In Hungary, the investment turnover of the first half of 2021 increased by 10%. This positive tendency is unique in the Central European region. By the end of the year, domestic investment turnover is expected to be up to 25-30% higher than last year, but the pandemic is still a serious risk globally.
According to the latest research of CBRE, real estate investment volume doubled globally in the first half of 2021 compared to last year’s figures. Many countries exceeded expectations, including the United States and Asia-Pacific countries, where pre-pandemic levels were reached. The remarkable growth was experienced in countries where the vaccination programs had been successful,
resulting in a reduction or complete abolition of travel restrictions.
As far as Europe is concerned, the recovery is slower; the continent is expected to reach pre-epidemic levels by the end of this year. Based on current figures, Northern and Western European countries perform better than the southern countries. Besides the UK, which is approaching pre-epidemic levels, Germany has also realised a strong recovery due to the domestic turn of German investors.
In contrast, the recovery of the Central European market is still slow: in the first half of the year, the volume of investment in the region was EUR 4.1 billion, which is a 33% decrease compared to the previous year. Several differences can be observed on a regional basis dependent on cross-border capital movements, the majority of which is still limited due to travel restrictions. However, the good news is that the Czech and Hungarian markets had better reliance on domestic capital; thanks to this,
Hungary – uniquely in the region – has achieved a 10% growth in investment volume of EUR 550 million compared to the first half of 2020.
According to CBRE’s calculations, the Hungarian market will continue to grow slightly by the end of the summer; as a result of which, investment turnover may exceed EUR 700 million by September, as well as the level of investment volume in Hungary can reach EUR 1.2-1.3 billion by the end of this year, realising 25-30% growth on a yearly basis. Further recovery is expected in the US and the UK. However, the pandemic is still a serious risk globally, as a possible new wave and the associated travel restrictions could significantly slow down the economic recovery.
As the Hungarian news portal Portfolio reports, interest in industrial real estate has grown significantly on a global level, including several European countries such as the Czech Republic and Poland, where investments in industrial real estate have already accounted for 25-30% of total turnover in recent years. In Hungary, however, this proportion is much less, mainly due to the low willingness to sell and the lack of new developments in recent years. Numerically, this means an investor demand of 26% in the first half of 2021, showing a 10% decline compared to last year when 36% of Hungarian investors preferred industrial real estate. The changing investment preferences can explain the decline, as the interest in offices has significantly decreased by the booming trend of work from home.
As a result, in 2019, 58% of investors would have invested in office real estate, while in 2021, only 38% would do so.
At the same time, interest in retail real estate has also increased: the asset class is preferred by a narrow group of investors which accounts for 11% of respondents.
The outstanding investor interest is also justified by the strong rental market indicators. In terms of net rental levels, 2020 has brought a dramatic change: the decent growth trend of the decade has started sharply upwards, and this year it is already 130% higher than a decade ago – reported by the Hungarian news portal Pénzcentrum. The same decade-long trend in the office market is exactly the opposite: after peaking in 2019, net rental fell to 2011 levels last year. Although the office market in the second half of the year is already showing signs of recovery, it will take longer due to the current uncertainty.