Hungary Real Estate Report Q1 2013

Publisher Name :
Date:12-Dec-2012
No. of pages: 61

The Hungary real estate report examines the commercial office, retail, industrial and construction
segments throughout the country in the context of continuing domestic and regional economic weakness.
With a focus on the principal cities of Budapest, Gyor and Debrecen, the report covers the rental market
performance in terms of rates and yields over the past 18 months and examines how best to maximise
returns in the commercial real estate market, while minimising investment risk and exploring the impact
of government austerity on a market already characterised by a static supply and demand dynamic.
Hungary’s real estate market, like so many others, was seriously damaged by the global financial crisis.
An uptick in demand for office and retail space, as well as industrial property will only arise in tandem
with a broader economic recovery. Nevertheless, this is once again under threat as Hungary’s economy
continues to struggle as a combination of slowing economic activity across Western Europe and severe
financial stresses at home weigh heavily on all components of GDP by expenditure.
In spite of the weak economic backdrop, and a construction sector which continues to be under pressure,
our latest data collection from Hungary – covering the first six months of 2012 – has revealed a
cautiously optimistic outlook over the medium term. While our indicators were not unanimously positive,
the landscape represents a fairly steady start to 2012 as the numbers have remained broadly constant, with
Gyor holding the most promise in terms of annualised performance. We do not anticipate an immediate
change in fortunes for the sector, but believe that by 2013 the country will see a much improved pipeline
and real estate outlook.
Key Points:
• The continued deterioration in economic activity in the eurozone, and the failure of the
government to thus far reach an external financing arrangement with the IMF/EU continue to
weigh on all areas of the economy. As it stands, net exports will provide some degree of support
to headline growth this year given how weak import demand has been, however, risks to our
growth medium-term growth forecasts lie firmly to the downside.
• The Hungarian construction sector will become a victim of the country’s poor macroeconomic
conditions and register yet another year of sharp contraction in 2012. In line with our
increasingly pessimistic outlook for macroeconomic growth in the country, we have revised
down our forecast for the construction sector in 2012 from a marginal 0.2% year-on-year (y-oy)
contraction to a 5.5% y-o-y decline (in real terms). However, we expect the sector to tread on
a positive growth territory during the rest of our 10-year forecast period, helped by favourable
base effects and investments in infrastructure and non-residential construction projects.
• We expect the infrastructure segment to increase its contribution to the construction industry
value to 48.4% by the end of our 10-year forecast period in 2021, compared with its estimated
share of 46.4% in 2011. The use of EU co-financed infrastructure investments will be the key
driver of growth in the sector. Meanwhile, growth in the residential and non-residential subsector
will average 2.5% y-o-y between 2013 and 2021, primarily helped by private sector
investments in non-residential buildings.

Hungary Real Estate Report Q1 2013

Executive Summary ........................................................................................................................................ 5
SWOT Analysis ................................................................................................................................................ 7
Hungary Real Estate/Construction SWOT ............................................................................................................................................................ 7
Hungary Political SWOT ...................................................................................................................................................................................... 8
Hungary Economic SWOT .................................................................................................................................................................................... 9
Hungary Business Environment SWOT ............................................................................................................................................................... 10
Real Estate Market Overview ........................................................................................................................ 11
Real Estate Market Analysis - Office ........................................................................................................... 13
Rents and Yields .................................................................................................................................................................................................. 13
Table: Historic Rents - 2011-2012 (EUR per m2/month) .................................................................................................................................... 13
Table: Net Yield, 2011-2012 (%) ........................................................................................................................................................................ 13
Table: Terms Of Rental Contract/Leases - H112 ............................................................................................................................................... 13
Supply And Demand............................................................................................................................................................................................ 14
Industry Forecast Scenario ...................................................................................................................................................................................... 14
Table: Forecast Rents - (EUR per m2/month) ..................................................................................................................................................... 14
Table: Forecast Net Yield, 2010-2017 (%) ......................................................................................................................................................... 14
Real Estate Market Analysis - Retail ............................................................................................................ 15
Rents and Yields .................................................................................................................................................................................................. 15
Table: Historic Rents - 2011-2012 (EUR per m2/month) .................................................................................................................................... 15
Table: Net Yield, 2011-2012 (%) ........................................................................................................................................................................ 15
Table: Terms Of Rental Contract/Leases - H112 ............................................................................................................................................... 15
Supply And Demand............................................................................................................................................................................................ 16
Industry Forecast Scenario ...................................................................................................................................................................................... 18
Table: Forecast Rents - (EUR per m2/month) ..................................................................................................................................................... 18
Table: Forecast Net Yield, 2010-2017 (%) ......................................................................................................................................................... 19
Table: Retail Indicators, 2009-2016 ................................................................................................................................................................... 19
Real Estate Market Analysis - Industrial ..................................................................................................... 20
Rents and Yields .................................................................................................................................................................................................. 20
Table: Historic Rents - 2011-2012 (EUR per m2/month) .................................................................................................................................... 20
Table: Net Yield, 2011-2012 (%) ........................................................................................................................................................................ 20
Table: Terms Of Rental Contract/Leases - H112 ............................................................................................................................................... 20
Supply And Demand............................................................................................................................................................................................ 20
Industry Forecast Scenario ...................................................................................................................................................................................... 21
Table: Forecast Rents - (EUR per m2/month) ..................................................................................................................................................... 21
Table: Forecast Net Yield, 2010-2017 (%) ......................................................................................................................................................... 21
Forecast Scenarios ....................................................................................................................................... 22
Infrastructure Report ............................................................................................................................................................................................... 22
Table: Hungary Construction And Infrastructure Industry Data, 2009-2016 ...................................................................................................... 22
Table: Hungary Construction And Infrastructure Long-Term Forecast, 2014-2021 ........................................................................................... 23
Construction And Infrastructure Forecast Scenario ........................................................................................................................................... 25
Macroeconomic Outlook .......................................................................................................................................................................................... 26
Table: Hungary - Economic Activity .................................................................................................................................................................. 29
Risk/Reward Ratings ..................................................................................................................................... 30
Real Estate/Construction Risk/Reward Ratings ....................................................................................................................................................... 30
Table: Real Estate Risk/Reward Ratings ............................................................................................................................................................. 30
Hungary's Business Environment ............................................................................................................................................................................ 30
Table: BMI Business And Operation Risk Ratings .............................................................................................................................................. 30
Institutions .......................................................................................................................................................................................................... 32
Table: BMI Legal Framework Rating ................................................................................................................................................................. 32
Infrastructure ...................................................................................................................................................................................................... 34
Table: Labour Force Quality .............................................................................................................................................................................. 35
Market Orientation ............................................................................................................................................................................................. 37
Table: Emerging Europe - Annual FDI Inflows ................................................................................................................................................. 37
Table: Trade And Investment Ratings ................................................................................................................................................................. 39
Operational Risk ................................................................................................................................................................................................. 41
Competitive Landscape ................................................................................................................................ 42
Company Profiles .......................................................................................................................................... 44
Budapesti Ingatlan Nyrt ...................................................................................................................................................................................... 44
Casaro-Hungary ................................................................................................................................................................................................. 44
Fomterv .............................................................................................................................................................................................................. 46
KÉSZ Central European Building & Construction ............................................................................................................................................. 47
SCD Group ......................................................................................................................................................................................................... 48
TriGranit Development Corporation .................................................................................................................................................................. 49
Vegyépszer .......................................................................................................................................................................................................... 50
Demographic Data ......................................................................................................................................... 51
Table: Hungary's Population By Age Group, 1990-2020 ('000) .......................................................................................................................... 52
Table: Hungary's Population By Age Group, 1990-2020 (% of total) ................................................................................................................. 52
Table: Hungary's Key Population Ratios, 1990-2020 ......................................................................................................................................... 53
Table: Hungary's Rural And Urban Population, 1990-2020 ............................................................................................................................... 54
BMI Methodology .......................................................................................................................................... 55
How We Generate Our Industry Forecasts .............................................................................................................................................................. 55
Construction Industry .............................................................................................................................................................................................. 56
Bank Lending ........................................................................................................................................................................................................... 57
Real Estate/Construction Business Environment Rating .......................................................................................................................................... 57
Table: Weighting Of Indicators .......................................................................................................................................................................... 58
Sources .................................................................................................................................................................................................................... 60Executive Summary ........................................................................................................................................ 5
SWOT Analysis ................................................................................................................................................ 7
Indonesia Consumer Electronics Market SWOT ................................................................................................................................................... 7
Indonesia Electronics Industry SWOT .................................................................................................................................................................. 8
Indonesia Political SWOT ..................................................................................................................................................................................... 9
Indonesia Economic SWOT ................................................................................................................................................................................ 10
Indonesia Business Environment SWOT ............................................................................................................................................................. 11
Asia Risk/Reward Ratings ............................................................................................................................. 12
Table: Asia Pacific CE Risk/Reward Ratings, Q113 ........................................................................................................................................... 15
Consumer Electronics Market ...................................................................................................................... 16
Computers........................................................................................................................................................................................................... 17
Table: Computer Spending By Sector (estimate) ................................................................................................................................................ 17
Table: Computer Sales, 2010-2017 ..................................................................................................................................................................... 20
AV ....................................................................................................................................................................................................................... 20
Table: AV Demand, 2010-2017........................................................................................................................................................................... 23
Mobile Handsets ................................................................................................................................................................................................. 23
Table: Mobile Telephone Industry Sales, 2010-2017 .......................................................................................................................................... 27
Consumer Electronics Industry .................................................................................................................... 28
Overview .................................................................................................................................................................................................................. 28
Industry Development ......................................................................................................................................................................................... 28
Table: Electronics Industry Overview, 2010-2017 .............................................................................................................................................. 28
Computers........................................................................................................................................................................................................... 32
Table: Computer Production And Exports, 2010-2017 ....................................................................................................................................... 32
AV ....................................................................................................................................................................................................................... 32
Table: AV Production, 2010-2017 ...................................................................................................................................................................... 33
Telecommunications ........................................................................................................................................................................................... 33
Table: Manufacturing, 2010-2017 ...................................................................................................................................................................... 34
Industry Forecast Scenario ........................................................................................................................... 35
Table: Consumer Electronics Overview, 2010-2017 ........................................................................................................................................... 36
Industry Developments................................................................................................................................. 37
Macroeconomic Forecast .............................................................................................................................. 39
Table: Economic Activity , 2011-2016 ................................................................................................................................................................ 41
Competitive Landscape ................................................................................................................................ 42
Computers........................................................................................................................................................................................................... 42
AV ....................................................................................................................................................................................................................... 44
Handsets ............................................................................................................................................................................................................. 46
Country Snapshot ......................................................................................................................................... 51
Table: Indonesia's Population By Age Group, 1990-2020 ('000) ......................................................................................................................... 52
Table: Indonesia's Population By Age Group, 1990-2020 (% of total) ............................................................................................................... 53
Table: Indonesia's Key Population Ratios, 1990-2020 ...................................................................................................................................... 54
Table: Indonesia's Rural And Urban Population, 1990-2020 .............................................................................................................................. 54
BMI Methodology .......................................................................................................................................... 55
How We Generate Our Industry Forecasts ......................................................................................................................................................... 55
Electronics Industry ............................................................................................................................................................................................ 56
Sources ............................................................................................................................................................................................................... 56BMI Industry View ........................................................................................................................................... 7
SWOT Analysis ............................................................................................................................................... 8
Indonesia Food Industry SWOT ............................................................................................................................................................................ 8
Indonesia Drink Industry SWOT ........................................................................................................................................................................... 9
Indonesia Mass Grocery Retail Industry SWOT.................................................................................................................................................. 10
Business Environment ................................................................................................................................. 11
BMI's Core Global Industry Views .......................................................................................................................................................................... 11
Table: Core Views .............................................................................................................................................................................................. 19
Asia Pacific Food & Drink Risk/Reward Ratings .................................................................................................................................................... 20
Table: Food & Drink Risk/Reward Sub-Factor Ratings, Q113 (score out of 10) ................................................................................................. 21
Table: Asia Pacific Food & Drink Risk/Reward Ratings, Q113........................................................................................................................... 24
Indonesia's Risk/Reward Rating ......................................................................................................................................................................... 25
Macroeconomic Outlook .......................................................................................................................................................................................... 26
Table: Economic Activity .................................................................................................................................................................................... 28
Industry Forecast Scenario .......................................................................................................................... 29
Consumer Outlook ................................................................................................................................................................................................... 29
Food ......................................................................................................................................................................................................................... 31
Food Consumption .............................................................................................................................................................................................. 31
Table: Food Consumption Indicators - Historical Data & Forecasts, 2010-2017 .............................................................................................. 32
Canned Food ...................................................................................................................................................................................................... 32
Table: Canned Food Value/Volume Sales - Historical Data & Forecasts, 2010-2017 ........................................................................................ 33
Confectionery ...................................................................................................................................................................................................... 33
Table: Confectionery Volume Sales, Production & Trade - Historical Data & Forecasts, 2010-2017 ............................................................... 34
Drink ........................................................................................................................................................................................................................ 37
Hot Drinks .......................................................................................................................................................................................................... 37
Table: Hot Drinks Value/Volume Sales - Historical Data & Forecasts, 2010-2017............................................................................................ 38
Alcoholic Drinks ................................................................................................................................................................................................. 38
Table: Alcoholic Drinks Value/Volume Sales - Historical Data & Forecasts, 2010-2017 .................................................................................. 39
Soft Drinks .......................................................................................................................................................................................................... 40
Table: Soft Drinks Value/Volume Sales - Historical Data & Forecasts, 2010-2017 ........................................................................................... 42
Mass Grocery Retail ................................................................................................................................................................................................ 43
Table: Mass Grocery Retail Sales By Format - Historical Data & Forecasts, 2010-2017 .................................................................................. 44
Table: Grocery Retail Sales by Format (%) ........................................................................................................................................................ 44
Trade ........................................................................................................................................................................................................................ 45
Table: Food & Drink Trade Indicators - Historical Data & Forecasts, 2010-2017 ............................................................................................ 45
Food ............................................................................................................................................................... 46
Key Industry Trends And Developments .................................................................................................................................................................. 46
Fonterra Sees Strong Dairy Potential ................................................................................................................................................................. 46
Tapping Into The Fast-Food Potential ................................................................................................................................................................ 46
Market Overview ...................................................................................................................................................................................................... 47
Food Production ................................................................................................................................................................................................. 47
Confectionery ...................................................................................................................................................................................................... 48
Halal ................................................................................................................................................................................................................... 48
Agriculture .......................................................................................................................................................................................................... 49
Organics ............................................................................................................................................................................................................. 49
Drink ............................................................................................................................................................... 50
Key Industry Trends And Developments .................................................................................................................................................................. 50
Heineken Seals Control Of APB ...........................................
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