FOREWORD
Welcome to our annual overview of the investing landscape in the Hungarian marketplace. Within these pages, we look at the trends for foreign direct investment, the hopes for the economy in 2025 and discuss the likely development paths for commercial real estate. We investigate the continued expansion of the business services sector, now spreading far beyond Budapest’s borders to Hungary’s countryside university cities, and take the temperature of the country’s drive toward a net-zero future. We even dust off our crystal ball to look at how Europe and Hungary can adapt to a “polycrisis” world with our reporting from the Protechtor Future Summit.
We also present several case studies, whether it is Ceva-Phylaxia’s application of cuttingedge research and development to animal vaccine production, how Lufthansa Technik is doing its best to smooth out seasonality peaks and troughs at its aircraft maintenance business at Budapest Ferenc Liszt International Airport, or CATL’s announcement that it will start battery cells production at its purpose-built factory in Debrecen in 2025.
Coincidently, those three companies showcase some of the reasons behind Hungary’s remarkable track record in attracting FDI in recent years. Phylaxia was founded in Hungary more than a century ago; Ceva is a French multinational. Lufthansa Technik is part of Germany’s storied Lufthansa Group, while CATL is a Chinese manufacturer building its plant next door to BMW’s brand new iFactory to supply the all-electric Neue Klasse due to start rolling off the production lines next year. Hungarian ingenuity is increasingly becoming a meeting point for Western and Eastern FDI.
Robin Marshall Editor-in-chief
A WALK THROUGH HUNGARY’S AWARD-WINNING INVESTMENT LANDSCAPE
In recent years, Hungary has confirmed its position as a strategic hub for global investments in the Central and Eastern European region, leveraging its geographic location, competitive economic policies, and innovative development strategies.
By Bence Gaál
Under the Hungarian Investment Promotion Agency’s leadership, the country continues attracting significant foreign direct investment while balancing interests from the East and West. In 2024, Hungary showcased record-breaking achievements, forward-looking ambitions, and bold responses to geopolitical challenges.
A testament to Hungary’s unique economic positioning was its role as a prominent participant at Expo
Real, the leading international fair for real estate and investment held in Munich. The event, featuring more than 2,000 exhibitors from 75 countries and nearly 40,000 professionals, served as a platform for Hungary to promote its role as a meeting point for investments from East and West, thanks to its excellent location in the heart of the Carpathian Basin.
Industrial and logistics developments were the focus at the Hungarian stand, alongside residential, hotel, and office projects. Key exhibitors
included real estate heavyweights like HelloParks, a Futureal group member, and Innovinia, the owner of the IG Park portfolio. Notable projects in cities such as Debrecen, Kaposvár, and Pécs underscored Hungary’s efforts to spread economic activity beyond Budapest.
Hipa CEO István Joó emphasized that Hungary attracted more than EUR 13 billion in FDI in 2023 (the final 2024 amount was not in at the time of writing), a figure that surpasses the combined inflows of its regional Visegrád Four (V4) peers: the Czech Republic, Poland and Slovakia. This achievement highlights Hungary’s growing appeal to a diverse range of investors, bolstered by strategic efforts to harmonize relationships with global powers.
ELECTROMOBILITY ACTING AS CATALYST
FOR GROWTH
Hungary has firmly established itself as a vital player in the electromobility sector, serving as a manufacturing base for all three premium German automakers, Audi, BMW, and MercedesBenz, as well as five of the 10 largest Asian battery manufacturers. Chinese investments alone have reached EUR 17 bln, reinforcing Hungary’s role as a pivotal node in the global battery and automotive supply chain.
Joó’s comments at the Hungarian Battery Week conference revealed even more ambitious plans: Hungary aims to become Europe’s leading R&D center for battery technology by 2030. This vision includes fostering innovation to secure the highest number of registered patents in Europe’s battery sector,
Minister of Foreign Affairs and Trade Péter Szijjártó speaks at a supplier forum of Chinese automotive company BYD held at the Hungarian Investment Promotion Agency HQ in Budapest on Oct. 15, 2024.
Photo by
Zoltán Kocsis / MTI
2025 OFFERS HOPE OF SIGNIFICANT BOOST TO HUNGARY’S ECONOMY
The 2024 business year saw a significant recovery of the Hungarian economy compared to the previous year, including increases in foreign direct investments, gross domestic product and purchasing power. Predicting the future of Hungary’s economy from this foundation, two expert analysts discuss anticipated foreign and domestic investments, developing sectors, new financial strategies and government stimulative initiatives for the 2025 fiscal year.
By Luca Albert
Hungary’s economy has seen a recovery in the 2024 financial year after a slight downturn in 2023. One of the most impactful sources for this improvement was the significant amount of foreign direct investment flowing into the country.
“In recent years, Hungary has maintained its attractiveness and served as a key location for FDI on both a continental and global scale. The country’s strategic location, skilled workforce, and competitive business environment have contributed to its sustained appeal as an investment destination,” shares Róbert Ésik, a partner at Big Four consultancy EY responsible for global location services and incentives across Europe, the Middle East, India and Africa.
“Hungary is a small economy, but it is economically open,” points out Gábor Farkas, head of tax and legal advisory services at PwC Hungary, another Big Four firm. “That means that the performance of the national economy is heavily dependent on investment by large international companies and the export activities of businesses operating in Hungary. Thus, attracting strong,
Róbert Ésik, EY partner responsible for global location services and incentives across Europe, the Middle East, India and Africa.
internationally dominant corporations to Hungary has been and continues to be in the national economic interest, as it ensures an increase in business investment and export activity,” he says.
“The positive externalities expected from such investment include diversification of the Hungarian economy, increased government revenues, possibly as a result of spill-over effects, strengthening the international position of locally-
owned companies, and integration into the supply chains of multinationals already present in Hungary,” Farkas adds.
“In the first half of 2024, the manufacturing sector emerged as the most active, with substantial investments flowing into the vehicle, machinery and equipment, chemical, and pharmaceutical products subsectors,” Ésik details.
“According to the statistics of the National Bank of Hungary, the majority of investments came from Austria, China, France, South Korea and the United States. Notably, based on the data of the Financial Times’ FDI Markets, Hungary captured more than a quarter of all Chinese investment coming into the continent over the past two years,” the EY partner notes.
PROMINENT INVESTMENTS
In 2024, two of the most prominent Chinese investments were related to the electric vehicle industry. Build Your Dreams, the leading Chinese EV manufacturer better known by its initials BYD, is building its first European plant in Szeged (175 km southeast of Budapest by road) in an investment worth approximately EUR 5 billion. Similarly, the country’s Contemporary
MATCHING THE POWER OF R&D AND LARGE-SCALE MANUFACTURING AGAINST ANIMAL DISEASES
The ground-breaking ceremony for Ceva-Phylaxia’s EUR 75 million vaccine production facility in Monor, on the outskirts of Budapest, on Nov. 14, 2024.
Preventable animal diseases are responsible for substantial global livestock losses and often cause widespread epidemics. With more than a century-old legacy, Ceva-Phylaxia boasts a major animal vaccine manufacturing and research hub in Hungary that has been at the forefront of innovation and is ramping up its production capacities to meet growing demand.
By Levente Hörömpöli-Tóth
The lockdowns might seem like an unreal memory, but we should never forget their lessons. Many of the viral pandemics since
1900 resulted from a “spillover” of a virus from animals into humans. Although the cause of COVID has not yet been proven, it is not unreasonable to expect that the next pandemic could have so-called
zoonotic origins. And there may well be more of them down the road. The concern is that climate change will significantly increase the burden of most infectious diseases as it accelerates the destruction of landscapes and drives the migration and interactions of humans, animals, and transmitting agents such as mosquitoes and ticks.
Fighting animal disease is, therefore, more critical now than ever. Animal vaccines are vital for livestock health, global food security, and public health. Diseases like African swine fever, avian influenza, and foot-andmouth disease have devastating impacts on food systems, economies, and livelihoods. (Editor’s note: See “The Damage Caused by Animal-Borne Diseases” for more on this.)
Two pieces of data showcase the significance of the issue: every year, 20% of the world’s livestock is lost to infectious diseases, equating to the protein needs of 1.6 billion people. Beyond agricultural losses, zoonotic diseases account for up to 70% of emerging infectious diseases.
“Vaccines are the first line of defense, protecting both animals and humans from devastating diseases. They are not just tools for farmers; they are public health necessities,” explains Tamás Szamkó, vice president of Ceva-Phylaxia, the Hungarian subsidiary of the fifth-largest global animal health company.
HUNGARY’S REAL ESTATE MARKETS AWAIT INVESTMENT UPTURN
Hungary remains regarded as an attractive real estate investment destination as it provides a significant yield premium on Western Europe, as well as nearer neighbors Poland and the Czech Republic, for investors seeking high quality, fully let sustainable assets with a price premium.
By Gary J. Morrell
In general, Poland and the Czech Republic are the more sought-after investment destinations, as reflected in annual volumes, followed by Hungary and, increasingly, Romania. However, a recovery in transactional activity in Hungary and the wider Central European region is not expected until deep into 2025.
With regard to product, there is a strong pipeline of asset-grade, sustainable commercial real estate products to attract investors, notably in the office,
industrial and hotel sectors. However, with the markets going through a price correction, both investors and vendors are playing a waiting game concerning strategies. It remains a question when the international investors, who provide a significant exit option for developers, will pick up activity. The market has been enduring a subdued period due to concerns over the cost of finance, longerterm demand in some sectors, and the uncertain economic and geopolitical environment. Once investment activity does return, investors and vendors will need to adhere to ever more stringent
ESG market demands and stricter and all-encompassing EU Taxonomy regulations, in addition to yield correction.
“Poland and Spain are attracting investors while there are concerns with regard to the German and U.K. investment markets. Hungary is somewhere in between, and investors are adopting a wait-and-see policy towards the country,” comments Benjamin Perez Ellischewitz, principal at Avison Young Hungary. “Investment volumes are down, and it would help if one or two ongoing office market transactions were concluded. The Hungarian investment market is still in a recovery and transformation phase after a very dry period. By the end of 2025, there could be more stability in the market,” he says. In general, analysts are looking to a much-anticipated upturn in market activity in the coming year.
“Although the numbers are yet to show it, activity is slowly rising in Hungary. We expect deals to close in the second half of 2025, with more benchmark-aiding decisions,” adds Gábor Zeller, head of capital markets at iO Partners Hungary.
Eston International notes that it is common to see 100 basis point differentials between buyers and sellers in Hungary. A lack of transactions has resulted in no reliable comparative investment data.
“Sellers strive to avoid undervaluing properties, while investors insist on prices close to valuations, and buyers are looking for higher yields, unique locations or special features. Moreover, neither side feels a strong compulsion to sell or buy,” the agency says.
Developer Atenor is now offering investors the 16,600 sqm, fully let first phase of its BakerStreet project.
RENEWABLES ENERGY SHARE GROWING BUT LAGS THE EU AVERAGE
Hungary’s energy needs are bound to grow significantly, not least because of upcoming large-scale batteryrelated investments. The administration is responding by betting heavily on renewables and enhanced storage capacities, but major grid improvements will be essential to keep energy matters under control.
By Levente Hörömpöli-Tóth
Who would have thought Hungary would be a global frontrunner regarding solar power? So much so, in fact, that the country can pride itself on having the third-largest proportion of solar energy as a share of total electricity generation in the world. With that figure expected to surpass the 20%-mark, it clearly showcases that solar has become a driving force poised to help achieve ambitious Net Zero goals.
The pace of deployment is further reflected by the fact that over 7,000 MW of solar capacity is in operation, already well beyond the 2030 target of 6,000 MW. As Attila Weinhardt, energy analyst of Portfolio, a leading business portal, explains to the Budapest Business Journal,
PERMIT HOPES BLOWN BY THE WIND?
The wind is no longer set to blow in vain. Or so it seems at first glance after the government gave the green light to unfreeze the general restriction on building new wind farms that had been in force since 2016. The current capacity of 330 MW can go up to 1,000 MW, but there’s a catch: it will occur at one single connection point in the Győr area (120 km west of Budapest by road).
The regulation doesn’t rule out the possibility that more than one investor gets engaged, nor will just
one single project necessarily be granted a permit. The restriction is rooted in the fact that the grid can’t receive more renewable energy, and it is hard enough to smooth out volatile intake already.
On the other hand, investors are welcome to launch developments for their own use, and companies can also partner up to use existing connection points jointly.
“We see modest activity in that regard, though,” Weinhardt adds.
“The ‘dating list’ is public, but it remains to be seen to what
highly subsidized projects, ESG commitments, and the decarbonization efforts of supply chains have all played a significant role in this development, not to mention the first decisive steps in electrification’s victory march.
extent it can work as a matchmaking catalyst for energy project developers.” Many times, technicalities hinder such cooperation. Maybe a solar park operator doesn’t have more land to put storage on. Combining solar with wind could be an option in theory, but if energy were to be produced from both sources, large storage capacities would be needed to make it work. The expert mentions another negative factor: wind turbine blades can get icy by dawn, and when they start operating, those broken-off pieces of ice could fly all over the place – potentially damaging nearby solar panels.
Energy analyst Attila Weinhardt.
FUTURE SUMMIT: POLITICAL EXPERTS FEAR
COLLAPSE, BUSINESS
LEADERS REMAIN OPTIMISTIC
Climate change, pandemics, resource shortages, security threats: crises have always been part of human history. However, never before have so many challenges emerged simultaneously, intertwining and amplifying each other’s impacts. This was a central theme of the fall Protechtor Future Summit, which explored how to adapt to constant market fluctuations and geopolitical risks.
By Gergely Herpai
Esteemed experts like Botond Feledy, founder and chief geopolitical analyst at Red Snow Consulting, and András Gelencsér, an atmospheric chemist, shed light on the global picture. Meanwhile, business leaders such as Gabriella Vidus, CEO of RTL Hungary, and Radován Jelasity, CEO of Erste Bank, chairman of the Hungarian Banking Association, and board member of the German-Hungarian Chamber of Industry and Commerce, shared insights into corporate challenges and successful coping strategies. Should we fear the rise of the East? What does success mean in today’s business landscape, and how can one plan strategies in a world turned upside down?
Many experts believe that the coming era will consist of a series of global crises (the so-called polycrisis), making the challenges of 2020-2024 merely a preview. The consequences of climate change, international security threats, the green transition, dwindling raw materials, and the heated competition between the United States and China are all ticking time bombs that could disrupt the world at any moment. Questions abound.
Answers were sought at the Dumaszínház theater, which hosted this year’s fall Protechtor Future Summit on Nov. 21, 2024. The event, organized by Stylers Group, targeted decision-makers from medium and large domestic companies as well as IT and HR leaders. Today’s corporate environment is more complex than ever, with operations further disrupted by transformative technologies like artificial intelligence. The broader picture is even more intricate, as Europe and Hungary must
navigate their place in a bipolar world dominated by America and China while the planet’s dwindling resources struggle to sustain humanity, which is increasingly fragmented instead of unified.
The first panel discussion, “The Polycrisis Century,” brought together economic and geopolitical experts to address today’s most pressing global and local challenges. According to Red Snow’s Feledy, the current power struggles among global powers are essentially zero-sum games. The central question isn’t who wins but who loses the least in each conflict.
The situation was graphically summed up by moderator Endre Kántor, who said, “The players have thrown all their chips into the center of the table and set them on fire. The only question left is who gets what remains after the flames die down.” Feledy emphasized the importance of focusing not only on crisis hotspots but also on less visible yet highly significant background issues like cyber warfare.
REAL IMPACTS
“Let’s not allow geopolitical discussions to focus solely on topics visible and prominent in the media. Instead, we should address factors that have real impacts.
Botond Feledy, founder and chief geopolitical analyst at Red Snow Consulting.
Photo by Gergely Herpai