Retail and shopping center development remains constrained by the increasing use of e-commerce and concerns over spending power. There are no major mall projects in the pipeline, with owners essentially concerned with redeveloping and upgrading their retail, leisure and service offer to enhance the retail experience and meet ever more sophisticated consumer demands.
The industrial pipeline is strong, and demand remains high, although vacancy rates are rising in an uncertain economic environment. Logistics and industrial dominate in the Greater Budapest area, while it is mainly light industrial production and assembly space in demand in secondary hubs across Hungary.
While there are substantial pipelines for the industrial and hotel markets in Hungary, things are more limited for offices, and there are none at all for shopping centers. Questions surround the structure of demand, the ability to source affordable finance, rising construction, energy and utility costs, permitting issues, the need to incorporate ESG features, and the likely availability of an exit through a sale.
Developer-led industrial development is finally extending to regional hubs across Hungary as in other Central European countries. With total stock for the sector having reached 4.58 million sqm in Hungary, 70% of it is located in the Greater Budapest area, according to Cushman & Wakefield.