High Season Soon in Budapest

Though the completion level of mere 11 thousand sq m in the first quarter of 2007 on the Budapest office market is rather sedate, the developers’ boom has far not passed away – claims the latest property report of CB Richard Ellis. The first quarter can be described as a calm period before the storm.

Last year the completion level already increased dynamically but the record figure of 2000 was not exceeded so far. This year, however, after the quiet first half a wave of office completions is expected adding some 200 thousand sq m to the stock only during the second half. 2007 is likely to break the annual completion record but in one year this title will be passed to 2008 when looking at the development pipeline. While the annual completion level reached only 160 thousand sq m in the three years prior to 2006, in the period of 2006-2008 this figure is expected to climb to 240 thousand.

Not only the supply got momentum; demand started the break records in 2004 already. Three years ago the annual take-up jumped above 200 thousand sq m, and in 2006 it almost reached 250 sq m. Outlooks for this year are very positive based on the impressive 60 thousand sq m take-up recorded in Q1, which was the strongest first three months ever. The composition of the gross demand was very favourable resulting in 65% net absorption, and only 15% lease-renewals. The demand for the coming completions was also high since every fifth sq m office space was leased in a building being currently under construction.