According to Erste Bank, the momentum in the Budapest office and warehouse segment will continue throughout the year. And just as last year, there will also be a significant amount of new space for lease on the market in 2023 – FMbusiness reports.
Developers rather wait
As Tamás Deák, Erste’s real estate financing manager shared, last year 267,000 sqm of new office space were handed over in Budapest, but this year it could be less than 200,000 sqm as – due to oversupply and economic environment – investors will rather expand ongoing developments. “The costs of construction and its financing are getting expensive at the same time, while the expected yield increases, and in such an environment developers rather wait, if they can” – Deák says.
Due to oversupply, the gap is widening
According to Erste, demand for office buildings in the Hungarian capital is still growing, only the rate of growth has slowed down. Older, less state-of-the-art office buildings have only been able to stay on the market with more modest rental fees. Due to the significant expansion of supply and much higher energy prices than before, the gap is expected to widen in the next period and there will be buildings that need to be rebuilt – FMbusiness reports referring MTI.
Records on the warehouse market
The bank report also pointed out that the warehouse market sets records from year to year, partly in terms of new developments, and partly because demand is constantly absorbing this growing offer. Last year with the handover of another 400,000 sqm the Budapest agglomeration warehouse market crossed 3 million sqm. This amount is expected to be increased by another 300,000 sqm this year.
According to Tamás Deák, given the gloomy outlook on consumption, no major retail development is expected in Budapest in the future. However, this trend will help the stable performance of the existing stock and its financing.