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REAL ESTATE review
PRESENTED CONTENT
DESPITE COVID, BUDAPEST OFFICE FUNDAMENTALS REMAIN STRONG The biggest headline from the 2019 office sector was that it had become “an entirely landlord market”, according to one of the key players in the field, Csaba Zeley, head of asset management at ConvergenCE. He says the COVID-19 pandemic has clearly changed the landscape, but says the underlying office fundamentals are still good.
Csaba Zeley One unknown following the past few weeks is the effect on future bank funding. Back in January, that was not a problem, although lenders were generally still being more prudent than they had been prior to the 2008 crisis. “There may well be changes to financing terms given even two months ago,” says Zeley. “I think it is fair to say that banks will be cautious. Don’t forget the loan repayment moratorium, which was one of the first reactions from the government, although counter balancing that will be the NHP funding initiatives which the government is promoting to kick start the economy again.” Some sectors have seen a much bigger immediate hit than others, hospitality being the obvious example. Prior to the pandemic, the hotel sector had been booming in recent quarters in Hungary (and especially in Budapest, as its reputation as a tourist destination has blossomed). The COVID-19 coronavirus outbreak has, however, had a “huge” negative impact on hotels, restaurants and entertainment in general, Zeley says.
“No-one knows when this will recover to the level it was before COVID. No-one can even estimate when we might see large numbers of foreign tourists again. I do think hotels in Hungary will see more Hungarian tourists, but they won’t be enough to keep every bar and café and restaurant open.” Retail also has big question marks, he says. “Online shopping has become extremely strong. It is a real question mark how many retail outlets will survive, especially in shopping centers.” GROWING TREND That builds on a trend that was already there. Zeley had been to the United States not long before the shutdowns. “I had been asked to bring back a toy
for the child of my partner. I could not find a [bricks and mortar] toy shop in the precincts of Miami. I could not believe it. It is not so extreme in Budapest, but I think we will see the same effect.” For the office sector, the future looks brighter. “I was worried eight weeks ago about what might happen, but now we see tenants coming back. Many negotiations were put on hold, but these have restarted, and we are already signing new lease agreements.” That builds on a period of sustained growth and lowering vacancy rates in the office markets. “The general vacancy rate fell under 10% three years ago and has been falling ever since,” Zeley tells Real Estate Review.
CBC Office Building
