How do investors assess the Hungarian commercial property market?

The decline in valuation on Hungary’s commercial property market came to a halt in the second quarter of 2024, and the cyclical perception of the market showed positive development, the National Bank of Hungary said in a report on Thursday.

Lower-than-expected GDP growth failed to impel the rental and investment markets in the second half of the year, but the Commercial Real Estate Report said a pickup in GDP growth in 2025, along with a turnaround in European markets, could reduce cyclical risks.

Presenting the report, Tamás Nagy, a central bank director, said the continuation of the positive development would depend much on the recovery in the domestic industrial sector. He added that financing shouldn’t be a problem, as banks did not expect to tighten lending conditions for commercial property developments.

Nagy pointed to uncertainty on the office market as hybrid work persisted after the pandemic and said a number of office buildings had been converted into hotels in recent years, while inaugurations could lift the vacancy rate to a “critical” 15pc in 2025. Investments in the industrial and logistics property segment have reached record levels and could lift the vacancy rate a bit, temporarily, from under 8pc in 2024, he said. He added that conditions were favourable for hotel investments as tourism indicators had reached pre-pandemic levels.