Budapest Business Journal 3109

Real Estate: Offices

Less Office Building Activity for 2023

A limited number of office development projects are expected to be undertaken in the immediate future. Developers are exercising caution given an uncertain geopolitical and economic market environment that impacts all development areas.  16

Role of FM, PM is Being Enhanced

Ever more sophisticated requirements from tenants, concerns over rising utility prices, and the increasingly central role of ESG and well-being have further enhanced the function  of property and facility management providers.  35

Veszprém, Balaton Shine as ECoC

In March 2019,Veszprém, just north of Lake Balaton, was made a European Capital of Culture for 2023. The program is officially called the VeszprémBalaton ECoC. Having weathered COVID19 and war since that announcement, its year is well underway.  38

Weak Prospects are Temporary

MNB Takes Action as Risks Moderate

Although the National Bank of Hungary did not change the base rate at its most recent meeting, it narrowed the upper end of the interest rate corridor. However, modifying the base interest rate is not on the agenda at this stage.  3

Despite a short term weak economic outlook, German firms intend to continue investing and increasing headcount, says András Sávos, president of the country’s business chamber here. 10

Central Bank Launches Eco-Friendly Product Finder

The National Bank of Hungary (MNB) has published a report on the state of green finance in the country, highlighting the robust growth of climate-friendly loans and announcing the launch of a green financial product finder tool.  7

EDITOR-IN-CHIEF: Robin Marshall

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GERMAN INVESTORS MARK HUNGARY’S ECONOMIC CARD

For all the fanfare made of Asian investments (think of our Korea Country Focus in the last issue or our China special back on March 10), they are relative newcomers to Hungary’s foreign direct investment block. The Germans, however, have been here since before the change in regime in some cases. They are genuinely, if you will pardon the pun, invested in the success of the country. Or, at the very least, in the continued success of their businesses in this country. That’s not exactly the same thing, but it does head in broadly the same direction.

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It means a certain weight is given to the opinions of the German-Hungarian Chamber of Industry and Commerce (DUIHK). The business organization is unusual for a bilateral chamber on two grounds. Firstly, it is partly funded by the German state. Secondly, it dwarfs all the others in terms of membership. According to its website, it has some 900 members. Little wonder, then, that in previous years, when the chamber has presented survey results, there has frequently been a high-ranking government member in attendance, often (though not exclusively) Minister of Finance Mihály Varga. Its 30th Anniversary Gala Dinner on June 2 is due to be attended by President Katalin Novák. But back to business. The latest German chamber sentiment survey was presented at the end of April and makes for interesting reading. German firms often seem more bullish about how accommodating the Hungarian economy is to their needs and how predisposed they are, therefore, to reinvesting. In this year’s survey (based on the answers of some 250 executives from DUIHK member companies and some other foreign chambers in Hungary), 79% said they would choose Hungary as an investment location again. While that sounds impressively high, it is markedly down from the record levels of the last couple of

years of 88%. One of the attractions of the German survey is that it is conducted simultaneously in chambers across the region, making comparisons very straightforward. Some of those countries saw scores of 90% or more on reinvestment. Other figures leap out. A 10-year-long trend of improving satisfaction with the economic policy framework came to a halt this year. Members are less happy with the tax system and the predictability of economic policy. DUIHK’s “Investment Climate Index,” calculated annually based on the survey results, fell this year from six to two points (on a scale of -100 to +100).

There are some brighter spots. Despite rising wages and an expectation that labor costs will increase by almost 15% this year (significantly more than in Poland, the Czech Republic, and Slovakia, where the wage increase is estimated at 8-10%), Hungary still has the third lowest wage costs in the EU, according to the chamber. That means its cost advantage for exporting companies, in particular, will continue to exist for some time, even with solid wage growth. And, while it is true that the situation of the national economy was described as “significantly worse” than in spring 2022, and the outlook for the next 12 months is also seen as fairly weak (one in two companies expect the situation to deteriorate, while only 13% expect it to improve), this ratio is already noticeably better than last fall.

Nobody is suggesting that German businesses are about to make a run for the hills and over Hungary’s borders to pastures new; far from it, in fact. But, equally, it is clear that, as the chamber notes at one point in the survey, there is a need for action on the part of the Hungarian government.

Robin Marshall Editor-in-chief

THEN & NOW

The color photo from state news agency MTI shows Liliána Csernyánszki of DVSC Schaeffler (right) and Kisfaludy Anett of FTC-Rail Cargo Hungaria in action in the 23rd round of the women’s first-class handball league at the Debrecen Hódos Imre event hall. The black and white image from the Fortepan public archive shows a women’s full-pitch handball match in the FTC stadium on Üllői út in 1949.

Photo by MTI / Zsolt Czeglédi

Photo by Fortepan / Márton Ernő Kovács

News • macroscope

Central Bank Takes Action as Risks Moderate

Although the National Bank of Hungary did not change the base rate at its most recent meeting on April 25, it narrowed the upper end of the interest rate corridor. The decrease in the risk of extreme scenarios made the move possible, according to the central bank’s deouty governor. However, modifying the base interest rate is not on the agenda at this stage.

ZSÓFIA CZIFRA

The Monetary Council of the Hungarian National Bank (MNB) held the 13% level of the central bank’s base rate at its latest rate-setting meeting. However, it narrowed the interest rate corridor, reducing the upper edge by 450 basis points from 25% to 20.5%.

The central bank’s base interest rate has been at this level since last September, and the council also kept the one-day deposit interest rate at 18%. The lower edge of the interest rate corridor was left unchanged at 12.5%.

The decisions met analysts’ expectations. Among the factors that made the decision possible, MNB deputy governor Barnabás Virág highlighted that gas and electricity prices had fallen significantly in Europe, gas reservoirs are at an adequate level, the end of the interest rate cycle of the major central banks is within sight, and capital inflows have been observed in emerging markets.

Among the internal factors, the foreign exchange market has stabilized, the government securities market is stable, auction demand is adequate, the balance of payments has improved, and the EU agreement has been reached, Virág said at a press conference following the decision.

The deputy governor noted that the current level of the base interest rate is adequate to manage fundamental inflation risks, so its modification is not on the agenda. He said a strong, lasting downward trend in inflation would be necessary before any cut could follow.

Step on the Path

When asked whether the Monetary Council’s decision could be considered an easing, the vice president said it was an important step on the path the MNB embarked upon in October. The data of the following months will decide how it should proceed, he added.

He underlined that the central bank is applying “a prudent and cautious approach” to the interest rate reduction of overnight deposit tenders. It will continuously evaluate the durability of the improvement in risk perception, external balance processes, and the preservation of market stability, Virág said.

Concerns related to the international banking system are being evaluated. The market environment, central bank

Producer Price Index of Industry in Hungary (2002-2023 January-March)

Source:

interest rates, and investor risk-taking are also important points to be factored into the decision-making process.

Virág pointed out that in Europe, a general trend in inflation could be observed, but core inflation had moderated less. In Hungary, inflation peaked in January, and the decline in food price inflation continued in April.

In the coming months, the consumer price index is expected to decrease at an increasingly rapid pace. The strengthening of base effects from the middle of the year will contribute to this. The disinflation path will continue at a faster rate than in recent months from the second quarter on, he said.

The central bank’s move and the proceeding announcement made a week before the actual decision represented a complete communications turnaround. Previously, the central bank had emphasized its strictness and raised the required reserve ratio as a sign of this, according to Gábor Regős, head economist at Makronóm Intézet.

Meaningful Change

The reduction to the top of the interest rate corridor does not significantly affect the market loan interest rates, as this is more affected by the interest rate of the overnight deposit instrument. At the same time, it does indicate a meaningful change, the economist argues.

The 450-basis point reduction can be considered a firm step and suggests that the actual easing may begin at a definite pace in the coming months, Regős says. He adds that the market was not surprised by the move, as evidenced by the fact that the forint exchange rate did not react substantially to it.

However, according to the economist, the central bank’s forward-looking guidance does not contain a clear indication for the coming months. Although the MNB announcement emphasizes the need to maintain a strict monetary policy, it also states that, during subsequent interest rate decisions, the Monetary Council will consider the durability of the improvement in risk assessment and will decide on any change to the overnight deposit instrument’s interest rate based on this.

The guidelines, therefore, do not definitively say that there will be an interest rate cut in May, but neither do they say that it is entirely out of the question.

“According to our expectations, the one-day deposit interest rate will not decrease in May, but only in June or July, if the risk assessment allows it, i.e., the EU negotiations are progressing properly. At the next meeting, however, a further lowering of the ceiling of the interest corridor is not excluded,” Virág had said after the decision was taken.

Hungary and Ukraine’s Neighbors win EU Import ban Concessions Roundup Crisis Ukraine

measures. While Hungary’s ban is due to last until June 30, the statement from the European Commission said its steps would enter into force on May 2

and last until June 5.

During a break in a meeting with other EU farm ministers in Luxembourg on April 25, Nagy said that he had wanted guarantees allowing a ban on imports of Ukrainian grain to remain in force until the end of December. He added that further negotiations were necessary on expanding the bans to products in addition to those recommended by the EU.

“With the application of an extraordinary protection measure, the EU has allowed a ban on the import of a number of agricultural products from Ukraine to member states as long as the current extraordinary market situation remains in place,” Nagy said in the post.

The European Commission said it had “adopted exceptional and temporary preventive measures on imports of a limited number of products from Ukraine under the exceptional safeguard of the Autonomous Trade Measures Regulation,” in a press release on May 2.

It said these measures were necessary in order to help ease “serious logistical bottlenecks” in Bulgaria, Hungary, Poland, Romania and Slovakia of wheat, maize, rapeseed and sunflower seed originating in Ukraine. The statement emphasized that these products could

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continue to circulate freely in all other member states and could “continue to circulate in or transit via these five member states by means of a common customs transit procedure or go to a country or territory outside the EU.”

With the agreement, Nagy said the European Commission had finally acknowledged the severity of the issue in these countries. Earlier, the EU had exempted Ukrainian grain from customs duties and quotas in order to expedite deliveries to countries in the Middle East and Africa.

However, these so-called “Solidarity Lanes” subsequently flooded the markets in neighboring countries. In addition to agreeing to a temporary ban, Nagy said the EC was proposing EUR 100 million in extraordinary support for farmers in member states neighboring Ukraine.

Phase in, Phase Out

Hungary’s Minister of Agriculture added that its ban on Ukrainian grain imports would be phased out once Brussels has introduced its own

Although these countries had introduced their bans on certain agricultural products from Ukraine in mid-April in an effort to protect their domestic producers, not all market participants were pleased by the actions.

Hungary’s grain lobby criticized the ban, for instance, saying it would lead to shortages and undermine efforts to curb the highest inflation rate in the EU.

“Our members are desperate and don’t support any import bans; in fact, we need imports,” Zsófia Pótsa, secretary general of the Hungarian Grain Association, which represents millers, grain processors and traders, told Bloomberg News on April 21.

She emphasized the need to import about 700,000 tonnes of feed corn following a poor harvest last year, highlighting that Ukraine would be the cheapest supplier. Pótsa added that stifling the influx would keep pressure on food prices in Hungary, where inflation still exceeds 25%.

NICHOLAS PONGRATZ

The European Union has agreed to a temporary ban on importing specific agricultural products from Ukraine, Minister of Agriculture István Nagy reported in a post on his Facebook page on April 28.

Minister of Agriculture István Nagy, seen here at the handover of Hungary’s largest egg production facility on April 20, says Hungary and four other states have won EU approval for a ban on some Ukrainian agri-goods. Photo by Zoltán Máthé / MTI.

“Our members are desperate and don’t support any import bans; in fact, we need imports.”

Skilled Heads Still Hunted on the Hungarian Labor Market HR Matters

A monthly look at human resource issues in Hungary and the region

The fear of recession brings a thaw to the labor market. Large companies are expected to start hiring again, but the lack of skilled workers remains a consistent hurdle on the market. Inflation is not making things easier, as companies need to make more revenue to raise wages and avoid employees leaving.

Since our last edition of HR Matters, inflation has continued to exert a strong influence on the labor market, directly or indirectly. Salaries and price growth have fueled one another; according to the EU statistical agency Eurostat, average hourly wages and salaries increased by 16.4% in Hungary last year, the fastest rate in the European Union. In a regional comparison, average hourly wages and salaries rose by 4.7% in the Czech Republic, 11.7% in Poland, and 6.1% in Slovakia.

It seems, however, that employees are still not happy with their revenue growth, as between January and March this year, the number of job seeker applications posted on the job portal profession.hu increased significantly, by 44% year-on-year.

Meanwhile, the labor shortage seems to be easing on the employer side, with the volume of employer advertisements for open positions falling by 18%

compared to Q1 2022. This is a median figure, and the situation regarding specific professions shows a different picture: the number of openings for jobs in law, legal consulting, education, science and sport climbed, while numbers in all other areas fell from a year earlier, profession.hu said.

The criteria for job selection confirms salary as being the main driver for searches in Hungary: 85% of employees consider this their top priority, according to a survey conducted by Randstad, the international recruitment agency. Besides salary, Hungarians also value pleasant working environments and long-term job security.

Price Rises Falling

Economic research institute GKI revealed a positive trend, which seems to have stabilized for six months now: a decreasing rate in price rises.

In commerce, only a quarter of companies plan price raises in the next three months. Compared to March, this figure has shrunk by 13 percentage points, while those looking to lower prices stands at 10%, as it was in March, GKI says.

But how does this compare to salary growth? According to the Central Statistical Office (KSH), in February 2023, average wages for full-time employees were:

• gross wage: HUF 531,200, a 0.8% growth, year-on-year;

• net wage: HUF 366,400

• real value of wages: -19.6%, with inflation at 25.4%

The fall of real wages has been continuous for six months and has increased from 1.9% in September last year to 7.6% in January. The lowest salary raises were recorded in the health sector (4.3%) and in arts, recreation and entertainment (7.6%).

The decrease in real wages has also been recorded in a survey conducted in February by labor force services provider Trenkwalder. Based on data provided by 500 respondents in the private sector, 43% are unsatisfied with their salaries, and 17%

are not expecting any raise at all this year.

As for what amount would be acceptable in the case of a raise, the majority indicated 20-30%. But they do not expect this to happen, and 55% of the respondents count on a deterioration of their financial situation this year compared to 2022. Despite that, twothirds of them consider the stability of their job more important than a salary raise in line with the inflation rate.

Another figure from the same survey somewhat contradicts this finding, as 57% of the respondents said they would take another job in the case of a 30% higher salary offer. In comparison, 8% would leave their current job for just a 10% higher salary. On the other hand, the respondents do not limit themselves to money; twothirds said they would accept for a limited time (one or two years) receiving their raise in the form of travel expenses, qualification courses, or home office.

Hard Work Pays Off

But not all categories were hit equally by real wage shrinkage. Physical workers enjoyed a higher increase

in average hourly wages in Q1, by 19%, close to HUF 1,800, another Trenkwalder survey indicates. Middle managers were less fortunate; their salary saw a modest growth of 10.5%, based on data from 500 employees in Hungary.

Physical workers in Central Hungary and Budapest saw the highest raise, at 30%, compared to last year, thus reaching an amount of HUF 2,350 per hour. In other regions where the raise has been lower, such as Northern Hungary, analysts expect a further raise by mid2023 to cope with the labor shortage.

As for middle managers, their raises of 10.5% are obviously not following the 25.4% inflation, but companies cannot grow their revenues at a pace that allows them to raise salaries accordingly, which endangers their ability to retain a skilled workforce.

Despite that, employers seem optimistic. A labor force forecast compiled by ManpowerGroup indicates that in Q2 2023, 26% of Hungarian employers plan to expand their workforce, while 22% plan to reduce it. Most of them, 49%, plan no change.

ManpowerGroup says those looking for a job should turn to energy and public utilities, finance, real estate, and IT sector companies, as these are the ones most likely to hire. This willingness to expand is mainly due to the lesser chance of an economic recession perceived by these companies.

This optimism is mainly shared by large companies with more than 250 employees. Filling open positions is still challenging, with 82% of the companies indicating this as somewhat problematic and 19% saying it causes serious setbacks. The most sought-after skills are in production, engineering and IT.

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BALÁZS BARABÁS

Photo by takasu / Shutterstock.com

LG Hungary Celebrates Decade of OLED Innovation With new TV Lineup

LG Hungary has celebrated the 10th anniversary of its OLED panel technology, which has significantly impacted the television market in Hungary over the past decade. The event on April 27 provided an opportunity to discuss the technology’s growth, consumer preferences, and future innovations.

Krisztián Szili, LG Hungary’s marketing director, acknowledged the company’s role in developing OLED technology.

“A decade ago, LG opened a new chapter in television with OLED technology. It’s been a journey filled with challenges and triumphs, and we’re proud to have contributed to the field,” he told the press conference.

Andrea Sztupár, managing director of GfK Piackutató Intézet, discussed the evolution of OLED TV sales in Hungary with Szili.

“Though overall television sales in Hungary did not increase significantly

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between 2014 and 2022, demand for OLED displays has grown steadily, with nearly 25,000 OLED displays sold annually by 2022,” she noted.

LG Hungary showcased its latest OLED range at the 10th-anniversary event, including G3 and C3 series displays, the world’s first 42 inch adjustable curvature OLED gaming TV, and the stylish Objet Collection series. The products exemplify LG’s dedication to innovation and its commitment to pushing the boundaries of what is possible with OLED technology, it says.

Szili highlighted the unique aspects of OLED technology that have contributed to its popularity.

“OLED displays do not require a separate backlight for pixels, allowing for perfect black representation. This feature has enabled the production of thinner, lighter, and even curved panels for a more immersive, realistic, and richly contrasted viewing experience,” he explained.

Falling Prices

Sztupár elaborated on the increasing accessibility of OLED TVs in Hungary, noting how the price has dropped over the years.

“In 2014, the average price for an OLED TV was nearly HUF 870,000, while in

2022, it was HUF 470,000. These factors and a wider range of products have positively impacted demand. This has been especially evident during major international sports events, such as the European Championships and the Olympics,” she said.

Over the years, the Hungarian market has shown varying preferences for screen sizes. While larger OLED TVs with a diagonal of more than 60 inches (152 cm) were popular between 2015 and 2019, smaller sizes in the 45-54 inches (114137 cm) category have gained traction since

2020.

The 55-59 inch (140-150 cm) range has consistently topped sales charts since 2014. Another factor contributing to the success of OLED TVs in Hungary is the increasing demand for smart TVs. With built-in internet connectivity, consumers can access streaming services, apps, and social media platforms directly from their televisions. OLED TVs offer an ideal combination of high-quality visuals and seamless integration with smart features, making them a popular choice for consumers.

Looking ahead, LG Hungary says it is focused on exploring new ways to harness OLED technology, such as incorporating it into transparent, flexible, and rollable displays. These innovations could significantly impact industries beyond television, such as automotive, aerospace, and digital signage.

MAP: A Useful Tool to Settle International Tax Disputes

In recent years, there have been significant changes in international taxation, transforming the mindset of both the tax authorities and private actors, whether companies or private persons, doing business at the international level. Just think of the BEPS project, the GloBE project, or, more recently, the termination of the U.S.-Hungarian double tax treaty.

If we accept that the purpose of the above projects is to prevent the erosion of tax revenues for the state and imagine what entrepreneurs face in cross-border transactions on a day-to-day basis, it becomes apparent that these entrepreneurs will or already have been challenged by foreign tax authorities. As a result, it is vital to know what tools we can apply to defend our position and avoid double taxation. Below, we briefly summarize the most important rules of those procedures available for Hungarian taxable persons.

Mutual Agreement Procedure

In Hungary, three mutual agreement procedures (or MAPs) are available for Hungarian taxable persons.

In all three, disputes are raised because of different interpretations of the double tax treaty in force, which leads to double taxation.

As a principal rule, procedures may be initiated before the Ministry of Finance provided that three years have not passed between the disputed first instance resolution of the foreign tax authority and the request submission.

The Classical MAP

The first procedure available for taxable persons is the so-called classical MAP and is based on the given double tax treaty. It is worth applying in those situations where the opposing state is not a member of the European Union.

The procedure has two phases: evaluating the submitted complaint and negotiating with the foreign authority. It is important to note that the ministry cannot reject the complaint on the ground that the taxable person has taken legal steps in the foreign country to challenge the disputed resolution.

Arbitration Procedure

This procedure aims to settle disputes deriving from different interpretations of the transfer pricing clause of the given double tax treaty. The arbitration procedure can be applied should the opposing state be a member of the European Union.

The procedure has three phases: evaluation of the submitted complaint, negotiation with the foreign authority, and the arbitration procedure (if the dispute cannot be settled in the second

phase). The complaint can also be submitted to the foreign jurisdiction if the conditions are met.

A period of two years is set aside to resolve the dispute. If that proves impossible, it will be forwarded to the arbitration tribunal.

EU MAP

This procedure is the so-called European Union MAP. It is worth applying in those situations where the opposing state is a member of the European Union.

The procedure has three phases: evaluation of the submitted complaint, negotiation with the foreign authority, and dispute resolution by the Advisory Commission (if the dispute cannot be settled in the second phase).

As a rule of thumb, the complaint should be filed not just with the Ministry of Finance but also with the opposing foreign authority (small and mediumsized enterprises and private persons have the right to submit their complaint to the Ministry of Finance only).

Should the taxable person take steps to challenge the disputed decision domestically, the third phase (dispute resolution by the Advisory Commission) cannot be initiated.

ZOLTÁN PAUKER

Zoltán Pauker, senior manager, Andersen Adótanácsadó Zrt.

2 Business

As Green Loans Surge, MNB Launches

Eco-Friendly Product Finder

The National Bank of Hungary (MNB) has published a report on the state of green finance in the country, highlighting the robust growth of climate-friendly loans and announcing the launch of a green financial product finder tool.

The report, “Green Finance in Hungary 2022,” was presented at a press conference on April 26 by MNB deputy governor Norbert Holczinger and director of sustainable finance Zoltán Kocsis.

According to the report, so-called green loans, which support projects or activities with positive environmental or climate impacts, increased by 46% in 2022, reaching HUF 1.4 trillion (EUR 3.9 billion) by the end of the year. This accounted for 5.6% of total loans in Hungary, up from 4.2% in 2021.

The report also revealed that green bonds, which are debt instruments that raise funds for environmentally friendly projects or activities, grew by 28% in 2022, reaching HUF 1.1 tln (EUR 3.1 bln) by the end of the year. That represented 7.4% of total bonds in Hungary, up from 6.4% in 2021.

The MNB said these figures show that Hungary is on track to meet its targets under the National

Energy and Climate Plan (NECP) submitted to the EU, under which it aims to reduce greenhouse gas emissions by 40%

by 2030 compared to 1990 levels and achieve climate neutrality by 2050.

To support the development of green finance further in Hungary, the MNB announced the launch of a green financial product finder, which is available on its website.

The tool allows users to search for and compare various green financial products offered by banks and other financial institutions in Hungary, such as loans, mortgages, deposits, funds, insurance and pensions.

It also provides information on the environmental or climate benefits of each product, as well as the criteria and standards used to define them as green.

Increasing Transparency

The MNB said that the search function aims to increase the transparency and awareness of green finance among consumers and investors and to encourage financial institutions to offer more and better green products.

“Green Finance in Hungary 2022” also emphasizes the urgency of accelerating the transition to a green economy, as climate change and

other environmental challenges pose significant ecological, economic, and social risks for Hungary and the world. The report warns that, without adequate action, these risks could negatively impact growth, competitiveness, employment, inflation, financial stability and public health.

The central bank calls for more cooperation and coordination among all stakeholders, including the government, private sector, civic society, and the international community, to implement effective policies and measures to mitigate and adapt to climate change.

The MNB also stresses the importance of increasing the financial literacy and awareness of consumers and businesses on environmental sustainability issues, as well as providing them with adequate incentives and information to make green choices.

“The MNB’s Green Program is not only a social responsibility initiative but also a strategic priority for our monetary policy and financial stability objectives,” Holczinger, the head of the national bank’s sustainable finance department as well as deputy governor, told the press conference.

“We believe that green finance can help us achieve our inflation target, reduce systemic risks, and support economic growth and competitiveness. We also see green finance

as an opportunity for innovation and development in the Hungarian financial sector,” he explained.

Room for Improvement

“We are proud of our achievements so far, but we also recognize that there is still room for improvement and further action. One of the main challenges we face is the lack of reliable and comparable data on environmental performance, which hampers the development of green finance products and services,” Holczinger warned.

“That is why we have launched a new online tool, the green financial product finder, which will help consumers and businesses find the best green financial products for their needs,” he added.

Despite the positive developments in green finance in Hungary, some challenges and barriers still need to be overcome to achieve a more sustainable financial system. One of the most significant is the lack of common definitions and standards for green finance products and activities. The MNB has proposed a taxonomy for green loans based on international best practices, but it is not yet mandatory for banks to use it. The EU taxonomy regulation is expected to provide more clarity and harmonization in this regard.

Another challenge is the low level of awareness and demand for green finance among customers and investors. The MNB has conducted several surveys and studies to assess the attitudes and preferences of various market segments toward green finance. The results show a need for more education and information on the benefits and opportunities of green finance, as well as on the risks associated with climate change and environmental degradation.

“One of the main challenges we face is the lack of reliable and comparable data on environmental performance, which hampers the development of green finance products and services. That is why we have launched […] the green financial product finder, which will help consumers and businesses find the best green financial products for their needs.”

MNB deputy governor Norbert Holczinger (right) and director of sustainable finance Zoltán Kocsis.

Are 10 Years of Inflation on the Cards? Some Food for Thought

Finance Matters

That’s not to say that inflation cannot decrease at times during the decade, during a recession, for example. In the 1970s there were ups and downs; overall, it was still one of the most inflationary decades on record.

In the first part of this article, I will briefly summarize my reasons for my “decade of inflation” prognosis. In the second part, I will offer evidence that inflation is not accidental but a deliberate act of government theft. Then I’ll offer some conclusions.

This summary does not purport to be comprehensive, but it does lay out five of the great inflationary structural changes in the world today.

1) Deglobalization: Factories are no longer built where factor costs are optimized; supply chain security has become a much more significant consideration. This inevitably results in higher prices, as do interruptions to supply lines and the need to stock more inventory.

2) Demographics: A demographic implosion makes the workforce more scarce, putting upward pressure on labor costs.

3) Green Energy: Put simply, it is more expensive than fossil energy. The more we substitute fossil fuels with green energy, the more it drives up energy costs. A dearth of green energy minerals will further drive up energy costs. Policy shifts towards green energy have made fossil fuel providers reluctant to invest in expanding or even replacing fossil fuel capacity for fear of being left with stranded assets; hence, fossil fuel prices are also driven up.

4) War Economy: Just as the United States tried to achieve “guns and butter” in the late 1960s and 70s (the Viet Nam war and Johnson’s “Great Society”), so too,

governments today are spending lavishly on everything from COVID relief to social security, while the Ukraine war (and other conflicts or threatened conflicts) are increasing military spending. An expanded money supply funds deficit financing.

5) Government Bank Loan Guarantees: These are experiencing surprising growth on both sides of the Atlantic, encouraging banks to lend more, once again fuelling growth in money supply and inflation.

In defense of the proposition that inflation is not accidental, but a deliberate act of theft, I offer the thoughts of several great thinkers. These are some of my favorite quotes on inflation:

J.M. Keynes: “By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of its citizens.”

Ludwig von Mises: “The most important thing is to understand that inflation is not an act of God, it is not a natural disaster, and it is not a disease. Inflation is a political strategy.”

Friedrich A. Hayek: “I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments.”

Warren Buffet: “Most of those in political office, quite understandably, are firmly against inflation and firmly in favor of policies producing it.”

Ernest Hemingway: “The first panacea of a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.”

William Ophuls, author of “Immoderate Greatness: Why Civilizations Fail.”: “Inflation is always an evasion of reality, an attempt to maintain an artificial prosperity. [ …. Leaders] have been backed into a corner by events and lack the moral courage or the political support to institute fundamental reforms, which would require them to inflict pain on the mass of commoners and vanquish powerful elites [...] [R]ulers bereft of backbone, ingenuity, and capital attempt to postpone the impending crisis by inflating.”

Ayn Rand: “Inflation is not caused by the actions of private citizens, but by the government: by an artificial expansion of the money supply required to support deficit spending. No private embezzlers or bank robbers in history have ever plundered people’s savings on a scale comparable to the plunder perpetrated by the fiscal policies of statist governments.”

Ludwig von Mises: “Inflation, however, can only continue as long as there is the opinion that it will cease in the foreseeable future. Once the conviction is established that inflation will not stop, panic breaks out.”

In conclusion, I might add that probably the only politically palatable way that politicians can make our debt levels more manageable again is to inflate them away by keeping the inflation rate a few percentage points higher than the interest rate.

Given that we are facing the highest amount of debt ever accumulated by humanity, some 370% of global GDP, there will be very little option but to inflate it away. Perhaps this is even the responsible course of action.

Les Nemethy has been warning that we were facing a period of high inflation since long before it was fashionable. Now, he believes that on the balance of probability, we face an entire decade of high inflation.

Photo by Westlight / Shutterstock.com

Gloster Founder Hails ‘Milestone’ Year for IT Firm

Gloster

Infokommunikációs Nyrt., the Budapest Stock Exchange-listed IT specialist, closed what it called its “most successful business year” in 2022, with a 27% increase in revenue and a 19% increase in EBITDA. The company’s international software development division showed marked growth thanks to three acquisitions.

Despite challenging macroeconomic conditions, Gloster’s revenue reached a record HUF 6.349 billion in 2022, driven by a 78% growth in international, euro-based revenue. As a result, this segment now constitutes nearly onethird of the company’s total revenue. Its continuous performance contracts also showed a 54% increase in regular income compared to 2021, indicating a positive trajectory amid current macroeconomic challenges.

Commenting on the company’s achievements in 2022, Gloster’s founder and chairman Viktor Szekeres told a press conference, “This year was a milestone for Gloster Group, as our international growth laid a crucial cornerstone for our 2025 growth strategy.”

He added that the company is financially stable and continues to actively search for acquisition targets that could further strengthen its profitability and international presence.

Szekeres also highlighted Gloster’s plans to move into the Budapest Stock Exchange’s Standard category, reflecting the company’s ambition

to enhance its visibility, market position, and investor confidence.

As part of this transition, Gloster must meet requirements such as increased transparency, improved corporate governance, and a more diversified shareholder structure. This move will also provide the company a platform to attract additional investment for future growth and acquisitions.

Driving Force

In 2022, Gloster’s international software development business was the driving force behind the firm’s growth, contributing 37.8% of total revenue and becoming the most significant division within the group.

That success was built upon three acquisitions completed last year. Among these, the purchase of a 51% stake in the Germany-based G-Plus Consulting GmbH marked a milestone in the company’s operations, providing Gloster with direct access to the German market and enabling it to become an IT supplier for major German car manufacturers without intermediaries.

Revenue for the international software development division increased by 113% year-on-year, making it the most significant contributor to Gloster’s bottom line. These results align with the firm’s vision of creating a world-class IT ecosystem to satisfy the demands of IT service providers in the international market, particularly in the Germanspeaking DACH (Germany, Austria and Switzerland) region, relying on the expertise of local engineers.

Strategic acquisitions in 2022 also included two Hungary-based companies with an international

market presence. In May, Gloster acquired a 54% stake in fintech design and development company ff.next. The latter firm has designed and implemented design-driven digital financial solutions for more than 10 financial institutions and 20 fintech companies, ranging from Singapore and the DACH region to Australia, the Middle East, and the United Kingdom.

Gloster also acquired a 60% stake in the Pécs-based Lanoga Kft., which operates in both the Hungarian and European private healthcare IT markets, in December 2022. This purchase broadened Gloster’s portfolio with a new market perspective and further solidified its international presence.

Thanks to a combination of acquisitions and organic growth, the workforce increased by 56%, reaching 202 employees by the end of 2022. The company now has offices in five Hungarian cities, including Budapest, Szeged, Kecskemét, Pécs, and Nagytarcsa.

The international software development division stands out in this regard, accounting for more than 60% of the company’s total workforce.

2023: Further Expansion

This year’s focus remains on further expanding its international presence, primarily in the DACH region, and continuing its growth trajectory in the software development sector. Gloster says it plans to leverage its recent acquisitions and existing partnerships to secure more significant contracts with major European and international clients. Moreover, the firm says it will enhance its expertise in emerging technologies such as artificial

intelligence, machine learning, and blockchain, enabling it to stay at the forefront of industry trends and provide cutting-edge solutions to its clients.

Another priority in 2023 is nurturing and retaining its highly skilled workforce, which is critical to the company’s success. Gloster will continue to invest in employee training and development programs, creating a “dynamic work environment that fosters innovation and collaboration.”

The firm argues its success in the international market not only benefits the company but also has a positive impact on the Hungarian IT landscape. By creating job opportunities, fostering innovation, and enhancing the country’s reputation as a technology hub, Gloster says it contributes to the growth and development of the local IT industry.

The listed firm’s commitment to providing world-class IT solutions and its ambitious growth strategy has positioned the company as a prominent player in the global IT market, Szekeres says. With its record-breaking performance in 2022 and its focus on continued expansion, Gloster believes it is well on its way to achieving its vision of becoming a leading IT service provider in the international market.

GERGELY HERPAI

“This year was a milestone for Gloster Group, as our international growth laid a crucial cornerstone for our 2025 growth strategy.”

Gloster’s founder and chairman Viktor Szekeres, left, presents facts and figures from a “milestone” year.

Weak Economic Prospects May be Temporary, DUIHK Survey Reveals

Despite a weak economic outlook in the short term, companies intend to continue investing and increasing headcount, according to the latest business climate report by the GermanHungarian Chamber of Industry and Commerce (DUIHK). However, the survey found lower satisfaction levels with the overall business environment than last year.

At the presentation of the results at the end of June, DUIHK communications director Dirk Wölfer presented some data on the relevance of foreign investments for both countries. For Germany, foreign direct investment in the 11 “new” EU-member states in Eastern Europe was higher than German FDI in China. Some 16% (one-sixth) of total German exports are absorbed by these countries, compared to just 8% for China. In Hungary, foreign investors generate nearly half of all corporate GDP, 14% alone are linked to German investors. In the automotive sector, almost two-thirds of the value added is generated by German companies, with the remaining one-third coming from other foreign investors.

About 250 executives of DUIHK member companies and some other foreign chambers in Hungary again voiced their views on the country’s economic situation and overall

investment climate. Unsurprisingly, the companies’ evaluations also reflected uncertainties in the Hungarian and European economies.

The current situation of the national economy was described as “significantly worse” than in spring 2022, and the outlook for the next

12

months

is also seen as fairly weak: One in two companies expect the situation to deteriorate, while only 13% expect it to improve. However, this ratio is already noticeably better than last fall, when companies were shocked by the energy crisis, which had just peaked at that time. Companies usually judge their own business prospects better than those of the general economy, DUIHK said. This proved true in the current survey again, although at a marginal level: the share of companies with a positive outlook equaled those with negative expectations. The last time the ratio was this negative was 10 years ago.

Investments and job Creation

On the other hand, despite this gloomy outlook, investment and employment intentions continued to show a positive balance and were even somewhat stronger than a year ago. According to the survey, this is particularly true

for large, export-oriented industrial companies. DUIHK president András Sávos (whose daytime job is as vice president and head of digitalization and process optimization at Knorr-Bremse AG) interpreted this as evidence that companies see the current economic downturn as temporary.

Nevertheless, DUIHK’s report states that there are still challenges ahead. Energy prices continue to top the list, followed by the shortage of skilled workers and exchange rate risks. However, the first two, in particular, are also evident to a similar extent in many other countries in the Central and Eastern European region, where the various local German chambers conducted parallel surveys.

The survey in Hungary devoted considerable attention to the labor market. In addition to the workforce shortage, which has been a burden to companies for the last six or seven years, it also focused on labor costs.

Fueled by high inflation and the shortage of qualified personnel, survey participants expect their labor costs to rise by almost 15%

this year. This is significantly more than in the simultaneous surveys in Poland, the Czech Republic, and Slovakia, for example, where the wage increase is “only” estimated at 8-10%.

According to Wölfer, Hungary still has the third lowest wage costs in the EU, meaning its cost advantage for exporting companies in particular will continue to exist for some time, even with solid wage growth.

Satisfaction Downturn

The DUIHK survey regularly evaluates the companies’ assessment of the quality of the investment environment in Hungary. To this end, the DUIHK also measures satisfaction through 20 factors that are decisive for daily operations and future investment decisions. For practically all of these factors, this year’s poll shows a slight downturn compared to 2022.

In Hungary, foreign investors generate nearly half of all corporate GDP. In the automotive sector, almost two-thirds of the value added is generated by German companies.

While labor market-related conditions are still viewed as appropriate by most survey participants, a 10-year-long trend of improving satisfaction with the economic policy framework came to a halt this year.

Among other areas, approval declined with the tax system (last year’s windfall taxes certainly played a role here) and the predictability of economic policy, which most likely reflects state interference in market mechanisms, such as administrative price regulations or intervention in foreign trade, the report states.

One of the critical figures to see a fall is the ratio of those who would choose Hungary as an investment location again. This dropped noticeably to

79%

in this year’s survey, following record levels of 88% in the past two years. Some countries in the region see scores of 90% or more when asked this question, so there is a need for action here, the chamber notes.

DUIHK’s “Investment Climate Index,” calculated annually based on the survey results, fell this year from six to two points (on a scale of -100 to +100). As the index has reliably tracked Hungary’s economic performance in the past years, the latest value confirms many forecasts expecting GDP growth of between 0-2% this year, DUIHK argues.

The complete report can be downloaded in full from the DUIHK website in German and Hungarian at: ahkungarn.hu/konjunktur

Communications director Dirk Wölfer (left) and president András Sávos present the findings from the DUIHK’s 2023 economic satisfaction survey.

3 Special Report

Real Estate: Offices

Market Talk: Questions Around Supply and Demand but ESG Grows in Significance

This Budapest Business Journal ’s Office Special Report examines the Budapest market from the perspective of the issues facing developers and office building owners regarding planning, financing, development, redevelopment, letting, property and facility management, and the exit strategy for a building.

The office market faces challenges around demand and take-up, changing specifications from tenants and staff, and the need for well-being provision in the workplace. There are also concerns over investment liquidity and the availability of suitable development plots at transport hubs reasonably near residential areas.

In all stages of the office development cycle, designers, consultants, architects, lenders, tenants, FM and PM providers, developers and investors must adhere to a combination of market forces and increasingly stringent ESG regulations.

These elements, in addition to rising utility costs and the necessity of making the provision of services more sustainable, could increase office operating costs. However, sustainability consultants and PM and FM firms argue that it will be cheaper in the longer term while also adhering to developing ESG regulations.

Despite these challenges, there is a relatively healthy development pipeline, though it is an active question whether there is enough to meet demand. Market and ESG pressures are producing higher quality, more efficient, and better-located office developments that help improve the city’s overall infrastructure.

In our experience, office demand is ever-increasing for several reasons, such as the ambition to decrease operational expenses by upgrading to an environmentally conscious building or simply because companies are just finding the right way to

work in the office after facing the challenges of creating home office policies and adjusting to hybrid forms of working. I firmly believe that the time has finally come to make up for the rash decisions some occupiers, unfortunately, were forced to take during the most intense period of the pandemic. Lease renewals signed in 2020 are now being reviewed and remedied to suit the companies’ needs better and support them with a more mature real estate approach.

Unlike in the 2008 financial crisis and despite all the hardships that the commercial real estate sector had to overcome in the past few years on a global and local scale, there is available capital to deploy; therefore, we anticipate some office investment transactions in the second half of the year. There is a constant demand for value-add investment products amongst the more opportunistic buyers. However, core grade “A” sustainable offices are still

likely to be considered due to the spread of EU taxonomy norms and the everincreasing demand for ESG compliance among occupiers, developers, investors, and generally across the business world.

Máté Galambos

Leasing manager

Atenor Hungary

The first quarter in the investment market in Hungary was very quiet, with less than EUR 100 million transacted and only one small office transaction taking place. The period before summer is expected to remain subdued with high inflation and, with rising interest rates, the availability of finance is tight. The market perception gap between vendors and buyers remains, and the majority of European markets are quiet, with the exception of Poland and Ireland, which are probably the most liquid investment markets currently. Nobody has a definite idea of how long this quiet period will continue.

GARY J. MORRELL

Image by Elnur / Shutterstock.com

Although there is little transactional evidence, prime Budapest office yields can be estimated at 5.75-6%. When you think the cash flow burden on the debt would stand at 6-7.5% (including amortization) in case of gearing on a prime asset, you realize we are definitely in a cash buyer market. So far, the Budapest office fundamentals remain solid with take-up activity holding (similar to Prague). We see particularly strong activity in the tech sector. This is reassuring. Due to the ownership structure of the logistics market (with a few strong developer/ manager platforms not trading out), and the concerns over the retail sector (with the exception of strip malls), the office segment remains the backbone of investment activity on the Hungarian markets. If offices are not trading, volumes will be significantly down.

Benjamin Perez-Ellischewitz Principal Avison Young Hungary

CPI Hungary predicts a challenging market situation in the Budapest office

segment in the upcoming 18-24 months. We see that occupiers are reluctant to secure long-term leases or expand their businesses in the current economic situation.

There is increasing demand for environmentally conscious buildings and office space (and landlords) as the tenants themselves will soon require an ESG rating to access green financing vehicles. The ratio of those tenants who include ESG solutions as part of the office selection criteria is around 15% today, but this ratio will grow very fast in the near future.

New and renovated space needs to provide access and amenities for disabled people, spaces enhancing

work-life balance (gym, massage room, etc.), and an increased volume of common social areas where informal collaboration can occur. Refurbishing existing buildings is undoubtedly an attractive development option. From an economic and sustainability point of view, redevelopment is a viable investment for landlords. A welllocated renovated office building can be worth nearly as much as a new one.

I suspect moderate demand from international investors in the next 24 months. Domestic money will still be available below the EUR 20 mln ticket size. Other regions in CEE will recover faster.

Mátyás Gereben Country manager CPI Hungary

In the name of the FM market, I would say both ESG and Well certification viewpoints have already opened new perspectives, and in the coming years, they will emerge even more. In the provision of the basic work environment, this means reaching the most optimal energy consumption and saving requires core FM competencies. FM experts and service providers have become at least tactical partners and,

in many cases, strategic partners for landlords and large building users. I believe in the future of technology. Our FM industry is labor-intensive, so the robotization potential is extremely high. Autonomous industrial cleaning robots are already on duty, but many more applications are already in the early adaptation phase. In our business flow, the number of documents is also very intense. There are already high-scale automation solutions available that can reduce human interaction needs. There is a saying: “What you can measure can be controlled.” The management and control of the building operation and facility management become more crucial to reaching the lowest energy consumption and the highest employee satisfaction.

Gábor Décsi CEO Dome Facility Services Group

During the past few years, the wellbeing and loyalty of co-workers have become a key focus area. Many

companies and office building owners are concentrating on providing a wide range of services, flexible space, reasonable operating costs, and environmental aspects simultaneously. At Frame Group, a professional FM provider, we help our partners find the best and most cost-effective way to achieve this goal. It is never too late to adapt and optimize, but we encourage investors and architects to consult with us before planning to maximize the benefit potential.

Owners and investors are under higher pressure to gain certificates to prove how their buildings are prepared and equipped and that related processes are correctly aligned. We expect a rapidly increasing demand for renewable energy

solutions; therefore, we are prepared to design and deliver complex solar systems for our clients. On the other hand, we are extending our fit-out and construction teams because we trust these trends will soon cascade down, reaching class “B” premises too.

László Orbán Group CEO Frame Group

ESG standard offices will not be more expensive, as these spaces are simply better managed, and hopefully, they have a lower impact on sustainability (through well-managed systems, energy consumption, and so on). This alone will not increase costs. The implementation of ESG-related features and systems will decrease costs. Further, these spaces will also be core attractions for investors, tenants, and other stakeholders.

ESG benchmarking is currently coming to the Budapest office stock. There are already a few buildings that were assessed against ESG standards, but I would expect that a more significant ESG boom will arrive in the Hungarian market during 2023 and 2024. It is clear that investors, financing institutes, and tenants require ever more ESG compliance; therefore, this requirement will push the whole market firmly towards ESG benchmarking.

Máté Galambos Gábor Décsi

Mátyás Gereben László Orbán

Benjamin Perez-Ellischewitz

Zsombor Barta

It is expected that ESG benchmarking will be harmonized and standardized for the commercial building sector. Currently, there are many ESG standards and methodologies available on the market.

Zsombor Barta

President of the Hungarian Green Building Council (HuGBC) Founding partner at Greenbors Consulting

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At Icon, facility and property management services are in one hand, which is not common in the real estate market; however, the feedback from our clients shows that this is an effective way of managing a property. The synergies of the two areas (property and facility management) at Icon can be effectively used and taken advantage of in the case of ESG strategies. The Corvin 5 Well-certified office building is an excellent example of this, where Icon provides both property and facility management. How an office is built and what technological solutions are applied have a smaller part in how efficient and environmentally friendly it is. What is more important from this perspective is how the building is operated daily: for example, what settings are applied on the machinery, quick reaction to changes and problems, as well as the education of tenants.

For landlords, the main priority is the return on investment, which can only be achieved if the office building is well-utilized and longterm lease contracts ensure its occupancy for years in advance.

As for tenants, the top priority is efficient operation, market-level rents, and energy costs. Given the low unemployment rate, how ESG standards are met at the office of the

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given company is often an important aspect in acquiring and retaining employees, especially for the young.

Róbert Flück FM director Icon

Real Estate Management

The Budapest office market reacted to the total removal of COVID restrictions, and leasing activity reached 400,000

sqm of office space in 2022, a slight increase compared to 2021 and a more significant one compared to 2020. This increased demand might decline slightly in 2023, but we expect demand for “A+” category sustainable offices to remain stable.

The market has a couple of principal driving factors due to the last few years’ COVID-homeoffice effect that will remain. First, some tenants will reduce their office space requirements, as employees will continue working in hybrid mode, resulting in fewer workstations. Another factor is the increased utility prices, resulting in multiplied service charges in inefficient buildings. Eventually, companies will relocate to new “A” or “A+” category buildings to control their operational costs and provide an attractive working environment for their employees.

In the short-term, moving to an ESG office is a higher financial investment for firms than staying in their original “B” category offices, but in the long-term, moving to an ESG-compliant office will always pay off; every firm will face much lower energy bills, and avoid the need to meet renovation costs or the expense of replacing outdated technologies.

Dömötör Károly Makk Head of leasing TriGranit

Our clients can always count on our integrated facility management, implementation and fit-out, and energy services.

At Frame Group we strive to make everyday life cosy and homely every day, every moment.Our work makes the lives of tens of thousands of people easier, more comfortable, and more organized.

www.frame.hu

Róbert Flück

Dömötör Károly Makk

Uncertainty Seen Across Central European Markets

Total supply in the Budapest office market has reached 4.3 million sqm, 3.5 million sqm of which is speculative space. Vacancy stands at 12.5%, according to Cushman & Wakefield. Seven office projects are expected to deliver in the next 12 months, including the 29,500 sqm Liberty by Wing, the 16,600 sqm first phase of Bakerstreet, the 15,000 sqm RoseVille by Atenor, the 11,000 sqm BudaPart Downtown by Property Market, the 14,000 sqm Madarász IV, and the 12,800 sqm F99 by Proform.

That stock level means the Budapest office market is now the second largest in the CEE region after Warsaw. Development is subdued across the major Central European markets as developers are reluctant to undertake new projects given the background of more expensive debt finance, rising PM and maintenance costs, and uncertainty over demand levels. There is a growing gap between ESG-compliant and non-ESG-compliant space in all markets, with markedly increasing demand for the former.

Prices will be much higher, and there will be a supply gap in the office market in Warsaw, according to many analysts. This will be most visible in 2023 and 2024. Last year, there was only 160,000 sqm of office space under construction on the Warsaw market, compared to more than 800,000 sqm in 2019.

In 2023, Warsaw office space will increase by only circa 65,000 sqm, according to Avison Young Warsaw. Total modern office stock in Warsaw has reached 6.4 million sqm, according to the Polish Chamber of Commercial Real Estate (Pink). Vacancy in Warsaw currently stands at 11.6%.

“After the project supply gap over the next two years, there could be a significant increase in activity from developers who have prepared large pipelines for 2025-2026. There may be a risk of a transition from undersupply to oversupply,” Pink says.

Thriving Provincial Markets

A notable feature of the Polish office scene are the thriving markets away from the capital. The size of modern

TriGranit: Building Climate-smart Solutions

Károly Dömötör Makk, head of leasing for TriGranit, talks with the Budapest Business Journal about its Millennium Gardens development and the growing importance of ESG.

BBJ: Phase I of Millennium Gardens officially opened on September 29, 2022. Where are you with the second phase now?

Károly Dömötör Makk: The second phase is currently under construction; our goal is to hand it over at the end of the first quarter of 2024. So far, everything is on schedule; we do not expect any delay in the handover.

BBJ: Is phase I fully occupied, and do you have any pre-lets for phase II?

KDM: The current occupancy rate of the first phase is 95%, while the second phase is waiting for its future tenants, but we are in advanced negotiations with potential tenants for about 50% of the building.

BBJ: You described phase I as “an exemplary showcase of ESG development practices.” Will phase II match it or go even further?

KDM: The second phase will match all the ESG criteria of the first phase, with some differences in terms of individual

tenant need and fit-out designs. Still, the principal green solutions (for example, heating provided by heat pumps, motion-sensing LED light sources that allow tenants to avoid energy waste, intelligent building management systems, energy-efficient elevators and air conditioning, water-saving faucets and shower heads) will be the same.

BBJ: How does developing to such a high level of ESG change the mix of tenants you can attract?

KDM: The real estate and construction sector accounts for about 40% of greenhouse gas emissions globally, with 28% attributable to the daily operation of buildings alone. Buildings also affect the health and well-being of their tenants and the communities within which they are embedded. Pursuing positive impacts in this space will create value and attract ESG-conscious tenants. In the past, meeting ESG requirements were seen as “nice to have,” but now, given strict ESG requirements and changing government policy, this will need to be treated as a priority.

Tenants (not only multinational giants but also local SMEs) are now actively, sometimes exclusively, seeking spaces that are certified accordingly and offer a place where employees are happy to work to enhance their employer attractiveness. According to a PwC survey, almost 90% of employees preferred to support or work for companies that cared about the same ESG issues they do. To support this sentiment further, a recently published report states that, by the end of this decade, the Millennial and Gen Z generations will constitute more than two-thirds of the world’s workforce.

office stock in the eight major cities combined has now surpassed that of Warsaw, with Krakow and Wroclaw seen as the core provincial markets. There is currently 600,000 sqm of space under construction away from the Polish capital, according to JLL

Total supply in the Prague office market has reached 3.85 million sqm, according to the Prague Research Forum, consisting of CBRE, Colliers, Cushman & Wakefield, Frank Knight, JLL, and Savills. From this stock, 74% is class “A” and 17% is “AAA”-rated.

The market has seen a significant fall in new supply compared to the pre-pandemic era, with only one or two projects expected to commence in 2023, according to Cushman & Wakefield. Vacancy stands at 7.5%. As of Q1 of this year, 145,000 sqm was under construction, with 90,000 sqm of space in nine office projects expected to deliver during the year.

In all Central European office markets, the challenge for the year ahead is seen as the wider economic environment, hybrid working habits, development costs, and the demand for ever more highly specified ESG standard space from tenants.

These generations place a greater emphasis on social and environmental concerns than their predecessors, and they will expect more from their employers on these issues. Meanwhile, the price of not caring about ESG just got higher. In France, for instance, the décret tertiaire will start applying fines to those companies not taking action to apply carbon-cutting initiatives. In the United States, the price tag for non-adherence is also increasing, with one firm receiving a fine of almost USD 10 million for misrepresenting their environmental compliance. Evading these penalties requires the creation of an immediate ESG action plan. At TriGranit, we offer our tenants more climate-smart solutions that will advance their climate (and ESG) efforts as well as our own.

BBJ: Beyond ESG, what are the latest trends for the office market?

KDM: Although leasing activity across Europe held up reasonably well in 2022, there is a widespread consensus that a recession will lead to declining occupancies, even in previously robust sectors. On the other hand, the office employment environment offers a competitive advantage for the economy of Budapest compared to many of its peers in CEE. Global firms in finance, insurance, accounting, and business consultancy provide these jobs, and the pandemic has hardly restrained the ICT industry, which has become the city’s largest sector. The surge in office employment in Budapest was the strongest in the region since 2015, and this trend is expected to continue.

GARY J. MORRELL

Artist’s rendering of the first phase of the Bakerstreet office project in Budapest.

Károly Dömötör Makk

3rd-party Accreditation Setting the Standards for Office Interiors

comments Regina Kurucz, an architect and assessor for the accreditation system.

“According to my view, a big challenge will be to convince office managers of the need for quiet spaces for relaxation and private phone calls. Relaxing areas help to reduce stress and improve work quality,” she explains.

“The Well Building Standard can help companies attract and keep the best workforce. I think this is an invaluable accomplishment when it is scarce,” Kurucz adds.

Energy Upgrades

Berényi of GTC Hungary sees the redevelopment and energy upgrade of existing office buildings as essential.

“It is probably more difficult, as the tenants are actively using the buildings during the refurbishment works. Through the refurbishment and energy upgrade of an existing building, we are repositioning it and making it more competitive in the office market,” He says.

The design, development, and PM and FM of offices increasingly align with third-party sustainability accreditation organizations. That means they must consider the office environment, layout and design, the provision of amenities, and the internal atmosphere. The perceived well-being of staff is seen as aiding employee retention and boosting productivity.

“The tools attracting employees back to the office include the design of the office interior and the variety of services offered. At GTC, we believe that landlords also have the responsibility and opportunity to influence our tenants when designing office interiors,” comments Zsolt Berényi, development director at GTC Hungary, reflecting the point of view of a developer.

“In this regard, the market needs a change of perspective. We, as landlords, must take an active role in supporting our tenants during the design of the office interior, to create a more liveable office environment. With this, we help their employees to return to the offices. We also believe in the power of community, for which the interior of the office is fundamentally important,” he adds. This can be seen as a combination of market pressure, sustainability regulations, and tenant expectations exerting influence on developers and building owners to meet the demands of tenants and staff. From the tenant

perspective, Valter Kalaus, managing partner at Newmark VLK Hungary, argues that tenants require flexibility.

“Some of the leased space should be devoted to multiple functions. This requires more mobile furniture and supporting infrastructure. Further, the initial layout should be variable to minimize the costs of future changes. Amenities should involve outdoor facilities such as an internal garden, fitness corner, and even sun beds or quiet rooms for relaxing,” he says.

Fractured old Models

The pandemic has fractured old operating models, and new habits have appeared, particularly with the comprehensive adoption of home office. Firms have recently started carefully appraising their opportunities for upgrading their buildings to create desirable places for returning employees. These workplaces have to be outstandingly convenient and sustainable, giving a superior working experience to gain engagement of employees, while at the same time lowering costs, according to Károly Dömötör Makk, head of leasing at TriGranit.

“The office is now shifting from a variety of space types to a collaborative, hospitality-driven environment; buildings that satisfy the need for human connection will have a competitive advantage. The office needs not only to prioritize safety, health, and comfort as a foundation but also support overall well-being by reducing stress and anticipating needs,” he says.

“There are many opportunities for programming to support healthy behaviors through access and opportunities, pop-up areas to provide flu shots and mental health counseling, as well as resolvable small group

fitness classes in the office that can be projected via Zoom to employees that are working remotely,” Makk adds. Sustainability accreditation from an independent, third-party sustainability organization such as the U.K.-based Breeam or the U.S.-based Leed and, increasingly, Well, have a range of requirements regarding interiors. These are now increasingly the norm for a development and a basic expectation for tenants, staff, and investors at the higher end of the Hungarian office market.

In Budapest, five office buildings are Well “Core”-certified, representing almost 100,000 sqm of space. A further

300,000 sqm is Well “pre-certified,” Well “Health-Safety Rated,” or enrolled in the Well program.

“Compared to the four million sqm of modern space in the Hungarian capital, this is a remarkable rate, taking into consideration that the Well Building Standard is not yet 10 years old,”

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TERRAPARK C + D

“As the result of the refurbishment works, the buildings can improve their green or ESG qualifications and reduce costs for the tenants. We are highly improving the energy efficiency of our office buildings with significant technical improvements at Centerpoint, Váci Greens D, and Duna Tower. Our goal is to make the operating and energy costs of our buildings predictable and calculable for our tenants,” Berényi notes. Development plans in the office market have been cooled down by elevated and unstable construction costs and high financing costs, but that does not mean there is no activity out there, industry players insist.

“The demand for attractive office space is very high. Employers, wanting to motivate teams to return to the office, arrange increasingly interesting and friendly workspaces. In turn, companies can look at whether there is a plan to reduce maintenance fees in the building where they decide to locate their office,” argues Avison Young.

“They [companies] can analyze the landlord’s ideas for reducing the service prices that make up the operating costs. This is a very important issue, for owners and tenants, in the context of the economic changes we face. Both parties should openly communicate on this issue to be aware of, and convinced, that all expenses are economically justified,” concludes the commercial real estate firm.

ADDRESS: 2040 Budaörs, Liget utca 3/2.

BUILDING YEAR: C Block 2008; D Block 1995-2000

PUBLIC TRANSPORT: Bus 40, 140, 240, 88, 188, 287, Terrapark shuttle bus

CONTACT:

Tel: +36 20 9848 999, www.terrapark.hu

Office interiors are now an intrinsic part of the project concept, design, leasing strategy, and property and facility management of building developments. That comes in reaction to tenant (and, in turn, staff) demands and increasingly stringent ESG national and EU environmental regulations.

GARY J. MORRELL

Terrapark C + D, Hungary’s first office park of Western European quality, currently is home to nearly 100 companies in Budaörs. Thanks to its excellent accessibility and favorable location, it offers high-quality office space in a natural environment. Terrapark offers office solutions at flexible conditions from 15 sqm to as much as 2,000 sqm on one floor.

An interior view at H2Offices in Budapest by developer Skanska.

Subdued Office Development Activity for 2023

A limited number of office development projects are expected to be undertaken in the immediate future. Developers are exercising caution given an uncertain geopolitical and economic market environment that impacts development costs, debt financing, leasing and take-up, maintenance and property management fees, as well as the possibility of an exit strategy.

GARY J. MORRELL

However, several office developers are going ahead with new-build and renovation projects in various locations across the city with the confidence that leases can still be concluded for quality, welllocated, sustainable office developments. “There is a delay in the speculative office development pipeline, except amongst developers not heavily reliant on external financing. However, at the same time, there is increasing market demand from occupiers for futureproof, sustainable, energy-efficient office projects,” comments Kata Mazsaroff, managing director of Colliers Hungary. Total supply in the Budapest office market has reached 4.3 million sqm according to the Budapest Research Forum (BRF), consisting of CBRE, Colliers, Cushman & Wakefield, Eston International, JLL, and Robertson Hungary. Cushman & Wakefield has traced 3.5 million sqm of this as developed on a speculative basis.

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MILLENNIUM GARDENS

From a developer perspective, Dömötör Károly Makk, head of leasing at TriGranit, comments that although increased demand might decline slightly in

2023,

the need for “A+” category, sustainable offices is expected to remain solid.

Mátyás Gereben, country manager at CPI Hungary, says that occupiers are reluctant to secure long-term leases or expand their businesses in the current economic situation.

With regard to the quality of stock in Budapest, European and established national developers such as Skanska, Atenor, CPI, Futureal, GTC, HB Reavis, Horizon Development, Property Market, TriGranit, and Wing have common sustainable development policies across their portfolios.

Essentially the market is seeing a growing demand-side gap between highend, well-located, ESG-conforming office assets and earlier-generation buildings.

Overall volume is muted for the next cycle; the forecast completion volume adds up to 180,000 sqm for 2023 and only 122,000 sqm for 2024 (including already pre-committed space), according to CBRE. A further 45,000 sqm of outdated space is due to be updated into modern, ESG-compliant offices.

Notable Refurbishments

Avison Young has traced 20 office projects representing 274,000 sqm of space under construction or already delivered this year. The largest project under construction is the 40,000 sqm Dürer Kert by Property Market. Notably, there are five refurbishment projects, including the 30,000 sqm CenterPoint 1-2 on Váci út by GTC, and the 10,000 sqm Academia by ConvergenCE and Europa Capital in the central business district.

A further five projects under construction and representing 105,000 sqm of space are due to be completed in 2024. Significantly, three of these are the second phases of ongoing projects by prolific developers, including the 24,000 sqm BakerStreet II by Atenor, the 22,000 sqm H 2 Offices by Skanska, and the 20,000 sqm Liberty North by Wing.

“There are still a few speculative office building developments ongoing, but fewer developments have started than in previous years. GTC believes in the development of the office market, which is why we started the construction of our Centerpoint 3 office building,” says Zsolt Berényi, development director at GTC Hungary.

needed to gain the finance for a newbuilt project,” he notes. And nor is ConvergenCE alone in its approach.

“As an international sustainable urban real estate developer, renovation seems like the most attractive option for us for many reasons. Renovation does not always present itself as the most financially beneficial solution, but it is, without a doubt, one of the most sustainable ways of property development,” comments Máté Galambos, leasing manager at Atenor Hungary.

“We have beautiful, historical buildings in the central business district of Budapest, most of them with amazing façades, which is why I believe that taking on the noble responsibility of a CBD refurbishment project (where some of the structural elements are saved and the heritage-protected elements of these buildings are adequately reinstated) is not only a really smart thing to do but also the most forward-thinking in our current climate,” he argues.

High Absorbtion

On the demand side, net absorption for 2022 was the second highest on record, exceeding 2019 levels, according to Cushman & Wakefield. Occupiers are increasingly focusing on ESG criteria, which will accelerate the absorption process.

Annual take-up increased last year to 247,000 sqm, an increase on the previous year. However, owner-occupier take-up represented 13% of this, says CBRE.

The overall vacancy rate for Budapest now stands at 11.3%. However, most analysts do not consider this increasing overall vacancy rate a concern. Cushman & Wakefield see much of the vacancy in older, outdated stock. Discount this, and the more realistic vacancy rate is 7-8%; with an undersupply of modern, quality office stock and a low pipeline for 2024, this will fall further.

MILLENNIUM GARDENS ADDRESS: 1095 Budapest, Lechner Ödön fasor 10/B

BUILDING YEAR: 2022 FREE SPACE: 19,800 sqm

PUBLIC TRANSPORT: Bus No. 23, 54, 55; tram No. 1, 2, 24; suburban railway: H7

CONTACT: Dömötör Károly

Makk: +36 20 950 2585, dmakk@trigranit.com, millenniumgardens.hu

“We believe that tenants are increasingly looking for efficiency, both from operational and maintenance perspectives. There is also a need for much more sustainable, energy-conscious, and socially space-driven office buildings in the supply market that can serve the tenants’ ESG strategy. Currently, only a few office buildings on the market can satisfy these needs,” he adds.

ConvergenCE has completed the 10,000 sqm

Academia office renovation project in the CBD. “We do not undertake the development of new buildings from the ground up but focus on value-add developments of existing buildings that require refurbishment,” explains Csaba Zeley, managing director of the firm.

“Value-add development is favorable in the current environment as it does not require a prelease, which is

Notably, there will be a fall in the vacancy rate for more modern, higher quality stock, an indication of the widening gap between old and new that is also reflected in rents and yields, according to Mike Edwards, head of capital markets at Cushman & Wakefield Hungary.

Office remains the most favored investment sector, with around 40% of the recorded investments for 2022. CBRE put current prime office yields at 6%, up by 75 basis points and back at 2018 levels.

“While core offices are still attractive, the segment is primarily reliant on allequity buyers in light of current interest rates inching towards 6% for those seeking external financing,” says the consultancy.

The market perception gap between vendors and buyers remains, and few transactions are being concluded.

“Although there is little transactional evidence, prime Budapest office prime yields can be estimated at 5.75-6%,” comments Benjamin Perez-Ellischewitz, principal at Avison Young Hungary.

Millennium Gardens has been designed to provide the ideal workplace conditions for you, including an appealing restaurant and café on the ground floor, a green garden with a partly covered terrace for guests, high-speed elevators, several bicycle storage areas with changing rooms and showers, numerous electric car chargers, as well as alluring rooftop terraces on top of both towers.

BakerStreet by Atenor.

Building a 5-star FM-PM Concierge Service

The ideal building management company combines both front- and backend capabilities, like a mashup between a five-star hotel concierge and a back-office systems technician, says Gábor Nagy, CEO of ICON Real Estate Management.

“In my mind, property management is something like a concierge, and the facility management is like an expert, so the front- and the back end, but it should be integrated,” Nagy says.

Most of ICON’s competitors in Hungary historically focused on one core area, either on property or facility management when they were established. Therefore their other competence is usually just a complementary one, Nagy says.

“ICON’s approach is different. We believe that the synergy of both these fields results in a greater customer experience. It is like a finely engineered and smoothly operating system, where PM is the user interface, while FM provides the back-end and their combined expertise with the interaction between the two fields gives our customers a unique tailormade ICON experience,” says the CEO.

The firm is a relative newcomer, founded in 2018, initially to manage the MOM Park shopping center and offices. The CEO says it was originally his idea to integrate functions within one firm but refuses to take all the credit.

“How we lead the company, it is not one big gorilla who knows everything, pushing all the ideas. This thing came from my mind originally, but it is quite different right now because all the members of the management, and the important people, the staff, put something into the idea and created it,” Nagy explains.

“If you impose a vision, it is not enough because in many cases, it doesn’t work. I think that it is always better to work together.” That philosophy applies across the board, he insists.

“Our company has more than 120 experts on staff, but we have a circle of 15 senior people thinking about the future of the business, so roughly onetenth of the staff is part of the strategy.

This is what I really need to see within a building as well; when a group of people is working together, it should be teamwork, continuously improving the processes and helping each other to work on that,” he says.

Talking of the future, Nagy is not one to believe that the rise of AI spells the end of work for firms such as his. A smart office can run efficiently and collect all the data it wants, but that needs to be interpreted by a human because a machine cannot know how it “feels” to work in a building.

“We have to use AI because the data can help us create the matrix, understand the situation and simplify the setup. But, it needs a human being who understands what the tenants and owners need,” he points out.

Education is Key

“And there is another interesting thing. You can create a building that is highend, smart, and ‘knows’ everything, and you can offer perfect services for the common areas, but it is still not enough if the tenants are doing something else in their areas.”

Put it another way, education is critical. FM staff needs to be able and willing to speak to tenants to show them how to get the best out of the building’s facilities. Gamification

is another means to this end, Nagy believes, setting up competitions between building tenants to see who can use their systems most efficiently or collect the most selectable waste. And this will likely be necessary until today’s teenagers and the often muchmaligned younger generation join the workforce en masse.

“Then it won’t be a question of education because they will bring the mindset. It is the oldies like us who need to adapt!”

In his time at ICON, Nagy has never known a period that was not exciting, but through it all, the firm has continued to win tenders, manage buildings and grow.

“When I joined the company, it was in the middle of COVID, when it sometimes seemed business would stop. But on the other hand, it was the time when many actors in the market started to rethink their business structure. And I was also surprised, but we saw many tenders at that time,” he recalls.

“There were opportunities to take, so we jumped in and started to build, step by step. The most significant decision from this period was when we bought CD Hungary’s facility management business line and, overnight, became a complex service provider.”

Vibrant Growth

At the time, ICON was less than three years old as a company but with more than 20 years of experience among its management and staff. Nagy describes it as a “vibrant” period, with people joining from multinational firms and CD Hungary. “This colorful structure is in our DNA. Companies can say so many things about their assets, but for ICON, we had little to show, just the experience and knowledge of our colleagues. And as we started to show our capabilities, our main partners asked us to manage more properties. In the end, you can see the numbers. We started showing what we know and how we could manage situations, and tenders kept coming. The latest was last month, and from May, we will provide the facility management of DunaPart Downtown,” Nagy says.

“In my mind, property management is something like a concierge, and the facility management is like an expert, so the front- and the back end, but it should be integrated.”

One thing is clear: Sustainability will be front and center of everything. Regulations like the EU Taxonomy will demand ever greater compliance, and ESG will become increasingly important. Listed companies are now subject to EU-wide ESG reporting requirements; by 2026, this will also apply to mid-size SMEs in the EU. Non-ESG compliant finance will become prohibitively expensive. Investors will find it ever harder to sell buildings that aren’t certified and won’t be interested in putting their money into anything else.

Perhaps, above all, tenants will need sustainable buildings to satisfy the requirements of their staff and, crucially, retain them.

“I completely agree,” Nagy confirms. “A friend told me, ‘Gábor, retention is the new recruitment,’ and I think he is absolutely right.” We are not yet at the point where ESG determines all, but we are on the path to it.

“What we can experience is that, beside ESG, the cost consciousness and energy consciousness will be more and more important,” Nagy explains.

“When supply is still growing in the office market, but demand does not keep up, like now, the occupancy rate is not as good. Landlords are interested in offering better quality services. And tenants are looking for decent cost and service balance at the end. So, the quality of the property and facility management services could become significant. There are tenders every quarter and opportunities for more growth.”

Gábor Nagy, CEO of ICON Real Estate Management

Challenges of CBD Development Lead to Multiple Budapest Office Districts

As a result, Budapest has several business districts across the city on both the Buda and Pest sides of the river.

“The principles of sustainability in terms of location is pretty simple: an urban office district is best located when easily and quickly accessible from residential and retail areas, and there are means of public transport that support commuting back and forth to these destinations, all while being cost and energy-efficient,” comments Máté Galambos, director of leasing at Atenor Hungary.

The Váci Corridor is, arguably, still the most favored office development destination. The area is a model example of how a local authority, in this case District XIII, can attract developers to a postindustrial environment with brownfield sites (crucially here providing direct access to the M3 metro) and develop the location into a leading business district with relatively easy access to and from residential areas.

In a recent delivery in the Váci Corridor, Skanska has completed the first 27,000 sqm phase of the 67,000 sqm H 2 Offices, the development located on the plot of the demolished former headquarters of Budapest Waterworks. A second

The additional difficulty of sourcing plots in the historic center and the resulting lack of an established Central Business District means developers are undertaking

projects in several slightly outof-center and suburban locations. Critically, these provide direct transportation links and are integrated into the wider urban environment, providing direct access to shopping, hospitality, and other facilities for office users.

22,000 sqm phase of the project is due to be delivered in late 2024.

Also in Váci út, GTC delivered the 27,500 sqm Pillar office complex last year. Further south but still on the same road,

One of the significant challenges for office developers in Budapest is to source suitably-sized development plots with direct public and private transport links that provide visibility. All this at a time when competition for such space in a relatively compact city is becoming more intense and consequently more expensive.

GARY J. MORRELL

The phased 38,000 sqm Liberty office complex is being developed by Wing near the junction of Könyves Kálmán körút and Albert Flórián út, in District IX.

the developer is constructing the 70,000 sqm CenterPoint and refurbishing the 30,000 sqm CenterPoint 1 and 2 buildings.

Although Pillar and H2Offices are located in green environments in the upper reaches of the Váci Corridor, one critique is that Váci ut should have been redesigned as an avenue, with more green areas rather than remain as a dual-carriageway, as is currently the case.

Strongest Activity

In the first quarter of 2023, the strongest occupational activity was recorded in the Váci Corridor, with it attracting 31% of total demand according to the Budapest Research Forum (BRF), consisting of CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL, and Robertson Hungary. The Central Pest submarket took second place with 23%, followed by Central Buda at 15%.

The outer boulevard of Hungária körút is also developing into an office hub. In District VIII it is home to the

72,000 sqm

Aréna Business Campus, which is being developed in four phases by Atenor. Wing, meanwhile, is set to deliver the phased 38,000 sqm Liberty office complex, further along in District IX where the boulevard becomes Könyves Kálmán körút, and near the junction with Albert Flórián út. Both complexes are located at road, metro and tram junctions.

“South Pest and South Buda still offer several suitable locations in

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Budapest. I would like to underline the attractiveness of Könyves Kálmán körút in District IX, where we developed the Telekom headquarters. Owing to its excellent location, we are developing a new project next to it, namely the aforesaid Liberty,” says Noah Steinberg, chairman & CEO Wing.

“The location has many advantages, with a range of dining and cultural facilities within a few minutes’ walk of the building. In addition, the area has recently undergone significant development, and other ambitious projects are underway, which will continue to enhance the prestige of the neighborhood and Liberty,” he insists.

Galambos argues that Atenor has become something of a trendsetter in the Budapest office market by developing in what were previously unrecognized office locations, such as the southern part of the Váci Corridor.

Waterside Opportunities

South Buda can offer waterside development opportunities, a prime example being BudaPart by Property Market on a 54-hectare site on the banks of the Danube at Kopaszi Gát [Dam]. The project includes office, retail, leisure, hotel and residential components in addition to large park areas and is based on the concept of developing a new city quarter, whereby a person can access all their basic day-to-day needs within a 15-minute walk. Most recently, Property

Market has delivered the 8,000 sqm BudaPart Downtown office.

Projects are now being developed on the Central and Southern Buda banks and across the river on the Pest side of the Danube. Such prime sites overlooking a river would be extremely challenging to source in many European capitals.

As mentioned at the top of this article, Budapest lacks a defined CBD due to the lack of large, well-located development plots. That is further compounded by the understandable priority the city planning authorities put on protecting listed buildings, meaning the planning process in the historic center can be protracted.

One option is to redevelop existing quality buildings, and there are certainly several listed properties

within the CBD in need of renovation.

Europa Capital purchased the riverside Akadémia Business Center, in partnership with ConvergenCE acting as the asset manager, in early

2022

and has redeveloped it into the 10,500 sqm Academia office center.

Developers like Wing and the French investor Groupama Gan REIM have also completed acquisitions of historic buildings in the CBD, a development vehicle that was arguably pioneered by Horizon Development with its Eiffel Palace (2013) and Váci 1 (2016) projects.

“As an international sustainable urban real estate developer, renovation seems like the most attractive option for us for many reasons. Renovation does not always present itself as the most financially beneficial solution, but it is, without a doubt, one of the most sustainable ways of property development,” Galambos agrees.

“We have beautiful historical buildings in the CBD of Budapest, most of them with amazing façades, which is why I personally believe that taking on the noble responsibility of a CBD refurbishment project, where some of the structural elements are saved, and the heritage-protected elements of these buildings are adequately reinstated, is not only a really smart thing to do but also the most forward-thinking in our current climate,” he concludes.

“Taking on the noble responsibility of a CBD refurbishment project, where some of the structural elements are saved and the heritage-protected elements of these buildings are adequately reinstated, is not only a really smart thing to do but also the most forward-thinking in our current climate.”

Real Estate: Office

in Brief News

MOL Opens Observation Deck of High-rise HQ

Construction Sector Wages Highest for Civil Engineering Work

Construction workers involved in civil engineering projects were paid one-third more than the industry average last year, according to data compiled by the Central Statistical Office (KSH). On average, construction sector workers earned a gross monthly HUF 380,000 in 2022. Blue-collar workers got HUF 310,000 and white-collar staff HUF 521,000. The average wage in the sector was 76% of the average for the national economy as a whole. The monthly average salary for a construction sector worker involved in utility projects stood at HUF 513,000.

MNB Notes Rising Vacancy Rates in Office Property, Industrial Markets

Hungarian oil and gas company MOL opened the observation deck of its new high-rise headquarters to visitors on April 21, according to portfolio.hu. The panoramic terrace on the top, 29th floor of the building, can be reached by a glass elevator from a visitor center on the ground floor. Entry to the visitor center is free of charge. Tickets for the observation deck may be purchased online. MOL laid the cornerstone

of the HQ in October 2018 and topped out the structure in August 2021. It was inaugurated in December 2022. The building was designed by London’s Foster & Partners in collaboration with Hungary’s Finta Studio. Berlin-based Kinzo and Hungarian partner Minusplus were in charge of interior design. The general contractor was Market Épitő. Around 2,500 people work in the 86,000 sqm office building.

The National Bank of Hungary (MNB) noted rising vacancy rates in the office and industrial property markets and pointed to the risk of oversupply in a report published on its website on April 27. “On the basis of construction underway, the risk of oversupply developing is significant within one year on the office space market and in the mid-term on the industrial and logistics property market,” the central bank warned. The MNB noted that the vacancy rate in the office market in the capital stood at 11.3% at the end of 2022, up 2.1 percentage points from 12 months earlier. The vacancy rate in the industrial

and logistics property market increased by 0.6 of a percentage point to 3.8% during the period. The report shows 267,000 sqm of office space was inaugurated in the capital last year, bringing the total stock to 4.3 million sqm. A “significant volume” of inaugurations is expected in 2023. Around 333,000 sqm of industrial and logistics space was inaugurated in and around Budapest last year, while another 358,000 sqm is due to be handed over in 2023.

Construction Sector Output Fell 11.8% y.o.y. in February

The output of Hungary’s construction sector slipped 11.8% year-on-year in February, falling for the third month in a row, and at an accelerated pace, according to data released by the Central Statistical Office (KSH) in late April. The output of the buildings segment dropped 8.8%, while civil engineering output fell 17.7%. In absolute terms, the construction sector output reached HUF 424.5 billion in February. The buildings segment accounted for 71.6% of the total. In a month-on-month comparison, construction sector output rose 1.9%, adjusted for seasonal and workday effects. The order stock was 25.2% lower at the end of February than 12 months earlier. Buildings segment orders were down 13.6% and civil engineering orders declined 33.1%. New orders dropped 44.4%, albeit from a high base. New orders in the buildings segment declined 36.6% and new civil engineering orders fell 49.7%.

ATENOR – A STRONG COMMITMENT TO ESG PRINCIPLES

• Green & accessibility

certifications – BREEAM

Excellent & Access4You

certified buildings

• Green Finance Framework

– created consistently with the guidelines of “Green Bond Principles”

• Green Bonds – issuing retail bonds for the purpose of financing sustainable real estate projects

• CO2-neutral developer

– corporate level Carbon

Neutral certification® in collaboration with CO2logic

• Soft mobility – Promoting environment-friendly ways of transport by easily accessible buildings

• Energy-efficient buildings

– reducing emissions and improving energy efficiency

• Acting for the future

– Planting trees locally every year since 2020

• Acting for People

– societal commitment for the wellbeing of citizens

See more of ATENOR’s Sustainability ambitions and actions on

The visitor center and observation deck of the MOL Campus have been opened to the public. Photo by Zoltán Máthé / MTI

Centerpoint - your new destination on the Váci út office corridor

Centerpoint is a 75,000 m2 state–of–the–art office development in the heart of the office quarter, delivered by GTC in two phases: a complete refurbishment and re-imagination of the existing iconic building and a brand new adjoining development, completing 2024.

Centerpoint connects sustainability, flexibility and efficiency.

For more information on the offices and the conditions of leasing, please contact GTC Leasing Team at leasing@gtc.hu or at +36 1 412 3680.

Category “A” office buildings in greater Budapest

Bank, bp, Stada Hungary, B+N Referencia Zrt, Nowy Styl, DKF, Qubes, Manna ABC,

266-2181 info@ futurealgroup.com

1133 Budapest, Árbóc utca 1–3. (70) 467-5482 reception@ agorabudapest.com

1097 Budapest, Könyves Kálmán körút 36. –sales@wing.hu

Cushman & Wakefield Kft., www. cushmanwakefield. com

Gladiátor VI. Ingatlan Befektetési Alap (100)

1083 Budapest, Szigony utca 26-30. (1) 266-2181 office@ futurealgroup.com

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

1097 Budapest, Könyves Kálmán körút 34. (1) 451-4760 sales@wing.hu

1095 Budapest, Soroksári út 30–34. 1132 Budapest, Váci út 20–26. (1) 236-6400 –21

478-0556 offices@cpipg.com Roosevelt iRodAház –27,757 29,600 8 250 5 8 230 A 12 Dr. Rose, Cloudera, Bloomberg, HOB – – Eston –OTP Ingatlanbefektetési Alap (100) A

CPI Property Group (100) 28,065 43,000 7 A 5 12 399 A A A – – JLL, www.jll.com –A A

1051 Budapest, Széchenyi István tér 7–8. (70) 654-5393 holub.erika@ iconrem.hu 22 pARkWAy www.psg-irodahazak.hu 27,600 31,200 9 A 3 8 554 A A A – – –A A

1087 Budapest, Könyves Kálmán körút 54–58. (1) 327-2050 info@psgirodahazak.hu 23

pillAR www.gtcgroup.com 27,425 29,059 6 A 3 16 389 A A ExxonMobil Hungary – – –A A

1134 Budapest, Dózsa György út 61–63. (1) 412-3680 leasing@gtc.hu 24 BARtók udvAR ii www.bartokudvar.hu 27,000 37,300 9 350 5 11 507 A A

NAK, Multisoft, Innobyte, MindentMent, MC-Bauchemie

– – – –Infogroup (100) –

Avison Young Hungary, info.hungary@ avisonyoung.com www. avisonyoung.hu

––CA IMMO (100)

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

1115 Budapest, Bartók Béla út 105–113. (1) 481-4530 info@infogroup.hu 25 ip West www.caimmo.com www.ipwest.hu 26,500 30,100 8 280 3 15 841 A A A – –

Avison Young Hungary, info.hungary@ avisonyoung.com

(100)

Kopaszi Gát Zrt. (100) –

Tippin Corporation (A), Optimum (A)

OTP Ingatlanbefektetési Alap (100)

OTP

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

1117 Budapest, Budafoki út (30) 147-0421 sales@budapart.hu

1054 Budapest, Szabadság tér 17. (1) 374-3040 richard.vigh@ cbre.com

1138 Budapest, Váci út 135–139. (70) 797-4113 bartok.richard@ iconrem.hu

1138 Budapest, Bence utca 1. (1) 336-0900 alapkezelo@ otpingatlanalap.hu

Alap

(1) 266-2181 office@futureal.hu, farkas.hajnalka@ otpingatlanalap.hu

1133 Budapest, Váci út 80. (1) 920-2193 erstealapkezelo@ erstealapkezelo.hu

CBRE, www.cbre.hu; Cushman & Wakefield, www. cushmanwakefield. com

VGF Invest Kft.

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

336-0900 kistamas.agnes@ otpingatlanalap.h

Kontron, Partner in Petfood, Ariston, Ricoh, Flaga, Dexon Systems, Budasensor, GoodMills, Homlok Építő, JS Logistics, Edco, Hungaroflotta, Honda, Sága

1123 Budapest, Alkotás utca 53. (1) 487-5501 office@mompark.hu

1117 Budapest, Alíz utca 2. (1) 920-2161 erstealapkezelo@ erstealapkezelo.hu

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

822-5466

Váci út 193. (1) 412-3680 leasing@gtc.hu

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

Cushman & Wakefield, www. cushmanwakefield.

Magyar Posta Takarék Ingatlan Befektetési Alap

920-2161 erstealapkezelo@ erstealapkezelo.hu

1062 Budapest, Váci út 1–3. (1) 877-1000 alexandra.virag@ eston.hu

1117 Budapest, Magyar tudósok körútja 9. (1) 888-4120 ingatlan@ diofaalapkezelo.hu

Greens Kft. (100)

1034 Budapest, Bécsi út 68–84. (1) 785-5208 info@atenor.hu

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

I. Ingatlan Befektetési Alap (100)

1134 Budapest, Róbert Károly körút 54–58.

Trax Retail, Alpiq Csepel, Alpiq Energy, DBK, GEOX, Philip Morris, Risskov, Wolf Theiss

Adria Port, Bázis Office Center, BuildEXT, HumanField, MádiLáncos Studio, Salzgitter, Mannesmann

www. convergence.com

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

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

Robert Bosch, Secops, Somfy, Finn Wellness

AG Mamas, Aurum, Billingo, CCE Hungary, Eurorisk, Fürgefutár.hu, EverDermLaser Center, JOBGROUP, VS-Faktorm, B+N Referencia

ConvergenCE, www. convergen-ce.com

Investum (100)

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

1082 Budapest, Futó utca 31–33. (1) 236-6408 Ersek.timea@ otpingatlanalap.hu

1054 Budapest, Báthory utca 12. –sales@wing.hu

1133 Budapest, Árbóc

382-7560 office@ gamma-am.hu

PM and FM Role Becoming Increasingly Enhanced

Property management and control of the building’s operations through FM have become crucial to reaching the lowest energy consumption and highest employee satisfaction, according to professionals from within the field.

László Orbán, CEO of Frame Group, sees the role of an integrated facility management provider as helping partners find the best and most cost-effective way to achieve flexibility of space, reasonable operating costs, and reduced environmental impacts.

“Facility managers are not only responsible for the smooth and efficient operations of complex FM solutions in the given property. As they are the ones overseeing complex integrated facility management of the property, they have the specific expertise and capability for identifying opportunities for quality upgrades or savings, either via readjustment of existing systems or implementation of the latest technical developments,” he argues.

“Together with respective property managers, they are capable of supporting investors with relevant information when deciding about investments that lead to more efficient and, therefore, sustainable operations of their real estate. This environment-friendly solution will be used for both “soft FM” and “hard FM,” in line with the signed service level agreement. The center of competence team supports all field and on-site colleagues to be able

to find the most sustainable solution for customers,” Orbán adds.

A central role of PM & FM is facilitating the well-being of office staff and the implementation of Well Building Standard principles at scale so that organizations can measure and improve their health performance across multiple locations.

Robust Features

“Using our robust set of Well features and our proven process, organizations can map, measure and quantify their health and well-being efforts. With this data, they can measure their impact on people while also comparing their progress internally and against industry peers,” explains architect and Well assessor

Regina Kurucz.

ESG and well-being and the need for effective benchmarking and transparency of data have already opened new perspectives. In the coming years, these issues are seen as having an increasing influence on property and facility management.

“PM and FM will have an increased role within the ESG office environment, as the ongoing and transparent management and monitoring of data is one of the key factors of ESG assessments,” says Zsombor Barta, president of the Hungarian Green Building Council (HuGBC) and a sustainability expert.

“Investors are screening commercial buildings against ESG benchmarks, but to get ESG-related benchmarks, data is needed. Data can be gathered, and ongoing and transparent

monitoring systems must be developed by PM & FM. Their role is therefore crucial for the ESG market,” he notes. “I think a high-end tenant needs high-end services. Also, sustainability and image are crucial for these clients; therefore, up-to-date information and ongoing, high-quality services are required. To fulfill these requirements, the office building staff must be prepared, and systems and frameworks must be implemented to be able to meet these needs and expectations,” he adds.

With regard to costs, Frame’s Orbán argues that ESG criteria should not increase lease or operational costs, as this is expected to be the basic standard requirement soon.

Holistic Approach

“It is a matter of preparation and a holistic approach. We feel responsible for helping our clients find alternative ways to optimize TCO [total cost of ownership] levels while respecting all requirements. This is not only valid for new premises but also for reconstructed ones. This is why we decided to extend our activities focusing more on reconstruction, fit-out, and energetics besides our strong IFM leg,” he explains Barta of HuGBC argues that, first of all, everybody within an organization should understand why data monitoring and gathering is needed, in what form, and the level of detail. If needs and expectations are understood, improved systems can be developed and implemented accordingly, he believes. It is clear that especially

for ESG, benchmarking and enhanced data management and gathering need to be implemented.

All investors and landlords are becoming more concerned with ESG, which is increasing the number of offices that are compliant with the standards. It is quite visible on the market that certifications like Breeam, Leed, Well, and Access4You, are becoming inescapable in the view of Orbán, not to mention the EU taxonomy.

“An important new approach for ESG environmental indicators is to consider the whole life cycle of buildings and real estate. In other words, the environmental impact of the production of building materials, of transport and construction, and operation and dismantling must be taken into account,” he says.

“Energy efficiency is also the key to the operation of buildings and real estate: first, careful planning is needed to ensure that a building can be operated efficiently, and then to ensure that the optimized amount of energy used in its operation comes from a climateneutral source,” Orbán adds.

According to Icon Real Estate Management, there are currently no standardized ESG requirements, based on which it could be decided whether a building is ESG conforming. How a space is built and its technological solutions are used is one thing, but how the building is used is even more critical from an ESG perspective. That means professional operation and tenant education are fundamental aspects, the company says.

Ever more sophisticated requirements from tenants and staff, concerns over rising utility prices, and the increasingly central role of ESG and well-being in the day-today management of offices have further enhanced the function of property and facility management providers.

GARY J. MORRELL

Corvin Innovation Campus is operated for developer Futureal by Icon Real Estate Management.

iCon Real estate ManageMent kFt. https://iconrem.hu/

Airport Zrt., Schwarzmüller

Electrolux, Blackrock, Henkel

OTP

Ingatlanbefektetési Alap, OTP Prime Ingatlanbefektetési Alap, Bonitás Első Ingatlan Alap, BSZLSzabadkikötő Zrt.

HO-ME 2000 Vagyonkezelő Kft.

postelnicu, elena gifon, jamie McHugh

1095 Budapest, Máriássy utca 7. (1) 299-2150 sales@ neopropertyservices.hu

1148 Budapest, Fogarasi út 5. (1) 468-4080 info@future-fm.hu

1097 Budapest, Gubacsi út 6 B/1. (1) 919-0554 hungary.gws@ cbre.com

1139 Budapest, Pap Károly utca 4–6. (30) 676-6369 info@kraft-fm.hu

levente velky, gyula Zoltán ifsics Levente Velky Ildikó Barcza

1138 Budapest, Váci út 191. (1) 231-4020 ildiko.barcza@ atalianworld.com

gábor nagy, Zsolt kákosy, Róbert Flück, gergely varga Gergely Varga Viktória Kiss

1026 Budapest, Riadó utca 5. (70) 662-5639 info@iconrem.hu

4 Socialite

Veszprém, Balaton Shine as European Capital of Culture Program Accelerates

In March 2019, the city of Veszprém, just north of Lake Balaton, was made a European Capital of Culture (ECoC) for 2023. The program is officially called the VeszprémBalaton ECoC. Now, having weathered COVID19 since that announcement and despite the war in Ukraine, Veszprém-Balaton’s ECoC year is well underway.

The city, 115 km southwest of Budapest and around 90 minutes by car or train, is an ancient settlement with a population of approximately 60,000. Lake Balaton, the internationally popular Hungarian Riviera (known to locals as the Magyar tenger or Hungarian Sea), is just 15 km to the south.

To showcase the diversity of cultures in Europe and celebrate shared cultural features, the EU appoints two ECoCs each year. According to a guide prepared by the European Commission for cities preparing to bid for the status, previous ECoCs have reported a measurably positive legacy.

Benefits include “The ECoC acting as a catalyst for a step-change in the development of a city or an area” and “A greater European and international understanding and profile, often seen in increased tourism and reputation.”

Speaking in September 2022, Veszprém Mayor Gyula Porga said, “We worked

very hard for this [and] it was important to include the Balaton-Bakony region. [….] The international judging committee really liked this idea of inclusion.”

The Hungarian government has certainly put its weight behind Veszprém-Balaton. Speaking earlier this year, Minister of Regional Development Tibor Navracsics said the ECoC program could be a “catalyst for growth in leaps and bounds.”

Veszprém-Balaton’s year as a European Capital of Culture officially got underway on January 21, two days before the National Day of Hungarian Culture. This commemorates the birthday of Ferenc Kölcsey, who penned the Hungarian National Anthem: 2023 is his centenary.

The Program Director

In late April, I asked Friderika Mike, program director of the Veszprém-Balaton 2023 ECoC, how the year was going.

Mike, whose background lies in urban and regional development programs focused on tourism and community, was head of the bidding team that swung into action around the end of 2017. Back then, she was an external consultant.

When Veszprém won its bid to become a 2023 ECoC, she was invited to head up VEB2023, as the organizing committee is known. Now Mike and her team work not just with the city of Veszprém but with 116 municipalities, 12 partners,

and various artistic communities. With around 3,000 events planned for the year, she and her team have their work cut out.

“Our year is based on micro-events,” she told me. “We aim to have something happening most weekdays. Every two weeks, we host a different European city in Veszprém. We’ve been a member of UNESCO’s Creative Cities Network since

2019,

so the focus is very much on music, fine art, and literature, whatever’s characteristic of that city. Music, in particular, is very important for our general cultural strategy.”

When we spoke, Veszprém was hosting Bologna, part of the Creative Cities Network. Later in the year, it will welcome cities from Japan and Colombia.

Each month, Veszprém has at least one highlight event. In February, this was an international literature festival focusing on young people between 14 and 25. Based on the concept “What does literature mean for young people now?” the event included workshops on disciplines such as songwriting and creating comics and welcomed guests from Austria, the Czech Republic and Romania.

March events focused on the 200th anniversary of the birth of poet and revolutionary Sándor Petőfi, the author

of “Nemzeti dal” (“National Song”), said to have inspired the 1848-49 Revolution and War of Independence against the Austrian Empire. It’s generally believed Petőfi died in one of the last battles of that war.

Big Time Blues

In April, Veszprém hosted Hungary’s biggest blues festival to date. “We deliberately chose blues because it’s a niche genre in Hungary,” Mike explained.

Performers included Grammy Awardwinning harmonica virtuoso and Harlem native Sugar Blue, highly rated Britishborn guitarist Matt Schofield and The Magic Mosquitoz. The event was, by all accounts, a huge success.

“More than 3,500 visitors came and stayed in Veszprém for four days or so,” Mike told me. “We deliberately booked all the performers for two shows, so they had to stay at least one night in Veszprém. As musicians do, they found each other, and there were plenty of spontaneous jam sessions. Audiences could feel that the performers were really enjoying themselves.”

One of the most intriguing events, and one that’s close to Mike’s heart, is Inota 2023, which will be happening over the last weekend of August.

The event will be held in a factory complex with three iconic cooling towers built in the

1950s

that supplied electricity to a large part of Hungary for decades.

“This powerplant always had a symbolic role in the region,” Mike explained. “Everyone had a relative who worked there. But it had been empty for years, only used for film and photo shoots.”

Inota 2023 is intended to be “Hungary’s biggest response-seeking, definitive audio-visual festival” with an international line-up of artists, creators and visionaries […] often transcending interdisciplinarity to create uncategorizable, novel, innovative, hybrid art forms.”

Ultimately, the goal is to start a dialogue between the different artistic disciplines and creative industries to develop a forward-looking way to use the complex at the foot of the towers.

On a more down-to-earth level, in June, Veszprém-Balaon will celebrate the midway point of its ECoC year with a celebration at the longest picnic table in Hungary, seating 3,000 people.

Keep up with Veszprém-Balaton at veszprembalaton2023. hu/en where there’s also an app to download. In summer, there will be a printed English language program in tourist offices, hotels, and so on.

DAVID HOLZER

The decommissioned Inota thermal power plant, with its three iconic cooling towers, built in the 1950s, will host an audio-visual festival as part of the ECoC program. Photo by Daniel Besnyő.

Chamber of Commerce Corner

This regular section of the Budapest Business Journal features news and events from various international business chambers. For further information and to register for specific events, visit the website of the organizing chamber. If you have information for inclusion on this page, send an email in English to Annamária Bálint at annamaria.balint@bbj.hu

The NetherlandsHungarian Chamber of Commerce (Dutcham)

Dutcham invites guests for an elegant yet casual 21st Annual Gala Dinner to celebrate the 21st year of the chamber and reaching “adulthood.”

Dutcham promises a night of exceptional gastronomy and entertainment, with company tables and mixed tables of 8-10 and food representing tastes historically connected to the Netherlands.

• When: Thursday, May 11, 7 p.m. • Where: Budapest Marriott Hotel, Apaczai Csere Janos utca 4, Budapest 1052

• Cost: Member single ticket: HUF 49,900 (incl. VAT), table of 10: HUF 469,900 (incl. VAT); non-member single ticket: HUF 62,900 (incl. VAT)

Swiss-Hungarian Chamber of Commerce (Swisscham)

Canadian Chamber of Commerce in Hungary (CCCH)

The CCCH is delighted to invite you to its upcoming 10th Canadian Bison and Salmon Dinner evening at the end of May, where it will say goodbye to spring and welcome the summer season. The event will occur at ÖbölHáz, near the Danube in South Buda. Indulge in the finest Canadian delicacies, including fresh wild salmon and bison, and enjoy an authentic Canadian culinary experience. There will also be a chance to purchase raffle tickets to win exciting prizes. The ambiance will be enhanced by live jazz music, providing the perfect accompaniment to the delicious cuisine.

• When: Wednesday, May 31, 6-11 p.m • Where: ÖbölHáz, Kopaszi-Gát 2, 1117 Budapest • Cost: Members HUF 43,900 HUF (+ VAT); non-members: HUF 56,900 (+ VAT)

Swisscham Hungary participated in the Connect Conference, where member companies spoke about the corporate culture of Swiss companies. The chamber congratulates the Blue

Colibri team for organizing such a meaningful full-day conference with 800 people and thanks participants in the panel discussion from its member companies.

German-Hungarian Chamber of Industry and Commerce (DUIHK)

The second online Journey Around the World: Women in International Business from the Global AHK Network by women@duihk with the Association of German Women Entrepreneurs (VdU) and the global AHK network took participants virtually to Iran and Saudi Arabia. Topics of the online conversation were globalization and tension with localization, women in business, and the life and commitment of the speakers at the two foreign locations. The welcome and

introduction were given by Elizabeth Lehnich, co-chair of the International Commission of the VdU, and Barbara Zollmann, managing director of AHK Hungary. Afterward, Marie-Theres

Thiell had a conversation with Susann Gerlach, CEO of AHK Iran, and Dalia Samra-Rohte, a delegate of AHK Saudi Arabia

30th Anniversary Gala

The DUIHK marks a special celebration this year, with the highlight being its

British Chamber of Commerce in Hungary (BCCH)

The BCCH will hold its annual meeting on May 17, at which a new council and chairperson will be elected for a two-year term. The guest of honor will be Britain’s Ambassador to Hungary Paul Fox. New to this year’s annual meeting and open to non-members will be the presentation and Q&A session with Rolls-Royce’s managing director György Balázs, and the director of engineering at Jaguar-Land Rover Nevijo Mance, moderated by Randstad’s Petra Polgár. This part of the event, scheduled for 5:45 p.m., marks the start of the networking and opens up the room to non-BCCH members.

• When: Wednesday, May 17, 4-8 p.m.

• Where: Kozmo Luxury Hotel, Horváth Mihály tér 17, 1082 Budapest • Cost: Free of charge for BCCH members; HUF 15,000 (incl. VAT) for non-members for the reception and networking after the annual meeting.

30th Anniversary Gala Dinner. Guests, including President of the Republic of Hungary Katalin Novák, will enjoy an evening of culture and entertainment, dancing, excellent food, and drink specialties.

• When: Friday, June 2, 7-11 p.m. • Where: Budapest Marriott Hotel, Apaczai Csere Janos utca 4, Budapest 1052 • Cost: Member EUR 150 per person; non-member EUR 280 per person; company table of EUR 2,000.

The American Chamber of Commerce in Hungary (AmCham)

Although a typically tricky topic to navigate, the inadvertent violation of sanctions was not something businesses in Hungary had to worry about. That changed drastically on February 24, 2022, from which point rapidly changing regulations created an increasingly complex and challenging area to navigate. The AmCham conference Sanctions and Compliance: Are you fully prepared? will present the geopolitical realities of current and potential sanctions and their effects on the global and state economies as well as practical aspects of complying with sanctions as a business, including the risks and pitfalls one must avoid. Guest speakers will be Botond Feledy, director of Tipping Point Consulting, a geopolitical risk analyst and EU Expert, and Ramsey Jurdi, an international dispute, regulatory and trade compliance lawyer at DLA Piper with substantial experience in economic sanctions.

• When: Wednesday, June 7, 9 a.m.-1:30 p.m.

• Where:

To be confirmed • Cost: Members HUF 34,990 HUF (+ VAT); non-members HUF 45,000 HUF (+ VAT)

Belgian Business Club in Hungary (BelgaBiz)

BelgaBiz will hold its general assembly at the Embassy of Belgium on May 11 to discuss issues related to the club’s operations and future direction and elect the new members of the management and supervisory boards. A reception will follow the meeting. On June 10, BelgaBiz will introduce a new concept for the business club, a Family Day to be held at Budapest Garden. It promises to be a funfilled event for members and their families, with activities and entertainment for all ages. It will also be an opportunity to say farewell to departing Belgian Ambassador Siegfried Peinen, who has been a devoted club member as its honorary chairman. BelgaBiz is grateful to the ambassador for contributing to its success over the years.

The French-Hungarian Chamber of Commerce and Industry (CCIFH)

Celebrate the 150th anniversary of the unification of Budapest together at CCIFH’s large-scale Garden Party, inspired by the last century.

• When: Friday, June 23, 4-10 p.m.

• Where: Városligeti Műjégpálya és Csónakázótó (City Park Ice Rink and Boating Lake), Olof Palme Sétány 5, 1146 Budapest. • Cost: Members HUF 32,000 (+ VAT); non-members HUF 45,000 (+ VAT).