment sector of choice, along with office? DH: We keep products in our portfolio and at the same time like to undertake purchases. We have signed a purchase agreement for a new 25,000 sqm building in Szombathely. In general, companies keep hold of their industrial assets and, therefore, there is very little product available.

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Budapest Business Journal | July 30 – September 9, 2021

PROMOTIONAL FEATURE

Special Report | 19

Logistics Assets: Winners of the Pandemic Real estate investment funds are usually associated with office buildings, although it has recently become clear that it is not the only type of real estate worth investing in: as it turns out, assets in the logistics sector are the true winners of the pandemic. The real estate portfolio of Diófa Asset Management, manager of the third largest property fund in Hungary, also includes three logistics parks, which have been of great importance to the investor in the past period.

A Pandemic Winner

Many expected COVID-19 to reverse the soaring rise of investment properties, but this prediction proved only partially true. Retail properties have suffered a clear drawback due to the pandemic since the discounts provided for tenants have set the limits on sales. Despite the rising adoption of working from home, office buildings have not come out on the losing side; however, there is one type of property asset that has undoubtedly come out of the epidemic victorious: logistics parks. Logistics properties have performed beyond expectation over the past one and a half years. In addition to the

The real estate portfolio of Diófa Asset Management, besides several exclusive Class “A” office buildings, includes three logistics parks, two of which are located in Budapest and one in the countryside. It is no coincidence that these properties are a vital part of the company’s real estate funds since the epidemic caused the logistics industry to soar, with the experts of Diófa being confident that this trend will continue in the future. The three logistic parks currently managed by Diófa Asset Management are:

record utilization of leasable areas, the willingness to invest in this type of real estate fund has also increased. Their success should not be so surprising, considering the reasons behind the constant rise in popularity of these assets: namely, the lockdowns due to COVID-19, which also increased e-commerce activity during this period. More and more people opted for online shopping than before, and most companies were forced to catch up with this trend. This significantly increased the utilization of logistics properties, allowing landlords to raise their prices, which were previously not exceptionally high for such parks. Furthermore, rising demand and prices will not be stopped by the end of the pandemic, according to real estate experts, with logistics parks continuing to play a major role in real estate investment funds in the coming years.

Diófa’s Logistics Assets Diófa Asset Management is one of the most dynamically developing companies in the Hungarian asset

management sector, providing asset management services to institutional and retail clients since its establishment in 2009 and premium asset management services since 2014. The institutional clientele of Diófa Asset Management consists primarily of prominent players in the fund and insurance markets, and in the case of retail investments, they offer investment opportunities in all major asset classes through investment certificates. It currently manages more than HUF 440 billion in assets for its institutional and retail clients. Real estate investment is one of the cornerstones in the investment activities of Diófa Asset Management; the company currently manages investments in its real estate funds worth more than HUF 250 bln. Diófa also manages the third-largest domestic real estate fund, the Magyar Posta Takarék Real Estate Investment Fund, as well as one of the most successful institutional real estate funds, the Torony Real Estate Investment Fund.

1. Innove Business Park: This property in District IX has an advantageous geographical location due to its proximity to the M5 motorway. The 19,000 sqm logistics park has a longterm contracted tenant base. 2. South Pest Business Park: Located in a redeveloped modern industrial zone, this 43,000 sqm property is characterized by high demand due to its condition and location. 3. Huncargo Logistics: The property is leased to Huncargo Holding, one of the important supply companies for the western Hungarian region. With an area of 14,100 sqm, the logistics park is located in Sopron. Diófa Asset Management has found an outstanding partner in the field of real estate, as it manages its real estate portfolio in close strategic cooperation with Indotek Group, with the latter operating and leasing the properties, and Diófa managing the investment activities related to the assets.

PRO PE RT Y M A NAGED BY

www.in-management.hu +36 1 920 2060 sales@in-management.hu

20 | 4

Special Report

www.bbj.hu

Budapest Business Journal | July 30 – September 9, 2021

21st Century Land Registry to Benefit Logistics DR. ESZTER KAMOCSAYBERTA

Managing Partner KCG Partners Law Firm

A significant barrier to the new supply of prime logistic spaces is that the permitting and entitlement processes are more complex, expensive, and timeconsuming than ever, increasing cost and decreasing potential supply, according to Prologis’ Research in its latest edition on logistics real estate.

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

News///in brief Logistics

INSIDE VIEW

On June 15, the Hungarian parliament adopted a new land registry act, introducing comprehensive changes to the Hungarian land registry system that may simplify such procedures, decreasing costs for developing new logistic sites. Most provisions of the New Land Registry Act are scheduled to enter into force on February 1, 2023.

Structural Trends Driving Demand for Legislation The supply of well-located industrial land is decreasing. Industrial-zoned land is shrinking in most highly populated areas due to conversions to other uses. Buildings have gotten larger and need more space as the primary function of a warehouse has changed from product storage to flow-through, making it even more challenging to find a suitable location. This highlights the importance of a new land registry using digital technology advances. The main goal of the new legislation is to upgrade the land register to an electronic database and fully digitalize land registration procedures, reducing time and costs. The new act introduces the main conceptual changes in the land registry system as follows: Principle of completeness: The rights, facts, and data regarding real estate that is the subject of the land register may be enforced if a given right, fact, or data point has been entered in the land register. Priority of the land registry: The new legislation aims at providing the fullest availability of rights, obligations, and data from the land registry regarding each property. The law requires that the land register be updated with technical data, which would also have priority over sectorial registries.

Automated decision making: It is expected that most of the land registry decisions will be automated, subject to certain conditions. These include whether all the data and information are at the authority’s disposal when the application is submitted, that the decision requires no deliberation, and that there is no adverse party. All of the above being so, the decision will be made within 24 hours.

New Perspectives?

As a general rule, the new Hungarian legislation aims to modernize real estate procedures by opening up new digital channels of data flow. Most importantly, the new act converts the land registry into a database that not only has priority above all other land-related databases kept by sectoral authorities, but this new database facilitates new functions, saving time and cost for investors. Property valuation necessitated collecting a robust amount of data from the property market, consuming valuable time and significant resources. But if there is a database in which data can be collected and analyzed along different parameters by using well-engineered software, the structured analytical work needed for the property valuation may be completed in next to no time. This is only one practical example of how the new land registry could be of use for investors, but the new database may facilitate the completion of many other business functions that are impossible under the current system. Land-registry reform will connect the land registry with other public electronic registers, enabling data from the land registry to be automatically updated and for information and communication to flow electronically. In many cases, automated transmission will be possible, and authorities, courts, and other authorized parties will have easier access to the system. The new land registry act also introduces a three-dimension database, enabling the illustration of underground and above-ground structures instead of the current twodimension land registry maps. The pandemic has highlighted the critical role of logistics in the functioning of society. The New Hungarian Land Registry Act will definitely become a useful fundamental support for this sector.

www.kcgpartners.com

Connecting Hungary to European High-speed Railway ‘Inevitable’ Connecting Hungary to the European high-speed rail network is not only a viable option, but also an inevitable step, said Secretary of State for Transport Policy László Mosóczi, at an online conference on the Hungarian section of the BudapestWarsaw / Vienna High-Speed Rail (NSV) connecting the Visegrád Cooperation countries, according to origo.hu. Presenting the results of the Hungarian feasibility study, Mosóczi said, “the largest-scale railway development in our lives is in sight. Although we can benefit from the investment, we are actually building high-speed rail for our children,” he stressed. The high-speed line will take passengers from Budapest to Vienna and Bratislava in less than 2 hours, Prague in 3.5 hours, and on to Warsaw in 5.5 hours, Mosóczi outlined. According to him, the development will create a sustainable future for the 175-yearold Hungarian railway network.

Knapp Investing HUF 6 bln in Nemesvámos The Hungarian unit of Austrian logistics company Knapp is investing nearly HUF 6 billion in Nemesvámos (120 km southwest of Budapest), Minister of Foreign Affairs and Trade Péter Szijjártó said on July 20, according to autopro.hu. The government is supporting the investment, which will create 500 high value-added jobs, with a HUF 1.4 bln grant, Szijjártó said. He added that Hungary had competed among 20 countries to bring Knapp’s investment to the city, where the closure of lawnmower

maker MTD Hungaria’s operation in 2020 left 456 people jobless and an industrial area of 90,000 sqm vacant. Knapp chief operating officer Franz Mathi said the group offers customized logistics solutions in several sectors, including healthcare, fashion, food and non-food retail, and industry.

Magyar Posta Lays Cornerstone of HUF 1.7 bln Logistics Base

State-owned Hungarian postal company Magyar Posta has laid the cornerstone of a HUF 1.7 billion logistics base in the Miskolc-Alsózsolca industrial park (180 km northeast of Budapest), according to napi.hu (Daily). The new facility will be three times the size of the postal service’s current base in Miskolc, where close to two million packages were sorted last year. The 4,747 sqm unit will be completed by early next year. On June 7, Magyar Posta inaugurated a package sorting center in Székesfehérvár (65 km southwest of Budapest), according to novekedes.hu (Growth). The center will handle 3.3 million packages a year, making it the biggest sorting center in the western part of the country, deputy CEO Szilárd Gerencsér said. He noted that the postal service had inaugurated seven package sorting centers around the country over the past two years under a program that aims to meet the growing demand created by online sales. Magyar Posta has a long-term rental agreement for the sorting center building in Székesfehérvár but has plowed about HUF 1.8 billion of its own money into the facility for upgrades that serve its own needs. The sorting center operates with a staff of about 250.

Budapest Airport Cargo Volume up 35.9% Cargo volume at Ferenc Liszt company’s presence in Budapest International airport reached contributes to the arrival of 86,798 tonnes in the first half approximately 2.5 million items of the year, up by 35.9% from per month currently by air, which the same period a year earlier, will increase strongly over the operator Budapest Airport (BUD) coming months, he said. Earlier, said on July 21. In June alone, the BUD signed a “sister airport” airport handled 15,233 tons of agreement with Shanghai cargo, 52.6% more than in June Pudong International Airport 2020 and 41.2% more than in June during a Chinese-Hungarian 2019. Budapest Airport CEO Chris logistics and e-commerce Dinsdale said that performance forum, according to portfolio.hu. over the past 12 months, when “The aim behind the signing of the airport handled 157,402 the sister airport agreement is tonnes of cargo, confirmed to launch, in the framework of that the sector is crucial for the even closer cooperation, new company. József Kossuth, head of passenger and cargo flights cargo for Budapest Airport, noted between the two airports, as that Alibaba Group, one of the soon as the regulatory framework largest e-commerce businesses allows, which could greatly in China, and its logistics partner, facilitate touristic, economic, and Cainiao, has chosen Budapest commercial relations between Airport as its regional hub. The the continents,” BUD said.

. . Budapest | July 30 – September 9, 2021 21 | 4Business Journal Special Report www bbj hu

. Special Report .| 21 www bbj hu

Budapest Business Journal | July 2 – July 15, 2021

Logistics Parks oPeRating ComPany, name, addRess, Phone, Website

WaRehousie LogistiCs

RaiL LogistiCs

aCCessibiLity to tRuCks

aCCessibiLity via WateR

domestiC WaRehousing

buiLding management

distRibution

Customs seRviCe

CtPaRk budaPest West www.ctp.eu

CtP management hungary kft. 2051 Biatorbágy, Verebély László u. 2. (30) 259-2465 www.ctp.eu

242,000

✓

–

✓

–

✓

–

dePo inteRmodáLis táRsas Logisztikai közPont kft. www.depologisztika.hu

PRoLogis PaRk budaPest-sziget https://prologisceesearch.com/hu/ raktari-parkok/magyarorszag/ prologis-park-budapest-sziget/

CtPaRk budaPest east www.ctp.eu

services

yeaR estabLished

Rank

ComPany Website

net WaRehouse sPaCe used foR LogistiCs WaRehousing (sqm)

Ranked by net warehouse space used for logistics warenhousing (sqm)

oWneRshiP (%) hungaRian non-hungaRian

toP LoCaL exeCutive Cfo maRketing diReCtoR

addRess Phone emaiL

2016

– CTP Invest, spol. s r.o. (100)

dávid huszlicska Veronika Ladó Thomas A. Kostelac

2051 Biatorbágy, Verebély László utca 2. (30) 259-2465 balazs.kovacs@ctp.eu

zsolt takács – –

2045 Törökbálint, Hosszúrét hrsz. 062. (23) 338-044 titkarsag@ depologisztika.hu

depo intermodális társas Logisztikai központ kft. 2045 Törökbálint, Hosszúrét (23) 338-044 www.depologisztika.hu

218,000

✓

–

✓

–

✓

1978

(100) –

Prologis hungary management kft. 1095 Budapest, Lechner Ödön fasor 7. (1) 577-7700 www.prologisce.eu

202,092

–

✓

–

✓

–

2001

A A

Paweł sapek – Marta Tesiorowska

2310 Szigetszentmiklós, Leshegy utca 30. (1) 577-7700 info-hu@prologis.com

CtP management hungary kft. 2051 Biatorbágy, Verebély László u. 2. (30) 847-3671 www.ctp.eu

190,000

✓

–

✓

–

✓

–

2016

– CTP Invest, spol. s r.o. (100)

dávid huszlicska Veronika Ladó Thomas A. Kostelac

2225 Üllő, Zöldmező utca (30) 847-3671 andras.kiss@ctp.eu

PRoLogis PaRk budaPest-gyáL https://prologisceesearch.com/hu/ raktari-parkok/magyarorszag/ prologis-park-budapest-gyal/

Prologis hungary management kft. 1095 Budapest, Lechner Ödön fasor 7. (1) 577-7700 www.prologisce.eu

174,932

–

✓

–

✓

–

2002

A A

Paweł sapek – Marta Tęsiorowska

2360 Gyál, hrsz. 7100. (1) 577-7700 info-hu@prologis.com

budaPest doCk szabadkikötő Logisztikai és iPaRi PaRk www.bszl.hu

budapesti szabadkikötő Logisztikai zrt.

170,000

✓

A A

ottó Cseh Edina Sponga Valéria Molnár

1211 Budapest, Weiss Manfréd út 5–7. (1) 278-3502 info@bszl.hu

PRoLogis PaRk budaPest-haRboR https://prologisceesearch.com/hu/ raktari-parkok/magyarorszag/ prologis-park-budapest-harbor/

Prologis hungary management kft. 1095 Budapest, Lechner Ödön fasor 7. (1) 577-7700 www.prologisce.eu

155,270

–

✓

–

✓

–

2001

A A

Paweł sapek – Marta Tesiorowska

1225 Budapest, Campona utca 1. (1) 577-7700 info–hu@prologis.com

áti dePo közRaktáRozási zRt. www.atidepo.hu

áti dePo közraktározási zrt. 1136 Budapest, Pannónia u. 11. (1) 305-2200 www.atidepo.hu

153,000

✓

–

✓

1996

Z.I. Logisztikai Zrt. (100) –

József földházi Mária Frühwirth Szabóné Györgyi Szabó Kovácsné

1136 Budapest, Pannónia utca 11. (1) 305-2200 mail@atidepo.hu

Wing zrt. 1095 Budapest, Máriassy u. 7. (1) 451-4760 www.wing.hu

140,000

–

✓

–

✓

–

2006

(100) –

– – –

2151 Fót, Akácos (1) 451-4760 egbp@wing.hu

gLP Üllő kft.

131,730

✓

–

✓

–

✓

–

2009

A A

– – –

2225 Üllő, Zsaróka út 8. (1) 336-2270 contact-hu@glp.com

mahaRt ContaineR CenteR kft. 11 www.containercenter.hu

mahaRt Container Center kft. 1211 Budapest, Weiss Manfréd út 5–7. (1) 278-3178 www.containercenter.hu

111,000

–

✓

–

✓

1997

High Yield Zrt. (50) WINTCO Kft. (50) –

zoltán fábián – –

1211 Budapest, Weiss Manfréd út 5–7. (1) 278-3178 mail@containercenter.hu

RaiL CaRgo teRminaL - biLk zRt. 12 www.railcargobilk.hu

Rail Cargo terminal - biLk zrt. 1239 Budapest, Európa u. 4. (1) 289-6000 www.railcargobilk.hu

95,000

✓

–

✓

2001

– Rail Cargo Terminal-Praha S.R.O. (85)Ocean Rail Logistics S.A. (15)

attila Czöndör – –

1239 Budapest, Európa utca 4. (1) 289-6000 titkarsag.rct.bilk@ railcargo.com

CtPaRk veCsés 13 www.ctp.eu

CtP management hungary kft. 2051 Biatorbágy, Verebély László u. 2. (30) 119-2075 www.ctp.eu

81,000

✓

–

✓

–

✓

–

2016

– CTP Invest, spol. s r.o. (100)

dávid huszlicska Veronika Ladó Thomas A. Kostelac

2220 Vecsés, 6127 hrsz., (30) 119-2075 peter.tar@ctp.eu

east gate business PaRk www.egbp.hu

gLP ÜLLő aiRPoRt Logisztikai 10 közPont https://www.glp.com/eu/

Special Report

www.bbj.hu

oPeRating ComPany, name, addRess, Phone, Website

WaRehousie LogistiCs

RaiL LogistiCs

aCCessibiLity to tRuCks

aCCessibiLity via WateR

domestiC WaRehousing

buiLding management

distRibution

Customs seRviCe

Budapest Business Journal | July 2 – July 15, Budapest Business Journal | July 30 – September 9, 2021

net WaRehouse sPaCe used foR LogistiCs WaRehousing (sqm)

22 | 4

Wing zrt. 1095 Budapest, Máriássy u. 7. (1) 451-4760 www.wing.hu

75,000

–

✓

–

✓

–

Prologis hungary management kft. 1095 Budapest, Lechner Ödön fasor 7. (1) 577-7700 www.prologisce.eu

67,121

–

✓

–

✓

–

gLP Üllő kft.

67,000

✓

–

✓

–

✓

–

CtP management hungary kft. 2051 Biatorbágy, Verebély László u. 2. (30) 847-3671 www.ctp.eu

64,000

✓

–

✓

–

✓

Wing zrt. 1095 Budapest, Máriássy utca 7. (1) 451-4760 www.wing.hu

60,000

–

✓

–

CtPaRk budaPest south 19 www.ctp.eu

CtP management hungary kft. 2051 Biatorbágy, Verebély László u. 2. (30) 847-3671 www.ctp.eu

58,000

✓

–

✓

masPed PoRt Logisztikai 20 közPont www.masped.hu

masPed Logisztika kft. 1211 Budapest, Szikratávíró u. 17–21. (1) 278-0951 www.masped.hu

50,000

✓

White star Real estate kft. 1124 Budapest, Csörsz utca 49–51. (1) 382-5100 www.whitestar-realestate. com

45,600

✓

Prologis hungary management kft. 1095 Budapest, Lechner Ödön fasor 7. (1) 577-7700 www.prologisce.eu

45,530

CPi hungary kft. 1138 Budapest, Dunavirág u. 2–6. (1) 225-6600 www.airportcity.hu, www.cpigroup.hu

CtPaRk tatabánya 24 www.ctp.eu

oWneRshiP (%) hungaRian non-hungaRian

toP LoCaL exeCutive Cfo maRketing diReCtoR

addRess Phone emaiL

(100) –

– – –

1044 Budapest, Ezred utca 2. (1) 451-4760 ipari@wing.hu

–

2000

A A

Paweł sapek – Marta Tesiorowska

2071 Páty, hrsz. 0161/26 (1) 577-7700 info-hu@prologis.com

✓

–

2021

A A

stefan sova – –

2310 Szigetszentmiklós, Bevásárló utca 1. (1) 336-2270 contact-hu@glp.com

✓

–

2016

– CTP Invest, spol. s r.o. (100)

dávid huszlicska Veronika Ladó Thomas A. Kostelac

2900 Komárom, Mylan utca (30) 847-3671 andras.kiss@ctp.eu

✓

–

2020

(100) –

– – –

2150 Fót, hrsz. 5453/3 (1) 451-4760 info@wing.hu

–

✓

–

2016

– CTP Invest, spol. s r.o. (100)

dávid huszlicska Veronika Ladó Thomas A. Kostelac

2330 Dunaharaszti, Gábor Áron utca 1. (30) 847-3671 andras.kiss@ctp.eu

✓

2001

A A

marcell kovács – –

1211 Budapest, Szikratávíró út 17–21. (1) 278-0951 logisztika@masped.hu

–

✓

–

✓

–

2018

– (100)

János gárdai Marietta Biczó Edina Magó

1223 Budapest, Növény utca 7. (1) 382-5100 info@park22.hu

–

✓

–

✓

–

2008

A A

Paweł sapek – Marta Tęsiorowska

2310 Szigetszentmiklós, hrsz.: 12718/2. (1) 577-7700 info-hu@prologis.com

45,000

✓

–

✓

–

✓

1996

– CPI Property Group (100)

gereben mátyás Tamás Pók Bea Déri

2220 Vecsés, Üllői út 807. (1) 225-6600 hungary@cpipg.com

CtP management hungary kft. 2051 Biatorbágy, Verebély László u. 2. (30) 259-2465 www.ctp.eu

43,000

✓

–

✓

–

✓

–

2016

– CTP Invest spol. s r.o (100)

dávid huszlicska Veronika Ladó Thomas A. Kostelac

2800 Tatabánya, Szarkaláb út (30) 259-2465 balazs.kovacs@ctp.eu

debReCeni Logisztikai közPont 25 és iPaRi PaRk www.trans-sped.hu

trans-sped kft. 4030 Debrecen, Vámraktár utca 3. (52) 510-120 www.trans-sped.hu

40,258

✓

–

✓

–

✓

–

✓

1990

(100) –

zsolt fülöp Olivér Sziller Zsuzsa Szilágyi

4030 Debrecen, Vámraktár utca 3. (52) 510-120 info@trans-sped.hu

CtPaRk aRRabona 26 www.ctp.eu

CtP management hungary kft. 2051 Biatorbágy, Verebély László u. 2. (30) 847-3671 www.ctp.eu

37,000

✓

–

✓

–

✓

–

2016

– CTP Invest spol. s r.o (100)

dávid huszlicska Veronika Ladó Thomas A. Kostelac

9027 Győr, Hűtőház utca (30) 847-3671 andras.kiss@ctp.eu

autóker Logisztika kft. 2360 Gyál, Heltai Jenő u. 73. (29) 544-690 www.businesspark.hu

35,600

✓

–

✓

–

1989

(100) –

– – –

2360 Gyál, hrsz. 7702 (1) 236-6400 alapkezelo@ otpingatlanalap.hu

2010

OTP Ingatlanbefektetési Alap (100) –

– – –

1097 Budapest, Gubacsi út 32. (1) 336-0900 alapkezelo@ otpingatlanalap.hu

Rank

yeaR estabLished

services

ComPany Website

PRoLogis PaRk budaPest-m1 https://prologisceesearch.com/hu/ 15 raktari-parkok/magyarorszag/ prologis-park-budapest-m1/

gLP sziget Logisztikai közPont www.glp.com/eu

CtPaRk komáRom 17 www.ctp.eu

east gate PRo www.wing.hu

PaRk22 ÜzLeti PaRk www.park22.hu

PRoLogis PaRk budaPest-sziget ii 22 https://www.prologisce.eu/ prologis-budapest-sziget-II

aiRPoRt City LogistiC PaRk www.airportcity.hu 23

m5-gyáL business PaRk 27 https://www.otpbank.hu/otpingatlanalap/ hu/Fooldal

City Point 9 váRosi Logisztikai 28 közPont www.otpingatlanalap.hu

iCon Real estate management kft. 1037 Budapest, Seregély utca 3–5.

34,746

✓

–

✓

–

. . 23 | 4Business Journal Special Report Budapest | July 30 – September 9, 2021

tuLiPán PaRk www.logicor.eu

PRoLogis PaRk 33 budaPest-budaöRs www.prologiscee.eu

CtPaRk székesfehéRváR 34 www.ctp.eu

teReLő utCa 35 www.otpbank.hu

shaRk PaRk www.logicor.eu

gLP gyáL Logisztikai közPont https://www.glp.com/eu/

innove business PaRk www.diofaalapkezelo.hu 38

áti -sziget kft. 2313 Szigetszentmiklós, Pf. 18. (24) 406-120 www.atisziget.hu

33,800

✓

–

✓

–

✓

–

Logicor management hungary kft. 2040 Budaörs, Vasút u. 11. (30) 870-3047 www.logicor.eu

32,844

✓

–

✓

–

✓

–

in-management kft. 1043 Budapest, Aradi utca 16–20. (1) 920 2060 www.in-management.hu/ingatlanok/ budapest/kiado/del-pesti-uzleti-park/

32,010

–

✓

–

✓

Logicor management hungary kft. 2040 Budaörs, Vasút u. 11. (30) 870-3047 www.logicor.eu

28,252

✓

–

✓

–

✓

Prologis hungary management kft. 1095 Budapest, Lechner Ödön fasor 7. (1) 577-7700 www.prologisce.eu

28,000

–

✓

–

CtP management hungary kft. 2051 Biatorbágy, Verebély László u. 2. (30) 847-3671 www.ctp.eu

25,000

✓

–

✓

–

. Special Report |. 23 www bbj hu

Budapest Business Journal | July 2 – July 15, 2021

services

✓

yeaR estabLished

Customs seRviCe

P ROP E RTY M A NAGED BY

distRibution

buiLding management

déL-Pesti ÜzLeti PaRk www.in-management.hu

domestiC WaRehousing

CameL PaRk www.logicor.eu

aCCessibiLity via WateR

aCCessibiLity to tRuCks

áti-sziget iPaRi PaRk www.atisziget.hu

RaiL LogistiCs

oPeRating ComPany, name, addRess, Phone, Website

WaRehousie LogistiCs

ComPany Website

net WaRehouse sPaCe used foR LogistiCs WaRehousing (sqm)

Rank

www bbj hu

oWneRshiP (%) hungaRian non-hungaRian

toP LoCaL exeCutive Cfo maRketing diReCtoR

addRess Phone emaiL

2001

Z.I. Logistics Zrt. (100) –

gábor kovács-f. Andrea Tornyossy –

2313 Szigetszentmiklós (24) 406-120 director@atisziget.hu

–

– (100)

bartosz mierzwiak – –

2040 Budaörs, Akron utca1. (30) 870-3047 –

–

2004

A A

– – –

1097 Budapest, Táblás utca 36. (1) 920-2060 sales@inmanagement.hu

✓

–

– (100)

bartosz mierzwiak – –

2051 Biatorbágy, Huber utca 5. (30) 870-3047 –

–

2005

A A

Pawel sapek – Marta Tesiorowska

2040 Budaörs, Seregély utca 8. (1) 577-7700 info-hu@prologis.com

✓

–

2016

– CTP Invest, spol. s r.o. (100)

dávid huszlicska Veronika Ladó Thomas A. Kostelac

8000 Székesfehérvár, Holland fasor 2. (30) 847-3671 andras.kiss@ctp.eu

– – –

1211 Budapest, Terelő utca 2–4. (1) 236-6400 alapkezelo@ otpingatlanalap.hu

✓

24,000

✓

–

✓

–

✓

–

2002

OTP Ingatlanbefektetési Alap (100) –

Logicor management hungary kft. 2040 Budaörs, Vasút u. 11. (30) 870-3047 www.logicor.eu

22,463

✓

–

✓

–

✓

–

– (100)

bartosz mierzwiak – –

2040 Budaörs, Vasút utca 11. (30) 870-3047 –

agate kft.

22,200

✓

–

✓

–

✓

–

2007

A A

– – –

2360 Gyál, hrsz. 7000/15 (1) 336-2270 contact-hu@glp.com

in-management kft. 1043 Budapest, Aradi utca 16–20. (1) 920 2060 www.in-management.hu

19,060

✓

–

✓

–

2006

A A

– – –

1097 Budapest, Táblás utca 39. (1) 920 2060 sales@inmanagement.hu

CtP management hungary kft. 2051 Biatorbágy, Verebély László u. 2. (30) 119-2075 www.ctp.eu

17,000

✓

–

✓

–

✓

–

2016

– CTP Invest, spol. s r.o. (100)

dávid huszlicska Veronika Ladó Thomas A. Kostelac

9700 Szombathely, Puskás Tivadar utca 10. (30) 119-2075 peter.tar@ctp.eu

masPed Logisztika kft. 1211 Budapest, Szikratávíró út 19-21. (1) 278-0951 www.maspedlogisztika.hu

13,300

✓

–

✓

–

✓

2001

A A

marcell kovács – –

2151 Fót, Keleti Márton utca 12. (1) 278-0951 logisztika@masped.hu

CtP management hungary kft. 2051 Biatorbágy, Verebély László u. 2. (30) 259-2465 www.ctp.eu

11,000

✓

–

✓

–

✓

–

2016

– CTP Invest, spol. s r.o. (100)

dávid huszlicska Veronika Ladó Thomas A. Kostelac

9027 Győr, Platánfa utca 6. (30) 259-2465 balazs.kovacs@ctp.eu

– – –

1033 Budapest, Szőlőkert utca 4/B (1) 236-6400 alapkezelo@ otpingatlanalap.hu

marcell kovács – –

2120 Dunakeszi, Alagi major (1) 278-0951 logisztika@masped.hu

P ROP E RTY M A NAGED BY

CtPaRk szombatheLy 39 www.ctp.eu

masPed észak-Pesti Logisztikai 40 közPont “b” teRmináL www.maspedlogisztika.hu

CtPaRk győR 41 www.ctp.eu

aquinCum Logisztikai PaRk 42 www.otpbank.hu

masPed észak-Pesti Logisztikai 43 közPont “a” teRmináL www.maspedlogisztika.hu

Cd hungary zrt.

4,423

✓

–

✓

–

✓

–

2002

OTP Ingatlanbefektetési Alap (100) –

masPed Logisztika kft. 1211 Budapest, Szikratávíró út 19-21. (1) 278-0951 www.maspedlogisztika.hu

3,200

✓

–

✓

–

✓

2001

A A

21 || 44 24

Special Special Report Report

www.bbj.hu

Budapest Business Journal | July 2 – July 15, Budapest Business Journal | July 30 – September 9, 2021

Logistics Service Providers

magyaR PoSta ZRt. www.posta.hu

WabeReR'S inteRnationaL nyRt. www.waberers.com

dHL CSoPoRt www.dhl.hu

RaiL CaRgo HungaRia ZRt. https://rch.railcargo.com

WabeReR'S-SZemeRey LogiSZtikai kFt. www.wszl.hu

küHne + nageL kFt. www.kuehne-nagel.hu

RaiL CaRgo LogiStiCS - HungaRia kFt. www.railcargologistics.hu

LiegL & daCHSeR SZáLLítmányoZáSi éS LogiSZtikai kFt. www.dachser.hu SCHenkeR nemZetköZi SZáLLítmányoZáSi éS LogiSZtikai kFt. www.dbschenker.com/hu

199,602

156,403 (2019)

82,756

70,800

59,556

52,050

32,240

29,263

23,857

212,141

210,000

–

62,905

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

diStRibution

tRanSPoRtation

dutiabLe goodS ✓

–

✓

Samsung, Amazon, IKEA

✓

–

MOL Nyrt., Audi Hungária Motor Kft., BorsodChem Zrt., ISD DUNAFERR Zrt., Mátrai Erőmű Zrt., Magyar Suzuki Zrt.

✓

Audi Hungária, Magyar Telekom, Pick Szeged Zrt., Tesco Magyarország, Unilever

✓

–

✓

yeaR eStabLiSHed

otHeR

WaReHouSing SeRviCeS –

domeStiC goodS

LtL

FtL

CaRgo ConSoLidation

domeStiC

inteRnationaL

RaiLWay

diStRibution

LogiStiCS SeRviCeS ✓

majoR CLientS in 2020

1993

1990

1993

2005

1991

1992

1982

1999

toP LoCaL exeCutive CFo maRketing diReCtoR

addReSS PHone emaiL

28,348

Hungarian state (100) –

györgy Schamschula – –

1138 Budapest, Dunavirág utca 2–6. (1) 767-8200 ugyfelszolgalat@ posta.hu

5,984

Trevelin Holding Zrt (30.99), MHB Optimum Zrt. (21), High Yield Vagyonkezelő Zrt. (20), other (38.01) –

barna erdélyi Szabolcs Gábor Tóth Dorottya Varga

1239 Budapest, Nagykőrösi út 351. (70) 421-6666 info@waberers.com

– Deutsche Post AG (100)

Zoltán Rezsek, Zoltán kemény, Zoltán bándli, Zoltán gáldi – –

www.logistics. dhl/hu-hu/home/ kapcsolatfelvetel. html

(0.01) Rail Cargo Austria AG (99.99)

norbert körös Román Kotiers Rita Szalay

1133 Budapest, Váci út 92. (1) 512-7435 cargo.rch@ railcargo.com

2,400

Waberer’s (100) –

Zsolt barna Szabolcs Tóth Dorottya Varga

1239 Budapest, Európa utca 6. (20) 377-3266 wszl@ waberers.com

1,075

– Kühne + Nagel AG (100)

márton Lányi Rade Nikolic Szilárd Paál

2071 Páty, Szent József út 4. (23) 889-000 info.budapest@ kuehne-nagel.com

– Rail Cargo Logistics - Austria GmbH (100)

gábor márta Tamás Gáspár –

1133 Budapest, Váci út 92. (1) 430-8500 office.rcl.hu@ railcargo.com

– Dachser SE (50), EL Holding s.r.o. (50)

Roman Stolicny – –

2085 Pilisvörösvár, Ipartelep utca 1. (26) 532-000 customer. pilisvorosvar@ dachser.com

358

– Schenker AG (100)

Sándor barényi – –

2310 Szigetszentmiklós, Leshegy utca 30. (1) 278-7878 info.hu@ dbschenker.com

Zsolt Fülöp, Szabolcs Zsolt Fülöp Olivér Sziller Zsuzsa Szilágyi

4030 Debrecen, Vámraktár utca 3. (52) 510-120 info@trans-sped.hu

tRanS-SPed CSoPoRt 10 www.trans-sped.hu

21,206

210,000

✓

–

✓

–

✓

–

1990

717

(100) –

gySev CaRgo ZRt. www.gysevcargo.hu

16,405

1,699

88,000

✓

–

✓

–

✓

2009

234

GySEV Zrt. (100) –

jános boda – –

9400 Sopron, Mátyás király utca 19. (99) 577-206 info@gysevcargo.hu

314

– Beteiligungsgesellschaft Lagermax Autologistik International GmbH (100)

jános molnár Bálint Hetyei –

2040 Budaörs, Vasút utca 3. (23) 506-100 lagermax@ lagermax.hu

LageRmax 12 autótRanSZPoRt kFt. www.lagermax.com

10,395

230,000

✓

–

✓

–

✓

–

✓

1994

oWneRSHiP (%) HungaRian nonHungaRian

22,964

53,400

WaReHouSing

net WaReHouSe SPaCe uSed FoR LogiStiCS WaReHouSing (Sqm)

net Revenue FRom LoigiStiCS SeRviCeS in 2020 (HuF mLn) A

FReigHt FoRWaRding SeRviCeS

no. oF FuLL-time emPLoyeeS on june 1, 2021

ComPany WebSite

totaL net Revenue in 2020 (HuF mLn)

Rank

Ranked by total net revenue in 2020

Porsche Hungária Kft., Ford Közép- és Kelet-Európai Kft., Mercedes Benz Manufacturing 1990 Hungary Kft., Kia Motors Hungary Kft., Eurasia Logistics Kft., Mercedes Benz Hungária Kft.

. . Budapest | July 30 – September 9, 2021 22 | 4Business Journal Special Report

ekoL LogiStiCS kFt. 14 www.ekol.com

euRoSPed ZRt. 15 www.eurosped.hu

bi-ka LogiSZtika kFt. www.bikalogisztika.hu

áti dePo 17 köZRaktáRoZáSi ZRt. www.atidepo.hu

maSPed LogiSZtika LogiSZtikai éS 18 vámügynökSégi kFt. www.masped.hu

RaiL CaRgo teRminaL 19 - biLk ZRt. www.railcargobilk.hu

veRSteijnen 20 LogiStiCS kFt. www.versteijnen.com

PLimSoLL ZRt. 21 www.plimsoll.hu

FLuviuS kFt. www.fluvius.hu

euRo mini StoRage 23 HungáRia kFt. www.euroministorage.hu

9,725

9,148

8,302

7,203

2,990

2,941

2,841

2,483

9,725

7,203

2,764

2,483

13,500

20,000

35,000

10,000

✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

otHeR

WaReHouSing SeRviCeS ✓

✓

–

✓

–

✓

–

✓

addReSS PHone emaiL

425

– Ewald Raben (100)

Csaba árvai Noémi Szűcs Zoltán Üveges

2330 Dunaharaszti, Jedlik Ányos utca 31. (24) 502-000 hungary.info@ raben-group.com

✓

211

– Ekol Lojistik AŞ (100)

ákos kovács Attila Harmos Ádám Molnár

1211 Budapest, Szikratávíró út Hrsz.: 210023 (70) 701-0847 hungary@ekol.com

✓

2018

Sped-Invest Team Kft. (100) –

István Sevecsek – –

1138 Budapest, Szekszárdi utca 14. (1) 450-9000 eurosped@ eurosped.hu

–

Claas Hungária Kft., SMP Automotive Mirror Technology Hungary Bt., Eagle Ottawa Hungary Kft., 1991 Stadler Szolnoki Vasúti Járműgyártó Kft., Essentra Filter Products Kft., DRENIK Hungary Kft.

✓

205

Anita Biró Karmazinné (100) –

gabriella Szécsi Dorina Törőcsik Kovácsné Attila Katkics

5000 Szolnok, Városmajor út 23. (56) 524-050 info@bi-ka.hu

148

Z.I. Logisztikai Zrt. (100) –

józsef Földházi Mária Frühwirth Szabóné Györgyi Szabó Kovácsné

–

1136 Budapest, Pannónia utca 11. (1) 305-2200 mail@atidepo.hu

137

Masped Zrt. (100) –

marcell kovács Zsolt Bende –

1211 Budapest, Szikratávíró út 17–21. (1) 278-0951 logisztika@ masped.hu

–

– Rail Cargo Terminal-Praha S.R.O. (85), Ocean Rail Logistics S.A. (15)

attila Czöndör – –

1239 Budapest, Európa utca 4. (1) 289-6000 titkarsag.rct.bilk@ railcargo.com

–

– Versteijnen Logistics Group B.V. (100)

Sándor voller Zoltán Jobb –

9600 Sárvár, Ikervári utca 42. (95) 325-777 info.hu@ versteijnen.com

✓

botond Szalma Mariann Sánta –

1139 Budapest. Forgách utca 9. (1) 210-9800 plimsoll@ plimsoll.hu

✓

–

Electronics, automotive, oil industry

–

✓

–

✓

yeaR eStabLiSHed

toP LoCaL exeCutive CFo maRketing diReCtoR

diStRibution

tRanSPoRtation

dutiabLe goodS

LtL

FtL

CaRgo ConSoLidation

domeStiC

inteRnationaL

RaiLWay –

www bbj hu

oWneRSHiP (%) HungaRian nonHungaRian

majoR CLientS in 2020 domeStiC goodS

LogiStiCS SeRviCeS ✓

diStRibution

WaReHouSing

net WaReHouSe SPaCe uSed FoR LogiStiCS WaReHouSing (Sqm) 70,000

FReigHt FoRWaRding SeRviCeS

. Special Report |. 25

Budapest Business Journal | July 2 – July 15, 2021

no. oF FuLL-time emPLoyeeS on june 1, 2021

Raben tRanS euRoPean HungaRy 13 kFt. www.raben-group.com

net Revenue FRom LoigiStiCS SeRviCeS in 2020 (HuF mLn)

ComPany WebSite

totaL net Revenue in 2020 (HuF mLn)

Rank

www bbj hu

1989

2013

1996

2001

1995

1,823

6,000

–

✓

–

✓

–

✓

–

1992

Individuals (49) TTS S.A. (51)

962

–

✓

–

✓

–

2001

PLIMSOLL Zrt. (100) –

botond Szalma Ferenc Kruppa –

1139 Budapest, Forgách utca 9. (1) 237-1100 fluvius@fluvius.hu

– Euroministorage Investments (Cyprus) Ltd. (100)

danu m. temelie – –

1097 Budapest, Gyáli út 50. (1) 333-8888 info@ euroministorage. com

Zoltán Szabó – –

2360 Gyál, Heltai Jenő utca 73. (29) 544-690 info@ businesspark.hu

263

7,500

✓

–

✓

–

2006

autókeR 24 LogiSZtikai kFt. www.businesspark.hu

257

✓

–

✓

–

✓

–

✓

–

✓

1989

X Ingatlanfejlesztő és Ingatlanhasznosító Zrt. (100) –

inteRCaRgo 25 HungaRy kFt. www.intercargo.hu

164

✓

–

✓

–

✓

–

1993

CG Invest Kft. (100) –

Csilla gömze – –

1117 Budapest, Szerémi út 7. (1) 425-2240 info@intercargo.hu

MNV Zrt. (33.33), Baja Municipality (33.33), ÁTI Depo Zrt. (33.33) –

László nagy – –

6500 Baja, Szentjánosi utca 12. (79) 422-502 info@portofbaja.hu

bajai oRSZágoS köZFoRgaLmú 26 kikötőműködtető kFt. www.portofbaja.hu

127

✓

–

✓

1999

www.bbj.hu

Budapest Business Journal | July 16 – July 29, 2021

Socialite Planning a Budapest Staycation This Summer

When I think of the charm of cities in the summertime, these lines from F. Scott Fitzgerald’s “The Great Gatsby” about New York always spring to mind: “We drove over to Fifth Avenue, so warm and soft, almost pastoral, on the summer Sunday afternoon that I wouldn’t have been surprised to see a great flock of white sheep turn the corner.” DAVID HOLZER

This summer, with foreign travel still a complicated, uncertain affair and prices for holiday rentals in the Balaton skyrocketing, the idea of staying in Budapest appeals more than ever before. For me, sheep or no sheep, the battered grandeur of Budapest is as romantic in the summer as it is in the depths of winter. I’m happy wandering the streets on the Buda side between Margaret Bridge and any of the other bridges, then crossing over the Danube to head up towards Districts VII and VIII in search of a cool bar or restaurant. This time, though, I want to explore Budapest’s glorious green spaces and venture a little further afield. I have a weekend in which to do so. When I visit the city, I’m fortunate that I always stay up on the hill on the Buda side with Margit-sziget (Margaret Island) lying below, in the middle of the Danube, and reached by the Margit híd (Margaret Bridge). I plan to start with a walk around Margaret Island as early as I can

Aerial view of Margit-sziget and Margit híd, an ideal stopping-off point in a Budapest staycation. Photo by Alexey Oblov / Shutterstock.com. bear it on my first morning, a little over five kilometers, and then head somewhere for lunch. From the metro station at the Buda end of the Margaret Bridge, it’s possible to get the H5 HÉV overground train all the way to Szentendre, a charming town on the Danube. Szentendre has a somewhat Mediterranean feel because it was settled by Serbs fleeing the Turks in the 17th century. I’m intrigued by the From Sea restaurant in Szentendre. This, as the name suggests, has plenty of seafood on the menu. Much as I love the way Hungarian cuisine uses freshwater fish, I often hanker for something caught in the sea.

Hekk or High Water

a best-kept secret, Csillaghegyi strand is very much a place where Budapesters congregate. The baths were opened in 1919. Set in a large, leafy park dotted with sculptures, its terraced sunbathing areas and promenades made Csillaghegyi strand particularly modern and elegant. With its sleek lines suggestive of an oceangoing liner, the main building retains a flavor of that elegance today. For me, four things I’ve learned about the Csillaghegyi strand are worth sharing with you. Its website claims that the first wave pool in Hungary was installed at the baths in 1925. This would make it the precursor of the wave pool at Gellért Baths in the city, built in 1927. Incidentally, Ludwig II of Bavaria (also known as “the Fairy Tale King”), who reigned from 1864 to 1886, is credited with being the inventor of the wave pool. A legendary builder of over-the-top fantasy castles, Ludwig made waves by electrifying a lake. I’ve been unable to find out how.

But I might settle for hekk, Hungarian for hake, at one of the restaurants on Római strand. Not that hekk, prepared the Hungarian way, means “settling” for anything. It’s every bit as delicious as good British fish and chips but with the bonus of paprika rubbed into the fish and batter and the fries. In Tarzan’s Wake I love Római Strand. It’s a bit like Nor have I found out who won when a seaside resort was picked up and Olympic champion Johnny “Tarzan” placed by the Danube, which gives it a Weissmuller swam a race at Csillaghegyi surreal quality. If you want to be among strand against Hungary’s Dr. István ordinary Budapesters at play, this is the Bárány, Olympic silver medalist, or place to go. You can get to Római Strand or places nearby on the number five HÉV. even the year the competition took place. Bárány was the second person in If I decide I want to swim rather the world to swim 100 meters in under than gaze longingly at the water, I’ll a minute after Weissmuller, so it must head for Csillaghegyi strand, also on have been a close race. the Buda side. While it’s not precisely

Weissmuller was of Hungarian origin. He was born in 1904 in Freidorf in the Hungarian part of AustriaHungary (now part of Romania), emigrated to the United States, and made his first Tarzan movie in 1932. Usually regarded as the definitive Tarzan and famous for his “Tarzan yell,” Weismuller was one of the Beatles’ heroes pictured on the cover of 1967’s revolutionary Sergeant Pepper’s Lonely Heart’s Club Band album. Paul McCartney explained how Weismuller ended up on the album cover. “These were all just cult heroes. George chose a few of his schoolmates he liked, and the rest of us said names we liked the sound of: like Aldous Huxley, H.G. Wells, Johnny Weissmuller...” The third thing worth reporting about the Csillaghegyi strand is that the water in the outdoor pool is always absolutely freezing. Perfect for waking you up on a sultry summer day in Budapest. And the fourth thing is that the best lángos in the whole of Budapest are found at Csillaghegyi strand, or so I’m reliably informed. Lángos, deep-fried fluffy bread, which I have topped with garlic paste and Hungarian sour cream, is utterly delicious but such an indulgence I only ever have it once a year. How fitting that the next time I indulge myself with a lángos, it will be after I’ve swum in freezing cold water, following in the wake of Tarzan.

www.bbj.hu

Budapest Business Journal | July 16 – July 29, 2021

Photo by Natalia Van Doninck / Shutterstock.com

Aromatic Whites and Vibrant Rosés for Summertime Sipping Hungary is blessed with several light, airy, aromatic grape varieties that many of us might overlook in cooler conditions, but which can be a refreshing joy as temperatures soar and bigger wines fall flat. ROBERT SMYTH

Irsai Olivér is one such variety that many wine snobs turn their noses up at, but its pleasantly pungent white wine can be a revelation in the heat of summer. This crossing of the Csabagyöngye and Pozsonyi fehér grapes, created by Pál Kocsis in 1930, is what it is; a vibrantly aromatic grape that appeals to many consumers with its floral, fruity, Muscatlike, indeed summery, nose. Irsai can offer much on the first whiff but let you down with what can be a disappointingly flabby palate, the taste of which can be gone in a second with no acidity to flesh out the length. However, when the balance is better, with good acidity to match the aroma, it can be fragrant, fruity, and fresh. From Eger, Ostoros Irsai Olivér 2020 has got everything in the right place. This wine has a cooling, ethereal, and elegant quality, with crispy acidity and good fruit. It manages to deliver as much on the palate as on the nose; wines are, after all, to be drunk and not sniffed! A genuine bargain at HUF 899 from webshop.ostorosbor.hu, it won a gold medal at the Berlin Wine Trophy, a competition that focuses on predominantly supermarket wines. Majority-owned by Gergő Soltész, Ostoros is showing excellent consistency at lower price points and hopes to build up to an output of six million bottles per year. Its premium wines are bottled under the Soltész label. The very well-known Nyakas Pince from Zsambék in the Etyek-Buda region does one of the best Irsai Olivérs around, and the 2020 vintage is as good as ever, with likable lychee and grape notes.

Exciting Spiciness

Irsai Olivér is one of the parents of Cserszegi fűszeres, the other being Red Traminer. Crossed by Károly Bakonyi in 1960, Cserszegi frequently has the acidity that Irsai so often

lacks, as well as an exciting spiciness; indeed, fűszeres translates as “spicy.” At Garamvári Szőlőbirtok in the Balatonboglár wine region, it is a nice vinous experience to taste the large winery’s Irsai Olivér and Cserszegi fűszeres side by side (the 2020s are HUF 1,500 and HUF 1,515, respectively, from garamvariszolobirtok.hu). The latter is more restrained on the nose than the former but has a bit more zesty action on the palate. I’ll let you judge if it is worth the extra HUF 15! From the upcoming Bükk region in the country’s northeast, Zsolt Sándor manages to coax seriously complex wine from the Cserszegi fűszeres grape, with his spontaneously fermented and lees-aged (for 14 months) Lou Lee 2018 (HUF 6,500 from sandorzsolt.com), which comes from the Csattos vineyard. Incidentally, another exciting wine is his rich and nutty Ezerfürtű, a crossing of Hárslevelű and Tramini. Királyleanka is another aromatic white grape variety, known as Fetească regală in Romania, from where it originates. Etyeki kúria uses it as the base for a light, sparkling wine, Pláne Frizzante White, which also contains Zenit and Pinot Gris (HUF 2,250 from Bortársaság). Made using what is sometimes disparagingly known as the “bicycle pump” method ( pompe bicyclette in French), where carbon dioxide is added at bottling, Pláne Frizzante White is like a fruit salad in a glass with a deliciously creamy and gentle mousse. Over in Eger, János Bolyki is also noted for his still Királyleánka, which is made solely in the tank and oozes primary grape and peach aromas and also a zesty grape soda palate. In 2020, he managed to harvest the grapes before the rain hit. It was vinified in his stateof-the-art new winery, built next to his original winery that’s strikingly located in a former rhyolite mine.

Rosé Party

Hungary is a strong producer of rosés, often based on the Kékfrankos grape, which brings vibrant red fruit and a zippy acidity to the party. A good example is Bolyki’s rosé 2020; in addition to the Kékfrankos, it also has Blauburger, Portugieser, and Merlot in the mix. It oozes strawberries and has vibrant acidity that satisfyingly quenches the thirst. This salmon-colored rosé (HUF 1,890 from Bortársaság) features a large pink boot on the typically fun, creative, and colorful Géza Ipacs-designed label. As mentioned in my last column, the graphic designer has recently designed a new Eger logo for his hometown. Not surprisingly, it is based on a bull, given the region’s connection to Bikavér (Bull’s Blood), with a pair of contemporary-looking, sleek wings. Egri Csillag, (Star of Eger), which in 2010 became the white equivalent of the red wine Bikavér, must be composed of at least 50% of Carpathian basin grape varieties, such as Olaszrizling, Hárslevelű, Leányka, Királyleányka, Zengő and Zenit. Aromatic varieties like Cserszegi Fűszeres, Zefír, Irsai Olivér, Tramini and Muscat Ottonel are limited to a maximum of 30%. The Egri Csillág offerings of Bolyki and Tibor Gál in

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the Classic category from the 2020 vintage are currently drinking very nicely. The latter is composed of nine different varieties. “I believe in as many varieties as possible for Egri Csillag,” Gál tells the Budapest Business Journal. Both are available from Bortarsasag at HUF 1,750 and HUF 2,250, respectively. Meanwhile, three rosés from the sandy soils of the Kunság have scooped gold medals at the prestigious French Le Mondial du Rosé competition. Interestingly, two of them feature the Néró grape variety: Frittmann Néró Rosé 2020 and Szentpéteri Borpince Cabernero 2020 (70% Cabernet Sauvignon, 30% Nero). It is a hybrid variety that also incorporates other species of vines than the classic Vitis vinifera, often done to combat certain adverse growing conditions. Néró was created in 1965 by József Csizmazia, who coupled Eger 2 (also known as Villard Blanc) with Gárdonyi Géza. While hybrid varieties are often dismissed as inferior and lightweight, there’s something sexy about Néró. The other gold from Hungary’s largest wine region went to Font’s Kunsági Cabernet Sauvignon Rosé 2020. Light reds cooled down in the fridge can also make for pleasurable summer drinking, but the type of red is an important consideration. With its light tannins, spicy, fruity aromas and flavors, Kadarka is the ideal companion, but Portugieser is another good option, while lighter unoaked Kékfrankos can also be a good choice.

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