Budapest Business Journal 2919

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

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BUSINESS JOURNAL BUDAPEST

VOL. 29. NUMBER 19

OCTOBER 22 – NOVEMBER 4, 2021

Photo by Lázár Todoroff / AmCham.

SPECIAL REPORT

Real Estate Development

SPECIAL REPORT

Retail Developments Must Move With the Times It hasn’t been an easy few years for retail.

Concerns over the level of consumer spending after the financial crisis were followed by tough planning regulations for mall development, then COVID, the lockdown, and the rise of e-commerce. 11

SPECIAL REPORT

Post-pandemic Winners and Losers An overview of the prospects for real estate development must consider the availability of financing, demand and preleasing, sustainability and design and investment, with an exit strategy for a developer at a time and price that makes a project viable. 22

Good Growth Vibes

SOCIALITE

International Guitar Festival Returns Although Hungary was the first country in the world to hold a guitar festival, it didn’t have an internationally renowned competition until the Budapest International Guitar Festival and Competition was founded in 2014. Postponed last year by COVID, it makes it comeback this month. 28

NEWS

Rate Hikes Continue as Expected The MNB continued its tightening cycle, raising the key rate by 15 basis points to 1.8% at its latest rate-setting meeting on October 19. The council also decided to increase the overnight deposit rate by 15 basis points to 0.85% and the O/N and one-week collateralized loan rates by 15 basis points to 2.75%. 3

N ES BUSI

S

It is a “realistic expectation” that Hungary’s economy could grow by 5-6% in 2022, Minister of Finance Mihály Varga told the American Chamber of Commerce, despite “dark clouds” on the horizon. Other topics included the global minimum corporate tax, EU funding and the Moody’s upgrade.7 BUSINESS

Áder’s Call to Action at Budapest Climate Conference Launched with an impassioned video address

by János Áder, the President of Hungary, dozens of CEOs and professional specialists delved and debated the many vexed issues around climate change on October 7–8. 6

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News

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Budapest Business Journal | October 22 – November 4, 2021

BBJ

THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL CONTRIBUTORS: Balázs Barabás, Zsófia Czifra,

AN UNLIKELY RISE, AND A COMPETENT PERFORMER

Kester Eddy, Bence Gaál, David Holzer, Levente HörömpöliTóth, Christian Keszthelyi, Gary J. Morrell, Nicholas Pongratz, Gergely Herpai, Robert Smyth, Zsófia Végh.

LISTS: BBJ Research (research@bbj.hu)

Famously, we don’t “do” politics. Or, to be more nuanced, we don’t cover day-to-day politics. But business does not, cannot exist in a vacuum, cut off from the world around it. Though, I dare say, there have been a fair few businessmen and women down the years who wished it could do precisely that. Politics impacts business, and it is for that very reason that so many companies (but most especially the largest multinationals) have someone with a title that is a variation on the theme of director of corporate and government affairs.

Therefore, this issue of the Budapest Business Journal features reports on two politicians, one of whom certainly does have an impact on the business world and one who aspires to. Actually, he almost certainly aspires to higher things, but as a byproduct of those dreams, he could have a very direct influence on the corporate sphere.

We will take the latter first. Our story on page five reflects on the remarkable ascent of Péter Márki-Zay, a disaffected Fidesz supporter who has never been a member of parliament and has no official political party behind him (though he did found the Everybody’s Hungary Movement). From those unlikely beginnings, and based in large part on his record from his day job as the independent Mayor of Hódmezővásárhely, he finds himself the winner of the primaries to determine the joint candidate for prime minister of the six opposition parties.

He will now find himself going head to head with Viktor Orbán, a man who hasn’t really had to do much to win three consecutive terms with landslide majorities, such has been the state of the opposition parties, but who is arguably the most formidable campaigner in modern Hungarian politics, and who holds his party in an iron grip.

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Could Márki-Zay, backed by a rainbow coalition of parties that runs the spectrum from left to right and touches most bases in between, defeat Orbán? On paper, you would have to say it seems unlikely. But then it looked equally unlikely when he ran to be the mayor of Vásárhely, as it is known to us locals (I was married there), which was always assumed to be a Fidesz stronghold.

In the interests of balance, you will find the other politician I wanted to mention on page seven. Mihály Varga, the long-serving Minister of Finance, made his annual visit to the American Chamber of Commerce in Hungary and laid out his vision of the economic future.

One of the most impressive things about Varga is that he knows his audience. Fidesz politicians have a reputation for sticking very rigidly to whatever the party message of the moment is; such is the discipline of the organization.

But this wasn’t just a question of hitting the correct sound bites. Of course, he was upbeat about the economy, but he also acknowledged four “dark clouds” on the horizon that might prove a threat and spent some time examining each.

He had a tight schedule and had planned to leave “in the British way” as he put it (apparently a reference to slipping out of the room without saying goodbye; don’t ask me what is British about that), but found he had time, after all, to take a couple of questions from the floor (if not the assembled journalists). Whether you like a politician’s character or policies or not is beside the point. A competent person behaving in a thoughtful manner should not be the cue for a huge celebration, but it is reassuring when you come across it.

Robin Marshall Editor-in-chief

Why Support the BBJ? • 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.

• 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

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• 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.

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• 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.

THEN & NOW

Members of Parliament commemorate the late MP Lászlóra Seszták on October 18, 2021. In the black and white image from the Fortepan Public Archive, Parliament is seen in session in 1938.

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Budapest Business Journal | October 22 – November 4, 2021

News///macroscope Development of MNB Base Rate in Hungary

(March 23, 2004-October 19, 2021)

Source:

Rate Hikes Continue as Expected The National Bank of Hungary (MNB) continued its tightening cycle, raising the key rate by 15 basis points to 1.8% at its latest rate-setting meeting on Tuesday (October 19). The council also decided to increase the overnight deposit rate by 15 basis points to 0.85% and the O/N and one-week collateralized loan rates by 15 basis points to 2.75%, marking the bottom and top, respectively, of the central bank’s “interest rate corridor.”

ZSÓFIA CZIFRA

The Monetary Council of the MNB says it is executing the tightening at a steady pace after inflation rose to a nine-year high of 5.5% in September. The MNB was the first of the European Union member state central banks to embark on rate hikes back in June and has gone on with it each month since then.

Some analysts, however, say that the MNB should embrace a more hawkish

tone in its policy, as the Hungarian economy, like other economies in Europe in the course of recovery, is struggling with soaring energy costs, tight labor markets, and rising wages.

While the world’s leading central banks have maintained loose monetary conditions in the past month, there has been a shift in their communications towards a tighter tone. At its September policy meeting, the U.S. Federal Reserve decision-makers signaled that a moderation in the pace of asset purchases might soon be warranted if the economy develops in line with expectations.

Also in September, the European Central Bank slowed the pace of purchases under the Pandemic Emergency Purchase Program (PEPP).

The region’s central banks have all tightened policy to blunt the inflation spike but to differing degrees. The Czech National Bank delivered a 75 basis point hike in September, while Poland implemented a 40 basis point hike that markets had not anticipated this month.

The Monetary Council is committed to achieving and maintaining price stability, the MNB wrote in its statement following the decision. In the decisionmakers’ assessment, the inflation outlook continues to be surrounded by upside risks that might prove to be more persistent than earlier expected.

For this reason, the council said it considers it necessary to continue monthly interest rate tightening.

Further, it said it would continue the cycle of interest rate hikes until the inflation outlook stabilizes around the central bank target of 2-4% in

a sustainable manner and inflation risks become evenly balanced on the horizon of monetary policy.

Higher Inflation Path

The Monetary Council said the “significant” rise in commodities prices in recent weeks “points to a higher inflation path in the short run than expected in September,” when the central bank released its quarterly Inflation Report.

In that report, the MNB put CPI at more than 5% for the rest of 2021 before returning to its 2-4% tolerance band in Q2 2022 and stabilizing around the 3% target in the second half.

In September, headline inflation rose to a nine-year high of 5.5%, while the central bank’s tax-adjusted core inflation gauge rose to 4%, the top of its tolerance band. Significant price rises were measured over the last 12 months for alcoholic beverages and tobacco as well as motor fuels. In one month, consumer prices increased by 0.2% on average.

The government expects the inflation rate to start falling from the beginning of 2022 and sees the situation “normalizing” by the summer of 2022 to make the mid-term 3% target achievable by yearend, Minister of Finance Mihály Varga said at a press conference on October 19. The CPI target should be achieved gradually so as to avoid a “new wave of recession,” Varga added.

According to London-based analysts, inflationary pressures will increase in the coming months. Global financial advisor Morgan Stanley said the MNB’s Monetary Council had given the markets tougher forward-looking guidance. According to the company, the announcement that

the risk of inflation may prove to be more stubborn than previously expected suggests that the tightening cycle could be extended to 2022.

Analysts at Morgan Stanley’s London office said they currently maintain their forecast that the MNB will make two more interest rate increases, each of 15 basis points, before the end of this year, as energy prices remain high, further increasing the inflationary pressure.

However, according to analysts at Capital Economics, there are concerns in the market that the MNB’s monetary policy is not aggressive enough given the current inflationary environment, especially since the pace of interest rate hikes has slowed from an initial 30 basis points to 15. The company expects annual inflation in Hungary to rise above 6% in November and to remain above the upper edge of the central bank’s tolerance band until late 2022, longer than currently expected by the MNB.

Numbers to Watch in the Coming Weeks As for the next two weeks, the macroeconomics calendar is not very packed with releases. On October 28, the Central Statistical Office will publish employment and unemployment data for September. In August, 4.67 million people worked in Hungary, while the unemployment rate stood at 4%. On October 29, earnings statistics for August will be out. The National Bank of Hungary will publish the abridged minutes of this week’s latest Monetary Council rate-setting meeting on November 3.

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News

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Budapest Business Journal | October 22 – November 4, 2021

Varga: 4th Wave Here but Won’t hit Growth Due to the gradually increasing number of coronavirus infections in Hungary in recent weeks, experts agree that a fourth wave of the coronavirus pandemic has begun.

NICHOLAS PONGRATZ

However, it is expected to be weaker due to the high vaccination rate, meaning that current expectations of economic growth of around 7% and a deficit of about 7.5% will be unaffected, Minister of Finance Mihály Varga told the Portfolio Budapest Economic Forum conference in Budapest on October 19.

Similarly, Zoltán Gadanecz, founder of the GDN Real Estate Network, believes the period ahead will be different from the previous stages of the epidemic, particularly in the real estate market.

“We can only expect a significant negative impact on the real estate market if the virus demands a lot of sacrifices again, or if foreign capital withdraws from Hungary due to some external

AstraZeneca jabs and 19% of the 4,309,022 Janssen jabs.

Since those figures were collated, another 150,000 doses of the Pfizer/ BioNTech vaccine have been delivered.

Earlier, Hungary took delivery of 2,005,600 doses of the Russian Sputnik V vaccine and 5.2 million of China’s Sinopharm vaccine.

After talks with Russian Minister of Health Mikhail Murashko on October 14, Minister of Foreign Affairs and Trade Dr. Pál László Kovács consults with a woman Péter Szijjártó said that Hungary would about to receive a dose of the German-American get the technology necessary to make Pfizer-BioNTech Comirnaty coronavirus vaccine, Sputnik V at the national vaccine plant it at Pál Réthy Hospital in Békéscsaba on October is building by the end of the year under 19, 2021. Photo by Rosta Tibor / MTI. a political agreement reached in Moscow.

Hungary has an economic interest in manufacturing a vaccine that is in high influence,” he said. Since these chances demand worldwide, Szijjártó added. administering the inoculation, having are relatively small, Gadanecz said he With the abundance of deliveries and the been inoculated with China’s Sinopharm did not expect a reduction in prices. further development of eventual domestic vaccine earlier in the year.

Although the vaccine campaign production capacities, Hungary continues Vaccine Delivery has stagnated somewhat at just under to export excess vaccines to countries Meanwhile, COVID-19 vaccines six million people, the government in greater need. For instance, 400,000 continue to arrive in Hungary, with two- COVID jabs were delivered to each of continues to encourage those who thirds of the jabs expected under the haven’t had the jabs to get vaccinated Thailand and Vietnam, Szijjártó said in a joint European Union order delivered by and those for whom it is appropriate to post on his Facebook page on October 15.

October 6, according to data posted on receive a booster shot.

The minister noted that Hungary had the government’s dedicated website for Prime Minister Viktor Orbán got his agreed to sell the vaccines, at cost, to the two pandemic news koronavirus.gov.hu. booster jab last weekend, according to Southeast Asian states at the UN general The data revealed that 15,733,625 a video posted on his Facebook page assembly in New York three weeks earlier. of the 23,920,603 jabs from the EU October 17. Orbán had said he would “In addition to having enough vaccines order had arrived. Hungary had taken do so in his weekly radio interview on to inoculate all Hungarians and give them October 15, likening it to “life insurance.” delivery of 87% of the 10,874,511 Pfizer/ booster shots, we’ve also been able to help BioNTech jabs, 97% of the 1,723,610 Orbán received the Moderna vaccine, and are helping a number of countries Moderna jabs, 58% of the 6,513,460 on the recommendation of the doctor around the world,” Szijjártó said.

Investment Shows Signs of Uplift Global commercial real estate firm Avison Young has traced EUR 4.2 billion in investment volume for the first half-year in the Czech Republic, Hungary, Poland, Romania, and Slovakia. The consultancy recorded EUR 2 bln in Poland alone.

GARY J. MORRELL

This follows the established pattern with Poland as the dominant investment market in Central and Eastern Europe, followed by the Czech Republic, Hungary, and Romania.

In a recent transaction already reported by the Budapest Business Journal, the Hungarian investor Indotek Group decided to purchase the GTC Belgrade office portfolio for EUR 267.6 million.

The agreement will cover the sale of 11 buildings with a combined total of 122,000 sqm in five business parks.

According to analysts, once completed in this third quarter, the deal will become one of the CEE market’s most significant real estate transactions in the last five years.

Volumes should be relatively similar to 2020 at around EUR 10 bln for CEE and some EUR 1.1 bln in Hungary, according to Avison Young.

“After a quiet period in mid-2021, there is good momentum and a significant number

Prime CEE Yields 2021 Sector Office Industrial

Coronavirus ///roundup

Czech

Hungary

Poland

Romania

4% 4.5%

5.25%

4.5%

7.25%

6.5%

5.75%

7.5% Source: Avison Young

GTC Green Heart in Belgrade. of deals in the pipeline. I am confident on the activity level in the coming months,” comments Benjamin Perez-Ellischewitz, principal at Avison Young Hungary.

Domestic investors are particularly active in Hungary and the Czech Republic: in H1 2021, the share of domestic investors in Hungary stood at 80% and 44% in the Czech market. Across the whole year in 2020, the proportion of domestic investors was 52% in Hungary.

Local Capital

“On top of the usual Austrian and German capital active in the Hungarian, Czech, and Romanian markets, those

countries have seen a real development of local capital pools in the last few years,” Perez-Ellischewitz notes.

“Evolution of the legislation and the financing and tax framework have allowed for those developments,” he adds.

These domestic investors are also looking at possibilities in other parts of the region, given the lack of opportunities in their markets, and are, in effect, becoming regional players.

Perez-Ellischewitz points to Futureal, Indotek, and Wing are Hungarian examples of this phenomenon.

Looking at the performance of various sectors concerning investment grade stock and pipeline, Perez-Ellischewitz argues that what he calls the “doom scenario” for office will not happen, and he is confident of its performance in the long run.

“Obviously, as always, you have to be selective and different assets will fair differently. I think that the end of the debt moratorium will trigger an adjustment of prices in the hospitality sector. The logistics market is, of course, very hot currently.”

Yields are expected to remain stable for now in all assets classes, but a sizeable compression on logistics in the coming months to below 6% is predicted.

A significant differential of 100-150 basis points continues between Hungary, the Czech Republic, and Poland reflecting investor preferences.

For much more real estate news, see our Special Report on developments in the sector.

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Budapest Business Journal | October 22 – November 4, 2021

Outsider Péter Márki-Zay to be Opposition Alliance PM Candidate In one of the biggest upsets in modern Hungarian political history, the mayor of Hódmezővásárhely has won the second round of the opposition alliance’s primaries and is now set to face incumbent Viktor Orbán next spring.

KESTER EDDY

Péter Márki-Zay, a nominee lacking an official supporting political party, won the opposition alliance prime ministerial candidate pre-election contest amassing 371,560 votes, 56.7% of the total, in an exceptionally high turnout of 655,237 votes cast.

The result sets up Márki-Zay to do battle with Prime Minister Orbán, who has convincingly won three consecutive general elections since 2010, in next spring’s vote.

“Today is a celebration of democracy, and Viktor Orbán now has a strong challenger, including 106 joint constituency candidates,” Márki-Zay told a post-election press conference on Sunday evening.

He declared that the pre-election, or primary system, had “changed the opposition,” which will “replace Fidesz with a two-thirds majority next year.”

In what became a two-horse race after Mayor of Budapest Gergely Karácsony dropped out, Márki-Zay soundly defeated Klára Dobrev of the Democratic Coalition (DK), the winner of the first round, despite the member of the European Parliament increasing her vote by some 67,000.

Both leaders pledged to work together to maintain the unity of the opposition. Márki-Zay said he had called Dobrev the previous evening, and “we agreed that we will continue working together, regardless of the result.” Dobrev conceded defeat and congratulated Márki-Zay on his victory at 8 p.m. on Sunday, with just 60% of the votes counted.

Crucially, Budapest, which had primarily supported Karácsony in the first round, generally followed the mayor’s advice to back Márki-Zay, helping him triple his vote in the run-off.

Anna Orosz, now the interim leader of the centrist Momentum party, campaigning for Péter Márki-Zay at an opposition prime ministerial pre-election event in Budapest on September 1, 2021. Photo by Raketir / Shutterstock.com András Pulai, chief executive of pollster Publicus Research, said the result represented “a new paradigm in Hungarian politics, with the antiestablishment candidate winning the opposition primaries [….]. This may signal the end of the Orbán-Gyurcsány dichotomy in Hungarian politics,” referencing the husband of Dobrev and a former Socialist Prime Minister.

Opposition Success

Independent commentators concurred that, with some 850,000 voters taking part in the two rounds, the entire primary process had been a resounding success for the opposition. Nonetheless,

Márki-Zay and Business Who is Márki-Zay, and what would it mean for business if he became prime minister?

Péter Márki-Zay has been the mayor of Hódmezővásárhely, a town 170 km southeast of Budapest with a population of 45,000, since 2018, when he won a mayoral by-election against a Fidesz candidate with broad opposition support, amassing 57% of the local vote. He repeated this feat in 2019.

A disaffected former Fidesz voter and father of seven children, he proudly declares his devout Catholicism while stressing he respects all religious faiths and denounces sectarianism.

“I’m a conservative, I was the parish council leader in our Catholic community, the St. Stephen’s parish church, and up until 2010, I was a devoted Fidesz supporter. I didn’t support everything, but I still believe that

many challenges remain to be overcome to win even a simple majority in parliament next spring, never mind the coveted two-thirds majority cited by Márki-Zay in his victory speech.

As Political Capital, a Budapest thinktank, noted in its analysis of the results: “The second round did not alleviate concerns that in the countryside, especially in small settlements that serve as the base of the ruling party, there are few opposition voters.”

The six-party alliance can only win the general election if the opposition can increase support in such settlements, which “requires a meaningful effort from the prime ministerial candidate” and

Hungary developed closest to the European allies the fastest during Orbán’s first government, between ’98 and 2002,” he told foreign journalists in February.

Trained as an electrical engineer, economist, and in marketing, Márki-Zay is a firm believer in entrepreneurship and equality before the law. He is highly critical of what he terms the centralization of power under Prime Minister Viktor Orbán.

“I see the problem with Orbán [as] becoming the sole leader, first in his party, then on the right-wing of the political spectrum, and from 2010, gradually everywhere in the country.

He switched off the checks and balances, as much as they worked; he has almost unlimited power,” Márki-Zay asserts.

“I believe in local independence, in municipal independence, checks and balances, and the control of the power of the state. I’m very much pro-European Union and pro-

News | 5

particularly from Jobbik and the DK, the two parties which together will field 61 candidates of the 106 single-member constituencies, the analysis stressed.

Then there is the challenge of agreeing whose names will be nominated for the opposition’s share of the 93 seats available via the compensation list, which remains crucial for key party politicians to enter parliament if defeated in their individual constituency contests.

As Political Capital argues: “The joint party list can create the most tensions.

There is not even an agreement on when they should finalize the party list, let alone how the places should be distributed among parties.”

Potentially making the task even harder, Márki-Zay has talked of creating a seventh party caucus and has championed the idea that three out of the first 30 list places should be awarded to candidates of Roma origin (seemingly regardless of party affiliation).

“Tensions during the compilation of the joint party list can be said to be natural, [but the] parties will make a mistake if they take the debates to the public,” the think tank cautions, emphasizing that “the compilation of the list is a task for the political parties, which is – by nature – effective only if it is done behind closed doors.”

Nevertheless, as both Pulai and Political Capital note, there is an overriding factor compelling the opposition parties to reach a working, if not amicable, agreement: without one, the work done so far will come to naught since no single party in the alliance can do without the others.

“Everyone will support Márki-Zay, as long as he stays within the established boundaries. Now the parties need him, but eventually, in the end, he will need the parties,” says Pulai before turning to more earthy language.

“They will hold each other’s balls, and Márki-Zay will be included in this game.”

NATO. So, that’s why I consider myself as right-wing.”

He has also gained a reputation for clean governance. “I have a very strong stance against corruption, [and that] is also why we managed to win in Hódmezővásárhely,” he says.

However, observers warn that his tendency to engage in long speeches and off-the-cuff remarks, which have gone largely unnoticed nationally, could cause him problems on the national stage.

“He’s pretty much the same kind of guy as Orbán: he loves to argue, he loves to debate and confront himself and others,” says Publicus’ András Pulai.

“I’ve labeled him a Trumpian-style politician, and I tend to keep to this. He uses grandiose words and speeches; he refers to public polls which favor him and dismisses those that don’t.”

He has a reasonable knowledge of English, having worked in both Canada and the United States.

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Budapest Business Journal | October 22 – November 4, 2021

Business

Áder’s Call to Action at Budapest Climate Conference

Launched with an impassioned video address by János Áder, the President of Hungary, dozens of CEOs and professional specialists, either presenting individually or via panel discussions, delved and debated the many vexed issues around climate change at the Budapest Marriott Hotel on October 7 – 8.

KESTER EDDY

“My grandchild says to me: Grandpa, I grew up to be an adult in a period when the impacts of climate change posed a direct threat to human civilization.

I still have this nagging question, could you have stopped, in your own time, all that has happened by today? Why didn’t you listen to scientists? Why did you disregard scientific evidence?”

With these sobering words, describing a recurring dream he has with his as yet unborn grandchild 25 years hence, Áder set the mood for discussions at the second Budapest Climate Summit on October 7.

What followed over the next two days could fill a dozen issues of this paper with valid copy. Here, we highlight elements of just four speakers’ contributions from a wide range of disciplines.

Yvon Slingenberg, DG CLIMA

Yvon Slingenberg, Director of the European Commission’s DirectorateGeneral for Climate Action, arguably gave the most important presentation of the entire event in her keynote address, since she outlined the latest changes in legislation that will apply to all EU member states.

of years [.…] CO2 emissions have not been so high for two million years; thus, there are already some circumstances unable to be stopped.

Net-zero is not a question,” she said.

Matt Simister, Tesco Central Europe

Critically for all former Soviet-bloc states, the new targets will be based on emission levels set in 2005 rather than 1990. This means that Hungary’s oftquoted metric of “32% reductions in emissions” will no longer be the basis for comparison. This figure flatters the perceived national performance since it includes the huge effects resulting from the closure of energy-inefficient industries built up during the communist era, which would have been closed irrespective of climate change policies.

“For this system, we are also proposing to bring in new sectors, like maritime transport, which will cover all intra-EU trips, but also half of the trips going outside Europe. And, importantly, we propose also to cover fuels used in road transport and buildings, but this would be in a new, separate system,” Slingenberg said.

“This proposal is to also apply emissions trading to buildings and road transport, the purpose of which is really to provide an additional tool that ensures a higher certainty that we will reduce emissions from these sectors, because emissions from road transport have not [been] reduced in the EU since 1990, and, in fact, we have seen a considerable increase in Hungary, lately,” she pointed out.

“These two sectors will also remain part of another legal instrument which is called the Effort Sharing Regulation, and that applies to member states directly, and the purpose of that is to ensure that national policies will drive emission reductions.”

That is because the ESR proposes that member states “will be held

accountable to reduce emissions in the sectors covered by at least 40% by 2030 compared to 2005 levels,” Slingenberg pointed out.

“And here we have proposed an increase in all the national emission reduction targets, which range from minus-10% to minus-50%. Why this range? Again, this is a reflection of fairness in how we set the national targets because this is based on a GDP per capita allocation method, which has been used before, and it has been agreed at the highest level in the European Council that this should again be followed,” she said.

“For Hungary, as I’m sure you are aware, the committee proposal means increasing the target from the current minus-7% to minus-18.7%. So, that is ambitious, but I’m very happy that you will be discussing today how to make that happen.”

Diána Ürge-Vorsatz, Intergovernmental Panel on Climate Change

Diana Ürge-Vorsatz, the vicechair of Working Group III of the Intergovernmental Panel on Climate Change (IPCC), said that the issue seemed far away when climaterelated catastrophes were in Canada or Japan. But this summer, with 50ºC temperatures in Spain and Greece, deaths caused by floods in Germany and Belgium, along with a devastating tornado in the Czech Republic, climatechange effects are already lifethreatening in central Europe.

“Recent changes in the climate are widespread, rapid and intensifying, and unprecedented in thousands

Matt Simister, chief executive for Tesco Central Europe (and main sponsor of the summit), outlined his company’s extensive history in seeking emissions reductions and the drive to reduce waste in the food supply chain.

“In Hungary, this week, in partnership with Unilever and Waberer’s, we’ve launched the first fully electric heavy goods vehicle […], and on food waste, our CEE team were passionate before I arrived back in 2017. [...] We’ve reduced our food waste in Central Europe by 69% since 2016,” he told the conference.

“Some waste is natural in a business that’s trying to offer full availability to customers; we’ll donate it to humans first where we can and to animals where we can’t,” he explained.

Simister said the chain has become more innovative when coordinating charity collection of its food waste.

“We now have an app, developed in Ireland, that signals to the local charities when there is waste at the stores so that they can pick it up and take it to people in need.”

Gergő Lencsés, GE Gas Power

Gergő Lencsés, general manager of the gas turbines value chain for GE Gas Power, has a firm grasp of the technical challenges involved with the transformation to renewables. He also appeared frustrated at the ignorance of the politicians and activists driving that transformation.

“I think we should talk a little bit less about legislation and more about the technical challenges that we are facing.

That will help us to grow faster. For us engineers, please, give us time! We talk a lot about the intermittency with renewables, and that’s a major problem, but also there are quality problems as we put more renewables into the system.”

He asked how many electrical engineers were in the room? Two people raised their hands; with two on the stage, that made four people who spoke the same language.

Lencsés sought to explain the problems of the power factor in electrical circuits in layman’s terms. But with just four electrical engineers present, it’s difficult to ascertain how many understood him and the issues involved.

“It’s not easy, but electrons follow Kirchoff’s laws rather than our laws and regulations,” he cautioned.

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Budapest Business Journal | October 22 – November 4, 2021

Growth Prospects Look Good, Despite Some Dark Clouds It is a “realistic expectation” that Hungary’s economy could grow by 5-6% in 2022, Minister of Finance Mihály Varga told the American Chamber of Commerce at one of his regular business forum meetings with the lobbying organization.

Minister of Finance Mihály Varga. Photo by Lázár Todoroff / AmCham.

ROBIN MARSHALL

That growth reflects the strength of the region, the finance minister said, with 10 EU countries “already performing at the level before the pandemic.” Top of the list is Ireland, but that benefits from the multinationals based there for tax reasons, Varga pointed out. The remainder were from the Baltics and Central and Eastern Europe.

“Hungary has been able to return to the growth path even though tourism, which generates 8-10% of GDP, has not returned,” the minister told AmCham members.

The detailed analysis of GDP data necessarily takes time, he noted: Q2 closed in June, but exactly how well the economy had performed could only be seen when all the numbers had been crunched at the end of August.

To try and bridge that gap, the government has developed what Varga called the “weekly economic index,” which pulls data from online cash registers, Google searches for products and services, and the like.

That weekly snapshot reveals that despite the shutdowns of German and Japanese automakers because of the global microchip shortage (a move that the minister confessed had left him “rather alarmed” initially), Hungary is “still doing well.”

Varga said there was an excellent chance “of recording good figures” for the full year in 2021, a view he said was shared by analysts. “Some experts say we might reach 8% [GDP growth]. I would be very happy with that, of course, but I would also be happy if we reached 7-7.5%. Even the most pessimistic say 7% GDP growth can be counted on.”

“Moody’s cannot be described as ‘friendly’ to the Hungarian economy, so we were surprised when it upgraded. It is still far from an ideal situation; we are not yet at [the highest] triple-A level, but we are working on that.”

The minister acknowledged that there were some “dark clouds on the horizon.”

He highlighted four, including fuel and energy prices, along with inflation, which he said “goes hand-in-hand with relaunching the economy” but was “above the expected level everywhere.”

Thirdly, “The virus itself is not yet over,” he warned, “there is going to be a fourth wave.” Mutations of the virus also presented a threat, as evidenced in Israel. “There might be a situation where we have to introduce measures to prevent the spread of the virus.”

The fourth cloud he characterized as a “lack of things” such as those automotive microchips, or the recent fuel crisis in the United Kingdom, prompted not by a lack of fuel, but a lack of HGV (heavy goods vehicle) drivers to transport it. He also cited a lack of labor in construction and the lack of containers hitting logistics operations. “That was not there before but is characteristic of our period.”

Although not one of his “four clouds,” Varga also made a pointed reference to the lack of EU approval for Hungary’s Recovery and Resilience Facility (RRF), the negotiations over which were supposed to be concluded by the end of September.

The RRF makes loans and grants available to support post-COVID reforms and investments. The aim is to mitigate the economic and social impact of the coronavirus pandemic and to make European economies and societies more sustainable, resilient, and better prepared for the challenges and opportunities of the green and digital transitions.

Launch Ready

“It is ready to launch; however, we are still waiting for EU approval.” Thus far, 19 EU member states have had their RRF plans approved, most recently Malta on October 5. From the region, the Czech Republic, Croatia, Slovakia, and Slovenia have all been greenlighted, but not Hungary or Poland. Varga said the reason for the delay was “political.”

Unless funds are released soon, “we will be left behind,” the minister feared.

Business | 7

Hungary had therefore conducted “very successful” FX bond issues in dollars and euros to “make up for missing EU funds.”

An audience member asked what the government was doing to improve competitiveness since Hungary is only mid-table within the EU. The minister pointed out that he chairs the advisory National Competitiveness Council, set up in 2016, and featuring key scientific and economic players, the president of AmCham among them.

“We have been able to take steps forward, competitiveness did improve, but I am not yet satisfied. [….] The Hungarian economy has to become more competitive.” The solutions are complex and long-term, he said. One example he gave was that of life-long learning.

In Hungary, just 10-11% of Hungarian adults are enrolled in adult education. “In Austria, the level is 40-50%: Definitely, we have to follow that.”

“Moody’s cannot be described as ‘friendly’ to the Hungarian economy, so we were surprised when it upgraded. It is still far from an ideal situation; we are not yet at [the highest] triple-A level, but we are working on that.”

Asked about the landmark global minimum tax (adopted by the OECD later that day), Varga replied that “We are not planning on changing our stance,” that setting taxes had to remain a national, rather than EU, competence. He praised the “very intensive cooperation within the EU and outside” to reach an agreement. “I would like to thank the U.S. Treasury for their contribution” to finding a “good compromise,” he added.

The OECD, the G7, and the United States had all proved flexible, the finance minister said. That cooperation had resulted in an agreement that had been “really hard-fought” and was, he thought, “unprecedented.”

Dynamic Growth

Further evidence of the “dynamic” nature of Hungary’s economic growth could be found in the recent upgrade by Moody’s Investor Services, one of the three major international rating agencies, to Baa2.

Minister Mihály Varga with members of the AmCham board. Photo by Lázár Todoroff / AmCham.

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Budapest Business Journal | October 22 – November 4, 2021

Photo by Satoer Design / Shutterstock.com

COVID-19 Effects on Debt Levels and Inflation Les Nemethy looks at how the pandemic’s path might evolve and what the impact of that could be on the global economy.

You may recall that at the beginning of March 2020, I wrote an opinion that many considered outlandish at the time, that COVID-19 deaths in the United States alone may surpass a million.

I only wish I were wrong, but U.S. fatalities have topped 735,000 and are still rising as of mid-October.

According to the Economist, there have been more than 16 million “excess deaths” worldwide, probably attributable to COVID-19.

Allow me first to summarize the scenarios that I see for COVID moving forward and then about their impact on financial markets and the economy.

Most experts think that COVID-19 will eventually become endemic like the flu, always present but with “acceptable” levels of fatalities. But there are many paths to becoming endemic.

The best scenario is that COVID-19 relatively quickly fades into endemic status. The worst scenario is that, before we get there, one or more vaccineresistant viruses emerge that spread faster and/or are more fatal than even the Delta version. And of course, there are countless intermediate scenarios.

Unfortunately, the probability of new, faster, and/or more lethal variants emerging is considerable. The number of people carrying the virus continues to expand globally: the more humans have the virus, the more colonies exist, increasing the chances of mutation.

Eventually, a strain may emerge that will displace the Delta variant as the globally dominant strain.

Let’s look in a little more detail at the worst-case scenario. The spread of a vaccine-resistant worse-than-Delta variant would begin with only a few cases in absolute numbers (think back

to

Q2

2020) but would spread exponentially.

This would provide virologists and vaccine producers some time to (a) identify and isolate the virus, (b) provide a genetic footprint of it, and (c) implement large-scale manufacturing and distribution. (All previous vaccine stocks would be useless against the new variant).

It would be a race against time.

While one might argue that the above process would be faster because vaccine technology and production capacity have advanced with lightning speed over the past two years, as of October 2021, still less than 50% of the global population has received one jab. A new, highly deadly, and faster-spreading vaccine-resistant variant has the potential to wreak global havoc.

Economic Impact

Financial markets seem to have shrugged off COVID-19 and continue to proceed from all-time-high to all-time-

high. Specific sectors, like technology, even appear to have benefited from the virus (for example, through accelerated adoption of digitalization).

Given the high degree of uncertainty about the course of the virus and the hardship still wrought by it, governments might be forgiven for failing to enforce fiscal discipline. There have been unprecedented levels of stimulus, handouts, bank guarantees, deficits, etc.

Perhaps the most pervasive financial effect of the virus will be an accelerative effect on debt accumulation. (Global debt now exceeds 350% of global GDP.) Similarly, central banks have not raised interest rates to quash inflation.

All of the above assumes a relatively benign course for the virus. Should a vaccine-resistant strain emerge that spreads faster or is more lethal than Delta, the effects could be still more severe.

Travel and tourism may once again come to a standstill. Lockdowns might be imposed, as in the spring

of

2020,

dramatically curtailing economic activity.

However, unlike spring 2020, when there was no light at the end of the tunnel

The Corporate Finance Column

(i.e., a vaccine that might restore some semblance of normality), lockdowns might be relatively short-lived, in the expectation that these would serve to bridge the gap until new vaccines could be distributed in sufficient quantities.

Compared to the benign scenario, such a worst-case scenario would likely result in further accelerated stimulus and debt accumulation.

The above worst-case scenario would be for the developed world. Presumably, the lag in providing vaccines to the developing world would not change, meaning these countries would bear the brunt of a vaccineresistant outbreak. (Nor do many developing countries have the financial strength to permit massive stimulus/deficits).

Assuming the new mutation would spread fast in the developing world, the cycle repeats itself, and even newer, more resistant variants might emerge.

It illustrates that the only reasonable response to an epidemic is a global one, sorely lacking until now.

The rapid accumulation of debt and the acceleration of inflation as legacies of COVID-19 cannot be underestimated.

These will be the defining financial issues of the coming decade. High debt levels create economic instability and volatility (thus increasing the chances of a financial crash).

I am not for a moment suggesting that central banks and governments are blame-free, and all the responsibility can be heaped on the pandemic. But the virus has played a role in facilitating such profligate behavior.

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 previous president of the American Chamber of Commerce in Hungary.

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Budapest Business Journal | October 22 – November 4, 2021

The Business Community can Lead the Fight on Climate Change The annual business diner and awards ceremony of the Business Council for Sustainable Development in Hungary highlighted the urgent need for business models for the betterment of society and the climate and rewarded some of those trying to achieve that.

GERGELY HERPAI

The global average temperature is already 1.2°C higher than preindustrial levels. A drastic acceleration of ambitions and actions is needed to achieve the climate change goals of the Paris Agreement. What does it take to make the same rate of change seen in other areas, like the rapid digital switchover generated by COVID? What is the business community doing?

At the October 7 business lunch of the Hungarian Business Council for Sustainable Development, its “Vision 2050: Time to Transform” timetable for the business sector was presented.

“The world faces three critical challenges: the climate emergency, the loss of natural diversity, and growing social inequalities. The COVID19 epidemic has shown that these challenges are closely interlinked and

Business | 9

social responsibility programs were recognized in four categories this year.

Márta Irén, director of the BCSDH and a member of the professional jury, explained: “Reading the applications, we were pleased to see that although the protracted virus situation has taken significant resources away from companies, significant progress has been made in many areas of sustainability.”

For a Sustainable Future Award Winners 2021 CHANGE LEADER Björn Claussen, BNP Paribas Hungary LEADING WOMEN Zsuzsa Pálfalvi, Graphisoft Park Services; Jury members and winners of the BCSDH “For a Sustainable Future” awards.

Year of Action that our systems are not prepared for “This year is a year of action. Countries such shocks, ”said Julian Hill-Landolt, need to commit to net zero emissions director of the World Business Council by 2050. They need to submit much for Sustainable Development and the more ambitious national climate plans mastermind behind the vision. before COP26 in Glasgow. This is “Going beyond normal business is essential to accelerate the transformation. what companies must do if they want to protect people, themselves, and Business leaders need to adopt three the economy from the catastrophic mindsets: capitalism that rewards real consequences of climate change,” said value creation; a focus on building longAttila Chikán Jr., the BCSDH president. term resilience; and a regenerative “Low carbon emissions can no longer approach should be used, in addition to be the goal. Climate-neutral operations not causing more harm. The business must be achieved as soon as possible. community can play a leading role.

New technological solutions and rapid Still, it needs to work with academics, changes in consumption patterns are policymakers, funders and investors, needed at all levels,” he said. developers, and consumers to plan Chikán added that “committed leaders systems transformation,” Hill-Landolt and change-makers are vital to making told the meeting. sustainable economic activity more The BCSDH, whose 109 member strategic. The mission of BCSDH is to companies produce about 30% of support its member companies to be active Hungary’s GDP, aims to generate agents in shaping the necessary changes”. changes in models and business With the presentation of the fifth solutions in Hungary that impact climate annual Sustainable Future Awards, change and can promote real responses outstanding leaders and corporate to domestic challenges due to their take solutions and exceptional up by other companies.

Katalin Urbán, Grundfos Manufacturing Hungary; Nóra Hevesi, Barbara Szigeti, Tesco Hungary BEST BUSINESS SOLUTION The Hungarian National Bank for its “Green Program” that comprehensively represents the sustainability potential of the donor side; Spar Hungary, for its circular business model selling products from Máltai Manufaktúra; Tesco, for its food waste reduction program.

BEST SOCIAL RESPONSIBILITY PROGRAM Budapest Airport Zrt. for its Employees Foundation, a program for the further employment of employees during the drastic downturn due to the pandemic; and Güntner-Tata, for the “30 Years 30 Good Things for the Community” initiative, a program that exemplifies the responsibility of a local company towards local goals.

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Budapest Business Journal | October 22 – November 4, 2021

Working With a ‘Rock and Roll’ Team for the Benefit of All We asked Erik Slooten of Deutsche Telekom IT Solutions Hungary to reflect on winning the BBJ Expat CEO of the Year 2021 Award and share his thoughts on the immediate future.

Such is the life of the modern CEO that we caught up with him as he was being driven from one meeting to another.

ROBIN MARSHALL

BBJ: What went through your mind when you heard your name announced as the Top Expat CEO winner?

Erik Slooten: I did not expect to hear it at all. We were going to the event, all dressed up, just looking forward to a fancy evening. When I heard my name, I was completely overwhelmed.

My co-short listees are such champions themselves, have been so visible, I automatically assumed it would be one of them.

BBJ: We heard from 2020 winner Melanie Seymour, who sat on the awards jury this year, how difficult the decision was.

Why do you think the jury picked you?

ES: I cannot tell you why they did not pick one of the others, but I believe our approach to investing in local relationships is appreciated. Whether it is universities or middle schools, CSR promotions, or investing in our relationships with city halls, it is essential to our success. That has been our strategy from the very beginning. The relationship needs to be balanced for everyone. Local business investment teams, mayoral teams, rectors' teams need to see what is required from our perspective but should also see that their interests are being heard. I think that is one of the reasons we won. I say “we” because, while I am the leader, I am also fortunate with my team.

It is easy to be a good CEO when you have such a “rock and roll” group working with you and keeping you honest from time to time.

We have 5,100 people now and will add hundreds of staff beyond that. The question will be how we can grow and build more capabilities, including AI and software, and pool resources. It is an old-school way of thinking that we can just throw more people at any problem, and it is not sustainable for a small labor market like Hungary.

BBJ: Are there any immediate plans to bring new services, products, or jobs to Hungary?

ES: Yes, in three main areas. In IoT, we are slowly growing. Indeed, most capacity for Europe is in Hungary, and if there is a solution that needs to be Europe-based, it will be in Hungary only.

Secondly, Cloud is exploding. We will be developing sovereign cloud products with Google, using their data centers and product technology, while we will be responsible for integration and migration. This will be a Europebased cloud product so that EU data protection regulations will be met.

We will be supporting the specialist team that works in Germany. It is very exciting because these capacities don't exist at all right now. We will be hiring the smartest brains out there and then training them in the technical engineering that will be developed as we go along. We are talking about software specialists, cloud engineers, developers, and system architects.

Thirdly, the biggest security center outside of Germany is in Hungary.

Erik Slooten the winner of the BBJ Expat CEO of These services will increase, with the Year 2021 Award. Photo by Marianna Sárközy. hundreds of jobs over time. The fact that we are bringing all these jobs here shows the belief in the group for what BBJ: What do you think this will mean if it is workable from a team's point of Hungary can deliver. to them? view, as we find a new normal that is ES: I think they are very proud. They BBJ: The pandemic aside, what do you completely refreshed and sustainable. think are the most significant challenges know that I stand for what we stand for, If I talk about Hungary and our and opportunities in doing business here? values that we have developed together, business, we have benefited from ES: We have already talked about the and that reflect the values and strategic the rising demand for automation tight labor market. We need to find ways objectives of the Deutsche Telekom and digitalization. The pandemic to persuade lawmakers here to make it group. That resonates very strongly. was a catalyst for people to jump easier to employ people from outside When I was nominated, and when I won, into changes much faster. Industries the EU. We are not talking about skills everyone was so proud, celebrating not that suffered during COVID, like that anybody can have; these people are just me but what we stand for and are automotive or the airlines, turned to unique. Hungary has to be more open trying to achieve. companies like ours to benefit from to this because this labor market won't smart solutions, robotics, connectivity.

BBK: What are your expectations for the have enough capacity for what we need.

In Hungary, our growth will continue, business for the remainder of this year I think we also forget that Hungary but I am worried about the labor and into 2022? Do you anticipate any has such a colorful history, which has market. It is close to capacity from the further COVID-related disruptions, or is developed a lot of rich options and engineering perspective. We don’t have it a gradual return to “business as usual?” enough engineering students, and too experience. It is our responsibility as ES: I do not believe “business as usual” leaders to bring these to the rest of the many are leaving studies, without even will ever come back; I do not think world. We should work with local CEOs completing them, to go elsewhere, so what we were doing before COVID because we impact each other. We could we have a brain drain as well. We used is sustainable, all that travel, flying help unlock the potential of Hungary in to say there would be fewer people and everywhere. This is an opportunity to ways we do not even know yet. more valuable jobs, but we struggle reset what “business as usual” should be. to find the people capable of doing BBJ: Anything else to add?

Economic shutdowns are not sustainable. those jobs. There will have to be more ES: I would just say never forget to say We should be much more agile; we need collaboration between shared service “Thank you.” We should be grateful to to react to changing situations much and delivery centers and the local IT everyone who works with us. You can be faster. We need to take care of the whole sector. How will we address this and be the big boss, looking down on the world economic ecosystem, like hospitality, flexible enough for the good of Hungary from your sixth-floor window and proud because we need them just as much as and those who invest here? of your success, but we have nothing they need us. So, we will be allowing Deutsche Telekom IT Solutions without the contributions of everyone else. people to stay at home more, or entirely Hungary will continue to grow.

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Budapest Business Journal | October 22 – November 4, 2021

Special Report Real Estate Development

Retail Offerings Must Move With the Times

It hasn’t been an easy few years for retail developers.

Concerns over the level of consumer spending in the wake of the financial crisis were followed by stringent planning regulations for shopping center development, and then the impact of COVID, the lockdown, and the rise of online retail.

GARY J. MORRELL

As a result, there hasn’t been a major shopping center delivery for a decade, although some projects have been planned by leading international retail developers such as Echo Investment.

Given all of this, the opening by the Hungarian retail developer Futureal of the 55,000 sqm, EUR 300 million Etele Plaza mall after several postponements of the project is seen as a milestone in the Budapest shopping center market.

It has been a long gestation period: Futureal acquired the brownfield development site at a railway, metro, tram, and road intersection on the western edge of Budapest

15

years ago.

“Etele Plaza is the latest generation, carefully designed shopping center that meets the current needs of shoppers and visitors. Over the last 10 years, our industry has been talking about entertainment, and the whole shopping experience has to be entertaining from the moment you start from home to the moment you arrive back,” says Tibor Tatár, CEO of Futureal.

It should come as no surprise that the new market entrant improves the age profile of the Budapest shopping center market: It is not just that there have there been no fresh projects in the past 10 years; 63% of the existing malls have not been refurbished over the same

Several shopping center owners are either considering the renovation of existing centers or actively doing so. CPI Property Group, which operates five malls, is refurbishing the Campona shopping center in South Buda with a proposed reopening date of

early

2022.

Wing is redeveloping Eurocenter in Buda with a scheduled completion date of spring 2022.

Turning to high street shopping, Horizon Development has completed the retail component of the Szervita Square Building mixed-use office, retail and residential complex. The Emerald Residence hotel, a hotel and retail complex by Biggeorge Property, also located in Szervita tér in the central District V, is due to deliver Etele Plaza, new Budapest shopping center. an up-market retail component.

Another area for development is provincial retail parks with significant “We did a shopper profile, for example, period, according to CBRE. Some 22% grocery content. One example is the EUR a young couple with small children of the stock has been renewed or built 24 mln, 11,000 sqm S-Park Kaposvár, living in block housing or a wealthy recently (including Etele Plaza), while delivered by SES Spar European Buda family with high spending power, 15% is up for regeneration.

Shopping Centers to serve Kaposvár (187 to try to understand what is the shopping km southwest of Budapest by road) and Retailers Optimistic experience, what entertains them, and the surrounding region.

“I do not see a radical change in supply what draws their attention from a profile and demand in the next two years in the by profile perspective,” explains Tatár. retail sector,” comments Erika Garbutt“All these details were designed into “Retailers are trying Pál, head of retail at CBRE Hungary. the complex (and this also includes to change, trying to “Retailers are optimistic and planning several thousand elements from tenant stronger expansion from 2022. They are experience) from a visual and digital find the best balance optimizing their portfolios and taking experience of how they approach the longer to approve new stores, but they shopping center by public transportation between physical stores are expanding and planning for the or by car,” he says. and e-commerce. In the future,” she adds.

“By thinking from a profile by profile future, shopping centers “There are no major shopping center perspective, we have tried to tick as projects in the pipeline; however, we are many boxes as possible, and I think that have to provide a pleasant working on several [projects] restructuring this has been slightly different to the environment, many services, and repositioning existing malls. The approach of previous shopping center majority of our shopping centers are older developers. We even sacrificed income and a combination of pick-up than 20 years. They need to renew and on certain tenants as we needed their points, flexi-offices, a wide follow today’s trends; otherwise, they will function, and they could not afford selection of F&B, culture lose out with regard to both tenants and to pay a high rent,” Tatár adds. customers,” Garbutt-Pál adds. and entertainment. All these Act Quickly Cushman & Wakefield put shopping are huge investment costs.”

When it comes to the need for shopping center stock in Budapest at center owners to adapt their centers to meet changing tenant needs, GarbuttPál argues that shopping center owners Garbutt-Pál sees the future for before the addition of Etele Plaza, need to follow the trends and act quickly. retail development as part of mixeda low supply of retail density by “We are living in a very fast-changing use complexes.

European standards. world where online and offline are “I believe this is the way forward, and Designed by the Hungarian both developing. Retailers are trying the pandemic is further proof that we architectural firm Paulinyi & Partners, to change, trying to find the best need more of these mixed-use projects,” Etele Plaza includes around 180 retail balance between physical stores and she says. “We like to work closer to our outlets, restaurants, cafés, multiplex e-commerce. In the future, shopping home; we would like to do some sport, cinema, a gym, and 1,300 parking spaces. centers have to provide a pleasant entertainment, or social activity close to The complex is Breeam “Very Good” environment, many services, and a our workplace and carry out all our daily certified, with Futureal is also looking combination of pick-up points, flexineeds, shopping, and services within to achieve WELL certification, although offices, a wide selection of F&B, culture 10 minutes from where we work and live. there is currently no accreditation and entertainment. All these are huge These must be all covered in a wellsystem for shopping centers. investment costs,” she points out. planned mixed-use development.”

770,000 sqm

12 | 3

Special Report

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Budapest Business Journal | October 22 – November 4, 2021

Market Talk: Development in a Post-COVID Hungary Opinions differ as to how many planned development projects are going ahead in a changing market environment regarding financing, leasing, sustainability, design, and investment.

Budapest Business Journal real estate editor Gary J. Morrell spoke with leading actors in the local commercial real estate market about its prospects and the issues impacting development in the various market sectors post-COVID.

a robust economic rebound. Companies will have established their own tailormade balance between old and new ways of working and, therefore, will be

Melinda Kovács able to make real estate decisions on their office needs, so our expectation is that demand will stabilize and start its return to pre-COVID levels.

Melinda Kovács Development and Leasing Manager Atenor Hungary We are still looking at projects that could be repositioned and re-introduced to the market using our skillset and expertise. We do not expect demand to decrease, and this is also supported by the latest market reports, stating that net absorption is still positive.

With the concept of well-being coming to the fore, landlords will not be focusing only on tenants as companies but rather on individuals as end-users. They should provide a user experience that makes working more comfortable and effective. The architecture and interiors will increasingly be about the employees and people-focused design, while sustainability is also an unavoidable aspect already inherent in everyday life.

GARY J. MORRELL

Atenor saw uninterrupted development activity during the COVID period and is planning to continue as before. Three of our projects (Váci Greens “E” and “F” and Aréna Business Campus “A”) were handed over during 2020, all of them on schedule, and we have three further office developments under construction: Aréna Business Campus “B,” RoseVille (both with a handover date of Q3 2022) and BakerStreet “I” (handover Q1 2023).

In addition to the above, there are two other buildings at Aréna Business Campus and the second phase of BakerStreet in the pipeline; the search for new development opportunities is also high on our agenda. We are screening the market for new office and residential development opportunities on an ongoing basis in our preferred locations.

We expect demand to pick up, backed by societal life returning to normal and

Csaba Zeley Due to the challenges of the transforming office market, pre-leases will slow down.

Financing is still available on favorable terms for projects with good characteristics

at great locations; the major obstacles to development are building material prices and construction costs.

The Hungarian property investment market still offers more beneficial conditions compared to Western European yields; therefore, both domestic and foreign investors show continuous interest in this sector.

Csaba Zeley Managing Director ConvergenCE We are still experiencing increasing demand in the logistic sector, especially around the Budapest area, where currently there is a lack of sufficient stock to satisfy demand, but due to the massive pipeline, this will be balanced out in the next 18 months.

Our rule of thumb is to start a logistic development when it has reached a 50% pre-lease level, a reasonable target in 2021, but it does not necessarily mean that it will be a BTS [built-to-suit] development.

Mátyás Gereben Sustainability accreditation plays a vital role in design and development.

On the one hand, CPI has a strong commitment to sustainability and decreasing CO2 emissions; on the other hand, more potential occupiers include sustainability requirements in their RFPs [requests for proposals]. I do not see a significant change in demand for improving building design and specs.

Of course, a standard quality has to be met, but rental fees and service charges are still the main driving factors, and if you develop a logistic property with above standard specs, tenants will feel it on the cost side.

Mátyás Gereben Country Manager CPI Hungary From a travelers’ point of view, we could already experience demand coming back in the summer in Budapest and the countryside; people seemed to crave holidays after the lockdowns. From an investment market point of view, potential buyers are also back after a long break, but, at the moment, they are more windowshoppers rather than actual buyers.

Péter Takács We expect a couple of Budapest hotels to trade this year and possibly more in the first half of 2022, but the investor demand we experienced back in 2019 is still far away. Foreign investors are looking for downtown flagship properties, but owners are not forced to sell these at a discount yet.

Domestic investors are also actively looking at Budapest but also outside Hungary. Many investors are focusing on resort-type hotels as the next asset class to have in their portfolios as the pandemic has shown that there is traveler demand for these holidays.

We see a lot of development activity in the near future. The ex-Buddha Bar hotel is under renovation, W (at the former Ballet Institute building) will open soon, the Autograph project in Dorottya utca is on schedule, and there are plans for Sofitel and Gellért to be fully renovated. But those properties that are in the development phase and where construction has not started are mostly on hold. Owners are trying to figure out what to build and how to operate.

Péter Takács Partner Cresa Hungary After a quiet period on the developer’s market, wherein CTP remained increasingly active, supply is finally reaching a level adequate to fulfill

Dávid Huszlicska

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Budapest Business Journal | October 22 – November 4, 2021

the current market’s demand. By the end of 2021, CTP will have handed over 274,000 sqm of new modern stock, most of which is already preleased; all are expected to be fully leased by handover.

CTP has a solid speculative background in Hungary and the region.

We can combine both speculative and built-to-suit developments as we can adapt our 50% ready products to tenants’ needs. Similarly, our finished facilities can also be tailored to a company’s needs. For example, Lenovo’s first European factory in CTP’s Industrial Park at Üllő started as a storage facility.

The market is characterized by rising land prices, a lack of immediately developable land, long development processes, rising construction costs, capacity, and shortages of raw materials, which are challenges for all market players.

Notwithstanding this, our buildings are finished on time, we have not exceeded our projected costs, nor have we increased rents.

Dávid Huszlicska Country Head CTP Hungary We are continuing with our development strategy as planned but considering and adapting to the new and everchanging tenant requirements and recent market trends.

Demolition works for our new ParkSide Offices project have already been completed, and we are planning to start construction in the first half of 2022.

Besides this, we are also preparing a logistics project in Szigetszentmiklós.

Tamás Ádány We see on the one hand the betterthan-expected COVID-19 related remote or work from home experience for many companies, and the economic consequences of the pandemic imply fading demand. On the other hand, the recovering economy and the postCOVID work environment, emphasizing collaboration, distancing, and inspiration,

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point in the direction of growing demand. On balance, in the coming year, we expect slightly decreasing demand.

Office developers and owners need to provide everything that is sustainable, green, or supports productivity and helps employees feel better in their workspace, making them want to come back to the office.

As far as interior design is concerned, we will probably see a significant impact. We believe that the new office will be even more tailormade and tenant-specific, with collaboration areas shifting even more into focus.

The main obstacles for developers in the different market sectors are uncertainty, soaring construction costs, bureaucracy, frequently changing legislation, too much involvement of politics even in single developments, and tightened financing conditions. Hotels are struggling with the slower recovery of international tourism and various travel limitations on top of these issues.

Tamás Ádány Business Development Director Horizon Development We see delayed office development plans that have not been announced yet, mainly from smaller players. Big players are still bullish, as long they can cover equity requirements from lending banks with cash. Office demand will decrease in the coming year, and 20% vacancy will be the norm in all markets.

Office developers and owners need to provide one-stop-shop concepts in

Special Report | 13

Hubert Abt entrance halls and fully digitized spaces to provide a hybrid workspace and comply with ESG Compliance.

Contactless entrance and digital booking systems will be needed for all sorts of services, including elevators and restaurants. More sensors will be required, with flexible space and conference space for walk-ins part of the design concept.

Sustainability accreditation issues are very central as, with no ESG certification, there is no finance and no new leases from corporate tenants.

Hubert Abt Founder & CEO New Work

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The Budapest Business Journal talks with Péter Takács of VLK Cresa about the state of hotel development in Hungary. A partner at the commercial real estate advisory firm, he gained some of his professional experience in the successful opening and running of international five-star hotels.

BBJ: Do you see any likelihood of troubled hotel projects hitting the market in large numbers?

Péter Takács: Not yet, not in large numbers. What has helped massively is the loan moratorium. As long as owners don’t have to pay anything to the bank, they are more likely to be understanding of the operators. The best scenario would see international tourist travel returning at the same time as the moratorium is gradually withdrawn, but the real world is rarely ideal, so in the second part of next year, we may begin to see more properties hitting the market. Hotels in Downtown Budapest with a good location, an established brand, and a well-maintained building will be fine. But those in secondary locations, in the suburbs or non-central, especially if they operate in a market that is slower to return, such as conferences, could be among the first.

BBJ: What is the investor appetite for the hotel market in Budapest. Are there still buyers looking for good products?

Péter Takács PT: Investors are actively looking, but there is a significant differential in pricing expectations between them and owners. What is going on now is more like window shopping; investors are looking around, making the occasional aggressive offer, but most owners, especially downtown, don’t need to sell.

A couple of deals are expected to take place this year – we are certainly working on some – but not in any significant volume. Next year will be different.

BBJ: How do you see the market developing over the next couple of years?

PT: It is still a desirable asset class. One thing we keep hearing is that investors increasingly want flexibility among their key criteria. They want a well-designed building so that, if another pandemic or some other disaster comes along in the next 50 years, it can be converted into residential units or offices. The sector will return to profitability, but it is going to take two to three years.

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Budapest Business Journal | October 22 – November 4, 2021

Positive Views on Office, Despite Many Challenges The office market faces challenges regarding financing, demand, preleasing requirements, tenant specification, staff requirements, and, not least, working habits for the post-pandemic era. Although most pipeline projects will go ahead, a fall in new speculative project development is expected.

GARY J. MORRELL

The relatively small pool of Hungarian and CEE office developers operating in Budapest had already been undertaking restrained development policies for

been a big boost for office projects, but now it seems like it will be the key to getting started,” Kalaus says.

Csaba Zeley, managing director of ConvergenCE, argues that although pre-leases will slow down, financing on favorable terms is still available for projects with good characteristics at great locations. Hubert Abt, founder & CEO of New Work, sees

a

60%

several years; therefore, oversupply is not foreseen as a problem.

Established office developers such as Atenor, Horizon Development, Skanska, and CPI are going ahead with planned office projects.

“Office developers must adjust to the market changes such as increased costs in the construction sector, a large amount of uncertainty in the office

pre-lease as standard for offices.

According to Cushman & Wakefield, office supply in Budapest for 2021-2022 remains constrained, with a projected pipeline of 356,000 sqm. Total modern office stock in Budapest now stands at approaching four million sqm according Aréna Business Campus by Atenor. to the Budapest Research Forum (consisting of CBRE, Cushman & Wakefield, JLL, Colliers International, Eston International, and Robertson market with limited pre-leases, and Hungary). The overall vacancy rate of different space usage requirements, but close to 10% is expected to increase further. there is no need to redesign the strategy New supply expectations for 2022 completely,” comments Valter Kalaus, add up to a sizable 276,000 sqm as managing director of Cresa. several projects, originally scheduled “New office projects are being for this year, have been delayed, considered, however, in a very careful according to CBRE. There is currently way; not many developers will move around 450,000 sqm of space under forward with speculative developments. construction, the consultancy says.

Having a large anchor tenant has always

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Higher End

Money issues are less of a concern for developers who fund projects from their own finances and have the option of an exit strategy at the higher end of the market.

Skanska, for example, has undertaken construction of its 10th Budapest office project, the 26,000 sqm initial phase of the 67,000 sqm BREEAM and WELL “Platinum” pre-certified H2Offices in Váci út. It is due to complete by the end of 2022.

“The leasing process is longer, although there is no sign of a fall in demand for space. Negotiations can take as long as

12-18 months,”

comments Aurelia Luca, executive vice president of operations for Hungary and Romania at Skanska’s commercial development business unit.

“WELL ‘Platinum’ pre-certification focuses on the wellbeing of buildings’ users. In this way, the workplace is not just a place of work and, therefore, there are more and enhanced requirements from employees. For example, the project includes green terraces and a large multifunctional garden, which is also accessible for the public,” she adds.

Sustainability accreditation from an independent, third-party organization such as the U.K.-based BREEAM and the U.S.-based LEED, and increasingly WELL, is now the norm for development.

Office interiors have been integrated into the concept, design, leasing

strategy, and project and facility management aspects of office projects, given the complexity of tenant and staff demands and increasingly stringent environmental regulations, not to mention issues related to COVID. “Tenant specifications may vary from company to company, so these will depend on the internal post-pandemic guidelines of each individual office tenant,” comments Melinda Kovács, development and leasing manager at Atenor Hungary.

“In terms of amenities, landlords will have to provide convenience services and common facilities that are inviting enough to make people want to move back from their homes into the office, where they find it easier to do their work assignments, due to the first-class, modern infrastructure,” she adds.

Destinations of Choice

The Váci Corridor and South Buda continue to be the development destinations of choice, although not exclusively so. Atenor is due to deliver Aréna Business Campus B, located on Hungária körút, or the outer boulevard, in Q3 2022, in addition to RoseVille and BakerStreet I, both located in Buda, in the first quarter 2023.

There are also two further buildings at Aréna Business Campus and the second phase of BakerStreet in the pipeline.

“Spaces will shift from large work station areas in favor of collaboration spaces, activity-based and breakout

Special Report | 15

H2Offices in Budapest by Skanska. areas, which is a trend that can already be seen in the case of many large occupiers, where the home office will remain part of the ‘new normal’ to various extents,” Kovács predicts.

“These spaces are designed to facilitate teamwork, brainstorming sessions, etc., while individual work may still be partly performed from home,” she adds.

With hybrid office use expected across the office market, the emphasis is being placed on communal areas, collaborative spaces, and meeting rooms. These processes are seen as having changed the look and style of offices.

“This trend is becoming even more important for the future. Also, the time has passed for over-crowded and fully packed offices places, mainly because of hygienic and pandemic issues,” comments Zsombor Barta, president of the Hungarian Green Building Council.

Leasing activity is expected to pick up further in the last quarter of the year, backed by the ongoing strong economic rebound and the general societal normalization in Hungary. The direct vacancy rate is predicted to peak around late 2022, according to CBRE.

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Budapest Business Journal | October 22 – November 4, 2021

Hungary’s Industrial Market Positively Booming Analysts see the industrial and logistics market as the real estate sector in the most favorable postpandemic position, with the growth in e-commerce significantly increasing demand, along with continued development of the automotive, light industrial, and related industries.

GARY J. MORRELL

Demand is strong, with Hungary having the lowest vacancy rate in the Central European region.

However, more speculative

Total modern industrial stock in the Budapest area stands at more than 2.5 million sqm, according to the Budapest Research Forum (BRF), consisting of CBRE, Colliers, Cushman & Wakefield, Eston International, JLL, and Robertson Hungary. There is an overall vacancy rate of 2.6%.

Underperforming

development is regarded as necessary for further market growth, particularly in provincial cities where developer-led development projects are quite rare.

“Over the last few years, we have experienced a significant increase in demand for high-quality industrial developments across CEE; still, we believe that supply can meet that

Some experts believe Hungary is underperforming in comparison with other major Central European markets.

The Czech Republic, a similar-sized country, has more than nine million sqm of class “A” industrial space.

Gábor Halász-Csatári, head of industrial agency at Cushman & Wakefield Hungary, argues Budapest is in a similarly strong position to Prague, Prologis Park Budapest Gyál. although Hungary lacks the regional hubs beyond the capital found in the Czech Republic and Poland.

“In the first half of 2021, circa in the Hungarian market,” comments Rudolf Nemes, CEO of HelloParks.

160,000 sqm of newly developed stock was handed over, coupled “However, growing near-shoring activities from the Far East to Hungary with a new demand volume of with the construction of the Fényeslitke Cargo Terminal [295 km northeast of Budapest by road], a gateway I think it is fair to say that developers of the New Silk Road, could generate have been quite accurate with their a boom in demand over the next planning,” Halász-Csatári says. couple of years,” Nemes adds.

194,000 sqm.

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Special Report | 19

INSIDE VIEW

How ‘Green’ is Green Finance?

Partner, Head of CEE Banking & Finance, Head of Hungary Banking&Finance Noerr and Partners Law Firm

CTPark Budapest West.

“Having said that, there is another 300,000 sqm under construction in Budapest and its vicinity alone. With a lot of speculative space coming onto the market, there is no necessity or direct need for built-to-suit seen, but rather pre-lease,” he explains.

“Győr, Kecskemét, Miskolc, Debrecen; these are all hotspots today for industrial developments. New demand tends to consist of suppliers of automotive producers and large manufacturing companies. The incentive structure in Hungary remains very attractive for FDI, and the Hungarian’ countryside’ is a competitive environment for any newcomer. Nearshoring and the shortening of supply chains have a noticeable effect on the development of regional hotspots,” Halász-Csatári adds.

CBRE has traced more than 300,000 sqm of industrial space under development and due to be completed in the greater Budapest area: More than 50% of that is already committed.

challenge right now is finding welllocated, adequately sized plots that are ready for development,” he warns.

“Permitting and construction are 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,” the head of industrial agency says.

Sustainability Growing

“Sustainability is slowly but noticeably becoming more important in industrial and logistics too. It is more frequent that international tenants must comply with global sustainability directives; hence, their tenements must reflect sustainable solutions. Most developers are now conscious of this trend and use it in their designs as a selling point,” HalászCsatári notes.

Industrial developers and park operators are building more highly specified and sustainability-accredited projects in response to changing tenant demands and regulations.

Budapest-centric Domestic and international developers Total modern industrial stock across increasingly seek BREEAM and Hungary is put at 10.8 million sqm as LEED accreditation for their parks. of summer 2021. Of this, 3.75 million Tenants are looking to save on utility sqm is operating on a lease basis, with costs, recognize the importance of the remainder owner-occupied. The staff wellbeing, and want green areas, majority of the properties are located in changing facilities for cyclists, and the Budapest area. electric charging units. Nowadays, they The CTP Hungary portfolio consists of must also observe COVID precautions and face the need to reduce the carbon footprint of their projects. of “Most developers are now conscious gross leasable area that is almost fully let. of this trend and use it in their designs The developer currently has eight projects as a selling point,” says Halász-Csatári. under construction in the Budapest area Prologis, for example, is committed to and regional cities such as Győr, Debrecen, following BREEAM standards, and CTP Szeged, Komárom, and Tatabánya. is developing to the BREEAM in-use “The Hungary market is very heavily “Excellent” standard for buildings across Budapest-biased; logistically, a lot of its Central European portfolio. companies prefer to stay on the ring road “The buildings in HelloParks’ greenfield in and around Budapest,” comments Dávid projects will all be BREEAM certified, so Huszlicska, country head of CTP Hungary. these requirements will be an integral part “There are many companies that of the development from concept design see the possibility of going to the through construction to operation, ensuring countryside; we could see this happening the most environmentally responsible thanks to local government support that criteria are met,” comments Nemes. enables new companies to enter these “In addition, further sustainable solutions cities,” Huszlicska adds. are planned and are being prepared.

Industrial development schedules From an energy point of view, the most tend to be quick, provided that the site significant environmentally friendly is ready for breaking ground and has, or solution provided by HelloParks will be is in the process of obtaining, a building the ability to cover its entire energy needs permit, Halász-Csatári says. for the operation of the offices of our first “Given the unparalleled demand for logistics building in Maglód with a solar industrial development sites, the biggest park installed on the roof,” Nemes adds.

660,000 sqm

Not all green- but improving

The new buzzwords causing excitement in the financing landscape in the last couple of years are “green finance,” “green bonds,” and “ES” (environmental, social, and governance).

Green finance aims to increase financial flows (banking, insurance, and investment) to sustainable investment and development priorities.

The game changer of the financial landscape

Increasing international concern about the impact of climate change has resulted in a growing focus on the environmental and social responsibilities of both corporates and governments. Consequently, green finance became a potential game-changer of the financial landscape. Banks and financial institutions (on the supply side) and borrowers and asset managers (on the demand side) were hungry and excited to discover this new arena.

So, ESG has become a key topic. The green bond market has developed exponentially in the last five years, with a growth rate of more than 60% per year globally.

ESG assets are on track to exceed USD 50 trillion by 2025.

Market players quickly realized that one could create value by applying an ESG strategy. However, there was no real consensus in many organizations about how to best navigate different stakeholders’ expectations.

On the investment side, the market for green and social bonds is rising rapidly. Similarly, on the lending side, there is an undisputed, fast-growing interest in sustainable finance. In Hungary, banks are now considering offering green loans as an alternative to traditional loans. However, the green lending market is still lagging behind the green bond market, where we have seen a wave of corporate green bond issues recently, primarily by real estate companies.

A gas distribution company can issue green bonds – how is that possible?

The lack of clarity on what “green” means often leads to confusion about what products classify as sustainable. Czech Gas Network Investments, a natural gas distribution company, has recently issued green bonds worth EUR 500 million. An average investor may face challenges

understanding how a natural gas company could use the word “green” concerning its business in the first place.

Likewise, several real estate development companies have issued green bonds in Hungary, the Czech Republic, and other CEE countries; half of all nonrenewable resources humankind consumes are used in construction, making it one of the least sustainable industries in the world.

The “green” labeling of operating real estate assets might also raise questions. For example, almost 40% of the existing modern office buildings in Budapest hold a “very good” (BREEAM) or “gold” (LEED) qualification, making the owners eligible to issue green bonds.

If 40% already fits the green bill, one might think the threshold needs to be revisited.

Regulators should take the lead

Until now, green bond issuers followed their own standards and guidelines when qualifying their bonds and activities as “green” or “sustainable.” To achieve more clarity, regulators realized they needed to drive the discussion and set the cornerstones. To that end, the EU introduced the Sustainable Finance Disclosure Regulation (SFDR) and taxonomy. Moreover, a separate regulation, the European Green Bond Standard (EUGBS), is under preparation. These regulations aim to create “a gold standard” for the market as to what “green” means.

The market has started to adapt already. Funds and asset managers have cut back on their use of the term “ESG” in preparation for the times when more rigorous labeling is applied. For example, DWS Group, the investment unit of Deutsche Bank, reported EUR 459 billion in “integrated ESG assets” at the end of 2020. After the introduction of SFDR, they reported EUR 70 bln in “ESG dedicated assets” at the end of H2 2021.

In Hungary, the central bank took an active role and introduced praiseworthy methods to boost green finance, including subsidized “green home loans,” green mortgage bond purchases, and capital requirement easement for banks pursuing green finance. A progressive approach that is way ahead of other regional regulators in CEE. With all the above taking place, green finance is on a path to have more standardized fundamentals to avoid “greenwashing” and will be able to move to a much greener place.

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

Dr. Edina Schweizer

20 | 3

Special Report

WHO’S NEWS

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

New CEO Announced at Codic Hungary Kornél Kalapács will take up the position of CEO at Codic Hungary in mid-October this year, replacing Cristophe Boving, the company has announced.

Before joining Codic, he managed the Hungarian division of Orco Property Group and later the Hungarian operations of the Colas-Bayer Group. A civil Kornél Kalapács engineer and MBA graduate, Kalapács has 30 years of international and domestic experience in real estate development, having worked on several megaprojects in France, Dubai, Turkmenistan, and Tahiti.

“Our goal with the Hungarian Codic team is to create sustainable and valueadded projects that meet the rapidly changing needs of society, both in the workplace and in the housing market,” said Kalapács.

He added that Codic is preparing for an eventful end to the year.

Following the successful opening of the Green Court Residence, the Green Court Office office building will be completed soon. Opening in November, the BREEAM Excellence pre-certified office building is already almost 75% let and will house the headquarters of international companies that seek to create an environment that promotes collaboration and sustainability.

The first tenants, Randstad of the Netherlands and Vagheggi of Italy, will

move into their offices next month.

The remaining space on the top floor, 4,000 sqm in total, is currently under negotiation. Codic has designed the building to meet the requirements of the Access4you Gold certification, which facilitates the work of people with disabilities.

DVM Group Names Comms, Marketing Director As the next step of its brand-building process, DVM group has renewed its communication and marketing department, appointing Attila Vámosi as its director. He brings with him some six years of experience gained in the construction industry.

DVM group started this year with a new corporate strategy, in which the communication area has a crucial role. This development Attila Vámosi allows the company to meet its market-oriented strategic objectives more efficiently, the firm says.

Highlighting the cornerstones of the organization, managing partner Tibor Massányi stressed: “It is the integrated services that represent the future in the dynamically developing environment of the construction industry, which is why we are setting up our corporate structure, and with it, our communication area, to support this. The company no longer considers this area a service apparatus but a key element of business acquisition.”

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Budapest Business Journal | October 22 – November 4, 2021

News///in brief Real Estate

Otthon Centrum: Real Estate Market has Recovered The price of used condominiums rose by an average of 3.5% in Budapest, while the value of so-called panel housing (pre-fabricated Soviet-era apartment blocks) increased by 7.5% and that of single-family homes by almost 11% in the first nine months of the year compared to the same period in 2020, according to Otthon Centrum, writes profitline.hu.

The real estate company explained in a statement that, since last year, when it was burdened by pandemicrelated restrictive measures and a significant market downturn, the real estate market has recovered, as demonstrated by rising prices in parallel with increasing demand.

In Budapest, the average per sqm of condominium apartments increased to HUF 762,000, which is 3.5% higher than in 2020.

Home Buyers From Outside EU Down 40% From 2019 Homebuyers from outside the European Union applied for a license to purchase real estate in Hungary in 2,200 cases last year, down 40% from 2019, listed real estate broker Duna House said on October 14, according to profitline.hu.

The decline was mainly due to the international travel restrictions related to the pandemic, Duna House said. Chinese citizens were the biggest group of non-EU buyers

on the housing market, making up 39% of the total, Duna House said, citing data from the Prime Minister’s Office. They also purchased the most expensive properties, Duna House added.

Israelis and Russians each accounted for 8% of foreign buyers, followed by Ukrainians with 5%. U.S., Turkish, and Serbian citizens also acquired larger numbers of properties in Hungary. Some 74% of non-EU buyers purchased homes in Budapest.

B+N Referencia Acquires Slovenian Subsidiary Hungarian facility management company B+N Referencia on October15 said it acquired the Slovenian subsidiary of its peer ISS Group, according to state news agency MTI. B+N Referencia said the move was the “logical continuation” of its acquisition in the spring of ISS Group’s businesses in Czech Republic, Hungary, Romania, and Slovakia. “In the last six months, B+N Referencia Zrt. has gone from being the domestic market leader to an indispensable player in the region,” CEO Ferenc Kis-Szölgyémi said. “Increasing size increases cost efficiency, and high volume gives us a competitive advantage over smaller players in all our markets,” he added. The acquisition of the Slovenian business will raise B+N Referencia’s headcount to more than 10,000. The firm had net revenue of HUF 71 billion in 2020, according to public records.

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

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Budapest Business Journal | October 22 – November 4, 2021

Post-pandemic Real Estate Winners and Losers An overview of the prospects for real estate development must consider the availability of financing, demand and pre-leasing, sustainability and design and investment, with an exit strategy for a developer at a time and price that makes a project viable.

Skanska is developing the first 26,000 sqm phase of its latest Budapest office project, the 67,000 sqm H2Offices in the Váci corridor.

Demolition works for the new ParkSide Offices project by Horizon Development have been completed, and construction works are scheduled to begin in the first half

of

2022.

Indictive of an emerging trend, the developer is also preparing a logistics project in Szigetszentmiklós (21 km south of central Budapest by road).

Several office developers are moving into the logistics sector, reflecting the improved longer-term attractiveness of this market.

BREEAM Excellent and LEED Platinum MOL Campus Seven new logistics facilities were headquarters in Budapest under construction. handed over in the greater Budapest area in the first half of the year, including 40,000 sqm at CTPark Budapest East, Atenor has three office developments 32,000 sqm at CTPark Budapest South, GARY J. MORRELL under construction: Aréna Business and 34,000 sqm at Szabadkikötő.

Campus B, RoseVille, and BakerStreet The industrial pipeline in the Budapest From a sector perspective, there are strong I. There are also two further buildings agglomeration has increased to a record pipelines in the office and the industrial and at the Aréna Business Campus and volume with 420,000 sqm of industrial logistics markets, while for hotel and retail, the second phase of BakerStreet in the space under construction, according to they are less robust. This reflects estimates pipeline. Despite that, the company is CBRE. Similarly, the consultancy says of demand, the prospect for pre-leases, and screening for new office and residential that the office sector is likely to reach or the availability of debt finance if required. development possibilities. exceed its peak, pre-pandemic volumes.

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• Aiming to obtain BREEAM “Excellent” and Access4You “Gold” certifications, the building will be handed over in July 2022.

ARÉNA BUSINESS CAMPUS • Aréna Business Campus will provide 72,000 sqm of “A+” category office space on Hungária Boulevard.

• The complex will consist of four buildings with an exceptional proportion and significance of green areas.

www.arenabusinesscampus.com • www.atenor.eu • www.roseville.hu

• Excellent location: it is only 300 meters from M2 metro, and 5 minutes from Aréna Mall shopping Center.

• The first, 21,000 sqm Building “A” was completed in 2020 Q2. Building B is already under construction and will be handed over in the summer of 2022.

Contact: Atenor Hungary Kft. 1138 Budapest, Váci út 121-127.

Zoltán Borbély Country Director +36 1 785 52 08, borbely@atenor.eu

Melinda Kovács Development & Leasing Manager +36 1 785 52 08, kovacs@atenor.eu

Máté Galambos Leasing Manager +36 1 785 52 08, galambos@atenor.eu

3

www.bbj.hu

Budapest Business Journal | October 22 – November 4, 2021

Special Report | 23

INSIDE VIEW

‘Fit for 55’ and the Energy Performance of Buildings Directive

Office interior by Cresa.

The Favorites The development of viable products is “Pre-lease requirements have tightened fundamental to creating a functioning generally. Logistical and warehouse investment market in all market sectors. developments are the current favorites, Money Wants a Home and hotels are the least popular with “According to our experience, the capital commercial banks,” comments Tamás is there, trying to find the best quality Ádány, business development director at Horizon Development, on the availability assets in most major asset classes, with offices leading the volume statistics, so of debt finance. an exit strategy can definitely be found,” “Below a 30% pre-lease, there is no life comments Melinda Kovács, development currently. Finance is available, though and leasing manager at Atenor Hungary. we must stress that commercial banks “Most investors are still looking for operate in a pro-cyclical way and, well-leased buildings with quality currently, we are experiencing tightened tenants and five-year plus leases, and conditions for project- and real estate developments with sustainable features financing,” Ádány adds. are sought after. For this kind of quality CBRE has traced 2,300 hotel rooms in assets, an exit strategy is relatively the active pipeline, and an estimated straightforward to be established,” Kovács adds. rooms CBRE expects the total investment are due to open in Budapest this year. volume for Hungary to be in the range of EUR There are currently no new shopping center projects in the pipeline in Budapest, following the opening of Hungarian capital is likely to remain Etele Plaza, the first significant opening the dominant force in the near term, in several years. That said, there although foreign investors from the CEE are several regeneration projects of region and Western Europe are stepping existing centers ongoing or expected to up their activity. commence.

The booming industrial sector is In addition to the commercial attractive to developers and investors; viability of projects, developers need however, investment activity is low to meet tenant and staff demands in due to the lack of available assets. the post-pandemic era, not to mention Industrial developers and park increasingly stringent national and operators tend to hold onto their international environmental regulations. products longer term, a common Third-party sustainability problem throughout the CEE region. accreditation is “a must” to provide an Concerns remain regarding the international benchmark and lease a hotel and retail sectors as investment project at the quality end of the market destinations, reflecting the viability of and, ultimately, sell it to investors. new development projects regarding Office and industrial interiors are average hotel occupancy rates and increasingly being integrated into footfall, respectively. the concept, design, leasing strategy, “At this moment, other asset classes and property management of new than retail are much more attractive developments. This makes the product for investors, especially industrial and more expensive, although savings can be achieved in the longer term (on utility logistics. But this is also driven by retail, not directly, but through e-commerce,” costs, for example), and adherence to sustainability regulations is, in any case, says Erika Garbutt-Pál, head of retail at CBRE Hungary. a legal requirement.

“Retail was, is, and will always be an Developers are now expected to investment with higher risk, especially contribute to the wider environment now rental conditions (for example, by providing amenities to attain shorter lease terms, high fit-out development permits. Office and contributions, turn over rents) are not hotel developers are employing more helping to attract investors into this leading international architects to asset class,” she concludes. improve the look and feel of the city.

1,140

1.2 mln-1.4 mln.

Zoltán Bódog

Partner

Associate

WOLF THEISS BUDAPEST

WOLF THEISS BUDAPEST

In July 2021, the European Commission launched its “Fit for 55” initiative, proposing to make the EU’s climate, energy, land use, transport, taxation, and buildings fit for reducing net greenhouse gas emissions by at least 55% by 2030 (compared to 1990 levels).

The “Fit for 55” proposal, among other things, includes: • A separate new emission trading system (ETS) for buildings, as a carbon intensive sector, to address the lack of emissions reduction, with part of the new revenue to be dedicated to climate and energy-related projects; • An Effort Sharing Regulation to achieve emission reduction targets for buildings; • An amendment of the Renewable Energy Directive to accelerate the transition to a greener energy system with specific targets for the use of renewable energy in buildings; and • An annual target of 3% for the public sector on renovation of buildings to reduce overall energy use in the recast Energy Efficiency Directive.

The proposed changes will have a significant impact on national policies across Europe and a wide range of sectors, notably the building sector.

The building sector is one of the key areas, since buildings are responsible for 40% of the European Union’s final energy consumption and 36% of its greenhouse gas emissions, even more if the life cycle impacts of construction materials are included. In order to meet the “Fit for 55” targets, buildings’ energy consumption needs to fall by 14%, and associated emissions by 60%.

A large share of today’s EU building stock was built without any energy performance requirement: one third (35%) of the EU building stock is more than 50 years old, while more than 40% of the building stock was built before 1960. Almost 75% of it is energy inefficient according to current building standards. Nowadays, 11% of the EU’s building stock undergoes some level of renovation each year. However, very rarely does renovation work address the energy performance of buildings.

The weighted annual energy renovation rate is extremely low at some 1%.

Across the EU, so-called “deep renovations” that reduce energy consumption by at least 60% are carried out only in 0.2% of the building stock per year.

The European Commission’s objective is to at least double the annual energy renovation rate of residential and nonresidential buildings by 2030 and to foster deep energy renovations. These tasks are quite challenging on their own, but a further difficulty is that the sector is highly complex: fragmented in its value chains and fragmented in the EU’s policy framework.

The revision of the Energy Performance of Buildings Directive, planned for later in the year, will identify specific measures to accelerate the rate of building renovations, contributing to energy efficiency and renewable goals and greenhouse gas emissions reductions in the building sector. The plan is to introduce mandatory minimum energy performance standards for buildings, as a key policy instrument to boost both the renovation rate and depth.

Minimum Performance Standard is a regulation requiring buildings to meet a certain performance standard by a specific time, in coordination with natural trigger points in the building’s lifecycle. The standard is typically based on energy performance standards (kWh/sqm/year), generally using the energy performance certificate as a proxy. But Minimum Performance Standards can also incorporate broader aspects such as operational carbon performance standards expressed in CO2/sqm/year and indoor environmental quality aspects.

Therefore, the upcoming amendment of the Energy Performance of Buildings Directive may mark a milestone towards reaching climate-neutrality by 2050.

According to the most recent analysis by the Buildings Performance Institute Europe, the annual deep renovation rate must be brought from 0.2% to 3% as soon as possible in order to be able to meet the “Fit for 55” targets and Minimum Performance Standards must be defined accordingly. This, together with the nearly zero-energy building standards which will be applicable for all new buildings from June 30, 2022 in Hungary, will most likely bring a fresh, possibly burdensome, era in fighting climate change in the building sector.

www.wolftheiss.com

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

János Tóth

24 | 3

Special Report

www.bbj.hu

Budapest Business Journal | October 22 – November 4, 2021

Real Estate Developers

2

3

4

ECE pRojEktmanagEmEnt buDapEst kFt. www.ece.com

inFogRoup HolDing kFt. www.infogroup.hu

Wing zRt. www.wing.hu

5,431

3,832

3,275

–

✓

✓

✓

✓

✓

–

✓

✓

–

–

✓

–

✓

✓

–

A

–

Polgár Industrial Park phase C-D, Bartók Udvar, Kecskeméti West Industrial Park, Kecskeméti South Industrial Park

ConDominium opERation

REal EstatE bRokERagE

assEt managEmEnt

A

built-to-suit DEvElopmEnt

–

REal EstatE utilization

–

REal EstatE invEstmEnt

✓

ConstRuCtion

publiC builDing

✓

pRojECt managEmEnt

inDustRial

✓

poRtFolio managEmEnt

inFRastRuCtuRal

✓

ongoing pRojECts in HungaRy (invEstED valuE in HuF, ExpECtED yEaR oF ComplEtion)

FaCility managEmEnt

REsiDEntial

6,189

aCtivitiEs anD sERviCEs

CommERCial

buDapEsti ingatlan Hasznosítási és FEjlEsztési nyRt. www.bif.hu

typEs oF invEstmEnt

oFFiCE

1

Company WEbsitE

total nEt REvEnuE in 2020 (HuF mln)

Rank

Ranked by total net revenue in 2020

✓

✓

✓

–

–

✓

✓

–

✓

–

✓

✓

Eurocenter shopping center (2022), LIVINGPark West I (2021), LIVING-Kassák ✓ ✓ Passage (2022), LIVING-Park West II (2023), LIVINGLe Jardin (2024)

–

✓

✓

✓

✓

✓

–

–

–

–

✓

✓

✓

✓

✓

–

✓

✓

–

–

–

✓

✓

✓

pREviously ComplEtED REFEREnCE pRojECts, yEaR oF ComplEtion

majoR CliEnts in 2020

oWnERsHip (%) HungaRian nonHungaRian

top loCal ExECutivE CFo maRkEting DiRECtoR

aDDREss pHonE Email

A

A

(100) –

kristóf berecz Róbert Hrabovszki –

1033 Budapest, Polgár utca 8–10.

(1) 332-2200 info@bif.hu

–

Árkád 1. Budapest, Örs vezér tere (2002), Árkád Pécs (2004), Árkád Győr (2006), Debrecen Fórum (2008), Árkád Szeged (2011), Árkád 2.

Budapest, Örs vezér tere (2013)

✓

Bartók Udvar office Jabil, Lidl, complex, Tiszaújváros NAK, ABB, BTS logistics hall, Freudenberg, Polgár Industrial Park, Toyota Karcagi Industrial Tsusho, Lidl, Park, Club Velence TIGRA, MC residential and resort Bauchemie, park Mindentment

A

paweł sapek – Marta Tesiorowska

1095 Budapest, Lechner Ödön fasor 7.

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

Dr. mihály schrancz Judit Litresits Ferenc Harangozó

1117 Budapest, Dombóvári út 27.

(1) 241-0100 iroda@ propertymarket.hu

–

A

–

✓

✓

✓

✓

✓

✓

✓

✓

–

6

bn ingatlanFEjlEsztő zRt. www.biggeorgeproperty.hu

1,911

✓

✓

✓

–

✓

–

A

✓

–

–

–

✓

–

–

–

–

✓

A

7

pRologis HungaRy managEmEnt kFt. www.prologiscee.eu

–

–

1082 Budapest, Futó utca 47–53.

(1) 266-2181 info@ futurealgroup.com

– Real estate funds (100)

–

–

tibor tatár Róbert Karli Tímea Szili

1023 Budapest, Lajos utca 28–32.

(1) 225-2525 info@biggeorge.hu

–

–

1095 Budapest, Máriássy utca 7.

(1) 451-4760 info@wing.hu

tibor nagygyörgy – –

✓

–

noah m. steinberg – –

Biggeorge Property Zrt. (100) –

✓

✓

Wingholding Zrt. (100) –

A

✓

–

Magyar Telekom, Siemens, Ericsson, Wizz Air, TÜV Rheinland, HIPA, alza.hu

A

2,980

–

1115 Budapest, Bartók Béla út 105–113.

(1) 481-4530 info@infogroup.hu

Futureal Development Holding Kft. (100) –

5

–

ádám székely Máté Kovács Balázs Czifra

✓

FutuREal managEmEnt szolgáltató kFt. www.futurealgroup.com

–

Székely family (100) –

BB Hotel Budapest (2021), Gizella Loft (2021), East Gate Business Park D (2021), LIVINGMetropolitan Garden (2021), Siemensevosoft HQ (2020), LIVING-Kassák Residence (2020) Magyar Telekom HQ (2019), Ericsson HQ (2017), ibis Styles Budapest Airport Hotel (2017) Budapest ONE 1. phase (2020), Corvin Technology Park (2019), Corvin Promenade, Nokia Skypark (2016), Vision Towers (2015), Corvin Corner (2015), Corvin Towers (2010)

1,776

A

– ECE Projektmanagement International GmbH (100)

–

–

A

–

–

✓

–

–

–

✓

–

–

–

A

A

(100) –

✓

✓

–

–

✓

✓

–

✓

✓

✓

A

A

– Quintana Investments Limited (100)

gyula ágházi Zoltán Lehoczky Ernő Koncz

1062 Budapest, Váci út 3.

(1) 374-6500 info@granitpolus.com

A

– Skanska Commercial Development Europe AB (100)

aurelia luca András Péterfy –

1133 Budapest, Váci út 96–98.

(1) 382-9100 property@skanska.hu

✓

✓

✓

✓

A

pRopERty maRkEt kFt. www.propertymarket.hu 8

9

gRánit-pólus managEmEnt zRt. www.granitpolus.com

skanska magyaRoRszág 10 ingatlan kFt. www.skanska.hu

1,278

✓

✓

✓

–

–

–

BudaPart, Dürer Park

1,001

✓

✓

✓

–

–

✓

–

969

✓

✓

–

–

–

Christoph augustin, sandra brigitte müller, Dr. nóra kismarci, 1106 Budapest, sandra ilona Örs vezér tere 25/A Riccardi, (1) 434-8200 gabriella info@ece.hu szarka, mária verebélyi, ulrich schmitz – –

–

A

–

–

✓

✓

✓

–

✓

–

✓

–

A

3

www.bbj.hu

atEnoR HungaRy kFt. www.atenor.eu 11

656

✓

–

✓

–

–

–

tRigRanit 12 FEjlEsztési kFt. www.trigranit.com

514

✓

–

–

–

–

–

Millennium Gardens, 2021

14

ConvERgEnCE www.convergen-ce.com

CoDiC HungaRy kFt. 15 www.codic.eu

350

277

108 (2019)

✓

✓

✓

✓

✓

–

–

–

✓

–

–

–

–

✓

–

–

A

–

A

–

HomeWork, Modiano

assEt managEmEnt

REal EstatE bRokERagE

ConDominium opERation

built-to-suit DEvElopmEnt

REal EstatE utilization

REal EstatE invEstmEnt

ConstRuCtion

pRojECt managEmEnt

poRtFolio managEmEnt

FaCility managEmEnt

ongoing pRojECts in HungaRy (invEstED valuE in HuF, ExpECtED yEaR oF ComplEtion)

Aréna Business Campus Building B: Q3 2022, RoseVille: Q3 2022, BakerStreet Phase I: Q1 2023

gtC magyaRoRszág 13 ingatlanFEjlEsztő zRt. www.gtc.hu

A

Hb REavis ConstRuCtion NR HungaRy kFt. www.hbreavis.com

A

✓

A

✓

A

–

A

–

A

✓

A

–

A

HoRizon DEvElopmEnt kFt. www.horizondevelopment.hu NR

WHitE staR NR REal EstatE kFt. www.whitestar-realestate.com

A

A

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

–

A

A

ParkSide Offices (2024)

pREviously ComplEtED REFEREnCE pRojECts, yEaR oF ComplEtion

majoR CliEnts in 2020

oWnERsHip (%) HungaRian nonHungaRian

top loCal ExECutivE CFo maRkEting DiRECtoR

aDDREss pHonE Email

Cargill, Mazars, NN, Sanofi, Intrum, Bonduelle

– Atenor S.A. (100)

zoltán borbély – Máté Galambos, Melinda Kovács

1138 Budapest, Váci út 121–127.

(1) 785-5208 info@atenor.hu

A

– TG CEE S.á.r.l.

(100)

tomasz lisiecki Bálint Brenner –

1132 Budapest, Váci út 30.

(1) 456-6200 info@trigranit.com

A

– Globe Trade Centre S.A. (100)

Robert snow, yovav Carmi, ariel Ferstman Csaba Zovát –

1138 Budapest, Népfürdő utca 22.

(1) 412-3680 leasing@gtc.hu

A

(69) (31)

Csaba zeley Balázs Kovács Orsolya Simon

1133 Budapest, Árbóc utca 6.

(1) 225-0912 office@ convergen-ce.com

A

– Codic Hongrie S.A. (100)

kornél kalapács Hervé Bodin Ibolya Csiernik

1051 Budapest, Szent István tér 11/B (1) 266-6000 info.hungary@ codic.eu

A

– CPI Property Group (100)

mátyás gereben Tamás Pók Bea Déri

1138 Budapest, Dunavirág utca 2–6.

(1) 225-6600 hungary@ cpipg.com

A

– HB REAVIS GROUP B.V. (100)

pavel jonczy, Róbert kubinsky – –

1133 Budapest, Árbóc utca 1–3.

(1) 238-0359 construction@ hbreavis.hu

A

Individuals (100) –

AIG & Partners, Cain International, M7, Erste, DEKA, Bluehouse Capital, OTP, Goldman Sachs, Raiffeisen, AIG, Marathon

– White Star Real Estate LLC (100)

–

–

–

–

✓

✓

–

–

✓

–

Váci Greens buildings A, B, C, D, E, F, building F: May 2020, building E: October 2020; Aréna Business Campus building A: May 2020.

✓

✓

✓

–

–

–

✓

–

✓

–

Bonarka for Business Building H in Krakow Poland, 2019

✓

Centerpoint office building (2003-2006), Spiral office building (2008), GTC Metro office building (2010), GTC White House office building (2018), Pillar ✓ office building (2022), Riverside apartment house (2004), Riverloft office and apartment house (2007), Sasad Resort residential park (2008, 2010)

✓

Eiffel Tér office building (2010), City Point 9 Városi Logistics Center (2010), Park One office building, Bratislava (2007), ✓ CityZen office building (2016), Kálvin Square office building (2016), Árpád Center office building (2019), ZenGarden office building (2019)

–

✓

–

✓

✓

–

✓

✓

–

–

–

–

✓

✓

–

✓

✓

–

✓

✓

✓

–

–

–

✓

–

Krisztina Palace (2010), Green Court Office (2021)

✓

Balance Hall (2019), Airport City Logistics Park buildings E-F(2019), Gateway Office Park (Budapest, 2018), Quadra (Budapest, 2017), Balance Loft (Budapest, 2017), Balance Building (Budapest, 2016)

Cpi HungaRy kFt. www.cpigroup.hu NR

Special Report | 25

aCtivitiEs anD sERviCEs

publiC builDing

inDustRial

inFRastRuCtuRal

REsiDEntial

CommERCial

typEs oF invEstmEnt

oFFiCE

Company WEbsitE

total nEt REvEnuE in 2020 (HuF mln)

Rank

Budapest Business Journal | October 22 – November 4, 2021

✓

A

✓

Eötvös12, Villapark (2023), park22, ✓ business park I. (2022 Q4)

✓

A

✓

✓

✓

A

✓

✓

–

A

✓

✓

✓

A

✓

✓

✓

A

✓

✓

✓

A

✓

✓

–

A

✓

–

✓

A

A

✓

Eiffel Square (2011), Eiffel Palace (2014), Váci1 (2016), ✓ Promenade Gardens (2018), Szervita Square Building (2020)

✓

Markó offices 9 (2018), IP West office building (2009), The Quadrum office building (2008), Haller Kert office building (2008), Market Central Ferihegy retail park (2007), M1 Business Park (2006), Airport Business Park (2004), Alkotás Point office building (2002), Infopark A (1999)

✓

A

1052 Budapest, balázs Czár Deák Ferenc utca 5.

– (1) 473-1209 Ildikó Rézműves info@horizondevelopment.hu

jános gárdai Marietta Biczó Edina Magó

1124 Budapest, Csörsz utca 49–51.

(1) 382-5100 hu.office-bud@ whitestarrealestate.com

26 | 3

Special Report

www.bbj.hu

Budapest Business Journal | October 22 – November 4, 2021

Asset Management Companies

neo pRopeRty 1 seRviCes ZRt. www.neopropertyservices.hu

2

Wing ZRt. www.wing.hu

CusHMAn & WAkeField neMZetköZi ingAtlAn 3 tAnáCsAdó kFt. www.cushmanwakefield.hu

AddvAl kFt. 4 www.addvalgroup.com

5

CA iMMo HungARy kFt. www.caimmo.com

Ce lAnd 6 MAnAgeMent kFt. www.celand.hu

NR

23,496

3,275

2,775

993

A

A

A

A

A

A

A

Portfolio diversification according to ownershiP structure (%)

top loCAl exeCutive CFo MARketing diReCtoR

AddRess pHone eMAil

lászló vágó Tamás Giller György Miklósi

1095 Budapest, Máriássy utca 7.

(1) 299-2150 info@ neopropertyservices.hu

oWned by Clients

oWn pRopeRty

ConstRuCtion site

Hotel

oFFiCe

industRiAl

RetAil

otHeR

ACCounting seRviCes, ContRolling

pRojeCt MAnAgeMent

oWneRsHip (%) HungARiAn nonHungARiAn

✓

✓

✓

✓

✓

–

A

A

A

A

A

–

100

EG PRO Business Park, Liberty office building, LIVING-Le Jardin, BB Hotel Budapest, Gizella Loft, LIVING-Metropolitan Garden, Siemens✓ evosoft HQ, LIVINGKassák Residence, Magyar Telekom HQ, Ericsson HQ, ibis Styles Budapest Airport Hotel, East Gate Business Park

✓

✓

✓

✓

–

10

43

45

2

–

A

A

Wingholding Zrt. (100) –

noah M. steinberg – –

1095 Budapest, Máriássy utca 7.

(1) 451-4760 info@wing.hu

100

– (100)

gergely pados Zsuzsanna Kiss Orsolya Németh

1052 Budapest, Deák Ferenc utca 5.

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

Hubert Mühringer Erika Puskás Rita Szabó

1077 Budapest, Wesselényi utca 16.

(1) 479-6020 office@ addvalgroup.com

A

A

✓

✓

✓

✓

✓

–

51

27

17

5

–

–

A

A

✓

✓

–

✓

–

–

20

–

80

–

–

–

100

(100) –

✓

✓

✓

✓

✓

–

–

–

100

–

–

100

–

– CA Immobilien Anlagen AG (100)

john Mckie – –

1092 Budapest, Köztelek utca 6.

(1) 501-2800 office@caimmo.hu

✓

✓

–

✓

–

–

A

A

A

A

A

–

100

Individuals (100) –

Csaba széll Anita Molnár-Széll Zoltán Balla

1123 Budapest, Alkotás utca 53.

(1) 785-4985 info@celand.hu

✓

Corporate finance management

100

(69) (31)

Csaba Zeley Balázs Kovács Orsolya Simon

1133 Budapest, Árbóc utca 6.

(1) 225-0912 office@ convergen-ce.com

833

A

A

239

A

A

Hegyvidék shopping center

ConveRgenCe www.convergen-ce.com A

poRtFolio diveRsiFiCAtion ACCoRding to type oF pRopoeRty MAnAged (%)

AKKO Invest Nyrt. (100) –

Millennium Towers I, II, III, H, City Gate, Capital Square, IP West, Bartók ház, Canada Square, Víziváros Office Center, R70 Office Complex

A

ReCeivAbles MAnAgeMent

MAin pRopeRties MAnAged in H1, 2021

tenAnt MAnAgeMent

seRviCes oFFeRed in pRopeRty MAnAgeMent

poRtFolio, pRopeRty And ReAl estAte MAnAgeMent

totAl vAlue oF pRopeRty MAnAged in HungARy in 2020 (HuF Mln)

net Revenue FRoM Asset MAnAgeMent in 2020 (HuF Mln)

CoMpAny Website

totAl net Revenue in 2020 (HuF Mln)

RAnk

Ranked by total net revenue in 2020

A

Árpád Center Irodaház, CityZen Irodaház, Kálvin ✓ Square Irodaház, M7 Tárnok Business Park, ZenGarden Irodaház

✓

✓

✓

–

1

99

–

–

–

3

www.bbj.hu

tenAnt MAnAgeMent

ReCeivAbles MAnAgeMent

pRojeCt MAnAgeMent

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otHeR

✓

✓

✓

–

–

gAMMA pRopeRties kFt. NR www.gamma-am.hu

NR

NR

✓

✓

✓

✓

A

Real estate assset management, rental, business and financial building management, real estate management

inFogRoup Holding kFt. NR www.infogroup.hu

M7 ReAl estAte NR HungARy kFt. www.m7re.eu/hu

Portfolio diversification according to ownershiP structure (%)

–

100

–

– CPI Property Group (100)

Mátyás gereben Tamás Pók Bea Déri

1138 Budapest, Dunavirág utca 2–6.

(1) 225-6600 hungary@cpipg.com

–

–

100

Individuals (100) –

tibor gasser – –

1093 Budapest, Közraktár utca 30.

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

A

A

A

A

A

A

A

A

A

A

A

A

–

60

A

30

A

A

A

A

– Immofinanz AG (100)

viktor nagy, ottó vörös – –

1134 Budapest, Váci út 45.

(1) 236-0435 mail@immofinanz.com

A

A

A

A

✓

✓

✓

✓

–

–

A

A

A

A

A

100

–

A A

dániel jellinek – –

1148 Budapest, Kerepesi út 52.

(1) 688-1700 indotek@indotek.hu

A

Bartók Udvar office complex, Polgár Industrial Park, Karcagi Technology and Industriali Park, Kecskeméti South Industrial Park, Kecskeméti West Industrial Park, Tiszaújvárosi Development Area

✓

✓

✓

✓

–

–

–

45

15

5

35

100

–

Székely family (100) –

ádám székely Máté Kovács Balázs Czifra

1115 Budapest, Bartók Béla út 105–113.

(1) 481-4530 info@infogroup.hu

A

Aerozone Business Park, Csillag Center, Gödölllő Business Park, Eger Business Park 2

✓

✓

–

–

–

–

A

A

A

A

A

100

–

– M7 Real Estate Europe Limited (100)

balázs Magyar – –

1013 Budapest, Krisztina körút 32.

(1) 701-4050 info-hu@m7re.eu

✓

✓

✓

✓

–

–

7

–

58

35

–

100

–

– CEE PropertyInvestment Immobilien GmbH (100)

géza barabás Tímea Földi –

1051 Budapest, Bajcsy-Zsilinszky út 12.

(1) 429-5050 office@simmoag.hu

✓

–

–

✓

–

–

–

–

100

–

–

100

–

– tomasz lisiecki TG CEE S.á.r.l.

Bálint Brenner (100) –

A

A

A

A

s iMMo ApM HungARy kFt. NR www.simmoag.hu

A

A

A

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

tRigRAnit NR FejlesZtési kFt. www.trigranit.com

A

A

A

Millennium Gardens

A = would not disclose,

NR = not ranked, NA = not appliacable

AddRess pHone eMAil

Riverpark, Andrássy 93, Andrássy 100, K6, Merkur Palota, Artotel, Ausztria Ház

iMMoFinAnZ seRviCes HungARy kFt. www.immofinanz.com

indotek gRoup www.indotek.hu

42.8 9.9 43.5 3.8

top loCAl exeCutive CFo MARketing diReCtoR

oWned by Clients

poRtFolio, pRopeRty And ReAl estAte MAnAgeMent ✓

oWneRsHip (%) HungARiAn nonHungARiAn

oWn pRopeRty

A

Cpi HungARy kFt. www.cpigroup.hu NR

Special Report | 27

ConstRuCtion site

A

Hotel

A

oFFiCe

A

poRtFolio diveRsiFiCAtion ACCoRding to type oF pRopoeRty MAnAged (%)

industRiAl

totAl vAlue oF pRopeRty MAnAged in HungARy in 2020 (HuF Mln)

MAin pRopeRties MAnAged in H1, 2021

seRviCes oFFeRed in pRopeRty MAnAgeMent

RetAil

net Revenue FRoM Asset MAnAgeMent in 2020 (HuF Mln)

CoMpAny Website

totAl net Revenue in 2020 (HuF Mln)

RAnk

Budapest Business Journal | October 22 – November 4, 2021

–

–

80.5 19.5

1132 Budapest, Váci út 30.

(1) 456-6200 info@trigranit.com

This list was compiled from responses to questionnaires received by October 20, 2021, and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

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

4

www.bbj.hu

Budapest Business Journal | October 22 – November 4, 2021

Socialite Budapest International Guitar Festival and Competition Returns On October 22, the finalists for the Budapest International Guitar Festival and Competition will be announced.

“From the first moment, the competition has fulfilled all our hopes, bringing great young musicians from all over the world to compete in front of a large international jury and spreading the word of the competition to many parts of the world.”

DAVID HOLZER

Previous winners include Ukrainian guitarist Marko Topchii who won in 2017. Topchii has competed in more than 100 international competitions, taking around 50 first places, making him the guitarist with the most competition wins in the world. He is on the jury this year and played the opening concert.

I discovered the Budapest International Guitar Festival and Competition when I was doing online research into Hungarian guitarists for my forthcoming book on the legendary Gábor Szabó.

The Liszt Prize-winning guitarist József Eötvös launched the Budapest International Guitar Festival and Competition in 2014, and he is its artistic director. Eötvös teaches at the Liszt Academy of Music, where he founded the classical guitar department in 2002.

He is also artistic director of the Balatonfüred International Guitar Festival and founder of the Eötvös Music Foundation, which, he told me, “supports talented young guitarists by providing them with concert guitars.”

The Budapest competition is open to professional classical guitarists, university students, and graduates, but they must be under 35.

Eötvös also works as a composer, and when the pandemic is not preventing him, he gives concerts, masterclasses and sits on the jury of international competitions, following the rise of a new generation of young musicians.

Although Hungary was the first country in the world to hold a guitar festival, it didn’t have an internationally renowned competition until Eötvös and his wife, Zita, founded the Budapest International Guitar Festival and Competition.

who shot to international fame in the 1980s with the band Dire Straits, had a Jewish-Hungarian father named Erwin.

I also knew that, in the world of jazz, Hungarian-born Gábor Szabó is regarded as an extraordinarily innovative guitarist. Since he died in Budapest in 1982, Szabó’s reputation has been growing steadily.

Attila Zoller, born in Visegrád in 1927, is not as well-known as Szabó, but he was also a great innovator and the first guitarist to play free jazz.

Zoller played with all the jazz greats, including Chico Hamilton, Stan Getz, Herbie Hancock, and many others.

Spreading the Word

As he puts it, “I’m responsible for the artistic part; Zita manages everything else. From the first moment, the competition has fulfilled all our hopes, bringing great young musicians from all over the world to compete in front of a large international jury and spreading the word of the competition to many parts of the world,” Eötvös says.

“This year’s theme is ‘Colors of the Guitar,’ and we’ve already seen many different and wonderful approaches to playing from our contestants,” he adds.

The competition has been held every three years since 2014. In between, Eötvös and Zita organize three-day festivals of themed concerts with worldleading artists often making their Hungarian debut.

In 2020, it was impossible to hold the competition, so it was moved to this year.

The hope was that it could be in person, but Eötvös realized, “To give every country in the world an equal chance, we still needed to hold the competition online. Many potential contestants from different parts of the world would not have been able to come to Hungary so easily as there was a lot of uncertainty about travel.

Marko Topchii, 2017 winner of the last I have to confess I know nothing about competition. Photo by Gábor Valuska. Hungarians in the international classical guitar scene. Eötvös put me straight.

“Hungarians are actively involved in the international guitar scene, and The idea of an online competition proved to be the right one, as we are doing very well for the size and 54 competitors from 29 countries entered, population of the country,” Eötvös said. and in the end, 48 competitors sent in “I would like to mention András their video footage for the first round.”

Csáki, who was a student of mine at So far, the international jury has the Academy of Music and is now my allowed 27 competitors to reach the colleague and professor of the guitar semi-finals. The list of finalists will department at the same academy. Antal be published on October 22. The first Pusztai is known in classical and jazz. prize will be a Sakurai Special guitar My good friend Sándor Szilvágyi, a Liszt made by the legendary Masaki Sakurai Prize-winning guitarist, who recently worth EUR 5,000. died tragically, was a teacher at the Japanese guitars are highly regarded Bartók Konzi.” He wasn’t done there. because of the extreme precision of “Péter Girán, Márton Nagy, Lotti their craftsmanship. Sakurai Special Szalai, Zsombor Sidoo are all excellent. guitars marry that with ease of playing Tritonus Guitar Trio and Venti Chiavi and excellent sound volume; they are a Trio, who won first and second place in mouthwatering prospect for any guitarist. the chamber music category at one of our biggest competitions, the 2019 edition of Hungarian Guitar the American GFA competition, should Although Hungarian rock and roll also be included,” he added. bands have never really made their You can follow the competition at mark on the global stage, I knew that www.budapestguitar.hu, watch the at least two famous guitarists had videos submitted by the contestants Hungarian origins. for each round, buy tickets for the The parents of flamboyant KISS bass festival concerts, and vote online for guitarist Gene Simmons, born Chaim the contestants to win the audience Witz in Haifa, Israel, in 1949, were prize. The Budapest International Jewish-Hungarian and came originally Guitar Competition Facebook page from the northeast of this country. will also keep you up to speed on the Scottish-born guitarist Mark Knopfler, competition’s progress.

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www.bbj.hu

Budapest Business Journal | October 22 – November 4, 2021

Socialite | 29

Natural Wine Begins to Flow in Hungary Like the cloudiness caused by the sediment that rises up from the bottom of an unfiltered and unfined bottle, the natural wine phenomenon that is sweeping the wine world is also shaking up the Hungarian scene, bringing clamor and confusion in its wake.

ROBERT SMYTH

Wine experts and lovers have been debating the topic furiously on social media, with many dismissing natural wines as terrible and nothing more than a fad fueled by ignorant hipsters, who claim that conventional winemakers are killing us.

However, I don’t think that natural wine is a flash in the pan, and it is very much in demand by an enthusiastic younger generation, promising a certain X-factor for the curious members of Generation X and beyond.

The natural wine movement is really about returning to vinifying grapes the way they used to be handled, before the advent of technology and synthetic herbicides/pesticides came onto the scene and revolutionized winemaking.

You could, of course, argue that wine was made all the better, fresher, fruitier, and certainly much cleaner, by technological advances, that pesticides and herbicides are used for good reason and, furthermore, in amounts that have zero impact on health.

On the other hand, there surely exists plenty of room for different approaches, and a return to earlier ways also reflects what’s going in other walks of life.

While larger wineries cannot really afford to take risks and have to focus on pumping out a faultless, uniform product to satisfy the demands of shareholders, owners, consumers, and distributors alike, smaller producers often have the freedom to experiment.

The Kristinus Borbirtok in the Balatonboglár wine region does buck this trend and is an example of a larger winery successfully pursuing a natural approach.

One trend I’ve been witnessing in Hungary is smaller cellars moving towards organic and biodynamic growing, and in some cases going the whole natural hog, which essentially means doing very little to the wine.

Back to Basics

More wineries are going back to basics, adopting a minimum interventionist approach to winemaking, neither adding nor taking away from the wine.

Not adding to the wine implies spontaneous fermentation from the yeasts inherent on the grapes and in the cellar, and the use of no additives other than a bit of sulfur to prevent the wine from spoiling; hardcore natural vintners often eschew even the use of this naturally-occurring chemical.

At a blind tasting of natural wines that I recently attended, to which participants

all brought a bottle, a non-natural wine somehow slipped into the line-up, and it really did stick out, despite the actual natural wines all being clean and without unpleasant, dirty notes.

For me a natural wine should be clean, yet also have a certain funkiness going on. It really is a whole “New Old” category and needs to be treated as such.

When they’re bad, natural wines can be awful, but when they’re good, they certainly warrant serious attention.

I recently had the opportunity to visit two of Hungary’s leading lights of natural wine, and was greatly impressed by what I saw and tasted.

One Hungarian winemaker who has gone entirely sulfur-free is Levente Major, owner and winemaker at Levente Pince, in the village of Abasár (88 km northeast by road) in the Mátra wine region. His wines, from the Olaszrizling, Riesling and Kékfrankos varieties, are to my palate concentrated, full of character and very pleasant to drink.

He even makes a natural wine out of Irsai Olivér, which I always considered to be a technologically-made wine; his does capture the essence of this aromatic grape, but with plenty of richness and oily texture.

Most of his wines go abroad, as foreign distributors get and really appreciate what he’s doing, while the local market is put off by what are somewhat premium prices of around HUF 6,000 a bottle.

That seems justified, nevertheless, given the extra yards he puts in to grow grapes via only organic treatments.

“Grapes are every day work, you can’t just come up from Budapest occasionally,” he says.

Deer Problem

Major has recently bought 10 hectares of vines in one block on Sár hegy, but deer have gobbled up seven hectares worth of the 2021 vintage, primarily down to his refusal to spray conventional chemicals.

In broad daylight, we could see a brace of deer chillin’ and chewin’ among the vines.

He is planning to build a fence to keep the animals out. At first glance, with his big beard, you might mistake him for a hipster, but do that at your peril; also the headmaster of the local school, he tells me that he is into Norwegian black metal.

Heading south to the often overlooked Hajós-Baja wine region, the bijou Sziegl Pince is located in Hajós (157 km south of Budapest), in what is considered to be the world’s biggest cellar village, Hajósi Pincefalu, in itself a must-see for wine lovers.

Balázs Sziegl, a Hajós native, runs the winery together with his wife, Petra, who

“I think it’s just a different approach, we can certainly live together,” says Petra. She and Pálma Koch went to the same school. Incidentally, Pálma’s father Csaba, the Hungarian Wine Academy’s Winemaker of the Year in 2019, also makes some exciting organic wines from obscure local varieties.

I quiz Sziegl about when the magic moment to go natural arrived. “It wasn’t a moment, but rather a process.

We wanted to reduce the role of the winemaker [to allow the place of growth Levente Major. Photo by Or Szűcs. to express itself], and with every passing year we’ve moved towards this,” he says.

“We didn’t want to compromise and if hails from the next village, but the pair there’s not a sense of joy in what you’re actually met while studying viticulture doing, then the result won’t be good.” and viniculture in Budapest.

I had heard a lot about the Sziegl “We don’t use any additives, neither do Kadarka coming into this tasting, and it we take anything out of [the wines]. Wines is indeed exceptional, or rather, they are, created the natural way tell you about their with two single-vineyard bottlings serving land of production and the personality of up different aspects of the grape variety. the winemaker,” their website says.

Meanwhile, the Kékfrankos 2020, We arrived at the Sziegl winery after made from 80% whole-bunch pressing a visit to the 800,000-bottle-a-year and aged for eight months in 500-liter Koch Borászat. Sziegl is full of barrels, has a beautiful deep purple admiration of the work done by the larger color and oozes violets and blueberries, local player, and the two winemaking along with a leathery-balsamic note, families are on friendly terms. plus a bit of a bite on the finish.

PROMOTION

Exclusive concerts for adults and children

At the next concert of the Unikum season ticket, on 10th December, a worldwide known artist will play on the piano, which is a rare opportunity to see, as she has already announced her retirement! Maria João Pires gave her first concert at the age of four, at the age of seven she performed publicly at Mozart Piano concertos, and she is still one of the composer’s most dedicated interpreters in the world.

In December she can be greeted on the stage of the Liszt Academy of Music, as she has still undertaken this concert tour. She will perform with one of the most world-renowned conductors of Haydn and Mozart’s music, Gábor Takács-Nagy, who will now give a concert with his own orchestra, the resident chamber orchestra of the Verbier Festival from the picturesque Swiss village. The audience will hear Beethoven’s compositions along with Mozart’s music.

But Filharmonia Hungary also provides fun for children. After kindergarten or school a joint family event for the weekend? A classical music for kids? Go to Storytelling Music concert, one of the most prestigious family program in Budapest! Tamás Lakner moderates these classical music productions translated into children’s language with the help of playful elements and a fantastic sense of style.

At the first concert, on 7th November short stories about great composers will be told by the Hungarian State Opera Orchestra, but the children’s concert of the Hungarian National Choir and the Szent István Philharmonic should not be missed in the season either! While the first two concerts will be held at the Erkel Theater, the closing concert can be enjoyed by the audience in the renovated magnificent hall of the Opera House. Bring all members of your family and let’s experience the wonderful musical moments of the Filharmonia Hungary concert series in Budapest!

Tickets and season tickets can be purchased at the Filharmonia Hungary’s Budapest office (1143 Budapest, Szobránc u. 6-8.

3rd floor, +36 1 302 4961; budapest@filharmonia.hu), at www.jegymester.hu, at well-known ticket offices, and before the concert at the venue.

30 | 4

Socialite

www.bbj.hu

Budapest Business Journal | October 22 – November 4, 2021

State Secretary László György of the Hungarian Ministry for Innovation and Technology.

Duncan Graham, BCCH chairman.

The British Chamber of Commerce in Hungary (BCCH) celebrated the 30th anniversary of its foundation with a gala evening at the Four Seasons Hotel Gresham Palace Budapest.

BBJ STAFF

“The event was a big hit; more than 140 guests arrived for a really fun night with excellent, professional food and service from the Four Seasons,” BCCH chairman Duncan Graham told the Budapest Business Journal.

Live musical entertainment was provided by the aptly named band

Photos by Márton Neményi.

Gala Marks 30 Years of BCCH Supporting Business in Hungary

Italian community, who have provided support for the birthday event. The membership numbers are now significantly improving, and our events are proving to be popular with the help of our office team of Oliver Strommer and Gábor Schaffer.”

Long Connection

British Ambassador Paul Fox looked back at the long connection with Hungary, with the BCCH established in 1991. He looked forward to the COP26 UN Climate Change Conference in Glasgow shortly, believing it would make further progress toward sustainability.

“He thanked the chamber, a voluntary organization, for its support of British companies and the opportunities provided by networking events such as the party. He said the BCCH had an important role here, working closely with the embassy team and the U.K.’s Department for International Trade wherever possible,” Graham said.

Guest of honor State Secretary The BCCH 30th anniversary cake by Angela Anderson. László György described the Hungarian efforts to improve sustainability and press on with “green issues,” “Union Jacks,” and broadcast media Arnott as treasurer, has real strength complimenting the United Kingdom for specialist Krisztina Bombera moderated in depth with a wealth of experience,” its early position in the “race to zero. the event. In his welcome speech, he explained.

He also emphasized the number Graham noted that the chamber had “Now that we are slowly moving of British companies successfully increased membership despite this being back to live events, we hope to settled in Hungary and the new a difficult period for business in general. cement relationships with our friends companies enquiring about “The current board, with Kinga at the [German Business Club] DWC opportunities via the Hungarian Kalocsai as vice-chair and Douglas via Dr. Arne Gobert and also the Investment Promotion Agency.

Guests at the event.

British Ambassador Paul Fox.

www.bbj.hu

Budapest Business Journal | October 22 – November 4, 2021

PRESENTED CONTENT

4

Socialite | 31

Continuing Kodály Traditions in the Digital Era Named for the renowned Hungarian musicologist, the Kodály Choir in Debrecen celebrates 50 years of performing as a professional ensemble this year. Its extensive repertoire ranges from unaccompanied acapella pieces through classical oratorios to the latest contemporary choral works.

BALÁZS BARABÁS

The choir has been performing as a professional ensemble since 1971, but was founded much earlier, in 1955 by György Gulyás. Since then, it has given more than 2,500 concerts in 40-plus countries, in venues including the Kennedy Center in Washington, the Concertgebouw in Amsterdam, in Jerusalem, Manila, and Mexico City. The choir is marking its 50th jubilee with a series of concerts. The Budapest Business Journal talked with chief conductor Zoltán Kocsis-Holper.

BBJ: What were the original motivations for founding the Kodály Choir?

Zoltán Kocsis-Holper: The main idea was to present Hungarian choir life, the traditions, the works, and all related choral and artistic values not only on a national level but also internationally, to draw

attention to this Hungarian artistic treasure.

After five decades, this is still at the core of the Kodály Choir: to take choral traditions around the country and beyond. Meanwhile, we put a great emphasis on also learning the creations of contemporary composers.

BBJ: What makes a good choir?

ZK-H: There are many factors. First, if we are talking about a professional ensemble, the qualification of the members is of the utmost importance, and I have in mind not only musical education but also to shape the vocal qualities, to expand the vocal skills. It is also fundamental how these people can work together, what kind of community they can create. For us chief conductors, the most critical task is to find the individual qualities within communities. In this sense, a chief conductor does not have only professional duties, but also pedagogical and psychological; we must conduct the preparation, the work of the members

BBJ: On an international level, where does Hungarian choir art stand, what are its specifics?

ZK-H: I believe that, during the last decades, Hungarian choral art has earned a very respectable place worldwide and has kept this place. Albeit the number of choirs has decreased in the past few years, the level of Hungarian ensembles that emerge on the international stage is still at the top worldwide. If I need to answer what makes a Hungarian choir so special on a Kodály level, it is precisely the education following the Kodály concept, growing through music. During Chief conductor Zoltán the lifetime of Zoltán Kodály, a very wellKocsis-Holper in action. established choir movement emerged, in Photo by Márton Fejes. which his disciples have also played a significant role. Those who joined this movement or have some knowledge about so that they give their best performance it through their parents wish to further when the time comes for the concert. this kind of choral tradition, while the musical education based on the Kodály BBJ: In the digital era, do people still method results in a deeper understanding listen to choirs? of music. Also, we may be proud of the ZK-H: Yes, I was born in Sopron and Hungarian composers. We have excellent started my musical career there, and I choral composers renowned worldwide, also experienced this. If we reach people and this is also important, that new choral in the right way, with the right impulses, pieces emerge that are appreciated not there will be a clear interest in choral only by us but by the whole musical world. concerts. And this is also one of our tasks, to reach people in such a way that, More information about from all the available impulses, this is the Kodály Choir jubilee an option to which they respond happily. concert series is available at I believe that if someone once attends a www.kodalyfilharmonia.hu choral concert, they will come again, to look for that experience again.

PARTNER CONTENT

Expats set to Unite at Bonfire Night Charity Party November 9 sees the return of the annual “Bonfire Night” international community fundraising party in Budapest organized

by XpatLoop.com, with some sponsorship opportunities still available.

BBJ STAFF

Seen by many as a highlight in the fall social calendar, this popular international community event brings together expats and cosmopolitan locals from local business, diplomatic, and cultural circles in Hungary.

Dennis Diokno, the CEO of longtime event sponsor FirstMed Budapest, described the last in-person party in 2019 as “A truly spectacular evening!

I thoroughly enjoyed the fabulous company at this event again.”

He added, “FirstMed has proudly been the main sponsor of this XpatLoop Charity Gala fundraiser for many years and has been a partner of XpatLoop.com for nearly 20. I look forward to many more good times together!”

This year FirstMed has teamed up with Dr. Rose, the leading private hospital in Hungary, as co-main sponsors of what XpatLoop calls its “feel good + do good”

publisher of XpatLoop.com and the event organizer, says there is still time for businesses to offer auction prizes for the event and adds that some sponsorship opportunities are still available.

He adds that tickets are selling well for this year. “Priced at a modest HUF 10,000 per person, they include lots of refreshments and live entertainment, such as a performance by Budapest’s favorite expat covers band ‘The Vibe,’” he says.

One of the event’s highlights is always the live auction. The traditional duo of local expat actor and voiceover artist Hans Peterson and TV personality Zsuzsa Demcsák will again present this essential fundraising part of the night.

The auction offers a wide range of items generously donated by event From left:Dennis Diokno, CEO of co-main sponsor FirstMed, Stephen supporters like the Budapest Marriott Linfitt, publisher of XpatLoop.com, TV celebrity Zsuzsa Demcsák, and Hotel. This year, other regular sponsors Éva Patzauer, managing director of the Csodalámpa Charity Foundation. include Sándor Zwack, chairman of the board of directors of Zwack Unicum, who has arranged a cocktail bar for party. The two firms will also announce a given for many years to children with the event along with bottles of Unicum new business cooperation at the event.

Barista and Unicum Riserva bottles on serious health conditions by making The guest of honor will, as usual, be every gala table. their dreams come true through the U.K.’s Ambassador to Hungary.

He is also confirmed as a guest this year, collaboration with the Csodalámpa / Last year the then newly arrived Paul as is, for example, János Szlifka, the general Magic Lantern Foundation.”

Fox made a video message to support manager of Aston Martin Budapest.

Honored this fundraiser.

The Budapest Business Journal has Gábor Patzauer, founder and president of “As a Brit and as ambassador, I am supported this event for many years, the Csodalampa Foundation, said, “Our proud that XpatLoop.com has held offering as it does the chance to party team is greatly honored that its mission of for charity with friends and new faces. celebrations for Bonfire Night for over a decade. Not only have they been some of granting 260-300 wishes per year for very XpatLoop.com promises a buzzing ill children is supported by XpatLoop.com atmosphere created by guests from all the best parties in town, but also events event guests and readers; thank you!” that have raised incredible amounts of around the globe; there is sure to be a In 2021, the event will be held in funds for a number of worthy causes,” multitude of reunions, introductions, the ballroom at the Budapest Marriott Fox said in his address. and handy contacts - both business on November 9, following COVID “In particular, I would like to highlight and social. See XpatLoop.com for more safety regulations. Stephen Linfitt, the the fundraising support XpatLoop has information on the official invitation.