Office buildings under construction

159 471 sqm of modern office space is expected to be delivered in 2010, which is 23.8% less than the
corresponding figure from 2009 (222 394 sqm) and 34.8% less than the new supply in 2008 (244 518 sqm).

The crisis that reached Hungary in late 2008 finally ended the gradual increase in new office supply. Prior to the crisis, developers planned to deliver approximately 450 000 sqm till the end of 2009, although about half of that has since been postponed or construction activities have been suspended. Decline in tenant and investor demand, together with high vacancy rates made developers set up new strategies. Recently, the primary aim of
developers switched from earning profit to survival. 2010 is going to be a year of waiting it out, and RERA’s projection is that the same can be expected for 2011 as well. Although several office projects were expected to start by 2012, based on last year’s experience only those having an adequate number of pre-leases or genuine end user demand will be initiated. The market has shown significant activity on the end user side at the turn of 2009/2010, as two office buildings – both currently under construction – were sold during the development phase. One of them, the K3 building, is planned to be handed over in May to the new owner Allianz, while the other building, Millennium Tower “K”, was purchased by K&H Bank.