From offices to hotels: Budapest to see major transformation
Budapest is likely to undergo a major transformation in the near future. Hundreds of thousands of square meters of office space are expected to become available in Budapest as state organisations relocate to new premises. This presents a prime opportunity for property owners to renovate and increase property value by converting them into apartments or hotels.
The latter is particularly beneficial for diversifying the hotel market, according to a June report by Newmark VLK Hungary.
Budapest’s transformation from offices to hotels
Over the next two to three years, various government offices will vacate downtown buildings. Property owners must decide how to repurpose the newly available space, which requires financial investment but also offers opportunities for development, noted experts from Newmark VLK Hungary, as reported by Economx.
Initial steps include thorough technical assessments and real estate market evaluations to determine future use. While some buildings may remain as offices, there’s a growing interest in converting them into residential apartments or hotels, a trend already seen in Western Europe and the United States, including Budapest.
The uncertainty in the office market may prompt owners to consider new functionalities, especially due to strong demand in the hotel and residential sectors. Factors like easier conversion of downtown office spaces into smaller units compared to new developments outside the city centre are also considered.
Demand is increasing for accommodations
According to hotel market expert Róbert Székely, there’s increasing demand for accommodations, supported by forecasts indicating growth in European hotel revenues through 2025. With limited greenfield investment opportunities in downtown areas, developers are turning to repurposing existing buildings like offices or residential complexes for hotel development.
Recent shifts include a move from short-term to long-term lease contracts, providing owners greater stability in revenue, despite higher perceived risk from banks due to single-tenant arrangements in these transformed properties.
Budapest to attract more tourists thanks to these transformations
Overall, these transformations are expected to broaden Budapest’s hotel offerings, potentially attracting more tourists and benefiting both tourism and infrastructure development. Four-star hotels are particularly favoured among business travellers and individual tourists, typically profitable in central districts where tourism is concentrated.
Outside central areas, transformed buildings may cater to lower-priced hotels or alternative accommodations like youth hostels, apartment hotels, or mixed-use facilities appealing to budget-conscious or younger travellers willing to explore further for lower rates.
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