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Hungary Real Estate Market View

Orsolya Hegedűs • 31/05/2022
As of 30 May, the economic outlook for Hungary has weakened since Russia invaded the Ukraine. Whilst the recovery from the pandemic-induced slowdown outpaced the CEE region in 2021 and the GDP growth was faster than expected in Q1 2022, the war has begun to weigh on activity. Therefore, Moody’s has revised downward their 2022 forecast for GDP to 3.2% from 4% published in April. 

The Fidesz-KDNP alliance won the elections in April and secured another supermajority in parliament. Ministers in the new government of Prime Minister Viktor Orbán took their oath in the parliament on 25 May. 

Inflation is well above the National Bank’s target of 3% with April’s inflation of 9.5% hit a more than two-decade high. The recent rise in inflation is primarily driven by the high energy prices and global supply-chain disruptions. The government has responded to the strong inflation pressures by introducing price caps for vehicle fuel and some food. In addition, the government aimed to levy supertax on companies in 8 key business sectors including banks, energy, telecommunication as well as airline companies, colleting 800 million forints extra taxes in 2022. The new supertax system is implemented from the beginning of this year and will be revised at the end of 2023. 

 

The central bank has indicated that it will continue to raise interest rates as necessary to curb inflation pressures and limit downward pressure on the currency. The central bank recently accelerated the pace of its rate hikes, with the key monetary policy rate now at 5.4%, which was the 10th consecutive increase in a row. According to forecast, inflation pressures should begin moderating towards the end of 2022.

The labour market is demonstrating some signs of tightness and the unemployment rate continued to trend down. Real wage growth has increased, according to CSO data average gross earnings grew by 31.7% in February compared to the same period of 2021. Retail sales growth has accelerated and the increase in real wages combined with pent-up demand will keep consumption, and services spending healthy in 2022. Consumer prices however jumped in Q1, and the sharpest increases were registered in food, alcohol and durable goods prices. 
Retail sales continue to increase, exceeding 2021 end year levels as no restrictions were re-implemented and tourism activity is returning to the capital. According to CSO data, retail sales have increased by 16.2% in March compared to the same period of the previous year. The cap on fuel prices has pushed the volume of automotive fuel sales by 51%. Even though the share of online sales fell in March, its overall share is increasing, currently taking up 8.9% of all retail transactions. 
 

05 May

 
As of 2 May, the Covid cases are on a decline in Hungary signalling the pandemic is becoming endemic as such, the Government has declared that the official governmental web page will only publish Covid related data weekly, instead of the three-day frequency. Use of masks are still not considered obligatory, only exception being hospitals and healthcare facilities. Vaccination currently stands at 64% while the share of those who already had their second vaccine is 61% and 38% of the population has received the third dose as well. Since 29 April 2,183 new cases were registered up until the 1 May.

The 2022 Q1 office numbers were finalised. Total take-up in the first quarter amounted to 80,750 sq m. Since the appearance of the pandemic in Hungary, this is the most active first quarter of the year in regards of leasing activity. New supply arriving to the market has reached 78,350 sq m, which is already nearly double the amount of the total new deliveries in 2021. This is mostly due to most 2021 projects expected to be delivered by 2021 were pushed back to 2022. We expect that by the end of the year, 300,980 sq m of new supply will arrive to the market. Vacancy has increased by 0.6 ppt, currently standing at 9.8%, still below the 10% threshold.

2022 Q1 leasing activity further accelerated demonstrating continuous positive market sentiment in the industrial sector. Total take-up amounted to 125,260 sq m with 82% shares of net take-up, largely represented by pre-leases of buildings currently under construction. New supply arriving to the market was somewhat restrained, especially compared to the record high numbers of the previous quarter reaching 166,350 sq m in the Greater Budapest Area. The 2022 pipeline however is significant with the forecasted delivery of 407,800 sq m of industrial space. If delivered, 2022 new supply could surpass 2021 record numbers. 
 
 

07 April

The 2022 parliamentary elections took place on 3 April. On the 4 April with 98% processing rate, governmental parties (FIDESZ-KDNP) already obtained 53.29% of all votes, making them the winners of the elections. With the current vote rate, governmental parties have also obtained a two-thirds majority in the next parliament.

As of 4 April, the fifth wave of the Covid pandemic in Hungary has reached its end period, as such the Government has declared that the use of face masks is no longer obligatory on public transport and in other public areas including shops, cinemas, restaurants and bars. The only exception being hospitals and healthcare facilities in order to protect the elderly and chronically ill. On 1 April the number of daily new cases had reached 2,327. 1,858 Coronavirus patients are hospitalised, 56 of whom are on breathing machines. Both of these numbers have been on a declining trend for weeks, as in mid-February 5,219 patients were hospitalised and 288 patients were on breathing machines.

In January the volume of industrial production increased by 8.9% compared to the same period of the previous year. The volume of Export has also increased by 6.5% compared to the same period according to CSO data. Exports of vehicle production, which accounts for 28% of manufacturing export sales, increased by 8.6%. It important to note however that in February, industrial production prices were higher by 22.4% compared to the same period in 2021. The rise in prices were mainly driven by the increasing energy and raw material prices, as well as increasing wages. According to Moody’s analytics Hungary’s reliance on auto manufacturing will be one of the speed bumps that causes GDP growth to moderate over the coming months. After a strong fourth quarter in 2021, GDP growth will slow as Hungary contends with supply-chain disruptions.

The 2022 - Q1 quarterly office and industrial data collection has started, possible final numbers will be available from mid-April.
 

09 Feb

As of 7 February, the number of new cases during the three days of the weekend reached 33,720. In January the number of new cases projected over the same period of three weekend days amounted to 14,655, showing an increase in the number of new cases in Hungary. 94% of new cases are registered with the new Omicron variant of the virus. Share of vaccinated population has increased to 63%. Previously mentioned ‘vaccination weekends’, whereby people can go to hospitals and vaccinations points for vaccination without previous registration during the weekend days were successful in January and is further extended to the whole of February as well.


The 2021 - Q4 office and industrial data collection is closed. Regarding the office sector, end-year take-up numbers show positivity compared to 2020. In Q4, demand has reached 111,360 sq m, making the 2021 overall demand level to be at 365,780 sq m. Year-on-year, this represents an increase of 9.3%. New supply arriving to the market however was moderate only amounting to 44,450 sq m. The forecasted pipeline for 2021 was considerably larger, however many projects with the forecasted delivery of the second half of 2021 were delayed to the first quarters of 2022, making the 2022 pipeline significantly larger. 

Industrial market activity has reached all-time record numbers both in case of new supply and demand. In the last quarter of 2021, new supply amounted to 166,350 sq m making it the strongest quarter of 2021 and making the total new supply of 2021 to be at 345,760 sq m. Demand in Q4 reached 237,475 sq m and has reached 635,560 sq m in 2021, showing an increase of 18 % year-on-year from the 2020 record high levels.
 
The retail sales exceeded expectations in the second half of 2021 following the removal of restrictions, as tourism activity returned and pent-up demand from consumers have been released. Indeed, according to preliminary CSO data, retail sales increased by 3.5% in 2021 with clothing & footwear sales growing by a strong level of 37%. The improving turnovers in shopping centres continued, with footfalls on average kept below their pre-pandemic levels. Whilst brick-and-mortar shopping experience still dominates the market, online sales has reached the 10% mark by year-end, accelerating further, towards Western European levels. 

 

11 January

As of 10 January, the number of new cases during the three days of the weekend have reached 14,655. In mid-December the number of new cases projected over the same period of three weekend days amounted to 16,017 and to 21,060 in November, showing slight signs of recovery in new cases. However, the new Omicron variant has appeared in Hungary and its share within the newly infected is increasing. Share of the vaccinated population has increased to nearly 63%. The vaccination campaign is further supported by ‘vaccination weekends’ announced for January, whereby people can go to hospitals and vaccinations points for vaccination without previous registration during the weekend days.

CSO figures show positivity, compared to November of 2020 with the growth of 3.8% year-on-year. The share of online retail sales has further increased, now taking up 12% of all retail sales, the growth compared to November of 2020 is 0.9%. On the other hand, inflation is rising, consumer prices have increased, and they were 7.4% higher on average in November 2021 than a year earlier. The highest price increase was measured for motor fuels (15%) and alcoholic beverages and tobacco (11%). Despite the increase in prices, sales volumes at automotive fuel stations have increased by 6.2%.

The 2021 - Q4 office and industrial real estate data collection has started in December and will be finalised in the second half of January.

 

14 December

As of 13 December, the number of daily cases has slightly decreased compared to the same three-day weekend period in November. The number of new cases amounted to 21,060 for the mentioned period in November, and decreased to 16,017 in December, which is still considered high. Starting from the first day of November the use of face masks was declared obligatory on public transportation. Since then, people must wear them in any kind of indoor area, including shops, cinemas, and restaurants. Share of the vaccinated population has increased to nearly 62% from the share of 59% measured during the summer period. This is partially due to a vaccination week announced in late November when people could go to hospitals and vaccinations points for a dose without registration.

According to Moody’s analytics, the inflation rate is above the Hungarian National Bank’s target. The central bank has also indicated that it will raise interest rates as long as necessary to curb inflations pressures and limit currency stress. Hungary’s reliance on the auto manufacturing industry, combined with the expected continuation of supply chain disruptions in early 2022 could cause a bump in GDP growth and a challenging start of 2022. 

 

16 November

As of 15 November, the number of daily cases has increased significantly as for the three-day period of last weekend the mentioned numbers have reached 21,060. The number of daily new cases for the same period of the previous month were 3,270. Due to the increasing numbers, since the 1 November, the use of face masks on public transport is obligatory. So far, no further restrictions have been announced but many started wearing masks in any public area. Vaccination is ongoing and many have already registered for a third dose. 

Recovery is ongoing in Hungary, with GDP growth strongly accelerated from Q2 2021, already outperforming the other CEE economies. According to Moody’s analytics, office employment in Budapest has shown resilience in 2021 and even, expanded by 5% on pre-pandemic levels, indicating a trend which is expected to continue in 2022. The GKI Business Sentiment Index shows optimism in the business sector with the index reaching a two-year high in October, a level last seen in May 2019. 
 
During the third quarter of 2021 demand in the office sector has reached 81,520 sq m, which shows a slight increase compared to the same period of 2020, showing signs of recovery. In Q3, 78% of the total take-up was represented by net take-up (new lease, pre-lease, expansion), from which new leases were dominant with 67% while pre-leases only amounted to 11%. We expect that companies will prefer signing new agreements going forward, considering the strongly improved level of new supply in Budapest.
 

20 October

As of 18 October, the number of daily cases has continued to increase, over the weekend, 3,270 new cases were registered. Compared to the 1,070 new cases measured for the same three-day period in mid-September, this increase is significant. The new cases are mostly identified with the delta variant. Antigen tests and the campaign for the third dose of the vaccine is ongoing and accelerated by the seasonal illnesses. 

The commercial property market is supported by strong economic rebound. The European Commission has recently raised its projection on Hungary’s GDP from 5.5% to 6.3% in 2021. The GKI business sentiment has improved this year and is now characterised by optimism. Current inflation rate stands at 5.5% in September, which shows an increase from the highest level of 5.3% registered in June 2021. 

The development market has recently accelerated with the newest deliveries registered in the Logistics market. We have registered completions both in Budapest and in the countryside as well, totalling to nearly 30,000 sq m. Country wise the pipeline is going strong as there is currently 436,000 sq m of industrial space under construction which is a record high number. 

There were no new Office deliveries in Q3, however in the last quarter of 2021, 4 new schemes will be delivered with a GLA of 63,500 sq m thereby Budapest exceeding the 4 million sq m mark. Regarding the Retail sector, Etele Plaza opened in September with 55,000 sq m, which marks the latest Shopping Centre opening since 2013. There are ongoing refurbishment projects of existing Shopping Centres as well.
 

23 September

As of 20 September, the number of daily cases has continued to increase, over the weekend 1,070 new cases were registered. Compared to the 7-day average of 200 new cases measured at the beginning of September, this is a stronger increase. With the increasing numbers, the share of people wearing masks in shops and on public transport have clearly increased. The vaccination campaign focusing on children between 12 and 17 years of age, which started before returning to schools is strong and still ongoing. In addition, a high rate of people between the age of 18-19 have registered for the vaccination and nearly 60% of this age group have been fully vaccinated according to the coronavirus press centre. 

The number of nights spent by domestic guests in commercial accommodation increased by 8.1% in July compared to the same month in 2020 but was 11% lower than in July 2019, as recently published by the CSO. The number of nights spent by foreign guests increased by 16% compared to July 2020 indicating a slight recovery of tourism during summer whilst compared to 2019, the decrease amounts to 70%. Until February 2020, the Budapest hotel market had experienced significant growth, hence was one of the most impacted hotel markets in Europe. According to Oxford Economics, the overall travel demand to Budapest is expected to reach the pre-COVID levels by 2024. 

 

08 September

As of 6 September, the 7-day average of daily new cases remains below 200, which corresponds to the level measured during the early summer months but is on the rise again.  Therefore, registration for the third dose of the vaccine is available and ongoing, and more experts suggest the mask mandate to be reintroduced. The Hungarian Government has started a campaign to immunise children before the school year began. Nearly 48,000 children over the age of 12 have been registered for a vaccine.

According to CSO figures, the economic performance has shown improvement since Q4 2020 and demonstrated a solid rebound in Q2 with a GDP growth of 17.9% registered in Q2 and 7.2% in H1 2021 respectively.  The industrial production and exports have both strongly rebounded, and even exceeded pre-pandemic levels in H1 2021. It is expected the sector will grow by 13.3% this year and 8.3% in 2022 respectively. 

A moratorium to all loans was introduced during the pandemic and whilst originally planned to be in effect until 31 December 2020, it was extended until the end of June 2022. Primarily reflecting the continued weakening of the local currency, headline inflation has been above the central bank’s medium-term target of 3% since February 2021. Current inflation rate stands at 4.6%, which shows a moderate decrease from the highest level of 5.3% registered in June 2021. 

 


25 August

As of 23 August, the number of new cases over the weekend had increased to 340, mostly fuelled by the Delta variant of the virus, indicating the early signs of a fourth wave starting. Nearly 57% of the population is vaccinated and registry for the third dose of the vaccine is now available.

Increased activity can be experienced around the retail market, both from the consumer and developer side as footfall has increased to levels not seen since the appearance of the virus in Hungary according to the Mobility Report published by Google and retail sales have also increased by 1.2% y-o-y in January-May 2021 according to the Central Statistics Office. Online sales have seen a boom with a share of 9.2% by the end of May, however the brick-and-mortar shopping experience is still dominating the market. 

From the development side, after 8 years of no new shopping centre deliveries, Etele plaza will open in September with a GLA of 55,000 sq m. Landlords of existing centres have also started full refurbishments with a strong focus on F&B and leisure elements. Examples include Euro Center, Campona Shopping Centre or the former Corvin Áruház. Other schemes in the pipeline include smaller retail park developments.

 

11 August

As of 9 August, the 7-day average of daily new cases remains below 100, which corresponds to the lowest level since the appearance of the second and third waves of COVID-19. The Hungarian economy demonstrated resilience to these waves of the pandemic-induced restrictions, and economic performance has therefore shown improvement by the end of H1 2021. According to Moody’s Analytics forecasts, a solid rebound is expected from now onwards, greatly supported by one of the fastest vaccination rollouts in the EU. 

The industrial production and exports have strongly rebounded, and even exceeded pre-pandemic levels by April 2021. As a result, the industrial confidence index published by EUROSTAT has strongly improved. It is expected the industrial sector will grow by 13.5% this year and 7.3% in 2022 respectively. 

Q2 industrial numbers are finalised as well. Increased market activity with record high demand level is now evidenced by the dominant share of pre-lease transactions on the Budapest logistics market reaching 62% of the total take-up. Demand in Q2 equalled 172,700 sq m and the main driver was net take-up amounting to 148,980 sq m, including mostly pre-leases rather than new leases and expansions. The share of renewals was 13% amounting to 23,760 sq m. A significant amount of new supply was delivered to the market in Q2 including four new buildings and amounting to 117,800 sq m. The delivery of speculative stock in Q2 has pushed vacancy rate up by 1.4 percentage points, reaching 4%. 

 


27 July

As of 26 July, both the number of active and hospitalised cases remain at their lowest level since the appearance of the third COVID-19 wave, despite the gradual lifting of restrictions. Neighbouring countries have experienced some increase in the number of daily new cases on account of the spread of new virus variants, which might soon appear in Hungary. Nearly 56% of the population is fully vaccinated corresponding to one of highest vaccination rates in the European Union. 

Q2 office KPI’s recently published by the Budapest Research Forum have indicated signs of recovery. Total demand has reached 98,000 sq m, which is the highest level since the appearance of COVID-19 in Hungary and shows a quarter-on-quarter increase of 31% and a year-on-year increase of 11% respectively. Net take-up has dominated the market by a take-up share of 60%, whilst the remaining 40% was represented by renewals. 

Vacancy rate has continued to increase and currently stands at 9.8%. Whilst this represents a 0.8 pps uptick quarter-on-quarter and a 2.5 pps increase year-on-year, the overall Budapest vacancy remains below the 10% threshold.  New supply is continuously delivered to the market with several larger pre-lease transactions closed in this quarter, including the significant deal of IBM signing in the ongoing Corvin Innovation Campus development.

 


13 July

As of 12 July, the number of daily new cases remained under 40, being close to record low levels since the third wave of the pandemic reaches its end in Hungary.  

Once 55% of the population received a vaccination Hungary saw a further easing of lockdown measures. This includes the optional use of face masks on public transport and in retail stores. 

Retail sales were reaching pre-pandemic levels in April and May 2021 and according to CSO, total retail sales showed a growth of 1.0% y-o-y in Jan-May 2021.  

Online sales have seen a significant increase: at the end of May the share of online reached 9.2% which represents a strong growth rate of 13% on what was a strong 2020 level.  

Primarily reflecting the continued weakening of the local currency, headline inflation has been above the central bank’s medium-term target of 3% since February 2021.  

In May 2021 inflation rate has increased to 5.1 % compared to the same period in 2020.  

June 2021 inflation rate stands at 5.3%, which is the highest registered level since 2012.  

Whilst inflation is expected to stay elevated, Moody’s analytics anticipates the inflationary pressures will subside gradually, moderating to around 4.4% in 2021 and 2.7% in 2022. 

 


01 July

As of 28 June, the number of daily new COVID-19 cases for the last three weeks has remained under 200, showing that in Hungary, the third wave of the virus has reached its lowest point and seems to be ending.  

Nearly 55% of the population has received the first dose of the vaccine and 49% has received the second dose as well.  

The next phase of measurement easing will take effect once 55% of the population is vaccinated; when mask wearing in retail shops and on public transport will be optional and hotels can be visited freely, without an immunity certificate. 

Regarding tourism, the number of guest nights has seen an increase of 70% year-on-year in April. 

This might seem like a significant increase, however guest nights only reached 81,000 in April 2020 during the first lockdown period, and current numbers are still below pre-Covid levels.  

We reached the start of the recovery period in May and with the almost full reopening of hotels, concerts and public sport events, we expect that tourism will experience a boom during the summer period.   

The inflation rate in May increased to 5.1% compared to May 2020.  

The two main product categories where consumer price change was the highest include vehicle parts (13.4%) and fuels and tobacco products (12.2%).  

Other product categories like groceries and clothing have seen a more moderate increase in consumer price with 2% and 1%. 

 


14 June

As of 14 June, the number of daily new cases is gradually decreasing.  

During the last week, the number of daily new cases only amounted to 112.  

Hungary is still second in the EU vaccination rankings.  

Currently 54% of the total population received the first dose of the vaccine and 42% received the second one as well.  

Children between the age of 12-15 can now be registered for the Pfizer vaccination.  

Due to the significant easing in Government restrictions since the end of April, footfall in retail and leisure is experiencing a strong improvement reaching levels not seen since the appearance of COVID-19 in Hungary - according to COVID-19 Community Mobility Report by Google.  

The same report also shows that office use has increased close to baseline level, indicating that people are returning to the office in Budapest but with 1-2 days a week still spent working from home.  

In April 2021, the volume of industrial production was 58.8% higher than the extremely low base level of April of the previous year, which was related to the restrictive measures taken - according to CSO data.  

Even though this difference is mainly due to the record low level seen last year, industrial production has also increased if compared to 2019 levels.  

Inflation however has increased to 5.1% in May, showing its highest level since 2012. 

 


02 June

As of 1 June, the third wave of the pandemic subsided in Hungary as both the number of deaths and hospitalised cases have been declining for the last few weeks. The number of daily new cases currently stands at the lowest level since last September and remains under 350 for the last three days. Vaccination is ongoing, currently 53% of the Hungarian population is vaccinated, which is currently ranked second highest in the EU. Nearly 37% of the population is fully vaccinated. 

Restrictions were further eased following 50% of the population having received at least one dose of the vaccine. Curfew is now fully lifted, whilst mask wearing regulations, mainly focusing on indoor areas (shops, public transport) are still in effect. Retail and F&B units have gradually reopened under normal shopping hours, but with a capacity limit to be applied indoors. In response, Hungary has experienced a major bounce back in footfall as indicated by Google’s mobility report that the mobility to retail & recreation has been returning to pre-COVID levels. Whilst brick-and-mortar shopping experiences still dominate, e-commerce has experienced a boom with online sales rocketing up to 10.5% in Q1 2021 representing a growth rate of 30% y-o-y.

New supply in Q1 2021 included a 11,000 sq m retail park scheme in Kaposvár, developed by SES. Development pipeline for 2021 includes 4 smaller retail park schemes in a total of 18,000 sq m GLA and, one large shopping centre scheme of the 55,000 sq m Etele Plaza. In addition, several ongoing shopping centre refurbishment projects are in the pipeline including Campona and EuroCenter with the forecasted hand-over of early 2022.

According to surveys conducted by GKI, the sentiment indicators have recently shown continuous improvement, with the Business Sentiment Index reached pre-pandemic levels in April.

 


24 May

As of 17 May, the number of daily new cases stands at 718 and the 7-day average of new cases remains under 920, both showing a steep decrease from the late March peaks. This indicates that the third wave of the pandemic has now taken a downward turn. Vaccinations are in progress with 4.6 million people vaccinated at least once. This corresponds to a vaccination rate of 47.5% which is one of highest in the EU. Also, nearly 27% of the population is fully vaccinated.   

As restrictions are gradually lifted, an effective vaccine is deployed, and global trade picks up, domestic and external demand are expected to recover from mid-2021 onwards. The GKI Business Sentiment Index shows further improvement and has already reached its pre-pandemic level in March 2021. The current occupier sentiment should follow this improvement in accordance with the recently announced easing of lock down measures and the forecast Budapest employment growth in 2021.  

Office demand in Q1 was dominated by net take-up and remained close to its pre-pandemic 5-year average, whilst pre-leases were pulled back. The net take-up has reached 37,300 sq m while renewals amounted to 36,300 sq m. A total new supply of 24,700 sq m was delivered to the market of which only 10% was speculative space. Availabilities have slightly decreased, and net absorption remained positive. New supply for 2021-2022 remains constrained with a projected pipeline of 426,000 sq m and a pre-let status of 45% as at the end of the quarter. Development activity will be focused on South Buda and Central Pest submarkets in 2021. Prime headline rents remained firm, yet incentive packages are expected to increase further this year. 

 


5 May

As of 3 May, the number of daily new cases stands at 1,590 which shows a steep decrease to one-fifth of the amount tracked the week before. The current surge peaked on 27 March, whilst the 7-day average of new cases now remains under 2,000. Vaccination is in progress with four million people already vaccinated at least once. This corresponds to a vaccination rate of 41% which is one of highest in the EU. In addition, nearly 21% of the population is fully vaccinated.   

Consequently, a gradual reopening is ongoing. Terraces of restaurants and bars were fully reopened on 24 April. The indoor premises of these services along with cinemas, theatres, spas, gyms, swimming pools, museums, libraries and sport events that have been closed since the beginning of November 2020 were reopened as of 1 May. Hotels are reopened and awaiting guests. All these services can only be used by individuals with an immunity card, which are issued one week after vaccination. Curfew restrictions have also been eased with services closing at 11pm and people must arrive home before midnight. Starting from 17 May, schools will reopen for higher grades. Teenagers between the ages of 16-18 can now register for vaccination starting on 10 May. 


20 April

Consequently, a gradual reopening is ongoing. Terraces of restaurants and bars were fully reopened on 24 April. The indoor premises of these services along with cinemas, theatres, spas, gyms, swimming pools, museums, libraries and sport events that have been closed since the beginning of November 2020 were reopened as of 1 May. Hotels are reopened and awaiting guests. All these services can only be used by individuals with an immunity card, which are issued one week after vaccination. Curfew restrictions have also been eased with services closing at 11pm and people must arrive home before midnight. Starting from 17 May, schools will reopen for higher grades. Teenagers between the ages of 16-18 can now register for vaccination starting on 10 May. 

As of 19 April, the number of daily new cases has gradually started to decrease from its peak of 9,000, measured in mid-March when the third wave of the COVID-19 pandemic hit the country to 4,300 (7-day average) now. Vaccinations are ongoing with currently more than 30% of the population vaccinated at least once and 14% of the population is vaccinated fully.

The lockdown measures have been somewhat eased, with curfew remaining in effect from 22:00 to 05:00 only and services such as hairdressers and beauticians are reopening under strict health protection measures.

Kindergartens and lower grades of elementary schools have reopened from 19 April. Higher grades, high schools and universities however remain closed and stick to online studying. Retail units including fashion stores and other non-essential stores have reopened with mostly normal shopping hours, but under a capacity limit to be calculated on a square metre basis. This limitation is also present in the before mentioned non-essential stores and most grocery stores as well. The regulation determines the maximum number of people allowed inside and must always be applied. Restaurants are currently functioning only with take-away and home delivery services, however possibly from May, units that have a terrace maybe allowed to reopen. 

 


9 April

As of 6 April, the third wave of the COVID-19 pandemic is still raging with the number of daily new cases ranging from 7,000 to 9,000 in recent days. During the Easter holiday period, the number of daily new cases has dropped, however this could be a result of people staying at home and fewer people being tested. Vaccination is ongoing and currently 24.2% of the population is vaccinated. When it reaches 25%, a gradual restart will occur. 

The restrictions regarding only essential shopping services that were implemented on the 11 November will be changed on 8 April. Previously shopping hours were limited to 19.00. However, from 8 April, this arrangement will be extended until 21:30. Retail stores, including those that have been closed since 8 March, may open under new square metre-based rules. On average, there can be 1 customer per 10 square metres in the store under the new regulations. Following the vaccination of teachers, schools and kindergartens will reopen on 19 April.

The general governmental balance has decreased by 6.0% as a proportion of GDP, compared to the previous year. The significant deterioration is a consequence of the economic effects of the COVID– 19 pandemic and the measures taken to mitigate them. 


25 March

As of 8 March, the 7-day average of daily new cases exceeded 5,300 showing that the third wave of the COVID-19 pandemic has hit the country hard. Whilst the number of daily new cases has already reached the peak measured during the second wave, vaccination is ongoing and currently stands at 9% of total population (vaccinated with at least one dose).  

The partial lockdown declared in early November is still in effect, but further restrictions have come into force for the period of 8-22 March. These restrictions include the closing of all non-essential retail and services. Kindergartens and elementary schools have again shifted to online schooling. Grocery stores, pharmacies and other essential services including private healthcare and financial institutions remain open.

Until coronavirus hit, the Hungarian economy had not seen a contraction since 2012 and consistently outperformed the Eurozone in terms of GDP growth, with a 10-year average rate of 2.1% against the Eurozone’s 0.5%. Following the first wave, Hungary bounced back through GDP growth of 9.8% in Q3 2020, exceeding expectations. However, the second wave of COVID-19 had a significant impact and further lockdown measures have been implemented. This has led to a fall again in Q4 and according to the CSO figures GDP fell by 6.4% in 2020. Recovery rate according to the World Bank in 2021 is forecast at 3.8% followed by 4.3% in 2022. The unemployment rate stood at 3.3% in 2019 and increased to 4.2% in 2020, well below the Eurozone’s 8.1%. This is expected to slow down the rapid wage growth and lead to a decline in consumption. Nonetheless, consumption is expected to recover at 5.7% by 2022. 

 


24 February

As of 22 February, the number of daily new cases has exceeded the 2000 cases mark per a 7-day average. Whilst this is below the average number of daily new cases measured during the second wave, it shows an increasing trend since mid-January. Vaccination is ongoing and stands at 5% of total population (vaccinated with at least one dose), and is currently focused on the elderly or those suffering from chronical illness. The partial lockdown declared in early November is still in effect until 1 March. 

Prior to the COVID-19 pandemic, retail sales grew at an average rate of 6.3% per annum in the period of 2016-2019. According to CSO figures, the total retail sales (excluding fuel) improved by 1.7% in 2020 in Hungary, well exceeding expectations with private spending on food (+3%) and medicines (+5.2%) further improving. Online sales rocketed up to 9% by year-end, which represents a growth of 40% y-o-y and should exceed 10% by 2022 even assuming it reverts to pre-COVID growth rates.  

Hungary implemented a total store closure in April and partial lockdown from November 2020. Currently, retail schemes operate under reduced hours, whilst cinemas, theatres and fitness centres all fully closed. F&B can only accept take-away orders. Still, Hungarian shopping centre and retail park schemes, that chiefly cater to the local market, proved to be resilient during the pandemic. In addition, Hungary has a comparatively strong position as shopping centre saturation is significantly below the levels of Western Europe or CEE capital cities.  

 


10 February

As of 8 February, the number of daily new cases is now, on average about 1,000 per week. In comparison to the first lockdown, this is a significant decrease, as during the period highlighted, this number reached an average of 5,000 - 6,000. The partial lockdown declared on the 4 November is still in effect until the 1 March. Vaccination has started with front-line workers and elderly people. 

2020 year-end results from the office market show that market activities were down by 52% y-o-y last year due to a generally slower market activity. Nevertheless, the net take-up constituted most of all leasing transactions and despite the challenges vacancy remained below the critical 10% threshold, at 9.1%. New supply is not overbearing and with this, confidence remains that Budapest will bounce back strongly in 2021.  

The industrial sector is experiencing record high demand levels with an increase of 29% y-o-y, driven by new relocation transactions. Vacancy rate decreased further and with pipeline projects already having high pre-let rates, there isn’t much vacant area on the market. Due to the strong expansion of online sales in 2020, we have registered growing interest from CEP (courier, express and parcel) and e-fulfillment centres. 

 


26 January

As of 25 January, the number of daily new cases has started to show a downward trend in recent days. This number is at times below 1,000. 

The State of Emergency declared on the 4 November is still in effect until 1 February, but many speculate that this will be further extended.. Some restaurants have already heard rumours, that there will be no easing until at least May. The Government is discussing the topic this week. Speculations say that the easing of the State of Emergency can start when about 5 million people (half of the country) is vaccinated but the distribution of vaccines is not as rapid as expected. A vaccine delivery for 36,000 people will arrive at the beginning of the week so a boost might be experienced in the number of vaccinated people. 

The Q4 2020 numbers for the office and industrial sector have been finalised, with this we have a clear picture of the 2020 total statistics. These numbers show that market activity was lagging behind the usual annual trends, but it also shows that there is still demand on the market and several larger transactions took place this year.   

 


14 January

As of 11 January, the number of daily new cases are experiencing a constant change. There are occasions when this number reaches around 5,000 new cases but in recent days a steady decrease was observed.

The State of Emergency declared on the 4 November is still in effect until the 1 February, but many speculate that the emergency will be extended further. Following EU standards, the distribution of vaccines has already started but many worry that the pace of the distribution is too slow. The first wave of vaccinated individuals will be those who are ‘fighting on the front line’, including doctors, social workers and nursing home workers. Schools, high schools and universities are still closed and focus on online teaching. The lower grades of elementary schools are open with the obligatory use of face masks. Teachers are constantly tested.  

Hungary is still finalising the December property market data, but it looks like that the retail sector experienced a boom in November and December, most probably thanks to the holiday season. Turnover of retail stores have decreased by 0.8% on a yearly basis in November but increased by 1.1% in quarterly basis.  

The volume of internet retail that took out 12% of the total turnover has increased by 43.2% on a quarterly basis in November.   

 


9 December

As of 7 December, the number of daily new cases has somewhat decreased to 3,800 from the average November numbers when the daily new cases had reached around 5,500.

The State of Emergency declared on 4 November is still in effect. On 11 November a partial curfew was introduced whereby between 20.00 and 5.00 everybody is required to stay indoors, whether at home or in accommodation. On 7 December, this curfew was declared to be in effect until 11 January. The only exceptions are for commuting to and from work, and for health emergencies. Public parks, shops, shopping centres, and markets are open. Shopping hour restrictions for elderly people is in effect once again, between 9.00 and 11.00. Restaurants are restricted to home delivery and retailers must close at 19.00. A general ban is in place for all events.  

During the summer, the inflation rate was nearing 3%, and because of this the Central Bank had its worries about tightening in the future. In the autumn, upward pressure on prices eased, so inflation rate reached the middle of the Central Bank’s target band. 

The Hungarian Banking Associate introduced several changes regarding banking administration, shifting it to electronic banking administration. This shift will significantly decrease personal activity - especially beneficial in the current situation. 

 


11 November

As of 9 November, the number of daily new cases continues to increase reaching more than 5,000. Further restrictions have already been implemented or recently announced, as follows: 

As of 4 November, a State of Emergency went into effect and as of 11 November, a partial curfew is in effect for a minimum of 30 days whereby between 8.00 and 17.00 everybody is required to stay indoors, whether at home or in accommodation. The only exceptions are for commuting to and from work, and in case of health emergencies. Public parks, shops, shopping centres and markets are open. Restaurants are restricted to home delivery and retail must close at 19.00. A general ban is in place for all events.  

Secondary and higher education must be switched to online, and university dormitories must close, whilst nurseries, kindergartens and elementary schools for under 14-year olds may stay open. Healthcare workers, nursery, kindergarten and school workers will be tested weekly. Open air individual sports are allowed, but amateur team sports are banned. Leisure such as fitness clubs, closed swimming pools, theatres, museums and zoos must close.  

Hotels can be open to business travellers, but all leisure bookings must be cancelled. The Government will reimburse 80% of all bookings cancelled for 30 days if hotel workers have received their salaries and their employment has been continuously upheld. Restaurants and leisure businesses will receive a 50% contribution to their employees’ salary and will be exempt from salary contributions for the period of emergency. 

 


27 October

As of 26 October, the number of daily new cases continues to increase, reaching over 3,000. Further restrictions are in discussion, as some of the new restrictions are different to certain governmental decrees previously issued in September. Blanket visiting bans for hospitals and retirement homes remains in effect. As of 23 October, people must wear face masks in open-air public gatherings as well.

The Government has introduced a programme, which starts from 15 October, that will be beneficial to jobseekers below the age of 25 and young people with a low level of education. The Hungarian Government is supporting this programme with €31 billion, mainly offering employment in the manufacturing and construction industry. This is only an initial push, the further aim of this programme is to develop mentoring programmes, beneficial to both companies and young people.  

The volume of construction output, according to raw data, was 13.6% lower than the previous year. The production of both main groups of construction decreased: by 17.1% for buildings and by 8.9% for other construction. Based on seasonally and working day adjusted indices, construction output increased by 1.9% compared to July this year and by 11.1% compared to the low in May. 

 


15 October

The past two weeks have seen a rise in the number of infected cases, as of 12 October, the number of daily new infected cases reached around 1,100 with some 33% of the cases registered in Budapest. Other coronavirus hotspots have started to appear in the countryside. Further restrictions have not yet been introduced, social distancing measures and blanket visiting bans for hospitals and retirement homes remain in effect.  

In September the GKI business sentiment index improved considerably from its April low, albeit downsizing plans feature in the business sector with decision making processes remaining slow. In line with the global trend, Q3 demand levels in the Budapest office market are expected to be restrained compared to the same period in previous years which were dominated by renewals. As new supply is continuously delivered to the market, the vacancy rate is expected to further increase from its record low level measured at year-end 2019.

Ongoing development schemes continue, and no major delays are reported. Indeed, Q3 alone has seen 60,000 sq m of new space coming to the market. Pipeline for the period of 2020-2022 shows an increased level compared to the amount seen in the last ten years. The impact of WFH in Budapest remains to be seen on future demand and design. Large-scale transactions, however, have proceeded over the past months and we see examples of large occupiers committing to long term leases as the Budapest market remains attractive for large SSC / BPO business. In addition, we have registered new potential market entrants in Q3. 

 


30 September

The second wave of COVID-19 reached the country earlier this month. Restrictions on entering the country imposed from 1 September remain in place and the wearing of face masks remains mandatory on public transport, in cinemas, theatres, health and social institutions and public offices. Bars and restaurants must close at 11pm. The blanket visiting ban for hospitals and retirement homes have been put in place again. 

In schools, if infected cases are discovered, the whole class is shifted to online schooling. From 1 October, only teachers and students will be allowed into school buildings and will be required to undergo temperature screening upon entry. 

The Hungarian economy fell by 14.5% in Q2 of 2020, clearly the impact of the lockdown and closure of a large part of the economy. Industrial production has fallen by 27% in Q2, but it has recovered strongly in the summer as manufacturing plants, especially in the auto sector restarted production. In Q3 a sharp bounce in activity is expected and GDP is now forecast to fall by 6.3% in 2020 before bouncing back to grow by 6.2% in 2021. 

Longer term, Hungary is expected to benefit from the recently agreed Next Generation EU recovery fund and the EU’s next Multi-annual Financial Framework (MFF). In total, according to estimates from Oxford Economics, Hungary will receive some €8.6 billion in grants from the recovery fund over the 5 years to 2025 which will provide a stimulus to the Hungarian economy equal to some 6.7% of GDP in 2021-25. The timing of the investment driven by these funds is difficult to predict, but GDP is expected to grow by 5.9% in 2022. 

 


16 September

As of 14 September, containment measures are still lifted in Hungary, but with the number of daily new cases exceeding the numbers of April and exponentially increasing, we can assume that Hungary has reached the second wave of the COVIC-19 epidemic. Border control restrictions are still in effect, anyone who enters the country must present a negative COVID-19 test or go into a 2 week-long quarantine. 

There are general rules for physical distancing of one and a half metres which must be kept between individuals. The use of a face mask in shops, on public transport and in taxis is mandatory. A penalty of €20 can be imposed if someone is seen not wearing a face mask on public transport.

Most schools have opened on time and are generally focusing on making up for the shortfall caused by the spring lockdown. All schools that have reopened operate under strict safety measures, but these measures and reopening protocols can vary between different schools, as some stick to online education with limited practical classes. 

Public areas like restaurants, cinemas, theatres and bars can be still visited, but employees must wear face masks. Open-air events can also be held with safety restrictions such as, spectators should occupy only one of every four seats and do not sit directly behind each other.  

 


3 September

As of 1 September, containment measures are still lifted in Hungary, but with the number of daily new cases approaching the numbers of April, Hungary might be nearing the second wave of the COVID-19 epidemic. Border control restrictions are temporarily re-introduced, foreigners cannot enter the country and Hungarian residents must also go into a 14-day quarantine or provide two negative COVID tests. Liszt Ferenc airport in Budapest remains open.

There are general rules for psychical distancing, one and a half metres must be kept between individuals and the use of a face mask in shops, on public transport and in taxis is mandatory. The frequency of public transport operations has increased as schools are beginning the new year. Most schools have reopened as of 1 September, with safety measures continuously in effect, but these measures and reopening protocols can vary between different schools, as some stick to online education with limited practical classes.

Public areas like restaurants, cinemas, theatres and bars can be visited, but employees must wear face masks. Open-air events can also be held with safety restrictions such as, spectators to occupy only one of every four seats and may not sit directly behind each other, however, mass events of more than 500 people remain banned indefinitely. 

 


 

19 August

As of 17 August, the containment measures are still lifted in Hungary. Public events above 500 participants, however, are cancelled for August. The red-yellow-green colour coding system that was introduced in mid-July is still in effect. Under these rules, anybody entering from high risk countries listed as ‘yellow’ and ‘red’ would have to go into 14 days of quarantine or need to provide two negative COVID-19 tests. PSR tests are self-financed from 1 August.  

According to the CSO first GDP estimate published on 14 August, the economy has dropped by 13.6% year-on-year in the second quarter, which is worse than previously expected. Headline inflation accelerated to an annual 3.8% in July, whereas MNB targets a headline inflation of 3%. The MNB has cut its base rate in June and July by a total of 30 basis points, to 0.6% and started a bond-buying programme. The next rate-setting meeting will be on 25 August. Nonetheless, according to Oxford Economics a contraction of 5.0% expected for 2020. In the absence of further significant COVID-19-related shocks, a recovery can start from H2 this year and Hungary's economy will rebound and reach pre-pandemic real GDP levels by early 2022, sooner than most other CEE economies. Credit rating agencies including S&P and Fitch have affirming their sovereign credit ratings with a stable outlook.   

 


5 August

As of 3 August, the containment measures are still lifted in Hungary. The red-yellow-green colour coding system that was introduced recently is still in effect. Since the neighbouring country Croatia is marked as green, many Hungarians tend to travel there as a vacation destination. Last week, the Government announced that any public events above 500 participants are cancelled for August.  

The Hungarian Government, together with the MNB, has announced a large amount of policies designed to support the economy amounting to nearly 20% of GDP. Monetary and fiscal stimulus combined with a strong recovery in discretionary spending should ensure a rebound in activity once the worst of the virus-related disruption is past. The economy is therefore expected to recover from H2 this year. This expectation is further reinforced by the fact that Hungary came out of the COVID-19 crisis completely well thanks to strong macro fundamentals that Hungary had when the crisis reached the country.  

International travel is a key with the gradual reopening of skies, international activities and deals might experience a boom. Clearly occupational performance will be monitored very closely by investors, prior to committing on new deals. We believe the fundamentals of the Hungarian CRE market, with low supply and vacancy across most sectors - underpinned by a strong domestic investor pool - as being in a relatively strong place. Therefore, we expect Budapest will be able to pick up quickly once travel restrictions are fully lifted and decision making allows new investment transactions to move forward. 

 


22 July

As of 20 July, the containment measures are lifted, but a red-yellow-green colour coding system was introduced in Hungary being effective from 12 July, in response to an increasing number of infections seen in neighbouring countries. Accordingly, the world countries are classified into hazard classes. Countries with the most risk received a red code, moderately risky countries received yellow and less risky countries received green. This coding is based on actual data and can be changed.  

Most office occupiers have returned to the office by now and currently operate under 25-50% office occupancy in order to meet the social distancing measures. Google's mobility report indicates that the mobility to workplace has improved 20% compared to baseline figures in July from the level of minus 50% measured in May and June respectively. 

The latest Research Forum figures show that Q2 demand levels in Budapest were below the trend due to the slower market activity over the crisis period; however, since circa 54% of the new supply is already pre-let, the availability in modern Class A stock is expected to remain unchanged. Class B stock is expected to be affected by less take-up unless properly upgraded. Ongoing development schemes proceed, no delays reported yet.  

 


8 July 

As of 6 July, the containment measures are lifted in Hungary. Restrictions on retail are already lifted, but everyone entering a shop must wear face protection of some kind. From 25 June, cinemas are reopened as of 2 June. The free parking that was introduced to minimise public transportation traffic is now abolished. 

The Hungarian Government, together with the MNB, has announced a large amount of policies designed to support the economy amounting to nearly 20% of GDP. Monetary and fiscal stimulus combined with a strong recovery in discretionary spending should ensure a rebound in activity once the worst of the virus-related disruption is past. The economy is therefore expected to recover from H2 this year. This expectation is further reinforced by the fact that Hungary came out of the COVID-19 crisis completely well, thanks to strong macro fundamentals that Hungary had when the crisis reached the country.  

International travel is a key with the gradual reopening of skies, international activities and deals might experience a boom. Clearly occupational performance will be monitored very closely by investors, prior to committing on new deals. We believe the fundamentals of the Hungarian CRE market, with low supply and vacancy across most sectors - underpinned by a strong domestic investor pool - as being in a relatively strong place. Therefore, we expect Budapest will be able to pick up quickly once travel restrictions are fully lifted and decision making allows new investment transactions to move forward. 

 


25 June

As of 22 June, the containment measures have been lifted in Hungary. Restrictions on retail were already lifted, but everyone entering a shop must wear face protection of some kind.  From 18 June, shopping hours for seniors were abolished and from 25 June, cinemas and theatres will fully reopen. Free street parking that has been introduced with the aim of reducing the occupancy in public transport is expected to be abolished on 1 July. 

The Hungarian Government, together with the MNB, has announced a large amount of policies designed to support the economy amounting to nearly 20% of GDP. Monetary and fiscal stimulus combined with a strong recovery in discretionary spending should ensure a rebound in activity once the worst of the virus-related disruption is past. The economy is therefore expected to recover from H2 this year.  

International travel is a key factor in the facilitation of new investment deals and the gradual reopening of the skies should stimulate more international activity. Clearly occupational performance will be monitored very closely by investors, prior to committing on new deals. We believe the fundamentals of the Hungarian CRE market, with low supply and vacancy across most sectors - underpinned by a strong domestic investor pool - as being in a relatively strong place. Therefore, we expect Budapest will be able to pick up quickly once travel restrictions are fully lifted and decision making allows new investment transactions to move forward. 

 


18 June

As of 15 June, the containment measures have been lifted in Hungary. The country borders have been reopened to and from neighbouring countries like Austria, Slovakia, Croatia and the Czech Republic. The ban on visiting hospitals was lifted on most hospitals, and hotels can restart operation. From 15 June religious ceremonies are allowed, just like weddings and funerals, and must have fewer than 200 guests. Restrictions on public transport is also taking a step in easing the measurements as buses will be fully occupiable. From 16 June, cinemas and theatres are both expected to reopen.   

Restrictions on retail including F&B were gradually eased, first in the countryside and later in Budapest. The current crisis however delivered a drastic but temporary decline in retail sales. According to CSO figures, retail sales in April declined by 10.2% and F&B fell back by c. 70%. May is expected to be significantly improved with consumers returning to physical retail. Google's mobility report now shows that the mobility to retail and recreation returned to baseline figures in early June.  

The volume of online retail accounted for 12.5% of the total retail sales in April, which is an all-time record high figure. Structural changes therefore have been accelerated by the current crisis and there is likely a permanent shift in demand for online retail. Changes however will take more time to filter through in Hungary as the share of online sales was only 7.3% in 2019 as opposed to Western European markets having a share of 18-20%.  

 


11 June

As of 8 June, the containment measures were lifted in Hungary. The country borders have been reopened to and from neighbouring countries like Austria, Slovakia and the Czech Republic. Universities can reopen but student accommodation facilities are still closed. Senior homes, nurseries, kindergartens and schools have gradually reopened country wide.  

Restrictions on retail including F&B were gradually eased, first in the countryside and later in Budapest. Cinemas are still closed, some that had the equipment have eased the situation by opening drive-in cinemas. From 16 June, cinemas and theatres may be able to reopen. The footfall in shopping centre schemes is recovering with a rebound in retail spending expected to follow from this month. Still, many retailers are struggling with debt loads accumulated during the lockdown period. As a result, many retail units have been closed down permanently, which might attract new operators and indicate changes in the tenant mix, even in prime retail schemes.  

All automotive production and OEM production resumed from late April, suggesting the Hungarian economy will begin to recover from Q3, although production is still operating under limited capacity due to global supply chain disruptions. BMW has recently taken over the land of the planned car manufacturing factory in Debrecen. Reliance on global materials and parts sourcing has become problematic during the pandemic for manufacturers all over Europe. The expectation is that over the mid-term, manufacturers will revert to holding more inventory and move away from ‘just-in-time’ inventory management. Consequently, more warehouse demand especially near automotive hotspots is anticipated in the mid-term of which Hungary, as a hub for German car production in Europe including Audi, Mercedes and the planned BMW, should benefit. 


3 June

As of 1 June, the containment measures have been lifted in Hungary. Restrictions on retail were gradually eased, first in the countryside, as of 4 May, and later in Budapest from 18 May.  Most retailers including F&B have now reopened. The footfall in shopping centre schemes is recovering with a rebound in retail spending is expected to follow from June.  

Hungary's economy is ranked one of the most resilient to the impacts of Coronavirus epidemic, with a contraction of 5.0% expected for 2020. A strong recovery is expected with a projected GDP growth of 4.4% in 2021 and 5.2% in 2022, according to Oxford Economics. 

The country borders have been gradually reopened from 25 May. The virtual standstill of automotive factories however contributed to a decline in industrial production. According to CSO figures, industrial production volume decreased by 5.6% y-o-y in March. All automotive production and OEM have restarted production from late April suggesting the economy began to recover from Q3, although production still works under limited capacity due to global supply chain disruptions.

The Budapest office market has entered the current crisis with solid fundamentals. Vacancy levels are stabilised at around 5% which is one of the lowest among the CEE capitals. Demand continued to grow y-o-y since 2009 and has not reduced for two consecutive years. Hungary has been a key beneficiary of the offshoring of BPO’s and shared service centres following the Global Financial Crisis, and whilst many other global offshoring destinations have struggled with the infrastructure requirements, Budapest has adapted well to the switch to home office necessitated by the current crisis. This should increase Budapest’s attractiveness further as a global offshoring location.   

 


28 May

As of 25 May, the lockdown in Hungary has eased throughout the country with social distancing measures remaining in effect. A gradual reopening of the country borders has been announced as follows: the southern borders will be reopened with Serbia from 25 May and with Croatia from 29 May. The western borders are planned to reopen with Slovenia from 1 June and with Austria from 15 June.   

Most office occupiers are now making extensive plans to facilitate a return to the office, and some are even trying these plans out in practice. Universities can reopen but student accommodation facilities are closed. Nurseries, kindergartens and schools will gradually reopen from next week, and hotels outside the capital can reopen from this week. 

Restrictions on retail are lifted, but everyone entering a shop must wear face protection of some kind. Shopping hours for seniors remains in effect for grocery stores and drugstores. F&B may be open if they have a garden or terrace where customers may consume food or drink. Most retailers are gradually reopening, and a rebound in retail spending is expected from June. 

The economy contracted by 0.4% q-o-q in Q1 according to latest estimates, the first decline in activity in four years. The closure of automotive factories contributed to a strong decline in industrial production in March and April. However, all car manufacturers have gradually restarted production, which suggests the economy will begin to recover in Q3. The outlook for the economy is well balanced, as the lockdown period was only about seven weeks, but Hungary has a central role in international supply chains and so depends on the pace of the recovery in the wider global economy. Oxford Economics forecast Hungary’s GDP will fall 5.0% this year, before recovering to grow by 4.4% in 2021 and 5.2% in 2022. 

 


21 May

As of Monday, 18 May, the curfew restrictions were lifted in the countryside on 4 May and in Budapest on 18 May. Social distancing measures and shopping hours for seniors are still in effect. Everyone entering a shop or using public transport must wear face protection of some kind. Public parks and outdoor playgrounds can be visited, outdoor swimming pools and museums can reopen to visitors. 

All retail stores were allowed to open from 18 May including F&B, with the restriction that outdoor areas and terraces can only be opened to guests. Public spaces can be used by restaurants as terraces free of charge in the period 18 May - 1 September. Most retailers are gradually reopening their premises and others are actively planning to do so under strict safety and health measures. Food retailers may have to calculate the safe maximum number of customers in the store at the same time.  

Most office occupiers are now making extensive plans to facilitate a return to the office, and some are even trying these plans out in practice. Universities can reopen but student accommodation facilities are still closed. No exact dates have been announced yet as to the schools reopening.  

With the reopening of the Opel factory in Szentgotthárd from 11 May, all automotive production and OEM have gradually been restarting. BMW, however, has announced a one-year delay in opening their new plant in Debrecen than originally planned, whilst groundwork and hiring for the new scheme had already begun.  

 


14 May

As of 11 May, a gradual opening of certain retail started and will be followed by the opening of restaurants and bars in Hungary. Curfew measures and shop restrictions, however, remain in place in Budapest and in Pest County.  

Most office occupiers continue to operate through home working despite there being no regulatory restrictions on the workforce coming to the office. Companies are now making extensive plans to facilitate a return to the office. No dates have been announced as to schools reopening.  

Specific retail profiles are gradually reopening their premises (e.g. IKEA, Decathlon), and others are actively planning to do under strict safety and health measures. Everyone entering a shop or using public transport must wear face protection of some kind. Social distancing measures and shopping hours for seniors are still in effect. Food stores may have to calculate the safe maximum number of customers in the store at the same time.  

Whilst border closing still limits ‘just in time’ in manufacturing, most automotive production and OEM are gradually restarting. Returning to work is being planned in a potentially rearranged labour market. BMW, however, has announced a one-year delay in opening their new plant in Debrecen than originally planned, whilst groundwork and hiring of the new scheme had already begun.  

The Hungarian Government, together with the MNB, has announced a large amount of policies designed to support the economy amounting to HUF9.2tr, nearly 20% of GDP. Most of the measures are focused on loan moratorium, tax deferment and liquidity provision, which will accumulate liabilities occurring this year and will have to repaid in 2021. Direct additional fiscal stimulus remains very limited. 

 


7 May

As of 4 May, a new phase of protective measures is in effect in Hungary. Starting this week, a gradual opening of all retail may start. Hotels, restaurants and coffee shops may follow later this month. Nevertheless, everyone entering a shop or using public transport must wear face protection of some kind. Food stores may have to calculate the safe maximum number of customers in the store at the same time. Stricter health protocols regulating restaurants and other businesses will probably be in effect for the whole year.  

Curfew measures and shop restrictions will remain in place in Budapest and in Pest County. Social distancing measures and shopping hours for seniors are still in effect. As of 1 May, a new progressive tax element will be introduced in Hungary, primarily affecting large FMCG retailers.  

The Hungarian Government, together with the MNB, has announced a large amount of policies designed to support the economy amounting to HUF9.2tr, nearly 20% of GDP. Most of the measures are focused on loan moratorium, tax deferment and liquidity provision, which will accumulate liabilities occurring this year will have to repaid in 2021. Direct additional fiscal stimulus remains very limited. 

 


30 April

As of 27 April, Hungary is still under lockdown. Curfew restrictions introduced on 27 March have been extended for an indefinite period to be reviewed on a weekly basis. Prime Minister Viktor Orbán has announced that some of the restrictions might be eased from mid-May taking into consideration nearby countries such as Austria and Italy who are dialling back restrictions on social and economic life. The automotive production and OEM have been gradually restarting with Audi, Opel and Suzuki all reopened. Production at the Daimler plant in Kecskemét will gradually resume from 28 April. 

Social distancing measures and shopping hours for seniors are still in effect. People are only allowed out to shop for groceries, do basic errands or obtain medical supplies. As of 27 April, people must wear face masks on public transport and in stores. Most retail stores are closed due to dramatic decline in footfall, but shopping centres are open and operate under tightened opening hours. As of 1 May, a new progressive tax element will be introduced in Hungary, primarily affecting large FMCG retailers.  

The Hungarian Government has announced a Financial Aid Package, which offered a blanket moratorium on loan repayments until the end of the year and, imposed measures to payroll tax cuts for the most heavily affected sectors. The package is fiscally supported by the Central Bank providing loans to commercial banks at a fixed interest rate of 0.9%. The MFB Group (Hungarian Development Bank) announced loan programs in a total of HUF 1,490 billion for the micro, small and medium-sized enterprise and large enterprise segments.

 


23 April

As of 20 April, Hungary is still under lockdown. Curfew restrictions introduced on 27 March have been extended indefinitely to be reviewed on a weekly basis. Whilst the current Government measures imposed no restrictions on the workforce coming to the office, most companies made an immediate transition to home office where their infrastructure was easily transportable.  

The borders are still closed from passenger traffic which limits ‘just in time’. Yet, automotive production and OEM have been gradually restarting with Audi being the first. More manufacturers’ restart is expected soon which includes Mercedes, Opel and Suzuki too.  

Social distancing measures and shopping hours for seniors are still in effect. People are only allowed out to shop for groceries, do basic errands or obtain medical supplies, and exercise in the open. Most retail stores are closed due to dramatic decline in footfall, but shopping centres are open but operate under tightened opening hours. As of 1 May, a new progressive tax element will be introduced in Hungary, primarily affecting large FMCG retailers.  

The Hungarian Government has announced a Financial Aid Package, which offers a blanket moratorium on loan repayments until the end of the year and, has imposed measures to payroll tax cuts for the most heavily affected sectors. 70% of wages will be paid by the Government for 3 months for part-time workers. The package is fiscally supported by the Central Bank providing loans to commercial banks at a fixed interest rate of 0.9%.  

 


16 April

As of 14 April, Hungary is still under lockdown. Whilst the current Government measures imposed no restrictions on a workforce coming to the office, most companies made an immediate transition to home office if their infrastructure was easily transportable.   

As of 16 March, the borders are closed from passenger traffic which limits ‘just in time’. Therefore, the key production industries such as automotive and related component supplier manufacturing have ground to a virtual standstill. Audi however, partially restarted production under strict safety measures from 14 April.  

Social distancing measures and shopping hours for seniors are still in effect. People are only allowed out to shop for groceries, do basic errands or obtain medical supplies, and exercise in the open. Whilst the Government still has not enforced non-essential shop closure, as a result of a dramatic decline in sales, many retailers have opted for voluntary shut down over the weeks. Most shopping centres are open but operate under tightened opening hours.

The Hungarian Government has announced a Financial Aid Package, which offered a blanket moratorium on loan repayments until the end of the year and, imposed measures to payroll tax cuts for the most heavily affected sectors. 70% of wages will be taken over by the Government for three months for part-time workers, and engineers and workers in the R&D sector will receive a 40% wage supplement. The Central Bank has increased the potential available liquidity of the banking system by HUF 2,600 billion and a moratorium has been introduced in the Growth Credit Programme. The base rate is left unchanged at 0.9%.  

 


9 April

Hungary is under lockdown. Whilst the current Government measures imposed no restrictions on a workforce coming to the office, most companies made an immediate transition to home office if their infrastructure was easily transportable. As of 16 March, the borders are closed from passenger traffic which limits ‘just in time’. The key production industries such as automotive and related component supplier manufacturing have ground to a virtual standstill.  

Social distancing measures and shopping hours for seniors are still in effect. People are only allowed out to shop for groceries, do basic errands or obtain medical supplies, and exercise in the open.  

Whilst the Government still has not enforced non-essential shop closure, as a result of a dramatic decline in sales, many retailers have opted for voluntary shut down in the last two weeks. Most shopping centres are open but operate under tightened opening hours.  

The Hungarian Government has already announced a Financial Aid Package, which offered a blanket moratorium on loan repayments until the end of the year and, imposed measures to payroll tax cuts for the most heavily affected sectors. A further larger scale rescue package is expected to be announced on 7 April.  

 


2 April

Hungary has been in lockdown since 28 March. Car manufacturers including Audi, BMW, Mercedes and Suzuki have temporarily closed production. Most office occupiers have shifted to home office. 

Social distancing measures are in place and shopping hours for seniors was introduced. By decree, leisure and entertainment venues have all closed and people are only allowed out to shop for groceries, do basic errands or obtain medical supplies, and exercise in the open. 

Whilst the Government has not enforced non-essential shop closure, as a result of a dramatic decline in sales, many retailers have opted for voluntary shut down in recent days. Most shopping centres are open but operate under tightened opening hours. 

The Hungarian Government has announced a Financial Aid Package, and more is expected to follow this week. It includes: 

A blanket moratorium on loan repayments for all companies and private borrowers until the end of the year. 

Measures to defend jobs, including payroll tax cuts for the most heavily affected sectors, such as tourism and entertainment among others.  

In the meantime, the National Bank of Hungary has left the base rate unchanged and will increase the available liquidity of the banking system by HUF 2,600 billion.  

 

Bratislava, Slovakia
Insights • Economy

Slovakia Real Estate Market View

A regular update on the commercial real estate market in Slovakia.
Lukas Brath • 03/06/2022
couple with face masks on Milan street
Insights • Economy

Italy Real Estate Market View

A regular update on the commercial real estate market in Italy.
Raffaella Pinto • 31/05/2022
Looking out over Buda castle, Budapest
Insights • Economy

Hungary Real Estate Market View

A regular update on the commercial real estate market in Hungary.
Orsolya Hegedűs • 31/05/2022
Rue Sainte-Catherine, Bordeaux, France
Insights • Economy

French Real Estate Market View

A brief bi-weekly update on the French commercial real estate market.
Patricia Vevaud • 31/05/2022
Prague, Czech Republic
Research • Economy

Czech Real Estate Market View

A regular update on the commercial real estate market in Czech Republic.
Marie Baláčová • 07/04/2022
Poland
Insights • Economy

Poland Real Estate Market View

A regular update on the commercial real estate market in Poland.
Katarzyna Lipka • 07/04/2022
Rome
Insights • Economy

Spain Real Estate Market View

A regular update on the commercial real estate market in Spain, reflecting all our service lines: Offices, Industrial, Capital Markets Group, Retail and Hospitality.
Ramiro Rodríguez • 10/03/2022
blue duotone graphic of people in office
Insights • Economy

EMEA Markets View

Our EMEA local market research colleagues share the latest real estate market views from their countries.
Andrew Phipps • 13/01/2022
Brussels Office Marketbeat
Insights • Economy

Belgium Real Estate Market View

A regular update on the commercial real estate market in Belgium.
Cédric Van Meerbeeck • 25/03/2021
red steel building
Insights • Commentary

UK Real Estate Perspectives

We are committed to providing our clients with up to the minute intelligence and commentary as to what is happening in the real estate markets.
Digby Flower • 04/11/2020
Debt and Structured Finance
Insights • Economy

Lenders brace themselves

The Debt & Structured Finance team at Cushman & Wakefield is in frequent contact with over 50 lenders and has inquired what the impact of Covid-19 developments is or is expected to be on lending activity.
Maud Visschedijk • 20/03/2020
New Perspectives (image)
Research • Topical Report

New Perspective: From Pandemic to Performance

As a global leader in the commercial real estate (CRE) industry, Cushman & Wakefield offers clients a new perspective on COVID-19’s impact on CRE and beyond, preparing them for what’s next.
Michael Boonshoft
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