Top 50 Real Estate 2023 Sample

TOP 50 EXECUTIVES

The Most Influential Real Estate Executives in Hungary 2023

Real Estate Businesses

Foreword

Welcome to what is the third annual iteration of this publication, although those of you with a careful eye for typography and design may have spotted some changes from last year. Like the welcome current trend in property development in Budapest for taking a classical listed building, renovating and restoring the interior and giving it added value, we have updated this title.

The new look and name bring it in line with its stablemates. But the content at its core has not changed. So, while the publication is hardly old enough to be listed, it does still contain useful listings to help you navigate around the premier real estate companies in Hungary and their leaders. Our real estate editor Gary J. Morrell has also produced six pieces of specially commissioned editorial to give an authoritative overview of the office, industrial and logistics, and hotel sectors, the Hungarian property investment market, the impact of ESG on the industry, and architecture and the evolving look of the city.

But beating at the heart of Top50 Real Estate Executives are the biographies that separate those two elements. When we launched the “Top” branded series, the aim was to continue to provide valuable business information, the bread and

butter of the Budapest Business Journal since it was founded 31 years ago, but also to add a more personal, human touch. We wanted to give readers an opportunity to get to know the personalities behind the company names just a little better. After all, the men and women featured on these pages go a long way to shape the cityscape (metaphorically, but in some cases also literally) of this place where we work, rest and play.

They give us their thoughts on what their companies are doing to reduce their carbon footprint, the real estate technologies that will be most significant in fighting climate change, the most challenging aspects of the market right now, and how crucial transparent benchmarking is for ESG in real estate. But they also share more personal details, such as their hobbies and career pathways.

As ever, we hope you find this publication useful and useable, and we welcome any feedback on it you have to share with us.

Robin Marshall MBE, Editor-in-chief Budapest Business Journal

Uncertain Development and Demand Market Limiting Office Projects

A limited number of office development projects are being undertaken as developers exercise caution in an uncertain development and demand market environment.

By Gary J. Morrell

The list of concerns is long: long-term lettings, office working practices and the time spent in the office, geopolitical and economic worries, rising development and construction costs, increasing maintenance and energy costs, and more expensive debt finance. Despite that, developers are going ahead with ongoing projects, albeit there is a low follow-up pipeline.

Developers generally express qualified confidence that tenants can be found and preleases concluded for high-end, sustainable office developments. That said, with hybrid work practices now the norm, tenant requirements are becoming more complex concerning specifications and requirements size, and the letting process can be more protracted.

The current financial environment favors those developers who are self-financing and therefore do not need to take on

Millennium Gardens by TriGranit.

Industrial Demand High, Vacancy at Record Lows

Industrial demand remains high, and vacancy stands at record lows as the industrial and logistics sector boom continues. Analysts say the market in the Greater Budapest area is in a favorable position given the growth in demand for logistics and e-commerce space and light industrial production and assembly buildings at major regional hubs across Hungary.

By Gary J. Morrell

The industrial and logistics market is the sector of choice with developers, attracting specialist regional developers and industrial park operators in addition to those more established in other fields. Ongoing developments indicate ever more sophisticated requirements reflecting the growing sophistication of the market. ESG-compliant products are being delivered in response both to demands for ever more sustainable projects from tenants and EU Taxonomy requirements.

Total industrial stock in Hungary has reached 4.7 million sqm, from which 3.2 million sqm (or 70%) is located in the Greater Budapest area as of Q1 2023, according to CBRE.

The area around the capital continues to dominate the logistics market as developers and park operators establish complexes at locations with direct access to the M0 circular motorway, providing direct motorway connections to the city, Ferenc Liszt International Airport, major Hungarian countryside hubs and international road links.

Developer-led industrial development is also extending to regional hubs across Hungary, as has occurred in other Central European countries, according to Cushman & Wakefield. Outside of the capital, 1.4 million sqm of manufacturing and logistics space is located in regional centers. With increasing logistics and particularly light industrial development predicted in Hungary’s secondary

CTPark Budapest West.

Up-scale and Beyond Dominates Hungarian Hotel Pipeline

Hungary and Central and Eastern Europe are seen as an increasingly attractive tourism and business destination. Guest nights are again on the up, although still below pre-pandemic levels, with the market negatively impacted by broader geopolitical, economic and financial concerns in addition to rising development, labor and operational costs.

By Gary J. Morrell

Despite the perceived complexities of hotel development and investment projects compared to other market sectors, hospitality has successfully attracted investors from the more traditional commercial property sectors such as office and industrial. This has been through a model of concluding long-term lease and franchise partnerships with branded and experienced hotel operators, who provide the expertise needed for the day-to-day operation of the hotels.

Although some projects have been put on hold or are subject to delays, there are a significant number of ongoing developments, including several high-end redevelopments of listed buildings in the historic center of Budapest. With the positive number of tourist visits, the hospitality and hotel sector is considered an attractive long-term investment option; however, yields are difficult to assess given the current lack of concrete transactions. The CEE hotel market will need to adopt ESG features, as is the case in Western Europe.

The Liberty Tribe rooftop terrace.

Investors Maintain ‘Wait-and-see’ Strategy Towards Hungarian Market

Investors are adopting a wait-andsee strategy towards the Hungarian market and, indeed, the wider European region. This reflects the unstable geopolitical environment and the resulting economic and financial uncertainty. In this situation, many exercise caution in anticipation of a more favorable political, economic and financial environment and, crucially, more predictable yields and pricing levels.

By Gary J. Morrell

Investors are holding back from concluding deals as market values are expected to fall further, and yields are moving out. Many vendors, for their part, are reluctant to sell as they believe that their assets have a higher potential value and lower yield than the market is currently prepared to offer. With yields moving out across Hungarian, CEE, and European investment markets, there is evidence that a market correction is ongoing. A recovery in activity is expected, possibly later this year or early next, in the view of analysts.

The other major ongoing issue is the need for purchasers and vendors to conclude deals based on ESG criteria regarding sustainability accreditation, transparency and benchmarking. This is particularly the case with investors seeking core-product with international tenants and carbon-neutral goals, and less so regarding value-add acquisitions.

“We are seeing a sharp downturn in activity and a longer period of ‘price discovery’ during which the expectations

of sellers and buyers are not matching. I don’t think we will witness a serious improvement in volume traded before the end of the year,” comments Benjamin Perez-Ellischewitz, principal at Avison Young Hungary.

“We are going through a market correction in CEE and Hungary. Some deals are in discussions at a different price point than earlier, but the transactions are taking longer to materialize, and the attrition/failure rate is much higher than before due to the difficulty with regard to price and the lack of debt finance,” he adds.

Kata Mazsaroff, managing director of Colliers Hungary, also sees the challenge concerning overcoming the pricing gap between buyer and seller expectations.

“These value expectation differences arise from expensive financing, [and] geopolitical and macroeconomic uncertainties which are driving up yields. We expect lenders to differentiate between sustainable assets and secondary assets with substantially more favorable terms for new modern, ESG conforming products,” she explains

The Wola Retro, in Warsaw, which Hungary's Adventum has agreed to purchase from Develia.

ESG-compliant Processes, Sustainability Accreditation Becoming the Norm

ESG-compliant processes and sustainability accreditation are a basic requirement from tenants in the leasing market and, as a regulatory expectation from the EU and national government, are now a norm at the higher end in a growing number of real estate sectors. This impacts all stages, from planning, permitting, and financing to construction, leasing, PM & FM and investment.

Budapest Airport’s Terminal 2 common spaces achieved a pioneering Well Health-Safety Rating in March 2023.

Preserving the Past, Future-proofing Today, Preparing Tomorrow

Views differ on how the city’s infrastructure, look and feel could be improved from an architectural and real estate perspective to make it attractive for investors and developers while improving the quality of life, environment, infrastructure and the historical legacy of Budapest.

By Gary J. Morrell

The city essentially faces the challenges of preserving its classical Central European look and atmosphere while developing its role as a business center and improving it as a modern and pleasant city in which to live and work. Any redevelopment in the protected historic center, much of it UNESCO World Heritage-listed, has to be undertaken in line with stringent building regulations.

Budapest escaped being near-totally destroyed in World War II, as was the case with Warsaw, for example, or subjected to the sort of Communist-era “redevelopment” that blighted parts of Bucharest. Warsaw is not a cultural and tourism center like Budapest or Prague; therefore, it can promote itself as a business and commercial center dominated by office, hotel and residential skyscrapers.

“Some compact territories of the city tend to form a certain architectural look, and this is good. I do not think that it is necessary to have a unified design. We have to protect our historical buildings, but some may be turned into modern office buildings while their façade still shows the original look. Fortunately, the number of these buildings is increasing,” comments Valter Kalaus, managing partner at Newmark VLK Hungary.

A notable redevelopment of a historic building project is the modernization of Kraus Palota on Andrássy út in the historic center, now close to completion. The original palace was built in the 1880s according to plans by Zsigmond Quittner (designer of Gresham Palace and many other landmark buildings in Budapest). The listed building was acquired in 2019 by the investment manager AEW on behalf of its clients. This strategy was first initiated in Budapest by the Hungarian firm Horizon

The BudaPart development overlooks the Danube.

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