VOL. 31. NUMBER 19 | OCTOBER 20 – NOVEMBER 2, 2023
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SPECIAL REPORT INSIDE THIS ISSUE
Real Estate Development
Developments Ongoing in Some Sectors Despite Challenging Market While there are substantial pipelines for the industrial and hotel markets in Hungary, things are more limited for offices, and there is none at all for shopping centers. 18
Industrial Demand High in Hungary The industrial pipeline is strong, and demand remains high, although vacancy rates are rising in an uncertain economic environment. Logistics and industrial dominate in the Greater Budapest area, while it is mainly light industrial production and assembly space in countryside hubs across Hungary. 22
Counting on China, and Car Sharing
SOCIALITE
Photographing Spirit of an Amazon Tribe The press release for the Museum of Ethnography’s exhibition of Claudia Andujar’s work describes her as a “Hungarian-origin female photographer.” In fact, the experience of being Hungarian Jewish is central to Andujar’s work, although it may not look that way at first, says David Holzer. 32
BUSINESS
AutoWallis’ Gábor Ormosy takes us inside the company’s recent collaborations and acquisitions, as his business introduces Chinese brands to Hungary and expands into car sharing NEWS through its purchase of Can Batteries Jump Share Now. 8
Start Industry?
Industrial production showed some vital signs in August, mainly due to battery manufacturing, but overall, the data fell short of expectations. Price increases were slower than expected in September, but Hungary still tops the inflation table in the European Union. 3
BUSINESS
Leaders Honored at 2023 Sustainable Future Awards The Business Council for Sustainable Development in Hungary has celebrated what it hails as significant progress in corporate sustainability at its 2023 awards ceremony while acknowledging that more must be done. 10
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Budapest Business Journal | October 20 – November 2, 2023
IMPRESSUM EDITOR-IN-CHIEF: Robin Marshall EDITORIAL CONTRIBUTORS: Luca Albert,
Balázs Barabás, Zsófia Czifra, Kester Eddy, Bence Gaál, Gergely Herpai, David Holzer, Gary J. Morrell, Nicholas Pongratz, Gergő Rácz. LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES:
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THE EDITOR SAYS
INTERNATIONAL DEVELOPMENTS RAISE EYES FROM HOME As if the violence and death that has now continued for more than 600 days in neighboring Ukraine were not enough, we have terrorist acts in Israel, war declared on Hamas, and the type of two-way bombardment into and out of a tiny strip of land that made the tragedy at the al-Ahli al-Arabi hospital in Gaza City all but inevitable. The medical center is apparently also known as the Baptist hospital and is owned by the Anglican Church. For all religion may offer a spiritual cloak, it can’t protect from bullets and bombs and knives. As it was in Gaza, so it was in Israel. We seem to have moved at high speed into a period where international events swamp domestic matters. Eyes were being directed away from Hungary in any case. Prime Minister Viktor Orbán took his leadership team to Tbilisi on Oct. 11-12 for a joint cabinet meeting with their Georgian opposite numbers. The two governments are politically close, and Orbán has been pushing Georgia’s EU credentials for some time, just as he has done for the Balkans. Perhaps he believes expansion dilutes the powers of the bigger states, especially if it is accompanied by a move away from unilateral votes, as it surely must if an enlarged European bloc ever hopes to get anything done. Perhaps he simply wishes to bring more allies on board, a matter that will have become more pressing now the Law and Justice Party (PiS) seems to have lost its grip on power in Poland. Since that Georgia trip, Orbán and leading ministers have been busy pressing the flesh and signing agreements in Beijing, where President Xi Jinping went as far as to laud the Hungarian leader as a “friend” of China. Orbán was an early adopter of Xi’s Belt and Road Initiative and
remains committed to bringing Chinese business to the center of Europe, even as the European Union, the United Kingdom and the United States seem to grow ever more suspicious of China’s true intentions. If that puts him at odds with much of the political leadership of the Occidental world, it is not something that seems likely to bother him, at least on the face of things. It is certainly nothing new. Meeting with Xi and his cohorts might be one thing (and the truth is that for all the talk of “systemic rivals” and “decoupling,” no country or bloc can afford to ignore a market the size of China). Meeting with Vladimir Putin is quite another. The bilateral Orbán held with the Russian leader may have been in neutral territory in a Chinese government house in Beijing, but it was still an in-person meeting between Putin and an EU member state leader, and they have been about as common as hens’ teeth in recent months. Perhaps you can see some of that in video from the meeting that has gone viral. It is easy to overinterpret these things: many critics have insisted it shows Orbán to be highly nervous; he certainly appeared distinctly fidgety. That is no crime. Neither is meeting Putin, actually, though that it happened at all won’t be welcome in Brussels or Washington and will have delighted Moscow. Orbán has merely underlined that he will continue pursuing policies on his grounds, whatever others think. He is nothing if not consistent in this. In the meantime, we appear to be teetering on the brink of a wider war in the Middle East. Much more of this, and no one will have the bandwidth to keep up with everything. Robin Marshall Editor-in-chief
Why Support the BBJ? • Independence. The BBJ’s journalism is dedicated to reporting fact, not politics, and isn’t reliant on advertising from the government of the day, whoever that might be. • Community Building. Whether it is the Budapest Business Journal itself, the Expat CEO award, the Expat CEO gala, the Top Expat CEOs in Hungary publication, or the new Expat CEO Boardroom meeting, we are serious about doing our part to bind this community together. • Value Creation. We have a nearly 30-year history of supporting the development of diversity and sustainability in Hungary’s economy. The fact that we have been a trusted business voice for so long, indeed we were the first English-language publication when we launched back on November 9, 1992, itself has value.
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A baker makes bread at one of the facilities of the Budapest Bakery Company on Bródy Sándor utca in 1970 in the black and white photo from the Fortepan public archive. In the color photo from state news agency MTI, a range of products are presented Photo by Zoltán Szalay / Fortepan
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THEN & NOW
at the Gluten-free Bread and Pastry Competition award ceremony at the National Chamber of Agriculture headquarters in Budapest on Oct. 18.
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Budapest Business Journal | October 20 – November 2, 2023
News
• macroscope
Can Battery Production Jump Start Industry?
Industrial production showed some vital signs in August, mainly due to battery manufacturing, but overall, the data fell short of expectations. Price increases were slower than expected in September, but Hungary still holds the dubious honor of leading the way regarding inflation in the European Union. ZSÓFIA CZIFRA
Falling short of expectations, industrial production fell by 5.3% in August, or, when adjusted for the working day effect, by 6.1%. Industrial output fell by 4.6% in the first eight months of the year. The majority of the manufacturing subsections contributed to the production decline. Out of the subsections with the most significant weight, the manufacture of electrical equipment grew at the highest rate, but the manufacture of transport equipment also increased. Simultaneously, the volume of production fell in the manufacture of computer, electronic and optical products, as well as food products, beverages and tobacco products, according to the latest data released by the Central Statistical Office (KSH). Based on seasonally and working day-adjusted data, industrial output decreased by 2.4% compared to the previous month, meaning it did not confirm the recovery seen in August. However, industrial production still performed better than the previous quarter, MBH Bank head analyst Gergely Suppan notes. The data suggests that the reduction in energy prices has not yet caused an overall easing in energy-intensive sectors, whose production may have remained subdued. Compared to the average
of
2015,
industrial production increased by 19.1%, while it exceeded the average production level of 2010 by 45.6%, Suppan notes. According to him, the stagnation of industrial production experienced since the beginning of Q4 2022 was primarily
Inflation in EU Member States (September 2023)
September 2022-September 2023, 12-month change in consumer prices Hungary Romania Slovakia Czech Republic Poland Croatia Slovenia Bulgaria Austria France Italy Ireland Malta EU Average Portugal Cyprus Germany Eurozone Lithuania Estonia Sweden Latvia Luxembourg Spain Finland Greece Belgium Denmark The Netherlands Source:
caused by the curtailment or shutdown of production in energy-intensive sectors as a result of the explosion of energy prices. In some sectors, especially the food industry, weakening internal and external demand resulted in more moderate production.
Lower Energy Use
Due to lower energy consumption (partly due to the mild winter weather and partly due to forced energy savings), industrial production was also dragged down by the decline in the production of the energy-producing sectors, says Suppan. According to the latest KSH data, among those sectors with the greatest weight, the production volume increased in vehicle production and, especially, the production of electrical equipment. At the same time, it decreased in the other sub-sectors. Hence, the production of computers, electronics, optical products, as well as the production of food, beverages and tobacco products, all fell. Suppan recalls that, when it comes to car manufacturing, there was a significant improvement from the second half of last year, as most players reported the complete recovery of their supply chains and the resolution of the previous acute shortage of chips and semiconductors. Thanks to this, the output of domestic
vehicle production reached a new twoyear peak last December. The backlog of orders accumulating due to missed deliveries may indicate continued favorable prospects for production, at least until it is cleared. Such prospects are overshadowed, however, by the fact that new orders in the vehicle industry fell
by
12.1%
in July, compared to the high base of a year earlier, while its order book fell by 3.2% compared to 12 months ago. As for the outlooks, after the expected temporary fluctuations caused by the energy crisis, Suppan augurs a gradual recovery in industrial production for the remainder of this year. The gradual recovery of internal demand explains this. The expected commissioning of new capacities, mainly related to battery production and the automotive industry, as well as the food, chemical and defense industries, may also support it.
Inflationary Pressure to Ease In the meantime, inflationary pressures seem to be easing somewhat: inflation slowed to 12.2% in September from 16.4% in August. This was mainly caused by base effects, as the sharp rise in
household market energy prices and the significant price rise in food prices of a year ago were not present this time. The lower-than-expected inflation was also contributed to by a slightly more moderate than expected price increase in the cost of services. However, that was somewhat offset by further increases in fuel prices. Also indicative of easing inflationary pressure is that core inflation decreased from 15.2% in August
to
13.1%
in September, which also indicates an easing of inflationary pressure. Although inflation slowed in Hungary at the beginning of the fall, prices rose only by an average of 4.9% across the European Union. The Hungarian rate of 12.2% is 2.5 times that. That means Hungary still leads the European rankings in terms of price increases, as demonstrated by the latest Eurostat data. In Romania, for example, inflation was at 9.2% in September, while Slovakia had a 9% rate. In spite of this, Suppan expects that by the end of the year, the inflation rate in Hungary may have decreased to close to 6%. For the full 12 months, he expects average inflation of 17.8%, while 2024 may see that fall further to 3.9%, despite the increase in fuel excise duty at the beginning of next year.
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Budapest Business Journal | October 20 – November 2, 2023
Wing Undertakes its Second Budapest Airport Hotel Project
Real Estate Matters A biweekly look at real estate issues in Hungary and the region
Construction has started on a new hotel at Ferenc Liszt International Airport, being developed by Wing in cooperation with the airport operator. The new Tribe hotel is being built next to the Ibis Styles Budapest Airport Hotel, also by Wing and opened in 2018. GARY J. MORRELL
This latest project reflects both the attractiveness of the Budapest hotel sector for developers and operators and the strategy of the operator Budapest Airport to extend services and infrastructure at Ferenc Liszt International as it looks to increase passenger and cargo traffic. With a direct connection to Terminal 2, the 8,000 sqm functional hotel with 167 rooms “will offer both business and leisure travelers an outstanding guest experience,” says Wing. Based upon the successful operation of the 146-room Ibis Styles Budapest Airport Hotel and the availability of an adjacent development plot, Wing has proceeded with the construction of the new Tribe hotel. In addition to accommodation, it will offer a
150-seat conference room
and two meeting rooms, a gym, a floor for sports enthusiasts, and a skybar. “The Ibis Styles Budapest Airport Hotel, developed by our group, has
Artist’s rendering shows the location of the new Tribe hotel (top right), just behind the existing Ibis Styles at Budapest Ferenc Liszt International Airport. been operating at almost full capacity since its opening, with excellent guest ratings. Based on existing guest demand and the success achieved, Tribe will arrive in 2025,” comments Noah Steinberg, president and CEO of Wing, on the new hotel project. “This will be the brand’s second unit in Hungary, alongside the hotel in the mixed-use Liberty building that we also developed. The existing Ibis Styles and the new Tribe will be directly connected, and the new complex will be an important milestone in the life of the airport; the development will further expand the airport infrastructure,” he says. “The number of available rooms more than double, and the additional high-quality
services will enable the airport to meet the needs of its guests at a higher level,” Steinberg adds.
Business and Transfer Travelers The hotel’s expanded services will be tailored primarily to business and transfer travelers with a large restaurant and lounge area that will accommodate 140 people in addition to a terrace with a capacity for 60 people, according to Frank Reul, VP for development at Accor Eastern Europe, owners of the Tribe brand. “It is of utmost importance to provide passengers with quality services. To this end, we are continuously developing the airport, in cooperation with our partners and through joint thinking,” explains René Droese, chief development officer for Budapest Airport. “There is an increasing need to expand services and capacities in and around the airport as passenger traffic increases; we are therefore delighted to welcome the plan to build a new hotel, which fits in well with our
Terminal
3
Dining area of the Ibis Styles Budapest Airport Hotel.
project and forms part of our Airport City development,” the CDO says. Ester’s Partners will be responsible for the interior look. The building has been designed with sustainability in mind, and it will be one of the first Breeam-certified hotels in Hungary, according to Wing. Swietelsky Magyarország is carrying out the structural works, with earthworks already underway.
“There is an increasing need to expand services and capacities in and around the airport as passenger traffic increases; we are therefore delighted to welcome the plan to build a new hotel, which fits in well with our Terminal 3 project and forms part of our Airport City development.” Wing’s hotel branch has completed four hotel projects with a total of 519 rooms to date. That will be further expanded this year with the Ibis Budapest Stadium and Tribe Budapest Stadium hotels adding an additional 332 rooms. Budapest Airport’s long-term development plans include the expansion of the passenger terminal and the related infrastructure and services. The airport operator had developed its plans in such a way that another hotel building could be added adjacent to the existing one.
For much more on real estate development, see our Special Report on the subject in this issue, pages 15-31.
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Budapest Business Journal | October 20 – November 2, 2023
News | 5
Ukraine
Orbán Meets With Putin in China Crisis Roundup Prime Minister Viktor Orbán met with Russian President Vladimir Putin at a government guest house in Beijing on Oct. 17, where both leaders attended the Belt and Road Initiative forum. The Hungarian PM thus become the first European Union premier to meet with the Russian leader since an international warrant was issued for his arrest over alleged war crimes in Ukraine. NICHOLAS PONGRATZ
The two sides discussed cooperation between Hungary and Russia in the areas of gas and crude oil deliveries, and nuclear energy, according to an announcement on
social media platform X (formerly known as with Alexander Novak, Russia’s deputy Twitter) from government spokesman Zoltán prime minister in charge of energy, and Denis Manturov, the deputy PM for trade Kovács. In comments via an interpreter and industry, in Moscow that day, during broadcast on Russian television before the the annual Russian Energy Week forum, to forum, Orbán told Putin that Hungary has never wanted to oppose Russia and is trying discuss the two countries’ cooperation in the areas of economy and energy. to salvage bilateral ties. Meanwhile, on Oct. 7, another Orbán stressed the importance of international crisis began to unfold peace during his conversation with Putin, as Hamas, the political and military according to a video message posted on Facebook after the meeting. Remarking that organization governing the Gaza Strip, unleashed a surprise assault on surrounding everyone in Europe is wondering whether portions of Israel, massacring hundreds of there will be a ceasefire in Ukraine, Orbán civilians. Israel retaliated with air strikes said, “the answer I received from the on the Gaza Strip before formally declaring president of Russia was not reassuring to war on Hamas the following day. Hungarian say the least.” He added that Hungary must leadership subsequently condemned the take this into consideration with regard to attack on Israel by Hamas. its policies over the coming months. “That is why it is important for us Unequivocally Support Hungarians to be able to maintain “We strongly condemn the brutal attack Hungarian-Russian cooperation in the against Israel and unequivocally support field of energy and other economic issues Israel’s right to self-defense,” President despite the war,” Orbán concluded. Minister of Foreign Affairs and Trade Péter Katalin Novák said in a message on X, declaring that Hungary had affirmed its Szijjártó said that Hungary would continue “unwavering support” for Israel. to strive for cooperation based on mutual “My thoughts and prayers with [Israeli respect with Russia in a Facebook post on Oct. President] Isaac Herzog and the Jewish people in these difficult times,” she added. Orbán also expressed “sympathy and adding that a secure energy supply could condolences to Prime Minister Netanyahu,” not be guaranteed without maintaining in a message on X, adding that Hungary’s relations with Russia. Szijjártó had met “thoughts and prayers are with the people of
13,
Israel in these dark hours.” After expressing his own condemnation of the “brutal terrorist attack,” in a post on his Facebook page, Szijjártó said Hungarian authorities had no knowledge of any Hungarians who had died or been injured in the fighting. Within two days, the Hungarian Air Force had conducted a rescue mission coordinated by the Ministry of Foreign Affairs and Trade and the Ministry of Defense, Szijjártó said in a post on Facebook. Some
325 people
had been evacuated on three flights that included 310 Hungarian nationals and 15 foreigners, including nationals from Israel, as well as Austria, Germany, Portugal, Sweden, and the United Kingdom. The Hungarian Air Force subsequently evacuated another 105 people on Oct. 13, with 89 Hungarians and 16 foreign nationals among them. While vocal with his support for Israel, Orbán told Kossuth Rádió on Oct. 13 that Hungary would not allow any rallies supporting “terrorist organizations.” The PM said he was shocked by “sympathy rallies supporting the terrorists across Europe,” including attempts in Hungary. “But we will not allow sympathy rallies supporting terrorist organizations as that would entail a terror threat to Hungarian citizens.”
PRESENTED CONTENT
Avoiding the Stress of the Daily Commute
AK: Many people see transport as a “necessary evil,” but we can see it as a part of our lives that has the potential to be a positive experience. Some people don’t move to a suburban or conurbation area, for example, because they are afraid of the daily commute. Let’s face it: in some cases, they may even be right, unless we find the best means to do the job. We believe that transport and the mobility solutions that go with it relate to each other like a tailor-made suit and the person wearing it do. Not everyone looks good in a tailored suit, but it is a misconception that it can only be more expensive than a regular one.
In the second part of our interview with András Kárpáti, the president of Hungary’s Future Mobility Alliance, the Budapest Business Journal looks for solutions to minimize the stress of commuting and improve the transportation experience. BENCE GAÁL
BBJ: Mobility is no longer just about getting from point ‘A’ to ‘B;’ it’s about the experience itself. Why is this increasingly important, and how is the alliance working to improve the user experience of mobility solutions?
András Kárpáti: This September, we jointly organized the Stress-Free Mobility Week at the Hungarian Automobile Club. The primary aim of this series of events was to raise awareness among transport users that it is stressful for many people to leave home in the morning or drive home in the afternoon. It’s time-consuming to get the kids to school or extra lessons in the afternoon, to the gym, and on and on. We have to get to a specific place at a particular time. Nowadays, travel times vary enormously, given
the mobility solutions available. Should we go by car? Or public transport? Or by micro-mobility? What would be the best? In our opinion, there is no single best solution; in fact, our primary goal is education. We want to make the different mobility solutions as widely known as possible. BBJ: What are the public benefits of making these conscious choices in the long run?
AK: Efficiency and experiential transport are based on the principle of choosing the most appropriate solution for each route or part of it, even in combination with other means, at the given time and according to the needs of the individual. The choice will be best made when the knowledge of transport users is as broad as possible. In the longer term, this could also mean a reduction in the number of
BBJ: Still, at the moment, transport is often a significant stress factor in people’s daily lives. How can the stress of commuting be minimized?
BBJ: There must be a knock-on effect of making these choices, right?
András Kárpáti cars in inner city areas, which will benefit everyone, as those who can travel more efficiently by other means will be happier, and those who are forced to use four-wheels will reach their destination faster due to fewer cars. Yes, we believe that transport can be a great experience.
AK: Our time, our stress, and our sense of comfort all affect our daily productivity and happiness. With wellplanned and well-chosen transport solutions, nothing is impossible. Of course, there have been, are, and will be situations where we can only choose the right combination with trade-offs. Still, if you think about it, our days are about many of these choices, and if we prepare consciously and make good choices, the stress of transport can be eliminated from our lives for everyone in different ways. We can provide a number of good, practical examples to guide you and even offer advice.
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Budapest Business Journal | October 20 – November 2, 2023
Hungarian FDI Electrified by the Electric Vehicle Buzz
Automotive Matters A monthly look at automotive issues in Hungar y and the region
Hungary aims to harness the power of the e-transition by attracting the largest possible number of electric vehicle investments. Annual mobility gathering IAA showcased why this effort is more than understandable. BBJ STAFF
German state Bavaria is a legendary automotive stronghold: it’s home to giants like Audi and BMW and some 1,100 suppliers along the value chain. And for a whole week in September, the Bavarian capital, Munich, became the nerve center of the entire mobility segment. The 2023 edition of IAA (Internationale Automobil-Ausstellung or International Motor Show) Mobility mobilized 600-plus exhibitors, more than
500
renowned
speakers and hundreds of thousands of visitors to view and test pioneering mobility concepts first-hand on-site and downtown. The only burden was “Die Qual der Wahl,” as the Germans put it: being spoiled for choice. One thing was clear from the start: the bulk of the solutions, products and services were connected with the buzzword “electric.” The organizers engaged in high-level politics as well as sheer celebrity power to underline that incentivizing policies and an eco-friendly public attitude pushed by famous role models are equally essential to speed the transition along the path to Net Zero. On the one hand, and although interrupted by green activists several times, German Chancellor Olaf Scholz announced a new law to expand the number of EV charging stations that will make “range anxiety” (the fear of running out of battery life before your car can deliver you to your destination) a thing of the past. On the other hand, Academy Awardwinning actor Natalie Portman talked about the necessity of gradual change in daily mobility habits that should ultimately lead to a green future.
Stakeholder Landscape
The exhibitor line-up reflected how the stakeholder landscape is shaped in the EV race. After Germany,
LG Magna e-Powertrain President Diba Ilunga detailing its new investment in Hungary, the JV’s first in Europe. China had the most stalls. E-auto maker BYD occupied nearly one-third of an entire hall alone. In his keynote speech, Hungarian Minister of Foreign Affairs and Trade Péter Szijjártó also took note of the rise of Asian market players. He stressed how European car makers had become dependent on Eastern suppliers that had raced ahead in the EV segment. Automotive is a critical sector in Hungary with a production
Hungary’s European First
“In around 2028-29, we expect (USD 31.6 bln), which has a lot to do with to get to an inflection point the fact that Hungary offers an attractive when the number of EVs business environment based on low taxes should reach that of vehicles and incentives, the politician said. “Those countries that can attract with [internal] combustion more investments from both the engines in Europe. So, that is West and the East can be the winners of the transformation,” the a big challenge for us to meet minister highlighted. “Enabling the demand, and on top of that, cooperation of German OEMs and Asian battery giants on Hungarian we need to be able to get it soil can guarantee that the economy done in a sustainable manner.” stays on the growth path regardless
Magna Powertrain President Diba Ilunga explained the background of the decision in greater detail. For starters, the company has facilities that produce whole systems and those that specialize in components only because they keep these functions separate. In terms of components, the company is well-equipped in Asia and North America today but not in Europe, meaning the Hungarian addition will round out its facility portfolio. Access to skilled labor was vital when they picked Hungary, as was the proximity to the company’s key locations and customer base. “In around 2028-29, we expect to get to an inflection point when the number of EVs should reach that of vehicles with [internal] combustion engines in Europe. So, that is a big challenge for us to meet demand, and on top of that, we need to be able to get it done in a sustainable manner,” Ilunga said. Another Hungary-related announcement at the event concerned the concept car of BMW’s Neue Klasse (New Class), units of which will roll off the production line of the company’s entirely digitized iFactory in Debrecen, Hungary, from
The investment of some EUR 51.6 million (USD 54.4 mln) will produce e-motors, inverters and on-boarding chargers in Miskolc (185 km northwest of the Hungarian capital). LG CEO William Cho presented the company’s vision of the car of the future that is transferable, explorable, relaxable, and works as an extension of your living space. The joint venture’s investment is a crucial milestone on this path.
“With Neue Klasse, we have launched the biggest investment in the company’s history. We are not just writing the next chapter of BMW, but a new book,” said board member for development Frank Weber. The LG Magna deal and BMW’s iFactory, which will be the first of its kind in the world with zero carbon production, will further strengthen Hungary’s position in an EV value chain.
IAA Mobility couldn’t have been kicked off better from the Hungarian FDI perspective. In the very first press conference slot, LG Magna ePowertrain, a joint venture between LG Electronics Inc. (of South Korea) and Magna International Inc. (a Canadian automotive supplier), announced it would build its first European production facility in Hungary.
value of
EUR 30 billion
of the uncertainties of the world economy,” Szijjártó added. Hungary was represented by the booth of the Hungarian Investment Promotion Agency, which featured several state-of-the-art automotive solutions from virtual reality to autonomous driving. The teleoperation simulator drew the most attention. It allowed visitors to drive a real car on the ZalaZone proving ground in Zalaegerszeg (230 km west of Budapest by road) from Munich.
2025 onward.
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Budapest Business Journal | October 20 – November 2, 2023
Hungary, Serbia Protest Bulgarian Transit tax of Russian Gas The governments of Hungary and Serbia said a decision by Bulgaria to levy a tax on the transit of gas from Russia was “an adversarial step” that put “the safe supply of energy at risk” for both countries in a joint statement issued on Oct. 17, according to state news agency MTI. “This decision goes against European solidarity, endangering the energy security of a fellow EU Member State and a candidate country,” the sides said in the joint statement. “Hungary and Serbia will coordinate their positions and will not leave this hostile Bulgarian decision without a proper response,” they added.
Navracsics Confident in Deal on EU Funds by November Minister of Regional Development Tibor Navracsics said he trusted Hungary would reach an agreement with the European Commission on access to its European Union funding
“by the end of November,” speaking at a conference organized by portfolio.hu on Oct. 17. Navracsics said the “final phase” of talks would start on Oct.
in credit under the Recovery and Resilience Facility (RRF) by the Aug. 31 deadline. Hungary will get another HUF 268 billion in RRF grant money, he added. Navracsics said Hungary had called down 94% of its EU funding for the 20142020 period, adding that he hoped the rate could be as high for the 2021-20 27 period.
Varga Urges Economic ‘Relationship of Equals’’ Between EU, U.S. Minister of Finance Mihály Varga said European-American economic ties could be effective “if based on a relationship of equals” and the European Union acted “according to its own interests” after a Eurogroup meeting joined by United States Treasury Secretary Janet Yellen in Luxembourg on Oct. 16, according to portfolio.hu. “While the European Union loses economic ground and its competitiveness weakens, the American economy is performing better than expected,” Varga said in a statement issued by his ministry. “Price shocks that appeared at the outbreak of the Russian-Ukrainian war have caused the EU’s economic performance to worsen to a significant degree, as the continent relies on
Photo by rawf8 / Shutterstock.com
News
in Brief
19. Navracsics noted that Hungary had called down just 3% of its EU funding for 2021-2027, part of which was related to projects pre-financed from the budget and the remainder for covering organizational development and infrastructure activities necessary to absorb the rest of the funding. He noted that Hungary had sent a request to the EC for around HUF 1.5 trillion
News | 7
imports of energy. In contrast, the United States is a net energy exporter in the global economy,” he added. Varga said the Inflation Reduction Act passed by U.S. lawmakers last year had disadvantaged European automotive industry companies because of tax preferences. “That raises serious concerns,” he added. He said a “strong,
growing” European economy was a prerequisite for a robust expansion of Hungary’s economy, which “requires an integrated cooperation between the two economic areas. Just as Hungary is open to all markets in the world, the European Union should also maintain its openness to China, among others,” he added.
PRESENTED CONTENT
Andersen Gives Best Tax Advice in Hungary for 3rd Year in Row As in the previous two years, Andersen Tax LLC is the best-performing Hungarian tax advisor, according to the assessment of the prestigious International Tax Review magazine. In addition to the “Tax Advisor of the Year in Hungary” award, the company has also won the “VAT Advisor of the Year” title for the second time.
BBJ STAFF
Founded in 1989, the International Tax Review is one of the world’s leading tax journals. This year, it awarded prizes to Europe’s best tax advisory service companies for the 19th time. A jury of ITR’s editors and experts ranked the candidates’ performance in several categories based on the volume and complexity of the tasks they had completed
during the period, the innovative nature of their implementation and feedback from clients. It was in this context that Andersen won the award for the best Hungarian tax advisory firm for the third year in a row. This year, ITR ranked Hungarian tax advisory firms in four categories. In addition to the top “Tax Firm of the Year,” the other fields were transfer pricing, VAT, and tax litigation adviser. Andersen also won the title of Hungary’s “Indirect Tax Firm of the Year” for the second time since 2022, meaning the company scooped two out of the four awards, which is a substantial professional accolade.
Consistently Winning
Károly Radnai, CEO of Andersen Tax Zrt., says the firm has become an “unavoidable” player in the Hungarian tax advisory market. In addition to its business results, that is mainly due to the fact that the company consistently wins prestigious professional awards, year after year. “In recent years, we have not only shown how to achieve a high standard of service in tax consulting through persistent hard
work but also how to maintain this level in the long term. Both are similarly difficult tasks, as our competitors are, in a sense, already benchmarking themselves against us and trying to outdo us,” Radnai says. Together with the Szabó, Kelemen & Partners Andersen Law Firm, Andersen Tax LLC is a member of Andersen Hungary. The Budapestbased tax consultancy and law firm is currently the fifth most significant player in the Hungarian market after the Big 4 companies. Andersen Hungary has more than 100 employees.
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Budapest Business Journal | October 20 – November 2, 2023
Business
AutoWallis’ Strategic Moves Focus on Chinese Brands and Car-Sharing
In an exclusive interview with the Budapest Business Journal, AutoWallis CEO Gábor Ormosy shares insights into the company’s recent collaborations and acquisitions. With his business introducing Chinese auto brands to Hungary and expanding into car sharing through its purchase of Share Now, Ormosy outlines the multipronged strategies fueling the company’s growth amidst evolving market dynamics. GERGELY HERPAI
BBJ: Let’s start with some recent news: AutoWallis is now one of the few car dealerships that sells a Chinese car brand, BYD, to be exact. What do you expect from this cooperation? Gábor Ormosy: We’ve been working for a long time to partner with Chinese auto brands in our markets, and it’s a pleasure to be able to represent BYD, the world’s leading manufacturer of new energy vehicles (NEV), at Wallis Motor Duna’s South Pest showroom. I see a great opportunity in the presence of Chinese car manufacturers in Europe, as they are at the forefront of electric vehicle ownership and can reflect this in their pricing. This is a huge potential because the European market has been squeezed out by lowcost small cars. The emergence of Chinese brands increases competition, which is most beneficial for consumers. BBJ: Could more Chinese brands or manufacturers be added to your range? OG: I think it’s possible because we have always believed in a wide range of brands, and it’s no different with Chinese manufacturers. We are in advanced
Gábor Ormosy, CEO of AutoWallis Group. discussions with several groups of manufacturers, including several brands; the first result was the recently announced cooperation with BYD. BBJ: Several acquisitions have strengthened the group’s service and mobility portfolio. In which services and markets does AutoWallis intend to expand in the future? OG: This year, we have made several service-related acquisitions, such as the purchase of Net Mobilitás Zrt., the operator of jóautók.hu and autólicit.hu, the acquisition of Nelson’s fleet management business, and the addition of the Hungarian company Share Now. We are constantly exploring other opportunities, whether it be new acquisitions, representing new brands or launching new services in Hungary or the region. I look forward to announcing some of these shortly. BBJ: You mentioned the Share Now acquisition. What benefits and challenges do you see in this move? OG: The only thing missing from our service portfolio was essentially car sharing, and Share Now’s size, growth rate and business model were at a stage where, combined with AutoWallis’ professional background, it could create significant shareholder value for the group. We will be able to offer our primarily corporate customers a package of services that can meet all their needs, whether it is a long-term rental or a minute-based mobility service.
BBJ: How much did it cost to acquire Share Now? OG: Wallis Autómegosztó Zrt., the operator of Share Now in Hungary, was acquired by AutoWallis for HUF 4.9 billion. BBJ: Do you plan to expand the Share Now service beyond Hungary’s borders, or is the primary goal to strengthen and grow the business here? OG: Regional diversification is the cornerstone of AutoWallis’ strategy. In the future, we will continue to offer the broadest possible range of brands and services in all our markets. So, there is a strategic rationale for expansion, and we will continue to think about how and when to do this once we have integrated and strengthened ourdomestic operations. BBJ: Do you expect that, in the future, more people will rent or share an auto than buy their own? OG: We predict that the number of car-sharing users in Budapest could increase fivefold in the shortto medium-term as this mode of transportation has experienced significant growth in recent years. Therefore, we expect this trend to continue as it becomes an integral part of urban transportation, as car sharing can be a greener solution, in addition to being more economical, thanks to Share Now’s fleet of lowemission and electric models.
BBJ: What impact could the acquisition of Share Now have on theAutoWallis Group? OG: We expect significant synergies from the transaction in terms of operations and cross-selling opportunities. AutoWallis was already a major mobility provider in the region, but with this acquisition, we will cover the full range of mobility services. In addition, the purchase of Share Now is another crucial step towards expanding our green services and achieving our ESG goals. BBJ: Since you mentioned ESG goals, to what extent does an ESG approach play a role in AutoWallis’ operations? OG: We are committed to sustainable operations and social values, not only in our products and services but also in our continuous search for ways to further improve our energy efficiency. Accordingly, we plan to achieve ESG certification by the end of 2024. BBJ: According to you, AutoWallis’ growth strategy is “crisisproof.” What is the evidence for this statement? OG: Fortunately, I can now say that we are able to develop and grow in a challenging environment thanks to the principles of our growth strategy; in addition to acquisitions, organic growth is also important. We can justifiably be proud of our ability to grow above the inflation rate. We also see further acquisition opportunities, which will contribute to strengthening the diversification that will ensure stability and further growth even in an adverse environment. BBJ: AutoWallis’ first-half financials for 2023 are impressive. What steps has the company taken to achieve these results despite the adverse external economic environment? OG: This is the fourth year in a row that we have reported record results, and this was also the case in our most recent first-half flash report. In addition to the almost 30 years of experience behind AutoWallis, our growth strategy and the acquisitions we have consistently made in recent years are behind these excellent results. We believe it is vital to stand on more than one leg, both in terms of vehicle makes and geographical coverage, and we now represent 22 brands in 16 countries in the region, with more than half of our sales coming from abroad on a sustained basis. BBJ: AutoWallis Group exceed its 2025 growth targets by 2022. How? OG: The acquisitions and transactions of recent years have been successful, and while the integrated companies have significantly increased our ability to generate results, growth has also been accompanied by efficiency improvements. The AutoWallis Group is, therefore, on a steady growth path, with further development being driven by our stock market presence, capital strength, diversified operations and regional presence. Taken together, this creates the opportunity to adjust our previously set sales and management targets upwards again, probably in the first half of 2024.
www.bbj.hu
Budapest Business Journal | October 20 – November 2, 2023
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Business | 9
Marking 9 Decades of Gallic Airline Excellence To mark the 90th anniversary of the foundation of Air France this month, the Budapest Business Journal speaks with Ildikó McPartlin-Kiss, country manager for Hungary at Air France-KLM Delta. BBJ STAFF
BBJ: Congratulations on Air France’s 90th anniversary. How will you be marking it in Hungary? Ildikó McPartlin-Kiss: Air France is celebrating 90 years of elegance, 90 years of technology, innovation and comfort on board, and 90 years of travel, fine dining, design, haute couture, art and architecture. Since its launch, the company has celebrated French excellence, a “je ne sais quoi” that the world recognizes in France, thanks to an exceptional travel experience that takes elegance to new heights. We would like to showcase and celebrate these values in Hungary, where we will also be holding a birthday gala with our valued business partners and customers. BBJ: What is the Air France KLM story of the past 90 years in Hungary? IM-K: The Hungarian aviation industry took off in 1909, and civil aviation in the 1920s, and we are proud that KLM made its first flight to Budapest with a Douglas DC-6 shortly afterward, on Sep. 12, 1929. These planes flew on to Batavia (then the capital of the Dutch East Indies), and KLM was the first Western airline to fly to the then airport in Mátyásföld. Since then, KLM has been present for all but three years: between 2007 and 2010, Malév flew between Amsterdam and Budapest, and in 2020, during the COVID epidemic, KLM was one of the first airlines to return to Ferenc Liszt Airport as soon as it was possible. Air France has been present in Hungary since 1933, when our AF471 flight arrived in Budapest from Paris via Strasbourg, Nuremberg, Prague and Vienna and then flew on to Belgrade and Bucharest. Scheduled services between Paris-Orly and Budapest started in 1967, with the company’s Caravelle aircraft operating twice a week on this route. BBJ: Have passenger numbers recovered from pre-COVID? Have the inflation and war affected them? IM-K: It will take a bit longer to recover. We expect to return to pre-epidemic levels of passengers towards the end
Ildikó McPartlin-Kiss of this year and early next year for capacity. We cannot report on specific passenger numbers, but I can tell you there was exceptional demand for flights during this summer timetable period, which was not significantly affected by the war or inflation. People have been “freed” after the pandemic, have disposable income, and want to travel. Although we want to meet this extraordinary demand, the disruption to supply chains makes it challenging to take delivery of new aircraft and service existing ones. BBJ: How many destinations can you reach from Budapest via Air France-KLM today? What are the farthest, busiest, and newest routes? IM-K: Currently, we operate 51 flights a week to Budapest: 31 KLM flights and 18 Air France flights arrive and depart at Liszt Ferenc International Airport. Our low-cost subsidiary Transavia was previously present in Hungary, but due to a restructuring, we are focusing on the French and Dutch markets with this airline. The group offers passengers connections to 300 destinations in 120 countries with more than 200 daily flights from Paris and Amsterdam. When comparing distances, the 11,673 km (7,253 mile) flight to Santiago, Chile, is Air France’s furthest A350 destination. The newest? As of Oct. 29, 2023, Air France will fly between ParisCharles de Gaulle and Abu Dhabi. Also, a new non-stop service between ParisCharles de Gaulle and Raleigh-Durham (North Carolina) will be launched on Oct. 30, 2023. For KLM, the French city of Marseille has been added
to the network. KLM also offers over 20% more seats to Canada this winter than last year. Over the winter season, direct flights to Beijing and Shanghai will again depart daily. BBJ: How many Hungarians fly Air France-KLM abroad, and how many foreigners fly into Hungary each year, and how has this changed? IM-K: As I mentioned earlier, we cannot provide information on statistics for flights to Budapest. However, they are operating at high load factors, and the situation in the country means that inbound traffic is somewhat stronger, but the number of Hungarian business passengers and tourists is also as expected. BBJ: What plans are in store for Air France-KLM in Hungary? Can we expect more flights or connections? IM-K: Due to the seasonality of this industry, we will adjust our winter schedule to the slightly reduced demand. Next summer, however, we plan to return to the same number of flights as this year. KLM operated five flights a day before the pandemic, and we have already achieved that this summer, which shows how much demand there is for our service in the Hungarian market.
Europe.” The company was also ranked seventh best in the world, up from eighth last year, and received three additional first-place awards for its La Première service: “Best First Class Airport Lounge,” “Best First Cass Airline Lounge Catering,” and “Best First Class Onboard Catering.” Air France also received the award for Best Business Class Lounge in Europe. Transavia, a wholly owned subsidiary of KLM, was voted “Best Low-Cost Airline in Western Europe.” We are very proud of these awards. Air France offers the quintessential French culinary and style experience, while KLM excels in direct passenger service, demonstrating Dutch hospitality. BBJ: Does Air France KLM welcome the plans to reopen Terminal 1 at Budapest and eventually build Terminal 3? IM-K: We welcome any investment that will improve the experience of our passengers. After all, the journey starts at the airport, and making a positive first impression on them is vital.
BBJ: Is there anything else to add? IM-K: It’s very important for us to make our operations more sustainable, so we are spending billions of euros to replace older aircraft. We recently announced the purchase of 50 new Airbus A350s, and we have orders BBJ: Why should someone in Hungary for 100 A320neo family aircraft, the choose Air France-KLM to fly with? first of which will arrive at the end of IM-K: At the Paris Air Show this this year. These aircraft burn 20% less summer, the Air France-KLM Group fuel, which is crucial for our strategic took home several prizes from the goals. But we are also working to Skytrax World Airline Awards ceremony. be more sustainable by buying and For the third year in a row, Air France supporting kerosene production was voted “Best Airline in Western from sustainable sources.
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Business
www.bbj.hu
Budapest Business Journal | October 20 – November 2, 2023
Leaders Honored at 2023 ‘For a Sustainable Future’ Awards The Business Council for Sustainable Development in Hungary (BCSDH) celebrated significant progress in corporate sustainability at the 2023 “For a Sustainable Future Awards” in Budapest. Amid growing concerns about biodiversity loss, the event highlighted the need for business-led environmental stewardship. GERGELY HERPAI
The awards ceremony and business lunch took place on Oct. 12, 2023, recognizing notable contributions to Sustainable Development Goals (SDGs) and systemic sustainability change. A wide range of companies and individuals were honored, demonstrating the growing engagement of the Hungarian business sector in global sustainability initiatives. The ceremony underscored the business risk posed by biodiversity loss, an issue now perceived as more immediate than climate change. Nearly half of global GDP is linked to nature, underscoring the urgent need for corporate engagement in biodiversity restoration and nature-based climate solutions. At its business lunch, BCSDH presented a three-point recommendation for increased business engagement in biodiversity conservation. BCSDH’s Gréeta Nagy and AI expert George Tilesch explored the potential of humancentered AI to address sustainability challenges, emphasizing the synergy between technological advances and nature-based solutions. Tilesch clarified the symbiotic relationship between AI and nature. “The most powerful tool humanity has been given, thanks to AI, is also the best instrument to solve civilization’s problems. However, this will only work if we can make it human-centered,” he said. BCSDH president Attila Chikán Jr. underscored the importance of addressing biodiversity loss, citing a World Economic Forum report identifying it as one ofthe most serious global risks.
2023 ‘For a Sustainable Future’ award winners with BCSDH president Attila Chikán Jr. (far left) and BCSDH director Irén Márta (far right). “Biodiversity loss is not only an environmental challenge but also a significant business risk that could have far-reaching effects on the global economy. It’s imperative that the business sector responds robustly to mitigate this loss, demonstrating that this is both an environmental and a business priority,” Chikán noted.
‘Time to Transform’
to advancing the sustainability agenda by enabling meaningful discussions among participants. Now in its seventh year, the green business awards have adapted to a dynamic business environment and current challenges. The panel of judges, consisting of Gábor Bartus, Szilvia Krizsó, Irén Márta, István Salgó and Diána Ürge-Vorsatz, recognized companies and individuals who have made significant progress in integrating sustainability into their operations.
During the event, the BCSDH unveiled its “Time to Transform 2030” framework, which presents three strategic recommendations for the business sector. The first encourages companies to conduct organizational impact assessments to understand and act on their role in conserving and restoring natural diversity. By understanding the environmental impacts of their operations, companies can develop strategies to mitigate adverse effects and enhance biodiversity. The second recommendation urges the adoption of strategic initiatives that integrate natural diversity into corporate decision-making processes. The BCSDH emphasizes the importance of this step in cultivating a culture of sustainability within corporate environments, which can lead to a more sustainable operating framework. AI expert George Tilesch The third suggestion promotes explored the potential of a holistic approach to value chain human-centered AI to address management by advocating partnerships sustainability challenges. and collaborations. According to the BCSDH, such collaborative efforts are instrumental in creating a unified framework of sustainable practices The “Change Leader” award went across the value chain and guiding the to Balázs Báthory of Market Építő. community toward achieving common “Aligning business operations with sustainability goals. environmental goals is not only a As part of the event, an executive responsibility but also a strategic roundtable moderated by Irén Márta, necessity in today’s market,” he said. director of the BCSDH, saw industry Fostering Sustainability leaders share practical steps toward The “Leading Women” award highlighted achieving sustainability. The discussion facilitated the sharing of diverse ideas and the dedicated efforts of Andrea Koncsikné Káli of BDL-Pureco Group strategies, contributing to the collective and Krisztina Schubauer of Exim effort to promote a sustainable business Hungary. Schubauer said, “Leadership in landscape. More than just an awards promoting environmental responsibility ceremony, this dialogue contributed
is about fostering a culture of sustainability within our teams and extending this ethos to our broader business networks.” In the “Business Solutions” category, notable projects such as Ikea Hungary’s “Second Life for Furniture” initiative, Nestlé Hungária’s “Regenerative Farming Project,” and Graphisoft Park SE’s “Nature-Oriented Urban Office Park” were recognized for demonstrating scalable models for reducing environmental impact. In the “Facilitating Business Transformation” category, Opten Informatikai Ltd.’s ESG Solutions for SMEs, which provides resources to help small- and medium-sized enterprises on their sustainability journey, was highlighted. Generali Hungary won the “Business Transformation” award, marking a significant step forward in integrating sustainability into core business strategies. Deloitte and E.ON provided additional support for the event, while ALD|LeasePlan, Alteo and Unilever sponsored BCSDH’s carbon-conscious events, reinforcing the collaborative push towards a more sustainable business landscape. Beyond the awards, the event facilitated pragmatic business-led discussions on biodiversity preservation. The dialogue between Gréta Nagy and George Tilesch, coupled with the executive roundtable, enriched the debate on aligning technological development with environmental conservation. The “For a Sustainable Future Awards 2023” underscored the vital role of corporate engagement in addressing environmental issues. The BCSDH says the discussions fostered at the event aim to catalyze a collective shift towards a sustainable business paradigm in Hungary, ushering in an era of corporate responsibility aligned with environmental stewardship.
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Budapest Business Journal | October 20 – November 2, 2023
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Business | 11
EMBL-HCEMM Partnership Fostering Excellence in Science In the dynamic world of molecular biology and scientific research, collaborations and partnerships have proven pivotal in advancing knowledge and discoveries. The European Molecular Biology Laboratory (EMBL), a cornerstone of scientific excellence in Europe, has helped create and is supporting the Hungarian Center of Excellence for Molecular Medicine (HCEMM), establishing a partnership that holds great promise for the future of life sciences in Central Europe. BENCE GAÁL
This partnership, driven by a shared commitment to scientific excellence and innovation, not only enhances research capabilities but also strengthens the bonds of international cooperation. The Budapest Business Journal talks with several key figures in the partnership, shedding light on the benefits offered by the collaboration between EMBL and HCEMM. Founded in 1974, EMBL is an intergovernmental organization supported by 28 countries, encompassing a diverse international community of around 2,000 staff over 95 nationalitites. With sites across Europe, EMBL is at the forefront of molecular biology research. Its mission extends beyond conducting fundamental research to providing services to the scientific community, training the next generation of scientists, and promoting the integration of life sciences across Europe. EMBL’s interdisciplinary approach drives innovation and the development of cutting-edge technologies and methods in the field, with a strong emphasis on knowledge transfer for societal benefit.
From left: Karolina Pircs PhD, Prof. Lajos Kemény MD, Dr. Christoph W. Sensen, Vladimir Benes PhD. “With this partnership in place, we have access to EMBL facilities and expertise at an unprecedented level. And that’s a very important point because, naturally, no one country has all the resources and infrastructure available at EMBL,” Christoph Sensen, director general and CEO of HCEMM, tells the Budapest Business Journal. Set up following an EU “Teaming” grant back in 2016, the center quickly became one of the most important scientific institutions in Hungary. To take care of the administration of its program, HCEMM Kft. was incorporated by the Biological Research Center Szeged (BRC), the Semmelweis University in Budapest and the University of Szeged.
Critical Component
One of the critical components of the partnership between EMBL and a relatively new institution like HCEMM is the former’s extensive experience in nurturing a research culture of excellence, selecting and evaluating research groups, and building international networks. The EMBL-HCEMM partnership offers a plethora of benefits to both institutions and their scientists. Vladimir Benes, head of the Genomics Core Facility at Heidelberg, emphasizes the essence of exchange in science. While EMBL’s diverse activities provide a remarkable platform for scientists to share ideas and collaborate, access to EMBL’s stateof-the-art infrastructure is another significant advantage, ensuring that HCEMM researchers have the tools they need to conduct cutting-edge research. “Science is about exchange. That’s very important, certainly in natural sciences. The conferences and various training opportunitites have a very broad reach, so people across the world can get together. This also means that there is a large selection, a large catalog of people, scientists with different kinds of experience and skill sets,” Benes notes. Stability in core funding and grants is a critical aspect of the partnership, as Lajos Kemény, group leader at the HCEMM-USZ Skin research group, notes. This stability offers many opportunities for collaboration,
allowing scientists to conduct their own research and achieve their best performance. Of course, working together also opens up opportunities to gauge progress more accurately. “We have learned how the EMBL is working and how to strive for improved scientific output,” explains Kemény, who has been present in HCEMM since the beginning. Karolina Pircs, who leads the HCEMM-SU Neurobiology and neurodegenerative diseases research group, highlights the invaluable support received from the EMBL Chemical Biology Core Facility by providing her group with more than 2,400 FDA-approved drugs. Moreover, the partnership facilitates easier communication and networking, a vital asset for busy group leaders. “We have the possibility to visit all the EMBL sites and actually meet in person the group leaders that we really want to. I think networking and approaching people becomes a little bit easier this way, and I especially like the mixture between junior and senior people in the network,” she adds.
Visibility is Key
Science writer Márton Kuti, responsible for HCEMM’s social media communications, underscores the importance of public visibility. The center’s efforts in social media outreach have led to a substantial increase in followers on platforms like LinkedIn. Maintaining a balance between serious scientific communication and lighthearted engagement on platforms like Instagram and Facebook has proven to be an effective strategy, he says. Sensen also underscores the significance of visibility, pointing to the success of HCEMM’s science café programs, which have been very successful, with more than 80 people attending one such event in Szeged. Pircs notes that getting the information out is not only good for the visibility of HCEMM but also because it is essential to let the public know about the latest breakthroughs in research projects.
The partnership with EMBL has boosted visibility, as Benes explains. “With EMBL acting as an advanced partner, it is helping to get the news out there. The original Teaming grant program also had this in mind, really pushing forward and helping in increasing visibility on the scientific landscape in Europe.” And what about the near future? Sensen notes that while EMBL is approaching the 50th anniversary of its establishment, HCEMM is a relative newcomer to the scene. However, over the last few years, the reputation of the center has been established, and already, thanks to a new EU grant call, it may have the opportunity to provide mentoring to other countries in the region if the upcoming application is successful.
WHAT IS HCEMM? The Hungarian Center of Excellence for Molecular Medicine (HCEMM) is a distributed Institute, whose scientists develop advanced diagnostics and treatment options in support of healthy ageing. Currently, the HCEMM Program is funded by an H2020 Teaming Grant, where Semmelweis University, the University of Szeged and the Biological Research Centre in Szeged cooperate with their advanced partner EMBL (with headquarters in Heidelberg). The support of the Hungarian government is also essential for the operation of the HCEMM, primarily through the Thematic Excellence Programme and the National Laboratories Programme. HCEMM works at the interface of academic and industrial research on topics related to Translational Medicine. The goal is to improve the quality of life for an ageing Hungarian population, while at the same time lowering the cost of health care provision through novel applications in the field of Molecular Medicine. The coordination of the various activities is managed by HCEMM Nonprofit Kft., with headquarters in Szeged, Hungary.
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Business
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Budapest Business Journal | October 20 – November 2, 2023
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of Budapest, and a bachelor’s degree in superstructure from Ybl Miklós Technical College. He takes over from Zoltán Borbély, who served as country director since the inception of Atenor Hungary in 2008. Stéphan Sonneville, group CEO of Atenor, said, “Norbert’s extensive experience and leadership in the real estate sector make him a valuable addition to our team. We are confident that under his guidance, Atenor will continue to achieve remarkable milestones and strengthen its position as the most sustainable European property developer in the industry.” Norbert Schőmer
Norbert Schőmer Named Atenor Country Director Real estate developer Atenor has announced the appointment of Norbert Schőmer as its new country director for Hungary. Schőmer is an experienced real estate expert, having held significant roles in prominent organizations in the industry over the past decades. In his most recent role as deputy CEO at Wing Zrt., Schőmer led a dynamic office development team, overseeing the comprehensive property development of major Breeam- and Leed-certified headquarters, including E.On, Ericsson, Siemens/Evosoft, and Magyar Telekom, along with three speculative office buildings in Budapest. His expertise and strategic vision were instrumental in the inception and successful realization of these significant projects during his eightyear tenure, according to a press release sent to the Budapest Business Journal. Before joining Wing Zrt., Schőmer was at AIG/Lincoln for 14 years, where he served as managing director, and held pivotal positions as development director and head of the industrial department in his two years at DTZ Zadelhoff.
Zoltán Borbély Schőmer holds a master’s in science in real estate from Nottingham Trent University, an MBA in corporate finance from Corvinus University
HR Director for KPMG Hungary Zita Erős took up the position of HR director at KPMG Hungary on Sep. 4, the firm said. Erős is no stranger to the world of the Big Four. Starting her career as a business consultant, she was
Zita Erős responsible for recruitment selection, career development, and performance management in the Central and Eastern European offices of the Boston Consulting Group. Her diverse professional experience is reflected in her expertise in several industries beyond consulting, including the HR side of the GE-Tungsram transformation across 23 countries and supporting the international integration of Foodora as head of HR before joining KPMG. “I believe it is important to bring new directions to KPMG that will help us respond quickly and strengthen our market position, in addition to the programs that are already working well. As a leader, I passionately believe that teamwork is an essential ingredient for success, and I want to further strengthen and shape the spaces for collaboration within and between teams,” said the new HR director. With the appointment, KPMG aims to strengthen further its position as an inclusive workplace rich in opportunities, which provides professional fulfillment and an inspiring intellectual environment while attracting
talent, the company says. It also aims to develop further its operations and its client and corporate culture to humanize technology in a constantly and rapidly changing socioeconomic environment.
Dentons Strengthens Budapest Dispute Resolution, Arbitration Team Global law firm Dentons has strengthened its litigation, dispute resolution, and arbitration work in Budapest by recruiting litigation partner Gergely Stanka and a team of seven lawyers, including three of counsels, two associates, and two junior associates. This team brings a notable track record in representing clients in court and arbitration proceedings on both a local and international level, the law firm said. It has extensive experience in various types of litigation, including commercial, banking, and energy litigation, administrative- and taxrelated litigation, and labor law cases. The team complements Dentons’ fullservice offering across all areas of business law in Hungary. Stanka is a renowned lawyer and the former managing partner of the BPSS law firm. He was a permanent arbitrator of the money and capital market section at the Arbitration Court attached to the Hungarian Chamber of Commerce and Industry for several years. With his deep expertise in banking law, investment services, and capital markets, he is a trusted legal advisor to numerous domestic and international banks, investment service providers, investment funds, and fund managers. Stanka commented, “I am delighted to join Dentons alongside my trusted colleagues. By leveraging Dentons’ expansive global platform, we will have access to unparalleled resources to deliver top-tier legal services to our clients. I am excited to collaborate closely with all practice groups in Hungary and across Europe to provide innovative and effective solutions to our clients’ most intricate disputes. Our collective goal is to solidify Dentons’ position as the go-to firm for comprehensive and outstanding legal representation in all areas of disputes and arbitration.” Gábor Király, Hungary managing officer at Dentons, said, “We are thrilled to welcome such a highly experienced Litigation, Dispute Resolution, and Arbitration team to our ranks, and we firmly believe that their expertise, combined with our extensive resources, will forge an unparalleled synergy that will set us apart in the market and solidify Dentons’ position as the premier law firm in Hungary.”
KPMG Announces 2 Partner Appointments KPMG Hungary has announced the appointment of two new partners as of Oct. 1. Ildikó Takács is the new KPMG partner in audit, and Balázs Horváth is the latest partner in advisory. Both professionals have made regional and global collaborations a daily practice in their day-to-day operations. With their teams, they have developed and
implemented forward-thinking digital solutions, which effectively support clients’ work and success, ensure sustainable growth, and positively shape KPMG’s firm culture and vision, the Big Four company said.
Ildikó Takács Takács has been part of the KPMG team for 20 years. She played a leading role in establishing the KPMG Digital Audit Center, which supports the digital transformation of the audit business. With her help, the audit area recently made a seamless transition to a completely new process management and documentation software, representing another step forward in audit digitization and enhancing the quality and efficiency of audit work. The department, which currently employs 80 people, also supports KPMG’s global audit strategy internationally in developing and deploying highquality digital audit tools.
Balázs Horváth Horváth has been with KPMG since 2016, specializing in shared service centers and financial process improvement. He established the SSC Consulting Center within the firm, which has now become not only a market leader but also a key connector in the domestic SSC sector. Under the leadership of Horváth, the CEE SSC Network was also established in 2022, representing a significant potential for the export of knowledge and services. The network is now connected to potentially 2,000 companies in five Central and Eastern European countries.
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Budapest Business Journal | October 20 – November 2, 2023
Company E.ON to Establish Solar Plant Next to Bosch Factory in Hatvan E.ON will establish a small solar power plant with a total capacity of 4.6 MW next to Bosch’s factory in Hatvan (60 km east of Budapest), thus strengthening both companies' commitment to sustainability, according to profitline.hu. Robert Bosch Elektronika Kft. in Hatvan and E.ON have signed a letter of intent stating that the E.ON Hungária group of companies will establish and operate a solar park directly adjacent to the Bosch site, from which it will supply the Bosch factory with locally produced green electricity. The goal is for Bosch to increase its share of renewables in its energy consumption and to reduce the amount it purchases from the public grid.
GVH Fines Dreher HUF 12 mln Hungary’s Competition Office (GVH) has fined brewer Dreher Sörgyárak HUF 12 million for violating rules prohibiting beverage makers from signing exclusive contracts with catering establishments, the watchdog said on Oct. 17, according to penzcentrum.hu [Money Center]. In a probe, GVH found that Dreher had partnered with a catering establishment in the capital with conditions incentivizing the business to get “practically all” of its beer from the brewer. GVH instructed Dreher to set up an internal compliance program. GVH recently took similar measures against brewer Heineken Hungaria for similar violations.
MNB Fines Union Union Biztosító HUF 15 mln The National Bank of Hungary (MNB) has fined insurer Union Biztosító HUF 15 million for failing to fully implement remedial measures following a compliance fine in June 2021, the central bank and financial market regulator said in a release on its website on Oct. 17. In a follow-up, the MNB found the insurer’s IT system still failed to meet muster, preventing Union Biztosító from informing clients of the deduction of redemption fees for unit-linked policies, and it didn't always meet compulsory vehicle insurance notification deadlines.
AutoWallis Sales Rise 46%
Listed car seller AutoWallis’ vehicle sales rose 46% to 34,925 in Q1-Q3 from the same period a year earlier, according to a preliminary report released on the website of
News
the Budapest Stock Exchange on Oct. 16. Turnover of the wholesale division climbed 64% to 27,466 cars. In the retail segment, AutoWallis’ new car sales increased 5% to 6,014, while used car sales edged up 4% to 1,445. Growth was supported by the company’s acquisition, together with Portuguese peer Salvador Caetano, of Renault Hungária last year, adding 7,367 units to vehicle sales. However, even without the purchase, sales of the wholesale division still rose 20%, supported by a 57% increase in sales of SsangYong vehicles. AutoWallis CEO Gábor Ormosy said the company could upgrade guidance in the first half of 2024 after beating pro rata targets. Mechanics booked 132,736 hours in Q1-Q3, 9% more than in the base period. The car rental business generated 18,250 contracts, up 6%. The number of vehicles in its fleet management business jumped 352% to 3,915, lifted by the acquisitions of Nelson Flottalizing and the local operator of Share Now.
membrane plant, will rise to 1,200 by 2024, he added. The investment created 100 jobs. A state subsidy covered 35% of the project's cost, adding 8,000 sqm to the existing 25,000 sqm of production area.
UniCredit Mortgage Bank Sells HUF 20 bln in Green Bonds UniCredit Mortgage Bank has sold HUF 20 billion of green bonds at auction, the Hungarian lender said on Oct. 11, according to profitline.hu. Bids at the auction for the securities came to HUF 27.5 bln. Close to half of the bonds were subscribed by commercial banks. The security was UniCredit Mortgage Bank's third green bond issue.
Nagév Lays Cornerstone of HUF 7 bln Plant Family-owned Nagév laid the cornerstone of a HUF 7 billion hotdip galvanizing plant in Tiszacsege (180 km northeast of Budapest)
Business | 13
on Oct. 13, according to Menedzsment Fórum [Management Forum]. Nagév was awarded HUF 1.5 bln in government support for the investment, which will boost capacity by 20-30%, Deputy State Secretary Zoltán István Marczinkó of the Ministry of Finance said at the ceremony. Nagév, which also makes metal grates, had a net sales revenue of HUF 2.6 bln last year, according to public records.
Nestle Hungária Inaugurates HUF 90 bln Capacity Expansion Nestle Hungária inaugurated a HUF 90 billion capacity expansion at its pet food plant in Bük (200 km west of Budapest) on Oct. 5, according to origo.hu. Minister of Foreign Affairs and Trade Péter Szijjártó said the investment had created 280 jobs. Nestle Hungária managing director Péter Noszek said the company would continue to expand, creating over 500 jobs in Buk between 2020 and 2025.
BYD Launches Sales in Hungary
Dunaferr Transformation Could Take 18-24 Months State Secretary for Industrial Policy and Technology Gergely Fábián said a significant transformation to green steel lies ahead of Dunaferr, requiring a substantial part of its feedstock to come from recycled steel, according to state news agency MTI. That transformation will cost “several hundred million euros” and could be completed in 18-24 months, he added, noting that Liberty Steel Group had signed a cooperation agreement with a Chinese company on delivering a new electric forge a month earlier. Under the contract, the steelworks in Dunaujvaros will get a 150-tonne capacity electric arc furnace from China’s Cisdi Engineering Company, reducing carbon emissions by around 80% and allowing for flexibility in charge materials. European governments back green steel, and “European Union resources are available for the purpose,” Fabian said.
Veolia Water Hungary Inaugurates HUF 10 bln Investment French-owned Veolia Water Hungary, which makes water filtration membranes, inaugurated a HUF 10 billion investment at its base in Oroszlány (70 km west of Budapest) on Oct. 16, according to uzletem.hu. Veolia Water Technologies and Solutions CEO Vincent Caillaud said the investment would boost capacity by 30%. Headcount at the base in Oroszlány, the group’s biggest water filtration
Illustrative photo shows a BYD ATTO 3 EV on display. Photo by Chatchai Somwat / Shutterstock.com Chinese electric vehicle and battery maker BYD announced the launch of sales in Hungary on Oct. 17, according to autopro. hu. BYD has selected two dealers where buyers can order the fully electric vehicles: Wallis Motor and Duna Auto. Both have opened BYD showrooms in the capital. BYD aims to establish a network of at least 20 dealers in Hungary within two years. BYD Europe managing director Michael Shu said the company had “deep-rooted experience” in Hungary, home to its BYD eBus division and an
electric bus factory. BYD is initially offering three models in Hungary, all with six-year or 150,000 km guarantees. Guarantees on the vehicle batteries are for eight years or 200,000 km. BYD offers buyers 24-hour roadside assistance and is setting up a network of mechanics. Sales of BYD vehicles have started in 18 countries in Europe. Hungary is the first in the CEE region where sales have officially launched. BYD announced plans in the summer to set up a battery assembly plant on the outskirts of Budapest.
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Unicum Barista’s Coffee Component Makes Standalone Debut Zwack Unicum and Bányai are introducing a coffee specialty: the Unicum Barista Component, made from the same beans used in the Unicum Barista recipe. BENCE GAÁL
The arabica coffee from the Bányai Coffee Research farm in Costa Rica is available in bean and capsule versions exclusively in Unicum’s sample shop and webshop until Oct. 31, after which it will be available to a broader audience. Launched three years ago, Unicum Barista is a liquor aged in oak barrels with arabica coffee extracts and more than 40 different herbs. CEO Sándor Zwack says it has proved a successful product, even though it was launched during the COVID pandemic when most hospitality establishments were shut down. “I met lots of people saying that regular Unicum is too bitter for them,
but that they love having a Barista,” the chairman of the board of directors of Zwack Unicum notes, adding that it opened up a different market for the company. “It does not cannibalize other sales. Unicum is traditionally male-centric, but the age group of Barista drinkers is younger, and there are more females among them,” he explains. Component coffee results from acareful roasting process, with dark chocolate flavor notes and dried fruit finishing notes. “Picking the right coffee was a difficult task, as Unicum has a marked, strong character,” coffee expert Sándor Tóth says. “Component is built on three strong pillars: the coffee variety, the processing
A Hungarian Coffee Farm in Costa Rica
The Bányai Coffee Research (BA. CO.RE) farm in Costa Rica’s Lourdes Valley, 1,450 meters above sea level, is where Caturra and Catuai arabica coffee bushes soak up the sun on a section named after the Unicum Barista. The coffee is processed in the country using the traditional and labor-intensive “Honey” method, which leaves a wet film rich in sugar and minerals on the beans after harvesting and rotates them several times a day until they are completely dry. “The secrets of the Unicum recipe have been in our family for six generations; carefully selected herbs and spices from five continents are measured with expertise and dedication. That is why the relationship between Zwack Unicum and Bányai is so special. The late László Bányai provided us with the same expertise Sándor Zwack (left) and and quality and introduced us coffee expert Sándor Tóth. to the world of coffee,” says Zwack. Photo by Márk Somay “During the three years of developing Unicum Barista, we tested nearly 30 coffee blends with the help of coffee specialist Sándor Tóth until we and the roasting method. Finding finally found the coffee that worthily harmony with the herbs was essential complemented the Unicum flavor notes. in the research. In our experience, We are equally pleased to introduce its character, fine-tuned for Unicum Component to those looking for Barista, makes it do well even as an a quality coffee experience.” ingredient in cocktails,” he argues.
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Special Report Real Estate Development
Developers Juggling Multiple Demands and Challenges Development in the various real estate markets in Hungary is impacted by concerns about demand and concluding the preleases that enable a project to go ahead, the availability and cost of financing, the increasingly protracted planning and permitting process, rising construction, maintenance and utility costs, and, finally, the opportunity of an exit strategy with a sale onto an investor at an appropriate time in the business cycle of an asset. These wider political, economic and financial issues also impact real estate development markets in the broader CEE region and other European markets. Another factor is the impact of ESG on the market processes
and the imposition of increasingly stringent regulations by national governments and the EU. These processes aim to create more energy-efficient buildings using recyclable materials that lower the negative environmental impact of the structures. The problem is how these measures will be met financially and how this cost is divided between developers, tenants and contractors. Despite these processes, only a minority of assets are ESG and EU taxonomy compliant today. Further, relatively few developments meet the changing needs of staff, customers and guests. New developments and standing assets in all market sectors must
Tenants are attracted to efficient and sustainable office space in a market where vacancy is rising. The Atenor model is based Máté Galambos on selling projects after development and using our own equity across the 10 countries in which we operate. We therefore took measures to dispose of maturing products in Hungary and some of our other countries. We have sold RoseVille to an international investment group with a Hungarian fund. The sale was quick and aligned with current market conditions. This was the first real estate acquisition by the group in Hungary, and we see it as positive that we have attracted new equity. However, in the current investment environment, only opportunistic investors are looking at Hungary. There is interest in the acquisition of BakerStreet I, although we will not dispose of it unless the offer meets our expectations. At the same time, BakerStreet II holds a valid building permit and is ready for development. We see tenant demand in Budapest,
but financing can be an issue in the current environment, and one might consider external financing. Máté Galambos Director of leasing Atenor Hungary With regard to investment, the consensus is not in favor of the office asset class, and the majority of investors are still talking about “beds and sheds.” The debate is “contaminated” by the U.S. trend where some office hubs are totally dead. The reality is different in Europe, and we do not experience the same situation on the ground. However, we are still impacted by the generally negative view that “offices are dead.” Not many acquisition directors dare to take an office opportunity to B. Perez-Ellischewitz their investment committee these days. It is contrarian and difficult to finance. Nevertheless, I am convinced this is where attractive deals will be made in the coming months. Of course, one has to be selective and price the risk correctly. The market will continue to be dominated by Hungarian capital as long
be designed or redesigned to meet these changing needs and evolving environmental regulations. Moving forward, only those buildings designed, developed and maintained in line with ESG requirements will be commercially successful. Further, a definition of what constitutes “environment,” “social,” and “governance” and an international accountability and benchmarking process are needed, as well as qualified property professionals to undertake the work. Budapest Business Journal real estate editor Gary J. Morrell spoke with some of Hungary’s leading real estate professionals about the challenges facing the industry.
as international investors have ambiguous feelings about the market and the debt is not there to finance large portfolio or platform transactions, which is where we usually see the international capital. Benjamin Perez-Ellischewitz Principal Avison Young Hungary Office construction costs have significantly increased for the last few years and have not been reflected by rental levels Attila Madler over the previous two years. New developments will not start until either the cost is reduced or headline rents break the EUR 20 per sqm per month limit. Conversely, it is a “must” that new projects have proven evidence of meeting high ESG standards, preferably sustainability certified. The cost of financing will also need to decrease. The biggest issue among the development-related factors is definitely the construction cost level; more precisely, the fact that the currently accepted headline rents do not reflect the development cost of a new project. Changes in the rental
level can be expected only if the vacancy level of the office segment begins to decrease again, and thus, the pricing of new schemes can be differentiated from standing buildings. Attila Madler Chief asset management officer CPI Hungary Demand and supply have decreased significantly in the office sector, while ESG-driven requirements have increased extremely. That can motivate developers to satisfy these needs. On the one hand, GTC has ongoing developments, and, as mentioned above, there are tenant inquiries driven by ESG requirements. Zsolt Berényi On the other hand, we see a slowdown in building both in the region and in Hungary. I believe it is driven mainly by the relatively high cost of financing and cost of capital. The major issues facing developers in Hungary are the costs of financing and stricter conditions and loan limits for the CEE region. In addition, there is a lack of experienced professionals and still high prices due to high margins on the contractors’ side and low affectivity, home office and lack of ESG-compliant buildings, and very few international investors, if any. Zsolt Berényi Group development director GTC Hungary Predicting tourism growth rates, especially in a dynamic city like Budapest, can be challenging due to the various factors at play. Attila Radvánszki 2023 has been a remarkable year for Budapest, with prominent events such as the Harley Davidson festival and the World Athletics Championship propelling the city into the spotlight. Such events have undoubtedly played a role in attracting a significant number of tourists this year. While 2023 has set a high benchmark, 2024 is anticipated to see a more moderate, potentially single-digit Continued on page 16 ›››
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Special Report
Continued from page 15 ››› growth rate in tourism visits and room nights. One reason for this moderation is the natural ebb and flow that follows any period of exceptional growth. It is worth noting that despite this year’s surge, visitation numbers are still tracking behind 2019 levels, which we hope will be met by 2024. The ongoing recovery and increased optimism from Budapest Airport is certainly a positive sign, with more international flights resuming, signaling a gradual return to pre-pandemic operations. However, the tourism landscape is interconnected, and Budapest is not immune to global events. Attila Radvánszki Director Horwath HTL Hungary The supply of new buildings is getting very slim as there has not been new construction starting in the past 12 months; only the previously launched constructions will be finished. Beyond that, there will be a dry period in terms of new building delivery. It takes at least 24-30 months to see new larger office project delivery appear on the horizon. Some midsized projects may occur in districts needing regeneration in capital cities such as Budapest, in particular. Demand for classic office space has
been derailed by remote and hybrid work and flex offices/co-working spaces. Good ESG performance is becoming a more serious and complicated job to deliver. It is becoming a “musthave” criterion for tenants, landlords and investors. There should be a dedicated team and a responsible director on board to oversee this process. Developers will have to switch from their core activities of building brandnew buildings to redeveloping existing assets. However, such projects Valter Kalaus require special knowledge, as the properties may produce several unexpected technical problems that endanger profitability. There will be some great success stories, and there will be left-alone buildings as well. Valter Kalaus Managing partner Newmark VLK Hungary The demand, and therefore the pace of development, in the industrial sector is steadily slowing, and vacancy rates are rising. Several factors are needed to revive the market, such as an appropriate inflationary environment, an increase in
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general consumer propensity, and a reduction in financing interest rates. If the general economic indicators return to somewhat “normal,” Zsuzsanna Hunyadi developments will eventually resume. Price is still one of the most critical factors in the leasing decision, but more flexible terms, such as contracts of less than five years, are also increasingly attractive. In addition, professional management and partnership are the reasons why customers choose Prologis. ESG is part of our DNA, so we can cater to all the needs in this area, such as alternative energy sources, smart devices, or electric car chargers. Based on our experiences, this is highly relevant to international companies with strong net-zero targets, like Prologis. Zsuzsanna Hunyadi Director of leasing and customer experience Prologis Hungary The logistics and residential sectors should remain in focus due to market fundamentals. There is much room for e-commerce to develop
in Hungary but also for logistics providers to cover even neighboring countries from Hungarian locations. The strong growth in manufacturing also supports the warehouse market as suppliers to these plants also need property to operate in. The continuing structural housing shortage supports the need for residential developments in all segments Noah Steinberg from lower to more premium categories. The only caveat is that the Hungarian market is significantly influenced by the availability of state financial support for homebuyers. Thus, any developer should have a clear view of this for their investment horizon. The hotel segment also merits developers’ attention. Tourism and arrivals are back to prepandemic levels and are expected to grow further. Occupancy and room rates are continuously edging upward, while new product is more in demand by travelers. Noah Steinberg Chairman and CEO Wing
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PRESENTED CONTENT
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Special Report | 17
Finding the Human Touch to Make Sustainability Meaningful The Budapest Business Journal asked three of CPI Hungary’s leading experts to discuss how sustainability features throughout their day-to-day work. BBJ STAFF
BBJ: CPI uses “green leases” to educate tenants. How does this work? Henrietta Budai (sustainability manager): CPI Hungary’s Green Lease is a sustainability agreement forming an annex to the lease agreement. The primary purpose is to cooperate with our tenants (and indirectly our and their suppliers) to reduce the negative environmental impacts of our properties, including their leased areas. This document calls for using and running our built working environment, where we spend a third of our active professional life, with an environmentally conscious mindset.
Henrietta Budai Both landlord and tenant should commit to energy efficiency, energy and water saving, waste management, cleaning and what and how to use in the working environment. There is much room for raising awareness and educating our tenants so they can work with these commitments. We operate a combination of educative activities, tools and events. We issued two tenants and office worker guides to provide helpful, practical tips for energy efficiency and conscious water use. The tips give the tenants’ employees a closer understanding of how the building works (for example, the heating/cooling and mechanical systems). Many of them are not even aware of the benefits of LED lighting. And we also share our example. This year, we moved into a new office designed with sustainability in mind: we kept the old flooring, glass partitions, most of the fixed equipment, and much of our old furniture and water-saving fittings. And we also have an office composter. Sharing best practices and well-measured results can make for convincing arguments.
Balance Hall by CPI BBJ: What is the Tenant Sustainability Forum, and how does this work? HB: As part of the green lease agreement, we invite all tenants to bi-annual forums where we set goals along the cooperation fields I mentioned above. We also check where we are in meeting targets and how we can improve. It is a new type of cooperation, still unusual in the market, and we are in the introductory phase. But the feedback is very positive. Our tenants appreciate that we initiate a dialogue and try to realize shared goals where landlord and tenant inspire each other in sustainable behavior and solutions. Regular and mutual data and result-sharing support both parties in further reducing their environmental footprint. The forum gives the opportunity to meet personally and raise questions related to the running or management of the building, as well as networking between tenants. We plan to have such events in all of our office properties, and we hope they earn a prominent place in the calendar of the decision-makers among our tenants in the future. BBJ: CPI aims to create people-centric developments. Could you give us some more detail about this “human focus?” Bea Déri (director of PR, marketing and design): More than eight years ago, when CPI Hungary appeared in the Hungarian real estate market, we brought a peoplecentered approach to our development and renovation of buildings and put our tenants in the center. The property owner must be responsible not only for the beautification of the building but also for the protection and improvement of the environment surrounding it and the workers in the building. That’s when we created social spaces where we gave opportunities for networking and sharing knowledge. That’s when we introduced our Human Innovation Program (HIP) wellbeing brand into our buildings and created outdoor workstations, meeting rooms, and sports opportunities. CPI was the first in Hungary to realize that working in “simple” concrete structures full of offices does not fill people with motivation and inspiration and that, as property owners, we can help with this general mood.
BBJ: Do you have to brief designers to incorporate “human design” or only work with specialists in the field? Can anyone do this work? BD: We have a concept for human design and see ourselves as specialists in this area. Human design and the related term human innovation requires knowledge of tenant needs, the characteristics of the building, and the development limit of the tenant’s mental and physical well-being needs. Considering all these factors, it is not enough to create beautiful and impressive spaces; those spaces must be assigned functions that help people’s efficiency and are suitable for community building. We believe that the well-being of the users and the inspiring environment created for them is one of the means of achieving tenant satisfaction. The goal is to develop human- and experience-oriented environmentally friendly buildings. BBJ: People-centric buildings aren’t only about design. Can you give us some examples of what you call “human services?
Zita Kovács-Bertók Zita Kovács-Bertók (office business development director): In the context of people-centric buildings, this refers to amenities and offerings that enhance the well-being and experience of the occupants. Our HIP scheme
provides convenient services such as food markets, seasonal shopping possibilities, and wellness programs ( massage, manicure, fitness- and yoga classes) only a few steps from the office. Furthermore, our concierge service, dry cleaner, pop-up flower shop and childcare service facilitate the daily life of our Tenants. We also focus on community building with our myhive and HIP brands to provide a platform for networking and interesting workshops. We see our tenants as partners; therefore, providing platforms for discussions about current and relevant topics (such as the energy crisis, ESG and so on) are a high priority for us as a landlord. This allows us to understand our tenants’ needs and act immediately to provide tailored services. These services make the building more than just a physical space but a place where tenants feel valued, supported, and can thrive.
Bea Déri BBJ: Tenants being human, requirements can change, often at short notice. How important is flexibility in your approach to tenant requirements? ZK-B: Highly important; quickly adapting to changing needs can enhance tenant satisfaction, retention, and the overall appeal of your office spaces. It’s essential for maintaining positive landlordtenant relationships and staying competitive in the commercial real estate market. As a result of COVID, the use of home office became widely spread in most sectors that use office buildings. A downside has been that, over time, employees become afraid of isolation and may feel anxious in the home office. On the other hand, a pleasant office environment does not provide enough motivation nowadays. Tenants need a flexible and innovative landlord who can offer new solutions to entice employees back to the office. Beyond the communitycentric spaces in the common areas of the buildings, CPI offers flexible office products with convenient services across our entire portfolio, allowing employees to utilize these services in the location closest to them.
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Special Report
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Developments Still Ongoing in Some Sectors Despite the Challenging Market Environment While there are substantial pipelines for the industrial and hotel markets in Hungary, things are more limited for offices, and there are none at all for shopping centers. Questions surround the structure of demand, the ability to source affordable finance, rising construction, energy and utility costs, permitting issues, the need to incorporate ESG features, and the likely availability of an exit through a sale.
The RoseVille development by Atenor has 15,000 sqm of class “A” office space.
GARY J. MORRELL
These issues impact the different sectors in varying degrees and ways. All sectors are also facing the challenges of the broader economic environment and investor sentiment towards Hungary.
Asset owners in the office and, increasingly, industrial sectors need to provide more highly-specified, efficient and sustainable products with flexibility in the provision of space that will attract tenants and cater to staff needs in terms of amenities and locational and transportation issues.
Sustainability accreditation to the Breeam, Leed and Well systems are an essential requirement for a commercially successful asset in the office, industrial and hotel markets. Similarly, there is a need to adhere to increasingly stringent and comprehensive ESG regulations and EU Taxonomy.
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ATENOR HUNGARY: DEMONSTRATING SUSTAINABLE REAL ESTATE DEVELOPMENT Atenor, a listed Belgian real estate developer, along with its subsidiaries, proudly upholds sustainability as a fundamental value in all its ventures. Atenor Hungary, in particular, stands out for its unwavering commitment to designing projects in alignment with respected sustainability certifications. A significant hallmark of Atenor Hungary’s sustainability approach is our dedication to constructing energy-efficient, environmentally conscious buildings. With sustainability at the forefront, the company accurately employs energy-efficient technologies, ensuring that all projects meet or exceed the strict Breeam “Excellent” standards. By utilizing cutting-edge insulation materials and energy-saving HVAC systems, Atenor substantially lessens the environmental impact of its developments and contributes to a greener future. Furthermore, this approach extends to sustainable urban planning and design, promoting eco-friendly and socially responsible communities. This includes pedestrian-friendly spaces, robust public transportation connectivity, cycling infrastructure, and abundant green areas, all vital elements contributing to Breeam “Excellent” certifications. Social sustainability is equally crucial for Atenor. Engaging with local communities and stakeholders ensures that projects cater to the needs and aspirations of the people they serve. By focusing on energy efficiency, sustainable urban planning, community engagement, responsible construction practices, and sustainability certifications, Atenor leads the charge toward a greener and environmentally conscious future for real estate in Hungary and beyond.
BAKERSTREET 42,000 sqm • Phase I handover in Q1 2024 • Phase II handover in Q4 2024
www.arenabusinesscampus.com • www.atenor.eu Contact: Atenor Hungary Kft. 1034 Budapest, Bécsi út 68-84. Schőmer Norbert Country Director +36 1 785 52 08, schomer@atenor.eu
Máté Galambos Leasing Manager +36 1 785 52 08, galambos@atenor.eu
Krisztina Enzsöl Leasing Manager +36 1 785 52 08, enzsol@atenor.eu
ARÉNA BUSINESS CAMPUS 72,000 sqm • Building A handed over in Q2 2020 • Building B handover in 2023 • Building C & D planned
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12
months;
only previously started constructions will be finished. Beyond that, there will be a dry period in terms of new building delivery,” comments Valter Kalaus, managing partner at Newmark VLK Hungary. In contrast, the industrial and logistics sector boom continues unabated in the Greater Budapest area and, increasingly, in countryside hubs, although demand is said to be moderating. Consultants have traced a substantial hotel pipeline in Budapest, although several projects are on hold with no definite completion dates. That said, confirmed hotel projects are being delivered with leading branded hotel operators on the back of tourism figures for Budapest that are fast approaching pre-pandemic levels.
Most Attractive Options
“Logistics and hospitality are currently the two most attractive development options. I believe Budapest is a very attractive touristic destination and still not that expensive, so our capital is very popular. For logistics, the central location and Hungary being the gateway for Europe is the key, I believe,” comments Zsolt Berényi, group development director at GTC Hungary. Developers are having to produce ever more well-conceived and sustainable products in order to gain finance, let and sell a property. “Big companies have an obligation to provide a CSRD [Corporate Sustainability Reporting Directive] report
for
2024
for the first time; thus, there is knowledge on the measurement of the ESG parameters of the operations of their companies,” says Attila Madler, chief asset management office at CPI Hungary. “However, they do not know about the ESG aspects of the real estate industry affecting the ESG targets of their companies; thus, they need to be educated by building developers/ owners. We are in regular conversation with our tenants on ESG and energy topics and are happy to see that more and more often we receive inquiries from our tenants to share our ESG expertise with them,” he adds. At the end of the development cycle, building owners need to adopt a longer-term sustainable strategy to access finance, achieve preleases and have the option of an exit strategy with a sale. Investor sentiment towards the market in Hungary demonstrates a cautious wait-and-see approach. This reflects the unstable geo-political environment and the resulting economic and financial uncertainty.
In this situation, many vendors and investors are exercising caution in anticipation of a more favorable political, economic and financial environment and, crucially, more predictable yields and pricing levels.
Investment Consensus
Concerning investment, the consensus no longer favors the once allconquering office asset class, with most investors talking about the industrial and hotel markets. “In my view, recent office deals show that, despite the limited interest for Hungary among investors and the general backlash against offices, transactions are possible for assets that tick all the boxes. We are not out of the woods yet,” comments Benjamin Perez-Ellischewitz, principal at Avison Young Hungary. “I think the market has already processed a move out of yields by 100 basis points on the prime segment
and
250-350
basis points on anything less core. In my view, there is still some de-compression coming before the market is stabilized, and, certainly, no yield compression on the horizon for 2024,” he explains.
“Logistics and hospitality are currently the two most attractive development options. I believe Budapest is a very attractive touristic destination and still not that expensive, so our capital is very popular. For logistics, the central location and Hungary being the gateway for Europe is the key.” “We will be around EUR 400 million for the year if we account for market arm’s length investment transactions. Bottlenecks remain the lack of debt and the difficulty to price the risk in this period of uncertainty and deteriorating fundamentals,” Perez-Ellischewitz adds. In a recent investment deal, Hungary’s Erste Real Estate Fund has purchased the first phase of the 27,000 sqm H2Offices in the Váci Corridor from Skanska. The complex is Leed “Platinum” accredited, and Skanska also aims for Well accreditation for the complex. “We are delighted that our long-term trusted relationship with Erste Real Estate Fund resulted in the successful transaction of the H2Offices project. Our partnership, based on common values and a strong commitment towards ESG, has been enriched by another building. This transaction stands as a testimony to the interest in high-quality and sustainable real estate products, indicating a positive shift in demand on the investment market,” says Katarzyna Zawodna-Bijoch, president & CEO of the Skanska commercial development business unit in CEE.
INSIDE VIEW
How do you get Employees Back to the office? György Antal Director – Head of Permanent Placement Adecco Hungary
The pandemic has changed the functions of the office in several ways, not least that conventional workspaces have been replaced by hybrid working as the standard. Despite this, there has been a general intention among many businesses to bring employees back to the office. The question is how? The office is no longer simply the primary place of work as it was in the past but a communal space for social interaction and human relationships. With home office becoming a standard working pattern, many companies seem uncertain about their longterm need for current office space now and in the future. The inefficient use of rented space has become a regular topic of discussion among the senior management of many companies, not least from a cost-control perspective. There has been a general hesitation about moving to new offices, in response to which property developers are reconsidering speculative new projects. A further 210,000 sqm of space is under construction and planned to come to market from 2024 onwards. As a result, the vacancy rate in the Budapest office market has moved back into the double-digit range from its record low levels of recent years, reaching 13.1% in Aprilin ‘A’ category offices. One answer is the redevelopment of offices through Fit Out work. Modernizing community spaces is a progressive direction that fits in with the digital and experiential needs of new Generations Y and Z. However, not all companies can cover the increase in fit-out costs. Another forward-looking trend is creating ESG-compliant offices with modern facility management, which can help make them more attractive to young people. Other companies are waiting for their current lease contract
to expire to renegotiate terms and conditions to meet changing demands. It is now a tenant-driven market with strong bargaining power.
Flexibility Required
A high degree of flexibility and adaptability is needed from both parties. The impact of the changed environment means that all contracts now must consider various flexible scenarios for the future. A large community of employers in Budapest has approached employees via a survey to gauge their willingness to return to work in those companies where the proportion of home working is still higher. It found that a third of the workers surveyed stubbornly reject a unilateral return to the office. The response to this must be careful planning if the return to the office is to be successful and the best core professionals retained. Location and a modern environment form a solid basis, but what are the extra factors that turn an office into an attractive community space? A workplace with a good atmosphere will be inspiring because it brings out positive emotions in employees, strengthens interpersonal relationships, boosts creativity, and makes them more resilient to stress and adversity. A good company culture attracts people and makes for more loyal employees. It all starts with company culture. Caring, listening and taking responsibility for others are paramount in building community. In addition, fostering an innovative company culture is best done by not simply focusing on finding who made a mistake if things don’t go according to plan. A strong culture creates a strong community. Innovative thinking is valued, and emotional intelligence is enhanced, with empathy, responsibility and trust at the core. If a company has a culture that employees love, they will want to come to work and be passionate about what they do. For now, the general conclusion is that, in the longer term, we need to prepare for a hybrid working system. Those companies that have the means to provide this but reject the possibility of home office in a rigidly ultra-conservative way will quickly find themselves at a competitive disadvantage in terms of human capital. For the hybrid ratio to be restored to a level consistent with a company’s intentions and long-term plans, it will be necessary to make our offices attractive environments from a human aspect.
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New office projects are not being announced by the relatively small pool of international and local developers operating in Hungary, reflecting concerns over demand, the ability to conclude substantial preleases and the availability and cost of debt finance. “The supply of new buildings is getting very slim as there has not been new construction starting in the past
Special Report | 19
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Special Report
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Budapest Business Journal | October 20 – November 2, 2023
Limited new Office Development in Budapest The Budapest office pipeline is limited; builders are exercising caution, and new projects are not being initiated in an uncertain environment. Concerns include geopolitical issues, longer-term letting and demand, office working practices and the time spent in the office, rising development and construction costs, increasing maintenance and energy costs and more expensive debt finance. Despite this, ongoing projects are continuing. GARY J. MORRELL
The current financial environment and rising interest rates favor those developers able to use their own development finances or sell assets to investors. From a positive perspective, ever more sustainable office projects are being delivered in response to market pressures and environmental regulations. “Tenants are prepared to relocate to sustainable office accommodation as developers increasingly need to secure substantial preleases. Tenant strategy is looking at carbon-neutral real estate, ‘green leases’ with sustainability accreditation, and renewable energy,” says Máté Galambos, director of leasing at Atenor Hungary. Vacancy in the Budapest office market stands at 12.6% and is expected to rise to
about
14%
by 2024, according to CBRE. That said, there is a perceived demand for quality office space, and the higher vacancy rates tend to be in older stock that does not meet today’s more complex tenant requirements and increasingly stringent ESG and sustainability expectations. Thus, it can be argued that there is a widening gap between modern, sustainability-accredited
The Academia office center has been restored and recently reopened. offices and older, outdated stock. In response, some landlords are upgrading earlier-generation buildings to meet the new requirements. Total stock in the Budapest office market has reached 4.3 million sqm, 3.5 million sqm of which was developed on a speculative basis, according to the Budapest Research Forum, made up of CBRE, Colliers, Cushman & Wakefield, Eston International, iO Partners and Robertson Hungary.
Constricted Pipeline
CBRE estimates the total office completions for 2023 to be 180,000 sqm by year-end. Next year, it expects the delivery of 114,000 sqm, two-thirds of which is already preleased. For 2025, the delivery pipeline is believed to be 67,000 sqm of space. Concerning projects under construction, CBRE has monitored 15 where building work has not started, but planning is at an advanced stage. These have a combined volume of 311,000 sqm and could be completed by 2027. “The current economic and financial climate does not favor new commencements on a speculative basis; therefore, we expect these projects to kick off following a reasonable volume of preleases or owner-occupation,” comments CBRE. In a recent project, the mixed-use office and hotel Liberty south wing by Wing in District IX has delivered 10,000 sqm of Breeam “Excellent” office space. Development of the north wing is underway, with a 20,000 sqm office area expected to open in the first half of 2024. Wing is also due to deliver the new Liget Center Vitrum, which, with its
all-glass façade, will be added to the renovated Liget Center Classic and Auditorium. Another leading office developer, Atenor, is set to deliver its latest office project,
the 15,500 sqm
Breeam “Excellent” RoseVille, located in Óbuda. The complex has been sold to an investor, a relatively rare Budapest investment deal in the current environment. An alternative development option is the renovation of existing quality buildings, notably in the Central Business District, where there is a scarcity of building plots and a number of listed buildings in need of restoration. Europa Capital has just redeveloped the 12,500 sqm Academia office center in partnership with asset manager ConvergenCE. The project is in line for Breeam and Well accreditation. “ESG requirements are mainly tenantled, and we designed the Academia project based on ESG principles using the Hungarian Buildext architects,” comments Csaba Zeley, managing director of ConvergenCE. “This is located in the CBD, where there are few developments for new build projects. We do not undertake development of new buildings from the ground but focus on value-added developments of existing buildings that require refurbishment,” he explains.
Portfolio-wide Sustainability
Multi-country developers such as Atenor, CPI, GTC, HB Reavis and Skanska have sustainable development policies across their portfolios. From a development and property and facility management
perspective, accreditation to a thirdparty certification system (such as Breeam or Leed or, from an interior and staff well-being point of view, Well) is essentially a norm for class “A” offices. Building owners need to react to changing demands from tenants and building users for space that enhances well-being. At the same time, developers need to anticipate EU taxonomy regulations that aim to reduce emissions. “With regard to the interior dedicated Well accreditation system, human health is material to an organization’s bottom line, and the application of Well at scale makes that connection clear,” argues Regina Kurucz, an architect and WELL assessor. “By applying Well at scale, organizations can measure and improve their health performance across multiple locations. With this data, they can measure their impact on people while also comparing their progress internally and against industry peers. Staff, tenants and visitors can use indoor spaces more effectively and safely,” she says. Building owners must have stricter EGS-focused agreements for how they run the buildings. On the other hand, the carbon footprint of the operation can be decreased only in cooperation with the tenants: that is why the conclusion and regular execution of green lease agreements is becoming more important. “This means setting up and operating a new layer of cooperation with the tenants that sets common ESG targets, decides on common behaviors, measures the fulfillment of them and gives feedback of the results,” says Attila Madler, chief asset management officer at CPI Hungary.
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Budapest Business Journal | October 20 – November 2, 2023
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Dorothea Hotel: A Pinnacle of Heritage Preservation and Modern Development The historic precincts of the Dorothea Hotel, encompassing the Mahart and Futura houses and the former Savings Bank headquarters, have been meticulously refurbished to harmonize the architectural splendor of Hungary’s past with contemporary design. The project saw the preservation of all the buildings’ significant elements, echoing Budapest’s rich architectural lineage. Managed by the BDPST Group and in collaboration with the Milan-based firm Lissoni & Partners, alongside local Hungarian experts, the transformation signifies a noteworthy endeavor in Hungarian real estate development. The Dorothea Hotel, slated for a public unveiling on Budapest’s Vörösmarty tér in November 2023, is a testament to complex heritage conservation and modern property development. The project team, which encountered its share of challenges, remained unwavering in its commitment to preserving the inherent value. The development integrates three historically significant structures: the Mahart House, Futura House, and the former
Savings Bank headquarters. The composite property now boasts an international standard five-star hotel, upscale residential units, dining establishments, retail spaces, and an inviting rooftop terrace. Moreover, a botanical-themed inner courtyard subtly nods to former owners the Palatine Joseph’s interest in botany and Archduchess Dorottya’s advocacy for Budapest’s development. As part of the planning permission procedure, a detailed heritage conservation study was carried out by art historians, who worked out the areas to be protected and restored on a site-by-site basis. The Heritage Protection Office continued to monitor the construction once the permits had been issued, as the common goal was to restore the remaining architectural monuments in a dignified manner after the tumultuous history of the buildings. Preserving architectural values, alongside the conservation of historic memories, has emerged as an essential goal. The collective historical past of the building was researched, processed, and
compiled into a book to make it accessible to the general public. The initial construction phase mandated rigorous civil engineering processes. Alongside, archaeological explorations under the supervision of the Budapest History Museum unearthed fragments of the city’s past, including traces of a 17-18th-century well and a medieval cannonball. A dedicated emphasis on historical preservation permeated the development process. Notably, the façade on Wekerle utca, which exudes an ambiance reminiscent of Italian Renaissance styles, underwent precise restoration. Internal structural renovations preserved historical design elements while integrating contemporary construction techniques. A significant phase included the introduction of a steel-framed glass roof over the inner courtyard, a feat of modern engineering. The interior design, conceptualized by Lissoni & Partners and supplemented by Hungarian designers TSPC, marries history
Special Report | 21 with present-day aesthetics. The restaurants’ interiors are credited to Spain’s Astet Studio, while Hungarian studio Archikon Architects provided the overall architectural guidance. István Tiborcz, owner of the BDPST Group, commented, “Our primary objective remains value preservation. The Dorothea Hotel project is emblematic of this ethos. By rejuvenating these landmark buildings, we’ve ensured they resonate with modern-day requirements without sidelining their storied past.” Spanning 35,000 sqm, the hotel, managed by the Autograph Collection Hotels by Marriott International, features 216 rooms and an array of facilities, including a wellness center and conference rooms. Two culinary establishments, The Pavilon Restaurant & Bar and Anton Bar & Deli, will be operational from the launch, with plans for two more restaurants, Alelí and BiBo, to open in 2024 under the guidance of Michelin-starred chef Dani Garcia. In its entirety, the Dorothea Hotel project exemplifies a harmonious convergence of architectural conservation and progressive real estate development in Budapest.
BDPST Group Founded in 2015, BDPST Group is a dynamically growing capital investment and real estate development company. Its strategic goal is to become a group of companies with a clear economic vision, cross-sectoral and internationally competitive, and outstanding market performance. The group manages a number of investments in the tourism real estate market, the financial sector and logistics. It is committed to economic, social and environmental sustainability principles and practices. Therefore, it seeks investments that meet these criteria and contribute to the preservation of Hungary’s architectural heritage and the creation of value in the real estate market.
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Special Report
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Budapest Business Journal | October 20 – November 2, 2023
Industrial Demand Remains High in Hungary The industrial pipeline is strong, and demand remains high, although vacancy rates are rising in an uncertain economic environment. Logistics and industrial dominate in the Greater Budapest area, while it is mainly light industrial production and assembly space in demand in secondary hubs across Hungary. GARY J. MORRELL
The market sector is attracting both specialist regional industrial developers and park operators in addition to established players moving across from other sectors into what is considered an attractive development area. Total industrial stock in Hungary has reached 4.87 million sqm, of which 3.06 million sqm is in the Greater Budapest area and 1.5 million sqm outside the capital, according to the Budapest Research Forum, consisting of CBRE, Colliers, Cushman & Wakefield, Eston International, iQ and Robertson Hungary. Although going through a development boom, the Hungarian industrial market is small compared to its Central and Eastern European neighbors. Colliers puts total CEE industrial and logistics stock at 65 million sqm in its report “Exceeding Borders: Manufacturing & Warehousing Sector in CEE-12.” Poland is by far the dominant market at around 30 million sqm
or
38%
of the entire stock across the CEE12. This compares to 11.3 million sqm in the Czech Republic, according to the Czech Industrial Research Forum. Vacancy stands at around 8% in Greater Budapest and 7% in other hubs and is expected to rise. The average vacancy for the CEE region stands at 4%. The area around the capital continues to dominate the logistics market as developers and park operators establish complexes at locations with direct
CTPark Budapest West is located next to Biatorbágy on the M1 highway, in the vicinity of the M0 ring road and only 15 kms from Budapest city center. access to the M0 orbital motorway, providing a direct connection tothe city, Ferenc Liszt International Airport, major Hungarian regional hubs and international road links. Regional centers are seen as a magnet for industries related to global auto manufacturers, with significant investment flowing into electric vehicle production and battery manufacturing facilities.
Industrial Pipeline
CBRE puts the pipeline of modern industrial space for Hungary at 466,000 sqm, with another 135,000 sqm under active construction at the end of H1 2023. The pre-let ratio stood at 48% in Budapest and 45% in secondary hubs. Cushman & Wakefield has traced 343,000 sqm of industrial space under construction and due to be delivered this year and another 157,000 sqm for 2024. Around half of the pipeline is pre-let. The regional industrial developer and park operator CTP has recently undertaken the development of 120,000 sqm of space at CTPark Szigetszentmiklós on a 63-hectare (155-acre) site on the southern outskirts of Budapest near the M0. CTP currently has more than
200,000 sqm of space
under construction in Hungary, according to the company. The strategy is to develop in capitals and leading regional logistics and industrial hubs. Prologis, on the other hand, is committed to developing in Greater Budapest. “We know that a suitable location is key for our customers to optimize their supply chain, so we choose our development sites with this in mind, mostly in the greater Budapest area. The focus is currently on BTS [built-to-suit] developments at Prologis, and it seems other market participants follow the same strategy,” the company says.
comments László Kemenes, managing “This tendency is expected to continue director of Panattoni Hungary. in the coming years as the general “We have a good balance between market indicators also show an increase logistics and light industrial at in vacancies and a decrease in market about absorption capacity in all countries where we are present in Europe.” The state-owned National Industrial In terms of the location, most of the logistics Park Operator and Developer (Nipüf) requirements are for the Budapest area, has a land bank that covers significant notably the western part, while production is provincial cities across Hungary. focused around eastern Hungary,” he says. The company aims to deliver logistics Kemenes adds that Panattoni is centers, manufacturing halls and looking to add energy-efficient solutions warehouses in areas not otherwise to its products, such as solar panels, provided for by the market. electric vehicle charging facilities and Development is generally undertaken heat pump systems. He sees that these on a BTS basis with long-term leases of will soon become standard. at least five-plus years for spaces of at The company has Breeam “Excellent” least 10,000-15,000 sqm. Nipüf currently New Construction accreditation as has a landbank across 18 locations a standard for its products in Hungary. throughout Hungary. Although stateNew requirements from tenants are owned, its activities are conducted on a related to ESG aspects, with many market basis, according to the company. requiring energy-efficient solutions. Also from a countryside perspective, CTP is also committed to developing the Hungarian developer and investor Breeam-accredited buildings throughout Infogroup has an industrial portfolio its Central European logistics portfolio. of 100,000 sqm, mainly in eastern and central Hungary. The company has started Prologis aims its parks to at least Breeam “Very Good” standards. the development of a new 12,000 sqm HelloParks, currently the most active logistics building for Jabil in Tiszaújváros developer in Hungary, has delivered the (175 km northeast of Budapest). 46,000 sqm MG3 in Maglód (on the eastern “Our focus has been and still is on outskirts of Budapest), the first Breeam regional cities in Hungary,” says Balázs “Outstanding” accredited logistics building Csifra, director of sales, asset and in Hungary, according to the company. business management at Infogroup. The LogiCube logistics park, under ‘Big Box’ Builder development by the Hungarian company Panattoni, one of the leading European Defacturing, offers Breeam “Excellent” industrial developers, has entered warehouse and office space, primarily Hungary with the development of two for SMEs. A second 2,800 sqm phase “big box” speculative projects in Greater of its project in Greater Budapest is due Budapest. One has a development to be completed next year. It includes potential of 74,000 sqm in Herceghalom heat pump heating and cooling systems, (29 km west of Budapest by road); the solar panels and a green façade. other is a 65,000 sqm project in Gyál, on “We are seeing that demand for wellthe southeastern outskirts of the capital. designed, newly-built, energy-efficient “We still see strong demand for both facilities continues to grow, and while big box warehouses as well as for ‘last this will increase our construction costs, mile’ space. We are also pitching on BTS it is still worthwhile in the longer term projects connected to the car and battery for both developers and businesses,” production/manufacturing industries,” said Olivér Nagy, CEO of Defacturing.
50-50.
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Budapest Business Journal | October 20 – November 2, 2023
PRESENTED CONTENT
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Sustainability and Growth: CTP Hungary’s Vision for Future of Industrial Real Estate What lies ahead for Hungary’s industrial and logistics real estate market? CTP Hungary managing director Ferenc Gondi shares his insights into market trends, emerging industries, and the promising future of the Hungarian market.
BBJ: CTP has a portfolio of around 11 million sqm in core CEE markets, as well as in Germany, Austria, and the Netherlands, with plans to reach 20 million sqm by the end of the decade. What does this plan mean for CTP’s Hungarian operations? FG: CTP Hungary represents 10% of CTP Group’s total gross leasable area, which is a significant proportion of
BBJ: In your experience, are ESG aspects becoming more important for your tenants in Hungary? FG: Absolutely. What’s more, we are pleased to see this trend, as it also means that our future-proof offers are recognized even more by our tenants and partners. We cover all ESG aspects, and in line with sustainability requirements, the group strives to ensure that its investment projects are integrated into the everyday life, eco-system and townscape of the towns and settlements, in consultation with local communities. In agreement with the local municipalities, the group supports, among other things, outstanding urban development projects ranging from road improvements to sewerage projects and local community programs.
“CTP Hungary represents 10% of CTP Group’s total gross leasable area, which is a significant proportion of the entire corporate portfolio. The objective is to double the real estate portfolio in Hungary as well, as the country continues to benefit from positive regional trends, meaning there is demand for new investments.”
BENCE GAÁL
BBJ: The industrial and logistics real estate sector in Central and Eastern Europe is expected to expand strongly thanks to five crucial growth drivers, according to a recent CTP market research report entitled “CEE: a Business-Smart Region.” What are these growth drivers? Ferenc Gondi: Several factors can be identified in the region that provide a strong foundation for growth. It is essential to mention skilled human capital, which represents a constant source of labor supply for the sector. In addition, markets cooperate closely and are interconnected, with significant diversification, which ensures new and emerging opportunities. The region’s economies also have outstanding growth rates by European Union standards, and there is still huge potential in this respect. The real estate markets of the various countries have strong fundamentals, meaning that the sector continues to offer significant prospects for developers. It is not just the housing market that is strong, however, but the macroeconomic fundamentals as well, and the two, of course, are interlinked. As such, GDP growth in these states is historically high and, on a related note, domestic consumption is growing steadily, and the region’s economy has doubled since 2000. Although the global economy is currently facing several problems, CEE remains resilient.
Special Report | 23
Ferenc Gondi, managing director of CTP Hungary. the entire corporate portfolio. The objective is to double the real estate portfolio in Hungary as well, as the country continues to benefit from positive regional trends, meaning there is demand for new investments. We have a significant land portfolio for developing new industrial-logistics properties, and our client base has a substantial and sustained demand for new halls built and operated to a high standard. BBJ: Throughout 2021 and 2022, you noted that CTP doubled its Hungarian portfolio to one million sqm. This means that CTP owns more than one-fifth of Hungary’s total modern industrial/logistics stock. Where are the next areas for expansion in Hungary? Are there any plans to expand in the countryside? FG: In addition to the capital, the country’s most prominent zones also play an important role in the life of our company. CTP Hungary is highly familiar with the markets outside Budapest, and strengthening our presence in Hungary’s large emerging industrial zones is one critical objective. In addition to the M0 orbital road around Budapest, Debrecen is possibly the next regional sub-center, which, together with Nyíregyháza and Miskolc, could grow into an even more significant industrial triangle.
BBJ: The company’s portfolio in CEE is fully Breeam-certified, and your renewable energy capacity includes solar parks in the logistics centers. How does CTP ensure that its Hungarian portfolio stays up to date with the latest innovations from the world of sustainability? FG: Indeed, almost the entire CTP portfolio in Hungary is Breeamcertified. However, we are not satisfied with our buildings “just” being green-certified, as our goal is to obtain the highest certification level in all cases. We also aim to keep our older buildings competitive alongside new investments, and to this end, we emphasize the ongoing maintenance and modernization of our existing facilities. Among other things, we are refurbishing our gas-heated buildings with heat pumps, high-quality insulation and solar panels, which we hope will help them achieve higher Breeam ratings. In the spirit of continuous innovation, by the end of 2023, CTP Hungary will have installed 15 MW of solar capacity on the hall roofs of our logistics parks, while the group-level target is 400 MW by the end of 2026. We are well aware of market needs and know how to operate and develop our buildings to remain competitive.
Since 2020, we have been building facilities equipped with only heat pumps and steadily reducing our carbon footprint. We use sustainable technologies in new investment projects. To optimize energy consumption, we heat and cool our buildings with electricity and use no gas in new investments. This electricity is, in part, provided by our own solar farms; we are currently developing several largecapacity solar farms to provide green energy to tenants as needed. We are also working to reduce the carbon footprint of our buildings, and recycling is given priority in our developments to promote a circular economy. BBJ: Looking ahead, what are your expectations for the Hungarian industrial and logistics real estate market for the next year? FG: The Hungarian market will continue to benefit from its own and regional tendencies, and new industries are expected to create new demand, accompanied by recent trends. We have recently seen increased demand for light industrial and manufacturing facilities, and we project increased logistics activity by the end of next year as a result. In addition, new professional needs are emerging that support further developments, such as nearshoring or, as we sometimes refer to it, “friendshoring,” to strengthen supply chains to bring production and services closer to consumption sites in countries where it is safe to operate. Overall, we firmly believe in the potential of the Hungarian market.
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Special Report
Hotel Visits Returning to 2019 Levels Guest nights for Budapest are now returning toward pre-pandemic 2019 levels after COVID, followed by broad geopolitical, economic and financial issues, hit tourism hard, on top of concerns over demand and spending power, not to mention rising development, labor and operational costs. GARY J. MORRELL
Despite some of the perceived complexities regarding hotel and hospitality projects compared to other commercial property market sectors, the field has successfully attracted investors and developers from the more traditional areas such as office and industrial. Investors and developers are concluding long-term lease or franchise
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Budapest Business Journal | October 20 – November 2, 2023
Tourism figures for Budapest are once again robust, with total guest nights of 4.2 million recorded in the first half of 2023, according to CBRE. Foreign guest figures were up
16%
year-on-year,
representing 81% of the guest nights in the capital. “We are definitely seeing improvement; room nights in Budapest are close to reaching pre-pandemic levels, and with the increase in average daily room rates, we are hopefully close to stabilizing. Profitability still suffers, but the outlook is positive,” says Péter Takács, partner at the consultants, Newmark VLK Hungary. Summer tourism indicators have beaten records set in 2019, the last full year before the COVID lockdowns, according to the Hungarian Tourism Agency. As many as 6.2 million tourism visits were recorded in Hungarian tourism accommodations in JuneAugust, 6% more than in the same period of summer 2019. Attila Radvánszki, director of Horwath The W Hotel Budapest in the restored Drechsler Palace, HTL Hungary, says there are two construction for which was supervised by the DVM group. critical external factors to consider when considering tourism numbers in Budapest. The first is financial stability partnerships with branded and Although several projects have in crucial source markets, which, he says, experienced hotel operators; the been put on hold or are subject to is closely tied to their economic health. latter provides the hotel expertise delays, there are still many ongoing “If economies in these countries while, in theory, leaving the former pipeline developments based face downturns or recessions, to concentrate on their portfolios. on such commercial partnerships. it might reflect in reduced outbound
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European Geopolitics
“The ongoing armed conflict in neighboring Ukraine can impact travel sentiment and decisions. While Budapest remains a safe and attractive destination, any escalation in the conflict might deter potential travelers, especially those from regions not familiar with European geopolitics,” he says. The Budapest pipeline for the remainder of this year is put at two hotels, totaling 560 rooms. A further six hotels, totaling 546 rooms, are due to be delivered next year, according to Horwath HTL Hungary. The total pipeline for 2023-2028 is put at 20 hotels with 3,226 rooms. Radvánszki says the highlights from the pipeline are the Dorothea Autograph Collection, due later this year or early next; the Kimpton Budapest and Radisson Collection, scheduled to open next summer; the St. Regis (the refurbished Sofitel), due in 2024-2025; and the renovated landmark Gellért Hotel, which is slated to open in 2026-2027. The acquisition of the Sofitel from Indotek by BDPST in March 2023 is seen as a significant investment deal, although further hotel transactions are not expected in 2023. “The [Marriott] Moxy Budapest Downtown on Kazinczy utca, and the Dorothea close to Vörösmarty tér, are definitely worth attention, and we hope the St. Regis project will come back ontrack. […] We also expect new hotels to appear soon as a result of the conversion of an existing office building as well as renovations and rebrandings of existing hotel properties,” says Péter Takács of the pipeline projects. W Hotels, part of the Marriott brand, opened
the
150-room
and suite luxury W Budapest in July following the renovation of the 16,000 sqm Drechsler Palace on the UNESCO-listed Andrássy út. The project, by the Qatari group QPR Properties, was ongoing for several years and subject to a number of delays, reflecting the difficulties of developing in the historic center with strict and often complex planning regulations that require permissions from both city and heritage authorities. A notable trend in the Budapest hotel market has been the purchase
and redevelopment of 19th and early 20th-century Central European palaces into hotels, giving the buildings a use-value while at the same time maintaining the classic feel of the city.
Cross-sector Developers
The hotel market has attracted developers who operate across different sectors. The Hungarian regional developer and investor Wing has concluded an agreement with Accor for a 12,000 sqm hotel within the 42,000 sqm Liberty office development in Budapest. This will be a dual-branded hotel in Hungary, with Ibis and Tribe Hotel each operating half of the 332 rooms. Wing (as developers) and IHG Hotels & Resorts (as operators) have also signed a contract for the Hotel Indigo Budapest Andrássy and Holiday Inn Express, which will deliver a combined 265 rooms. “Wing’s hotel portfolio has grown significantly in recent years, and a number of top international hotel brands have chosen our developments,” comments Noah Steinberg, the chairman and CEO of the developer. “Wing will join an elite club of real estate developers that have completed at least
1,000 hotel rooms.
Diversifying our hotel developments, both in terms of location and brands, is an important part of our strategy, so we are delighted to welcome two highly successful brands from the prestigious IHG Hotels & Resorts family to our projects,” he adds. The Hungarian hotel investor and developer, BDPST, has bought the 100-year-old heritage-listed Gellért Hotel in Budapest from Indotek Group, and a comprehensive restoration of the interior into a 145-room, five-star hotel has begun. The renovation, designed by Archikon, has a scheduled completion of 2026. “ESG matters most to institutional investors who are currently quite passive in our region. The cost of energy, however, is a strong motivator for owners and developers to optimize their building’s performance and efficiency,” says Takács of Newmark VLK Hungary. Pipeline outside the capital is put at approximately 3,000 hotel rooms within three to four years, focusing mainly on the Balaton region and larger secondary cities like Debrecen to supplement industrial development projects. The first 102-room Marriott hotel outside the capital in Balatonfüred (127 km southwest of Budapest by road on the northern shore of Lake Balaton) by Hungarian developers is due to be completed in 2025.
Budapest Hotel Pipeline Realistic Date
Hotels
Rooms
2023
2
561
2024
6
546
2025 & later
12
2,119
TOTAL 2023-2028
20
3,226 Source: Horwath HTL
INSIDE VIEW
Is it Worth Investing in Real Estate Thru RE Funds? dr. Nóra Rácz Partner, Senior Consultant LeitnerLeitner A company engaged in real estate development and the sale and purchase of it is subject to numerous taxes, such as VAT, transfer, corporate income, local business, and land and building taxes. Real estate funds, however, offer an attractive opportunity for investors since they can reach several tax allowances. Therefore, after discussing the legal provisions and possibilities, funding a real estate fund could be a good solution for those considering property management or development. Alternatively, since this is undeniably challenging, involving their project companies in an existing RE fund could also be an option. A real estate fund is a special investment fund, a pool of assets jointly owned by investors and created and managed by a sub-fund manager (with the assistance of other institutions). It is an instrument that allows investors to place their savings in a simple, secure, and cost-effective way, sharing the risks in the real estate market and thereby capitalizing on favorable market trends. However, there are negative aspects to its establishment as well, such as high capital requirements and legal approval difficulties. RE funds can be open-ended, primarily offering a good investment opportunity for small investors since they don’t require as much capital as would be needed to purchase, maintain, manage, sell, or rent out a property individually to make their investment profitable. At the same time, these smaller investments can provide a source of funding for the fund’s owners to develop and sell properties. Closed-end RE funds don’t raise capital for development but are created from the more substantial capital of a select group of investors, allowing them to finance their projects but with more favorable tax conditions. So, how different is the taxation of real estate funds from that of the management of a traditional real estate business?
Unlike traditional businesses, RE funds are not subject to either corporate income tax or local business tax. Furthermore, the RE funds can also get credit from real estate transfer tax. Real estate purchases, in general, are subject to a transfer tax of 4% of the market value of the property. If the market value of the property is above HUF 1 billion, the tax will be only 2%, but the tax may not exceed the HUF 200 million limit per real estate. Nevertheless, if a licensed real estate fund purchases the real estate, the tax on the acquisition of the property is 2% of its market value, net of any encumbrances and without the HUF 200 million upper limit. But there is no difference in liability of paying building and land tax between RE funds and other business forms. The owners of a property or part of the property on the first day of the calendar year have to pay the tax to the local authorities. There is a duality about the rules concerning VAT payment: they partly conform to general regulations, but, in certain aspects, RE funds receive exemptions as well. The real estate fund is subject to value-added tax, which means that it must pay VAT and can deduct it in the same way as if it were not selling or buying the property as a real estate fund. For second-hand property, the rate is 27%, but taxpayers are entitled to a 5% tax reduction on the sale of new residential property. However, there is a special rule for investment funds, as the management of these and venture capital funds, including RE funds, are exempt from VAT. Last but not least, individual investors have an allowance in social contribution tax. As a general rule, the owners of investment certificates must pay a 15% personal income tax (interest tax) on the profit generated from their sale and, from the summer of 2023, a 13% social contribution tax. However, investment certificates of RE funds are exempt from this new tax. You may rely on LeitnerLeitner’s specialized full-scope tax incentive service package. Leitner Leitner is one of Central Europe’s most influential full-scope (tax, accounting, payroll audit and legal) consulting companies, with global coverage through the Taxand and Praxity networks.
www.leitnerleitner.com
NOTE: ALL ARTICLES MARKED INSIDE VIEW ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY
travel to destinations like Budapest.” The second factor Radvánszki identifies is geopolitical situations.
Special Report | 25
26 | 3
Special Report
www.bbj.hu
Budapest Business Journal | October 20 – November 2, 2023
E-commerce and Spending Power Concerns Continue to Constrain Retail Development Retail and shopping center development remains constrained by the increasing use of e-commerce and concerns over spending power. There are no major mall projects in the pipeline, with owners essentially concerned with redeveloping and upgrading their retail, leisure and service offer to enhance the retail experience and meet ever more sophisticated consumer demands. GARY J. MORRELL
Perceived tenant (and therefore consumer) requirements include an improved F&B offering, a more varied tenant mix and imaginative designs. Retail demand remains under considerable pressure, with the highest inflation in the EU impacting spending in Hungary. Operational costs present continuing problems for stores as center owners are, for example, passing on increasing energy prices to tenants. The limited ongoing retail development is essentially part of larger mixed-use projects or regional retail parks. As elsewhere in the Central European region, developers favor the development of smaller formats such as retail parks and strip malls that provide more flexibility for retailers and do not necessitate the commitment to the higher critical mass of shopping centers. Shopping center stock in Budapest is low by European standards, and there is little prospect of oversupply with low vacancy, notably for the top-tier centers.
The Etele Plaza by developer Futureal was the last major mall built in Budapest. It opened its doors in September 2021. The 55,000 sqm Etele Plaza by the prolific Hungarian developer Futureal, which opened its doors to the public
on
Sep. 17,
2021, was the first new shopping center delivery in Budapest since 2011. Analysts say it was a welcome freshening of the market as much of the existing earlier-generation stock is seen as outdated in the post-pandemic, e-commerce retail environment. Despite that, the pipeline in the traditional retail formats is very weak, and no new major mall projects are planned for the Hungarian capital.
Mixed-use is King
What new retail development there is in Budapest tends to be as part of mixeduse projects. One such ongoing project is the Zuglo Mall in District XIV by Bayer Property Hungary, which will provide around 10,000 sqm of retail as part of an office, residential and retail scheme. The developers aim to create what they term a new city quarter, and the project is due to be delivered in late 2024. In another Budapest mixed-use project, the Hungarian private familyowned Corvin Palace Development is reconstructing the former Corvin department store building in the central Blaha Lujza tér. Described as a modern retail, leisure and office complex, the 20,000 sqm Corvin Palace will provide 16,500 sqm of retail and office space on three levels in addition to rooftop bar and restaurant space. At a ceremony to mark the unveiling of Corvin’s original classical façade (dating to 1926 but covered in aluminum sheeting since 1967 after damage sustained in the 1956 Uprising), Mayor of Budapest Gergely Karácsony emphasized the connection between the heritage of the city and urban renewal in the redevelopment of the building.
Cushman & Wakefield puts total modern shopping center stock in Budapest at around 815,000 sqm with 1.3 million sqm across Hungary in a total of 56 malls. In addition, the country has 1.6 million sqm of retail parks and warehousing. CBRE says it has traced about 2.1 million sqm of modern retail stock in the Greater Budapest area, including 910,000 sqm of shopping center space. Such malls represent 43% of retail stock in Greater Budapest
and
22%
of total space in the countryside. Outside the capital, the picture is dominated by retail warehousing and retail parks, constituting 44% and 34% of stock, respectively. Many of the leading Budapest shopping centers have changed hands since completion, with owners planning or having already undertaken redevelopments and renovations. The top six centers in Budapest are close to full, while second-tier centers have 6-10% vacancy, according to CBRE. In one of the latest refurbishments, the retail asset manager, Multi Corporation, as center managers and designers, have completed the EUR 18 million refurbishment of the Allee Shopping Center. It describes a scheme to enhance the “interior and exterior design and investing in sustainability to pave the way to carbon neutrality,” and the complex has received Breeam “Outstanding” accreditation following the renovation. ING Real Estate originally developed Allee, now owned by the investor Allianz Real Estate, represented by CBRE Investment Management. Refurbishment works started in 2020; as part of the redevelopment, the food court has been extended with more restaurants and cafes added.
Flagship Store
Retailers are expanding despite concerns over demand, consumer spending, and rising operational and energy costs. Food and beverage and sports brands are expected to extend their market presence. One of the most significant new entrants is the Irish multinational fast fashion retailer Primark, with a 4,300 flagship store in Arena Plaza. Outside of Budapest, one area of possible retail development is retail parks with a substantial hypermarket or food content that attract brands offering less expensively-priced products. These have a lower critical mass than shopping centers and provide flexibility in lease sizes for tenants, often in areas of the country with limited modern retail provision. Several retail parks in countryside hubs are attracting investors. Adventum, for example, is committed to
redeveloping
14
Tesco-anchored hypermarkets across Hungary. “Single tenant and strip mall retail buildings in secondary Hungarian cities could be an option: in these regions, the density of retail is underdeveloped. Retail is going to expand by international/regional brands offering typically lower-priced products. These are searching for strip mall locations or first-generation shopping centers in Budapest and the countryside,” says Attila Madler, asset management director at CPI Hungary. A recovery in overall retail sales could build momentum for the sector, although the latest August data was disappointing and proved weaker than expected. Beyond that, it is essential for any retail project to have a comprehensive offering covering the broadest possible range of consumer demand, according to CBRE.
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.
28 | 3
Special Report
News Real Estate
Take-up on the Budapest office property market reached 136,700 sqm in the third quarter, rising 35% from the same period a year earlier, according to a report released by the Budapest Research Forum (BRF), writes portfolio. hu. New leases accounted for 49% of take-up, while renewals comprised 45%. Expansions and pre-leases accounted for 3% of total demand. The vacancy rate on the market stood at 13.2%, up 0.6 of a percentage point from the previous quarter and 2.2 pp higher than in the same period a year earlier. There was 4,344,580 sqm of modern office space in Budapest in Q3. Developers handed over two new properties with a combined area of 13,460 sqm during the period. BRF’s members are CBRE, Colliers, Cushman and Wakefield, Eston International, iO Partners and Robertson Hungary.
Output of Hungary’s construction sector fell 0.5% year-on-year in August, after an intermittent expansion in the previous month, according to data released by the Central Statistical Office (KSH) on Oct. 16. Output of the buildings segment fell 7.6%, but civil engineering output rose 13.6%.
Minister’s Cabinet Office, noted that the renovation was supported by a government scheme launched in 2018, which has aided the construction and renovation of 85 hotels.
in Brief
Budapest Office Take-up at 136,700 sqm in Q3
Construction Sector Output Fell 0.5% y.o.y. in August
www.bbj.hu
Budapest Business Journal | October 20 – November 2, 2023
In absolute terms, construction sector output reached HUF 616 billion in August. The buildings segment accounted for 61% of the total. In a month-on-month comparison, construction sector output dropped 5%, adjusted for seasonal and workday effects. Order stock was 23.9% lower at the end of August than twelve months earlier. Buildings segment orders were up 4.9%, but civil engineering orders dropped 40.6%. New orders grew by 31.9% during the period. New orders in the buildings segment rose by 22.3%, and new civil engineering orders increased by 46.6%. Construction sector output fell 4.7% in JanuaryAugust from the base period.
Carpet Factory Converted to Hotel in Békésszentandrás A landmark carpet factory in Békésszentandrás (150 km southeast of Budapest) has been converted into a spa hotel and inaugurated, according to the conservative daily Magyar Nemzet [Hungarian Nation]. Antal Barna, the CEO of Körösparti Nyár Plusz, who initiated the project, said the building had been renovated “true to its heritage and quality” at a net cost of more than HUF 4 billion. Grant money covered close to half of that amount and made the Bordűr Wellness Hotel possible, he added. Antal Rogán, who heads the Prime
Few Interested in Lightweight Houses The vast majority (71%) of family houses for sale are brick-built, with barely 4% belonging to the lightweight category, according to a recent market report by Duna House, writes business daily Világgazdaság [Global Economy]. Buyers are still prejudiced against these nontraditional buildings, even though, contrary to the stereotype, they offer a timeless, environmentally conscious and quick solution to creating a home.
Esztergom Inaugurates HUF 533 mln Business Incubator The municipality of Esztergom (45 km northwest of Budapest) has inaugurated a HUF 533 million business incubator in its industrial park, Mayor Adám Hernádi said, according to hirado.hu. European Union-funded business incubators have already been inaugurated in two other cities in Komárom-Esztergom County: Komárom (85 km northwest of Budapest) and Tata (70 km northwest).
Real Estate Prices Decrease in Q3 Real estate prices in Hungary decreased in the third quarter of this year by 0.8% compared to the second quarter, according to ingtalan.com. The uncertain economic environment and high loan interest rates explained
Number of Real Estate Sales in Hungary (2006-September 2023) Number of residential transactions between private individuals
the decline, which kept many people away from the real estate market. The combined effect of the decrease in demand and the increase in supply can be seen in the prices, but the real estate brokerage company expects that the turnover will not remain at this level in the long term.
Mapei Sales Edge up 1.1% Y.O.Y. Domestic sales of the local unit of Italian building materials maker Mapei inched up 1.1% year-on-year to HUF 26 billion, indicating a “turnaround” after first-half sales dropped 3.4%, Mapei Kft. said on Oct. 9, according to profitline.hu. Mapei Kft. acknowledged seasonal effects and a “small-scale” increase in building and renovation projects for the higher turnover. Managing director Béla Markovich said renovation projects “dominated” during the period, as property owners aimed to boost energy efficiency. The firm expects full-year revenue growth. The company had a net sales revenue of HUF 34.2 bln last year, according to public records.
Duna House Q3 Commissions Revenue up 6% Y.O.Y. The commissions” revenue of Duna House’s franchise network rose 6% yearon-year to HUF 3.3 billion in the third quarter, the listed real estate broker said in a preliminary report published on Oct. 6, according to state news agency MTI. Commission volume in Hungary edged down 3% to HUF 2.1 bln because of higher interest rates and a decline in purchasing power. In Poland, the commission volume jumped 43% to HUF 1.1 bln. The commission revenue of the recently acquired Realizza brand in Italy came close to HUF 100 million, falling 38%. Commissions revenue of Duna House’s own offices increased by 9% to HUF 500 mln. The brokered loan volume of the group fell 7% to HUF 177 bln. Brokered loan volume reached HUF 94 bln in Italy, HUF 61 bln in Poland and HUF 22 bln in Hungary.
Number of Empty Apartments in CsongrádCsanád County Jumps
September August July June May April March February January
Source:
The number of vacant apartments in Csongrád-Csanád County has jumped between the last two censuses, according to business daily Világgazdaság [Global Economy]. The 2022 survey revealed that almost 32,500 properties are empty in the county, roughly 9,000 more than at the 2011 census. The most extensive number of vacant apartments was counted in Szeged (175 km southeast of Budapest by road), the county’s largest city, at more than 16,000, almost a fifth of the stock. There are 2,700 uninhabited homes in Hódmezővásárhely (191 km southeast of Budapest), 1,500 in Szentes (140 km southeast), and 1,300 in Makó (200 km southeast). The number of empty apartments in Szeged is 7,500 more than in 2011.
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www.bbj.hu
Budapest Business Journal | October 20 – November 2, 2023
Special Report | 29
Real Estate Developers
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ECE pRojEktmanagEmEnt buDapEst kFt. 6,612 www.ece.com
FutuREal HolDing zRt. www.futurealgroup.com
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bn ingatlanFEjlEsztő zRt. www.biggeorge.hu
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pRologis HungaRy managEmEnt kFt. www.prologiscee.eu
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WHitE staR REal EstatE kFt. www.whitestarrealestate. com
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skanska magyaRoRszÁg ingatlan kFt. www.skanska.hu
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PT2, AN1 (2024), MG4 (20242025), MG2, FT3, FT7, PT3 (20252026)
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inFogRoup www.infogroup.hu 3
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Westside Garden2023, Spirit Residence2024, Waterfront Cityphase ✓ 42024, Silverbay Residence2025, Szemesbay Resort2025
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assEt managEmEnt
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ConDominium opERation
built-to-suit DEvElopmEnt
REal EstatE utilization
REal EstatE invEstmEnt
ConstRuCtion
pRojECt managEmEnt
poRtFolio managEmEnt
ongoing pRojECts in HungaRy (invEstED valuE in HuF, ExpECtED yEaR oF ComplEtion)
FaCility managEmEnt
aCtivitiEs anD sERviCEs
publiC builDing
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typEs oF invEstmEnt
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total nEt REvEnuE in 2022 (HuF mln)
Rank
Ranked by total net revenue in 2022
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majoR CliEnts in 2022
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Árkád 1. Budapest, Örs vezér tere (2002), Árkád Pécs (2004), Árkád Győr (2006), Debrecen Fórum (2008), Árkád Szeged (2011), Árkád 2. Budapest, Örs vezér tere (2013)
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Budapest ONE Phase 1 (2020), ETELE Pláza (2021), Corvin Innovation Campus (Phase 1) (2022), HelloParks Maglód MG1 – 2022, HelloParks Maglód MG3 – 2023, HelloParks Fót FT1 – 2022, HelloParks Fót FT2 – 2023, HelloParks Fót FT6 – 2023, HelloParks Páty PT1 – 2023
IBM, British Telecom, Vodafone, Gebrüder Weiss, Drogerie Markt, HTNS
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IGPark Miskolc 1st phase, IGPark Kecskemét South 1st phase, IGPark Tiszaújváros 1st phase, IGPark Polgár C, D halls
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– ECE Projekt management International GmbH (100)
top loCal ExECutivE CFo maRkEting DiRECtoR
aDDREss pHonE Email
sandra brigitte müller, Dr. nóra kismarci, gabriella 1106 Budapest, szarka, Örs vezér tere 25/A mária verebélyi, (1) 4348200 ulrich schmitz, info@ece.hu monika adrianna pyszkowska – –
(100) –
David Hendrych, Rudolf nemes – Tímea AladicsSzili
1082 Budapest, Futó utca 47–53. (1) 2662181 info@ futurealgroup.com
Individuals (100) –
Ádám székely Máté Kovács Balázs Czifra
1115 Budapest, Bartók Béla út 105–113. (1) 4814530 info@infogroup.hu
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Liberty I. (2023), East Gate PRO Business Park (2022), Magyar Kassák Passage (2022), Telekom, Park West 1 (2022), Gobuda Deutsche Mall (2022), Park West 1 Telecom, (2022), B&B Hotel Budapest Philip Morris, GE, RTL, ✓ City (2021), Metropolitan Garden (2021), SiemenseMAG, TÜV evosoft HQ (2020), Telecom Rheinland, HQ (2018), Wizz Air Training alza.hu, Wizz Center (2018), ibis Styles Air, HIPA, Budapest Airport Hotel Lightware (2017)
Wingholding Zrt. (100) –
noah m. steinberg – –
1095 Budapest, Máriássy utca 7. (1) 4514760 info@wing.hu
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Emerald Residence (2020), Elisabeth Residence (2021), Németvölgyi Residence ✓ (2021), Waterfront City I.-III. (2021–2022 - 2023), Westside Residence (2022)
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Tibor Nagygyörgy (100) –
tibor nagygyörgy Dávid Farkas Eszter Sallai
1023 Budapest, Lajos utca 28–32. (1) 2252525 info@biggeorge.hu
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– Real estate funds (100)
paweł sapek – –
1095 Budapest, Lechner Ödön fasor 7. (1) 5777700 zhunyadi@ prologis.com
AIG, Cain International, Europa Capital, DEKA, Erste, M7, OTP, Raiffeisen
– White Star Real Estate LLC (100)
krisztián barabás Marietta Biczó Larina Németh
1124 Budapest, Csörsz utca utca 49–51. (1) 3825100 hu.officebud@ whitestarrealestate. com
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– Skanska Commercial Development Europe AB (100)
aurelia luca András Péterfy –
1133 Budapest, Váci út 96–98. (1) 3829100 property@skanska.hu
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Markó offices 9 (2018), IP West office building (2009), The Quadrum office building (2008), Haller Kert office building (2008), Market Central Ferihegy ✓ shopping park (2007), M1 Business Park (2006), Airport Business Park (2004), Alkotás Point office building (2002), Infopark A (1999)
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HoRizon 10 DEvElopmEnt kFt. www.horizondevelopment.hu
1,499
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Hb REavis ConstRuCtion 11 HungaRy kFt. 1,177 www.hbreavis.com
gRÁnit-pólus 12 managEmEnt zRt. www.granitpolus.com
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CoDiC HungaRy kFt. www.codic.eu
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tRigRanit 15 FEjlEsztési kFt. www.trigranit.com
ConvERgEnCE 16 www.convergence.com
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Agora Budapest
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HomeWork (2023), Porto Bello Residence (2025), Modiano (2026)
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atEnoR HungaRy kFt. www.atenor.eu 14
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Millennium Gardens, HUF 45.8 bln, 2024 Q1
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Academia Offices (2023)
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Eiffel Square (2010), Eiffel Palace (2014), Váci1 (2016), Promenade Gardens (2018), Szervita Square Building (2020), Villányi Gardens (2023)
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majoR CliEnts in 2022
oWnERsHip (%) HungaRian nonHungaRian
top loCal ExECutivE CFo maRkEting DiRECtoR
aDDREss pHonE Email
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Market Építő Zrt. (100) –
Ákos kiss Judit Litresits Balázs Both
1117 Budapest, Dombóvári út 27. (30) 1470421 iroda@ propertymarket.hu
DEREIF, Union, Macquarie, Erste
Darga Development Kft., individuals (A) MV Development Limited (A)
balázs Czár – –
1052 Budapest, Deák Ferenc utca 5. (1) 4731209 info@horizon development.hu
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– HB REAVIS GROUP B.V. (100)
Róbert kubinsky – –
1133 Budapest, Árbóc utca 1–3. – hungary@ hbreavis.com
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– Quintana Investments Limited (100)
gyula Ágházi Zoltán Lehoczky –
1062 Budapest, Váci út 3. (1) 3746500 info@ granitpolus.com
kornél kalapács Hervé Bodin Ibolya Csiernik
1051 Budapest, Szent István tér 11/B (1) 2003815 info.hungary@ codic.eu
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Krisztina Palace (2010), Green Court Office (2021)
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– Codic Hongrie S.A. (100)
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Váci Greens A, B, C, D – 2013–2018, Aréna Business Campus A – 2020, Váci Greens E, F – 2020, RoseVille – 2023
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– Atenor S.A. (90) Atenor Group S.A. (10)
norbert schőmer Adrienn Péter Máté Galambos
1034 Budapest Bécsi út 68–84. (1) 7855208 info@atenor.hu
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Henkel Hungary, Fressnapf Millennium Gardens Phase Hungary, MSD – I, Bonarka for Business, PharmaRevetas Capital Silesia City Center, Poznan ceuticals, (100) City Center, Millennium City Provident Center Pénzügyi Zrt., ION Dealogic, Borealis L.A.T.
tom lisiecki Bálint Brenner Hajnalka Király
1132 Budapest, Váci út 30. (1) 4566200 info@trigranit.com
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Eiffel Tér office building (2010), CityZen office building (2017), Kálvin Square office building (2017), ZenGarden (2020)
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(69) (31)
Csaba zeley Balázs Kovács –
1027 Budapest, Horvát utca 14–26. (1) 2250912 office@ convergence.com
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Andrássy Palace office building (2022), Balance Hall (2019), Gateway Office Park (Budapest, 2018), ✓ Quadra (Budapest, 2017), Balance Loft (Budapest, 2017), Balance Building (Budapest, 2016)
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– CPI Property Group (100)
mátyás gereben Tamás Pók Bea Déri
1139 Budapest, Váci út 99–105. (1) 2256600 hungary@cpipg.com
✓
Pillar office building (2022), White House office building (2018), GTC Metro office building (2010), Spiral office building (2008), ✓ Sasad Resort residential park (2008, 2010), Riverloft office and apartment house (2007), Riverside apartment house (2004)
ExxonMobil, evosoft/ Siemens, Ericsson, MBH Bank, IBM, Ford
– Globe Trade Centre S.A. (100)
gyula nagy, zsolt Farkas Csaba Zovát –
1138 Budapest, Népfürdő utca 22. (1) 4123680 info.hu@ gtcgroup.com
✓
✓
✓
Cpi HungaRy kFt. www.cpigroup.hu NR
assEt managEmEnt
REal EstatE bRokERaqgE
ConDominium opERation
built-to-suit DEvElopmEnt
REal EstatE utilization
REal EstatE invEstmEnt
ConstRuCtion
pRojECt managEmEnt
poRtFolio managEmEnt
ongoing pRojECts in HungaRy (invEstED valuE in HuF, ExpECtED yEaR oF ComplEtion)
FaCility managEmEnt
aCtivitiEs anD sERviCEs
publiC builDing
inDustRial
inFRastRuCtuRal
REsiDEntial
CommERCial
9
pRopERty maRkEt kFt. www.propertymarket.hu
www.bbj.hu
Budapest Business Journal | October 20 – November 2, 2023
typEs oF invEstmEnt
oFFiCE
Company WEbsitE
total nEt REvEnuE in 2022 (HuF mln)
Special Report
Rank
30 | 3
3
www.bbj.hu
Budapest Business Journal | October 20 – November 2, 2023
Special Report | 31
Asset Management Companies
1
Portfolio diversification according to ownershiP structure (%)
–
–
45
15
5
35
100
–
4,389
A
✓
✓
✓
✓
✓
–
11 55
32
2
–
A
A
Wingholding Zrt. (100) –
noah M. steinberg – –
1095 Budapest, Máriássy utca 7. (1) 451-4760 info@wing.hu
100
– (100)
gergely pados Zsuzsanna Kiss Orsolya Németh
1052 Budapest, Deák Ferenc utca 5. (1) 268-1288 info.budapest@ cushwake.com
Hubert Mühringer Erika Puskás Rita Szabó
1077 Budapest, Wesselényi utca 16. (1) 479-6020 office@ addvalgroup.com
otHeR
ACCounting seRviCes, ContRolling
pRojeCt MAnAgeMent
ReCeivAbles MAnAgeMent
tenAnt MAnAgeMent
oWned by Clients
–
oWn pRopeRty
✓
ConstRuCtion site
✓
Hotel
✓
oFFiCe
✓
Individuals (100) –
industRiAl
5,501
IGPark Miskolc, IGPark Kecskemét South, IGPark Kecskemét West, IGPark Polgár, IGPark Tiszaújváros, IGPark Karcag, Bartók Udvar office complex
inFogRoup www.infogroup.hu
RetAil
MAin pRopeRties MAnAged in H1, 2023
seRviCes oFFeRed in pRopeRty MAnAgeMent
poRtFolio, pRopeRty And ReAl estAte MAnAgeMent
CoMpAny Website
poRtFolio diveRsiFiCAtion ACCoRding to type oF pRopeRty MAnAged (%)
totAl net Revenue in 2022 (HuF Mln)
RAnk
Ranked by total net revenue in 2022
oWneRsHip (%) HungARiAn nonHungARiAn
top loCAl exeCutive CFo MARketing diReCtoR
AddRess pHone eMAil
Ádám székely Máté Kovács Balázs Czifra
1115 Budapest, Bartók Béla út 105–113. (1) 481-4530 info@infogroup.hu
2
Wing ZRt. www.wing.hu
3
CusHMAn & WAkeField neMZetköZi ingAtlAn tAnÁCsAdó kFt. www.cushmanwakefield.com
4
AddvAl kFt. www.addvalgroup.com
1,020
A
✓
✓
–
✓
✓
–
20
–
80
–
–
–
100
AddVal Group Kft. (100) –
5
CA iMMo HungARy kFt. www.caimmo.com
728
Millennium Towers I, II, III, H, City Gate, Capital Square, IP West, Bartók Ház
✓
✓
✓
✓
✓
–
–
–
100
–
–
100
–
– CA Immobilien Anlagen AG (100)
john Mckie – –
1095 Budapest, Lechner Ödön fasor 6. (1) 501-2800 office@caimmo.hu
6
tRigRAnit FejlesZtési kFt. www.trigranit.com
708
A
✓
–
–
✓
–
–
–
–
100
–
–
100
–
– Revetas Capital (100)
tom lisiecki Bálint Brenner Hajnalka Király
1132 Budapest, Váci út 30. (1) 456-6200 info@trigranit.com
7
RobeRtson pRopeRty MAnAgeMent ZRt. www.robertson.hu
A
Robertson Hungary Kft. (100) –
Róbert tilki Tünde Pásztor –
1138 Budapest, Váci út 117–119. (1) 688-4400 office@ robertson-pm.hu
8
ConveRgenCe www.convergen-ce.com
411
A
✓
✓
✓
✓
–
–
–
15
85
–
–
–
100
(69) (31)
Csaba Zeley Balázs Kovács –
1027 Budapest, Horvát utca 14–26. (1) 225-0912 office@ convergen-ce.com
9
M7 ReAl estAte HungARy kFt. www.m7re.eu/hu
110
A
✓
✓
–
✓
–
–
–
50
50
–
–
–
100
– M7 Real Estate Europe Limited (100)
balázs Magyar – –
1139 Budapest, Váci út 99. (1) 701-4050 info-hu@m7re.eu 1123 Budapest, Alkotás utca 53. (1) 785-4985 info@celand.hu
Ce lAnd 10 MAnAgeMent kFt. www.naiceland.hu
3,560
528
A
A
✓
✓
✓
✓
✓
✓
✓
✓
–
✓
–
–
48 16
10 10
31
75
5
5
–
–
–
A
76
A
✓
✓
–
–
–
–
A
A
A
A
A
A
A
Individuals (100) –
Csaba széll, Anita Molnár-széll, Zoltán balla Katalin Ócsai Eszter Méhes
A
A
✓
✓
✓
✓
–
–
32
–
52
13
3
100
–
– CPI Property Group (100)
Mátyás gereben Tamás Pók Bea Déri
1139 Budapest, Váci út 99–105. (1) 225-6600 hungary@cpipg.com
A
Real estate asset management, leasing, economic and financial building management, property management
–
– 80.50 19.50 –
–
100
(100) –
tibor gasser – –
1093 Budapest, Közraktár utca 30. (1) 382-7560 office@gamma-am.hu
Cpi HungARy kFt. www.cpigroup.hu NR
NR
gAMMA pRopeRties kFt. www.gamma-am.hu
A = would not disclose,
NR = not ranked, NA = not appliacable
A
A
✓
✓
✓
✓
This list was compiled from responses to questionnaires received by October 18, 2023, and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time. The list is based on companies’ voluntary data submissions. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14, or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu
4
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Budapest Business Journal | October 20 – November 2, 2023
Socialite
Photographs of Amazon Tribe at Museum of Ethnography
The press release for the Museum of Ethnography’s exhibition of Claudia Andujar’s work describes her as a “Hungarianorigin female photographer.” In fact, the experience of being Hungarian Jewish is central to Andujar’s work, although it may not look that way at first.
Photographic Activist
The shaman and tuxaua João administers the hallucinogenic yãkoan (from the Reahu series) Catrimani, 1974 / Photochemical print. She then moved to New York, where she studied humanities at the prestigious Hunter College in New York City.
In
DAVID HOLZER
Now housed in a truly remarkable new building, the Museum of Ethnography in Budapest has existed for 151 years. Judit Gellér (one of the curators of the Andujar exhibition “Yanomami. Spirits. Survivors.”) tells me the institution is “a social museum dedicating exhibitions to generate discussions about social issues on the one hand and, on the other, to show the collection the museum has accumulated since it was established. All our exhibitions have an international, multicultural, ethnographic aspect, but some are devoted to the Hungarian cultural ethnographical heritage,” she explains. Her co-curaters are Borka Eszter Bazsó, Magdolna Szabó and György Szelja. Held in collaboration with São Paulo’s Vermelho Gallery, “Yanomami. Spirits. Survivors.” is the first contemporary photo exhibition in the new building. Unfortunately, Andujar, 92, is not well enough to travel to Hungary. She was born in 1931 in Nagyvárad (modern-day Oradea, Romania) to a Swiss mother and a Hungarian Jewish father. Towards the end of World War II, Andujar and her mother fled the Holocaust, escaping to Switzerland. Her father died in Dachau.
1949,
she married Spanish refugee Julio Andujar. From the 1950s onwards, she became associated with the contemporary art and photography scene. In 1956, she moved to Brazil to be with her mother. Andujar’s career in photojournalism began with a project on the Karajá people of Central Brazil. Since then, her work has appeared in magazines such as Life, Aperture, and Realidade. She received Guggenheim Fellowships in 1971 and 1977.
Communication Tool
In her photographic work, Andujar wasn’t especially influenced by great Hungarian photographers such as Capa or Brassai. As Gellér told me, “She didn’t know these artists personally. She took up photography in Brazil purely as a tool to communicate. It was there that she met photographers and anthropologists, and her photography began to develop. According to Thyago Nogueira, head of Contemporary Photography at the Instituto Moreira Salles in Brazil, “In the first half of [Andujar’s] life, she was searching for photographic representation of something that was immaterial, that was abstract; of a people and a culture, and of a way of seeing the world that she wanted to give a photographic form to.”
She first encountered the Yanomami, who live in the Amazon rainforest, in the
early
1970s,
became fascinated by them and their philosophy and found her subject. More than that, “They quickly became a second family to me,” she has said. Her work to help protect the Yanomami began then. It took time for them to become comfortable being represented visually by photography. One of the ways Andujar convinced them to accept it was by explaining that it could help protect them from the violence of the outside world. When, in the 1970s, the Brazilian government started planning to build a transcontinental highway through the Amazon, it began to look like the Yanomami way of life would be wiped out. Having been forced to flee Hungary by the Nazis as they attempted to destroy Jewish culture and knowing her father and members had been killed in the genocide, Andujar felt compelled to act. In 1977, she denounced the appropriation of indigenous land by settlers and was expelled from the region by the Brazilian military regime. Throughout the 1980s and ’90s, when the Yanomami were being killed by disease and poisoning resulting from the intrusion of the outside world, Andujar was their champion. She was one of the driving forces that led to the Brazilian government establishing a 96,000 square kilometer (37,000 square mile) protected area for the Yanomami in 1992.
Andujar documented the Yanomami culture in her book “Yanomami: The House, The Forest, The Invisible” published in 1998. “Yanomami. Spirits. Survivors.” presents 124 photographs, analog enlargements, digital prints and additional projected imagery that showcase a significant portion of Andujar’s life’s work. The exhibition is structured chronologically from when she arrived in Brazil through her career as a magazine photographer to her work as an activist. Her work generally doesn’t present itself as supposedly objective reportage of “the other.” As the Museum of Ethnography points out, “Andujar’s primary goal is not to document ethnographic phenomena; rather, her photographs reveal a personal narrative about her own journey and her dialog with the Yanomami people.” But it’s a journey that embodies the themes of cultural encounter, discovery, understanding and representation that are at the heart of anthropology. Driven by her sense that she’d found a second family and because her work is characterized by, as the museum puts it, “a unique and sensuous perspective often found in female artists,” Andujar takes a far less conventional and much more exciting approach. In her first photos of the Yanomami, she decided she wanted to try and show something of their vision of the Amazon around them and their spirit world. Using techniques such as flash devices, infrared film and Vaseline on her lens, she made photographs that were distorted and strange but intriguing. Somehow, the photographs taken by Andujar and curated by Gellér are all the more powerful for not being straightforward reportage. They’re even more of an activist tool to save the Yanomami and the Amazon itself because they attempt to convey the spiritual richness of the people and the place.
“Yanomami. Spirits. Survivors.” runs until June 2024. An exhibition of Korean costumes and clothing opens in late October. In spring 2024, the Museum of Ethnography will open a large permanent exhibition showing its collection and explaining its processes. Find out more at www.neprejaz.hu.
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Budapest Business Journal | October 20 – November 2, 2023
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Socialite | 33
Frank Hegedus: A ‘Fool for Christ’ With an MBA He has a bachelor’s in German, an MBA and a Doctor of Ministry. He’s been a clinic manager, a financial planner, a professional counselor, and now a church chaplain in Budapest. You might say Frank Hegedus has “got a few T-shirts.” KESTER EDDY
There is no such thing, of course, as “an average” church minister, but if there were, Frank Hegedus, Chaplain of St Margaret’s Anglican Church, Budapest, would surely be way off the mean. “I’ve become famous at St Margaret’s for saying, ‘Let’s have a coffee; when are you free?’” he says, sipping a cup in a District VII cafe. The Rev. Dr. Frank Hegedűs (although it’s not on his birth certificate, he uses the Hungarian “ű” in his official title) seems to have spent much of his life talking to people. Born and raised until he was 10 in Muskegon, a small, industrial city close to Lake Michigan in the United States, he says his “childhood dream” was to become a priest. He joined the Greyfriars, a group within the Franciscan order, and went to St. Louis University to study German literature, followed by a Fulbright Scholarship in Germany itself. “I did my basic theological training at the University of Munich. And then, I went back to the States, worked in a parish for a while, but became disillusioned with the Catholic Church,” he recounts, although he declines to go into details. “I’m not casting aspersions by any means: I have a very high regard for the Catholic Church; it just wasn’t for me.” There followed a substantial period of secular life and work. “I got a job as a clinic manager in a large hospital in Minneapolis. I thought, ‘Well, this is cool, but I should know what I’m doing!’ So, I [went] back to get a [more relevant] degree,” he says. Thus, in his early 30s, he entered business school at the University of St. Thomas, Minneapolis, studying for an MBA. This turned out to be something of a struggle. “It wasn’t Harvard, Yale […] but for me, it was challenging. I envied, admired,
Hungary. Then, he saw a vacancy for the position of pastor of St. Margaret’s Church. Hegedus landed in Budapest to begin his new ministry on April Fools’ Day, 2011. “I arrived not knowing for sure what I was getting myself into: a church community half a world away from the California I knew so well and made up of members from around the globe,” he recalls. “My predecessor, Canon Denis Moss, had done a marvelous job of getting the chaplaincy off the ground and on a sure footing, excuse the mixed metaphors, but I felt we needed to grow and reach out even more broadly to the English-speaking community at large in Hungary.”
Life Journey
Hegedus’ unique life journey invites a slew of questions. How, for example, does an MBA add value to his pastoral work? “I sometimes facetiously say that I learned more theology in business school than I did in seminary because a good business manager has, to use the church word, to take stewardship [seriously],” he says. For the mid-Western chaplain, it’s a question of caring for resources: a manufacturer, for example, has to ensure all equipment is in top shape while simultaneously caring for the workforce, such as providing EAP. “And you have to realize that is part of what a priest does too [...] take care of the human elements,” which is, he chuckles, “God’s resource at work in the world.” As for counseling, pastoral work is far less intense. Yet, some of the most Rev. Frank Hegedus. Photo by James Cloke. moving stories are similar, involving someone coming to terms with infidelity or addiction, “both of which “We were trained to know when can be devastating to the individual I guess, some of my colleagues for whom someone’s problem was just a normal, and to their loved ones,” he reflects. the number crunching was natural and everyday ‘my dog’s died, and I’m really One thing about finance that he just obvious. For me, it wasn’t obvious sad’ issue, as opposed to ‘I’m seeing did learn from his MBA, however, at all!” he recalls. ghosts and hearing voices.’ I can’t treat has held him in good stead. Rather than amortization rates such people; they need a specialist, “Let’s be honest, churches are and discounted cash flows, Hegedus as opposed to somebody who just needs businesses. [...] I’ve forgotten all that was interested in “the intersection a little hand-holding because they’ve finance stuff, but I did learn enough of work and people, and how that got fired, had a fight with their spouse to know you’ve got to have good functions,” as he puts it. or something,” he says. people to take care of your finances. Bizarre Move Around this time, in the mid-1980s, And I’m blessed with some sharp Given this, his next move seems he ran into a minister of the Episcopal people here to help me with that,” bizarre. “I don’t know why I ever thought Church, a branch of the worldwide he emphasizes. to go into financial planning, which Anglican Communion. So, it’s back to stewardship, and the I did a bit later. That was really stupid. “We were pretty much the same team effort at St. Margaret’s certainly I got a stockbroker’s license, [but all] age and had both been ordained on appears to have paid off. I found was: Now I know another the same day in the same city but “We have grown in the past thing that’s not for me!” in different denominations. So, we decade from Canon Denis’ sure Perhaps heeding his mistakes, he became friends, and he ushered foundation and very nearly doubled turned to counseling for corporations me into the Anglican world, and in size, nowadays approaching nearly in so-called Employee Assistance I’m forever grateful to him for that,” 50 congregants on many Sundays. Programs (EAP). EAPs enable Hegedus recalls. Saint Paul speaks of being ‘fools for businesses to provide short-term As a result, in early 1987, he became Christ,’ and I guess that is sometimes counseling intervention, in-person a U.S. Episcopal minister, initially just what we need to be to make it all or by telephone, for personal issues. keeping his day job before becoming work [...] And not just on April first.” It’s free to the employee, the idea a full-time priest, including a stint at being a happy worker is a better, a parish in Silicon Valley, California. more productive worker. Fast-forward two decades, a period in You can contact Hegedus or “These are pretty big in the States, less which Hegedus had been increasingly St. Margaret’s via the website so in Europe, perhaps,” Hegedus notes. strengthening his ancestral links with anglicanbudapest.org. By now, he had obtained a Doctor of Hungary, his father having been born in Ministry, a counseling qualification. Kány, a tiny village in rural, northeast
34 | 4
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Budapest Business Journal | October 20 – November 2, 2023
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
Italian Chamber of Commerce in Hungary (CCIU)
French-Hungarian Chamber of Commerce and Industry (CCIFH)
Celebrate art, tradition, and innovation with the Milan Jewelry Week from Oct. 17-22. The chamber has been invited to bring several Hungarian buyers to participate in the event. Numerous brands, artists, designers, and high jewelry academies from Italy and Hungary will come together to showcase their creations and share knowhow. Public engagement is ensured through exhibitions of international artists, presentations of exclusive collections, interactive workshops, and live performances. The week offers a unique opportunity to promote collaboration and strengthen ties between the two countries in this sector.
To provide a simple way of raising employee awareness of the challenges of climate change, CCIFH is offering a new short (20-minute) animation that provides firstlevel information on the complex process of climate change. Employees can learn in small groups and immerse themselves in the Climate Fresco workshop. The workshop animators are from AIR France-KLM, Decathlon and Michelin. • When: Wednesday, Nov. 15. 9 a.m.-noon • Where: Milestone Intézet W17, Wesselényi u. 17, 1077 Budapest • Cost: Members HUF 9,900 (+ VAT); non-members HUF 14,900 HUF (+ VAT)
Belgian Business Club in Hungary (Belgabiz) BelgaBiz organized an exclusive members-only networking reception on Oct. 5 at the Residence of Belgium to meet and greet Jeroen Vergeylen, the newly appointed Ambassador of Belgium to Hungary. His warm and friendly welcome promised a fruitful collaboration between the embassy and Belgabiz in the coming years, with a particular focus on the trio presidency of the Council of the EU, including Belgium and Hungary. Jim Bauters, president of Belgabiz, Jeroen Vergeylen, and Ferencz Gyöngyi of VGD Hungary Kft. greeted the guests. Belgian and Hungarian culinary specialties included beers from the Belga Sörmester, wines from Fuchs Ujvári Winery and sweets from The Belgian Hungary.
Joint Venture Association (JVSz) Swiss-Hungarian Chamber of Commerce (Swisscham) A Swiss-Hungarian Business Forum took place in Pécs on Oct. 4, part of the Swiss Days series jointly organized with the Embassy of Switzerland in Hungary. The central theme was the “Circular Economy for a Sustainable Future.” Guests were welcomed by Swisscham president István Béres, Mayor of Pécs Attila Péterffy and Jean-Francois Paroz, the Ambassador of Switzerland to Hungary. Following an introductory presentation on sustainability by Irén Márta of the Business Council for Sustainable Development in Hungary, participants were informed about SwissHungarian Cooperation Program projects in sustainability and health. After the break, two sustainability roundtable discussions featured representatives of Roche Hungary, the University of Pécs, Holcim Hungary Ltd., and Kontakt Elektro Ltd. The highlight of the day was a gala dinner, where Roche Hungary presented the cooperation agreement with the University of Pécs, which was signed in the presence of Minister Tibor Navracsics. The evening also featured a performance by Swiss Alpine horn players, a local dance group and the award ceremony of the cake competition organized by the Swiss-rooted confectioner Caflisch in Pécs.
JVSz recently launched its “Country Ride” event series to engage the SME sector nationwide. The next event will take place in Pécs on Monday, Nov. 6. The opening speaker will be Minister of Foreign Affairs and Trade Péter Szijjártó. Hungarian energy policy and Paks II (the expansion of the nuclear power plant) are key topics. The event also addresses the critical role of building innovation ecosystems. Business leaders from Baranya, Somogy and Tolna counties will be welcomed. A detailed program and tickets can be found on the JVSz website.
Hungarian-Norwegian Chamber of Commerce (HNCC) HNCC and the Embassy of Hungary will organize an online Scientist Seminar (Tudós Est) on Oct. 30. This series was launched in 2018 with the idea of introducing the work performed in Norway by Hungarian scientists, researchers, physicians, and so on in an easily understandable, popular yet scientific and concise way (each presentation is a maximum of 30 minutes). Zsófia Domsa, an adjunct at the Norwegian University of Science and Technology, will present “Jon Fosse’s Dramas on Hungarian Stages,” focusing on the works of this year’s winner of the Nobel Prize for Literature in Hungarian theater. Dr. Júlia Palik, a senior researcher at the Peace Research Institute, Oslo will seek to answer “How Does the Disarmament of Insurgent Groups Affect the Chances of Peace?” These lectures provide a unique opportunity to engage with diverse research topics in a language accessible to all, fostering a deeper understanding of these subjects. A “Medical Service and Technology Day” will be held at the Hungarian Embassy in Oslo at the end of November, jointly organized with the Hungarian-Norwegian Chamber of Commerce. This will be an excellent chance for four Hungarian medical service providers and product manufacturers to show their activities to interested prospective Norwegian partners.
Canadian Chamber of Commerce in Hungary (CCCH) The CCCH will host its traditional 29th Canadian Lobster Dinner on Nov. 11. This year, a portion of the raffle proceeds will go to SOS Children’s Village, a foundation that works in 136 countries to support families and help children at risk grow up in a loving home. Participants will be entertained by live
music, exhibitors, a silent auction and raffle prizes. Tickets include unlimited cocktails and alcoholic beverages. • When: Saturday, Nov. 11 • Where: Hotel InterContinental Budapest, Apáczai Csere János u. 12-14, 1052 Budapest • Cost: Members: HUF 69,723; non-members HUF 88,773
The Netherland-Hungarian Chamber of Commerce (Dutcham) Save the date for the annual Dutcham Christmas Drinks on Dec. 19, from 6 p.m., to celebrate at a “cool place” with warm food and drinks at the Crowne Plaza Hotel’s Cult Terrace.
British Chamber of Commerce in Hungary (BCCH) The BCCH invites guests to join it for one of the bestknown and most successful events in the expat calendar, the St. Andrew’s Ball celebrating Scotland’s national day, sponsored by long-standing member Budapest British International School. Experience authentic Scottish entertainment with Craig Weir, one of Scotland’s leading bagpipers, and dance along with the fabulous Liam Smith Ceilidh Band. There will be a three-course meal from the Marriott, along with wine, beer and, of course, whisky, courtesy of Diageo. There will also be a charity tombola for the benefit of Tabitha Haz Children’s Hospice, followed by disco hits to keep the dancing going until the early hours. Törley will be the official sparkling wine supplier for the event. • When: Nov. 25, 6 p.m. • Where: Budapest Marriott Hotel, Apáczai Csere János u. 4, 1052 Budapest. • Cost: HUF 39,000 per person (+ VAT) Dress Code: Black tie or Highland dress
German-Hungarian Chamber of Industry and Commerce (DUIHK) The DUIHK and the Hajdú-Bihar County Chamber of Commerce and Industry held a successful German InfoPoint event on Oct. 5 in Debrecen on “Sustainable, Innovative Solutions for Industry.” The event, held at the HBKIK HQ, was supported by Siemens Zrt. and the Hoffmann Group. Experts from leading multinational companies presented sustainable industrial practices. The presentations focused on the phenomenon that in recent years, in addition to climate change, the energy crisis has posed increasing challenges to business organizations, bringing the importance of environmentally conscious and sustainable business operations to the fore. The event provided information and inspiration to help Hungarian businesses increase their competitiveness by meeting sustainability requirements.
4
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Budapest Business Journal | October 20 – November 2, 2023
Party Like 007 This Bonfire Night
One twist this year is that, as it’s the 70th birthday of British icon 007 (Ian Fleming introduced “Bond, James Bond” to the world in 1953), it is suggested that guests come as a character from a Bond movie. A prize will be awarded for the best costume. Otherwise, it is the usual smartcasual dress code. Either way, there will be a “red carpet” photo wall as guests arrive with a complementary printed picture. Entertainment will include live pop, soul and funky tunes by Fruzsi & Badman and the the Just Show Band, which will play
Almqvist (Ireland), Désirée Bonis (the Netherlands), Jorge Roza de Oliveira (Portugal), Masato Otaka (Japan), and Mohamed El Shinawy (Egypt), as well as Duncan Graham, chairman of the British Chamber of Commerce in Hungary, and the Rev. Frank Hegedűs, the priest at St. Margaret’s Anglican Church in Budapest. The virtual bonfire and fireworks display reflect the British tradition of Bonfire Night, also called Guy Fawkes Night and is held annually across the United Kingdom to mark the anniversary of the foiling of a plot to blow up the Houses of Parliament in London
BBJ STAFF
Publisher Stephen Linfitt says some tickets are still available for the 18+ party on Saturday, Nov. 4, but adds that they are going fast. He urged people to “please book now to avoid missing out.” For those that can last that long, the evening, hosted once again by the Budapest Marriott Hotel, runs from 6 p.m. on Saturday until 1 a.m. on Sunday morning. Guests of honor at the Bonfire Night party include ambassadors Paul Fox (United Kindom), Ragnar
News
in
1605. The party also celebrates XpatLoop’s 23rd anniversary.
in Brief
Bend it Like Beckham in Budapest A new temporary figure has appeared at Madame Tussauds Budapest: one of the world’s most famous athletes, style icons, businessmen and celebrities. David Beckham’s wax figure is on loan from Madame Tussauds Prague and will be displayed for Hungarian fans at the Palazzo Dorottya in Pest’s District V for a few weeks. It was officially unveiled on Wednesday, Oct. 18.
Novák: Nobel Winners a ‘Great Honor’ for Hungary The two Nobel Prizes won earlier this month by Hungarian scientists Katalin Karikó and Ferenc Krausz, respectively, are a “great honor” for Hungary, President Katalin Novák said in an interview with local news site feol.hu on Oct. 16 following her visit to Fejér County. “Let us celebrate together that two exceptional Hungarians
18 but also supports other local charities helping children in need. The third benificiary is the Hungarian Red Cross.
Bond’s Birthday
Local expat portal XpatLoop.com is once again inviting guests to #FeelGoodDoGood at its popular annual charity fundraising gala, which, it says, “unites goodhearted guests from the international community in Hungary.”
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have achieved such major recognition to the greatest joy and pride of the entire nation,” Novák said. One Nobel laureate is already something to be immensely proud of, “but to have two at the same time is an outright miracle,” the president said. The residents of central Hungary’s Fejér County could be incredibly proud to have given the nation a Nobel laureate in the person of physicist Ferenc Krausz, she added.
Budapest, Shanghai to Host Olympic Qualifier Series Budapest and Shanghai will host the Olympic Qualifier Series, new festivalstyle events combining sport with urban culture, by the executive board of the International Olympic Committee on Oct. 12, according to state news agency MTI. The two-part series in the run-up to the Paris 2024 Olympic Games will be “an important step” in determining which athletes qualify in BMX freestyle,
“As a Brit and as ambassador, I am proud that XpatLoop.com has held celebrations for Bonfire Night for over a decade. Not only have they been some of the best parties in town, but also events that have raised incredible amounts of funds for a number of worthy causes,” said Ambassador Fox. As the tagline about feeling good and doing good clearly suggests, the party has twin goals: supporting charity while having a fun evening. There are three principal beneficiaries. The Magic Lamp Wish Granting Foundation (Csodalámpa) helps children aged between three and 18 suffering from life-threatening illnesses. The Young People in Need nonprofit organization (Rászoruló Fiatalok) focuses on solutions for the emotional abuse of Hungarian children up to
breaking, skateboarding and sport climbing, the IOC said. The Budapest stop on the series will be held at the Ludovika Campus on June 20-23, after the Shanghai event, to take place at the Huangpu Riverside on May 16-19. Balázs Fürjes, who co-chairs the local organizing committee, said Budapest was “honored to bring together a new generation of Olympic sports. As always, we are committed to offering our best in the Hungarian capital, ensuring we remain gracious hosts and contributing to the development of Olympic sports,” he added.
Organized Trips to Israel Suspended Passengers who have paid for this year’s cultural cruise to Israel can rebook to another date or destination with the largest Hungarian tour operator, OTP Travel, business daily Világgazdaság [Global Economy] has learned. Other travel agencies are following the company’s example. Israel was not included in the category of countries not recommended for travel when the bookings were made, which means that no one had a legal right to get the cost of the trips refunded. However, OTP Travel unilaterally decided to offer members
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tunes during dinner and return later in the evening to perform dance classics and get the party moving. That particular baton will be passed to DJ Woods to keep the dancefloor busy into the small hours. The usual international snack buffet will be served by many of Budapest’s best eateries and free-flowing alcoholic and non-alcoholic drinks. MC Hans Peterson will guide proceedings all evening with TV star Zsuzsa Demcsák. They will host a Live Auction and announce the winners of a Silent Auction. The proceeds from the charity raffle will go to Food Bank Aid to help Ukrainian Refugees in Budapest. There are a range of tickets, including new VIP packages introduced this year, available on xpatloop.com
of its seven groups starting this year the possibility of rebooking for another trip or at a later date. Alternatively, the price of the trip will be reimbursed to those who request it.
Saskatoon Celebrates Western Canadian Hungarian Folk Festival The city of Saskatoon in Canada was alive with the vibrant sights and sounds of Hungarian culture as the community came together for a threeday celebration of their rich heritage, language, and traditions. Suzanna Buro, curator of the Western Canadian Hungarian Folk Festival, told CTV News how significant the event is for the community. “This is the high point of our year. We can’t wait for it to be festival weekend because it’s the time when we get back together in this community that feels like a village. Feels like a family. We’ve all known each other for a long time,” said Buro. The festival, which ran from Oct. 6-8 at the Broadway Theater, featured diverse cultural performances, traditional dances and keynote speakers. Vendors also added to the festival’s charm, offering a wide array of folk dress and cultural artifacts to explore.
PHARMA CEO Break fast The Challenges Facing Pharmaceutical Industr y
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Call for Greater Efficiency, Transparency, Predictability for Hungary’s Pharma Sector Fifty guests drawn from across the pharmaceutical sector attended the inaugural Pharma CEO Breakfast event at the Anantara New York Palace Budapest Hotel on Tuesday, Oct. 17. Organized by the Budapest Business Journal with the professional support of Phoenix Group and Benu Pharmacies, the new platform is dedicated to one of the most dynamic industrial sectors, which faces unique challenges and touches all kinds of areas, from supporting everyday well-being to developing new medicines and treatments and, of course, providing a backbone for the Hungarian national healthcare system and keeping our hospitals running. The event started with two 15-minute keynote presentations. Zsolt Bibity, general manager for Hungary at IQ VIA, spoke about “Pharma Trends and Shortage Challenges.” Dóra Szerencsés, healthcare strategic director and partner at Inspira Group, spoke about the “Challenges Facing the Pharmaceutical Industry From the Patients’ Perspective.”
That was followed by a roundtable featuring Dr. Judit Bidló (Deputy State Secretary for the Professional Management of Health at the Ministry of the Interior), Dr. Katalin Szalóki (director of AIPM, the Association of Innovative Pharmaceutical Manufacturers or AIPM), Wolfgang Wallisch (CEO of Phoenix Group in Hungary), and Matt Zeller (country president for Novartis Hungary). To the surprise of no one, there was unanimous agreement the sector could always use more more money, and while government and industry naturally had different positions on the appropriate tax level, all agreed the proper allocation of the existing resources was the crucial issue. The discussion was notable for its collegiate nature. Takeaways included the need for a holistic approach, for all stakeholders to find the best way to work together for better patient health outcomes, a call for better transparency and predictability, the need for better efficiencies in all areas of healthcare, but also the potential offered across the next 18 months by centralized data collection and advances in AI, digitization and e-medicine for a transformative systemic change.
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