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.

The volume of commercial real estate investment in Hungary fell 28 per cent to EUR 400m in 2024. Domestic investors accounted for 73 per cent of that volume. The portfolio quality of project loans is good, with the non-performing rate falling to 3.7% domestically by the end of 2024, Tamás Nagy added.

As we wrote today, a property tax for foreign buyers could be imposed in Hungary.

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