1 A guide to real estate investment in Hungary 2014/2015 The time is now!
2 Contents 3 Introduction 5 Why Hungary now? 8 Office Market 11 Industrial Market 14 Retail Market 16 Submarket focus: Váci Corridor 19 Submarket focus: CBD 22 Understanding capital markets in Hungary 25 Trends and projects to keep an eye on 27 About Hungary 30 Leading industries 31 Subsidies for investment projects in Hungary 32 Legal environment of real estate investments 36 Tax environment of real estate investments 40 About JLL Hungary 42 Contacts
3 Introduction The time is now! Hungary is experiencing a revival of its economic performance and real estate investment activity which follows several years of poor performance amid the wider European and global financial climate. Since 2013, all major macro-economic indicators have improved and this has started to translate into real estate investment activity. We have registered as much volume in the first half of 2014 as we recorded for the entire The substantial pipeline of deals set to close in Q4 and early 2015 is a testament to the changing landscape. We are experiencing larger investments by local real estate funds associated to an inflow of foreign capital which should help the volumes to reach 600m in Benjamin Perez-Ellischewitz Director, Head of Capital Markets Hungary So far the CBD and the Váci Corridor submarkets account for the bulk of the investment volume. While we are not witnessing large development activity similar in size to the development of the Millennium City Centre or, the booming Váci Corridor from the pre-financial crisis times, we should however mention some high profile projects related to listed historical properties in the city centre and the expected development of the mixed-use retail and office project in Buda South. JLL has been a leader on the CEE and Hungarian market since the region gained momentum in the early 2000 s and our Capital Markets team has an unbeatable track record and access to the best opportunities, both on and off-market, for real estate transactions, JV structuring, debt issuance or trading. Moreover, our team offers a complete service from advisory for market entry, valuation, asset and property management, to leasing and project management services. We hope that this paper will help investors gain a better understanding of our real estate market and its recent development, including a general tax and legal overview prepared by DLA Piper. 3
5 Why Hungary now? 1 The economy has recovered and Hungary shows some of the best macro-economic indicators in the region GDP growth peaked at 3.7% in Q (strongest among the EU 28) and is forecast to finish at 3% for full year Inflation is around 0-0.5% and the central bank sharply reduced the main interest rate to 2.1%. After several years of adjustment of state finances, by 2013 the fiscal deficit became one of the lowest in Europe at 2.7% and the general government gross debt came back under the 80% level of GDP. In the meantime unemployment rate fell to 8% in Q Hungary has one of the highest Economic Sentiment Indicator of the EU 28 and remains on a positive trend. 2 Retail consumption is showing a positive trend Retails sales are growing with the strongest pace of the past few years. The positive trend echoes the reduction in unemployment and the increase of real wages. Such evolution comes at a good time for retailers, who, after several years of negative trends see a recovery of turnovers. 3 Local demand is complemented by recovering exports Hungary is one of the most open economies in Europe with an average of total exports and imports representing 75% of GDP (only Ireland scores higher in the OECD with 80%). As such, the country is highly dependent on the economic performance of its export markets. The positive economic signs in Germany, the main export market for Hungary with a share of 24% of total exports, come at a good time to amplify the recovery of the local demand. 5
6 4 Budapest is a competitive near-shoring centre Budapest has asserted itself as a major location for Business Process Outsourcing (BPO) companies and multinationals to set up Shared Service Centres (SSC). BPO/SSC occupiers, along with the Information and Communication Technology (ICT) sector are driving demand for office space in the capital city. Similarly to Paris, Budapest is the capital city of a very centralized country. The city represented 35% of the national GDP in 2007 and its share will reach 40% by The economic power of the city is reinforced by its role as the centre for administration, university education and culture. 5 Development pipeline remains limited The development pipeline in Budapest came under significant downward pressure since 2010 due to the restrictive financing situation and the increase of the vacancy rate in both office and logistic schemes. There has been a very limited supply of new developments to the market and, in the CBD, significant office developments are few and far between saw the delivery of the 14,500 m 2 Eiffel Palace in the CBD and the 21,070 m 2 Váci Corner Offices in the Váci Corridor. The two wings of Vision Towers on the Váci Corridor and the third phase of Corvin Offices in the Pest Central South submarket, are due to be delivered in the second half of this year. 6 Foreign investors remain the dominant force Despite the increasing share of national investors in the past years, the real estate investment market in Hungary remains highly international with foreign investors typically representing more than 80% of investment volumes. For assets above a 30m value, demand is almost exclusively international. Some of the largest tickets in the past few years have been related to the acquisition of 5-star hotels by Middle Eastern investors (Intercontinental, Le Méridien, The Four Seasons). 7 Hungary offers investors attractive tax structuring Efficient tax structuring can allow investors to avoid capital gains and limit the tax impact on income derived from real estate assets. A 10% corporate income tax rate applies for net taxable income up to HUF 500m (approximately 1.6m). The excess is taxed at 19% but, taking into account tax deductions TAX available in respect of interest payments on debt and shareholder loans and tax relief for depreciation of the asset, the effective tax rate can be very low. Market standards and ease of business 8 The real estate market in Hungary is standardized and supported by a robust and reliable land registry system. Lease agreements are of an international standard, based with annual rent uplifts in line with inflation. In retail, lease contracts with turnover rent provisions and turnover reporting are the norm. In the 2014 JLL Global Transparency Index, Hungary ranked 25 th among the Transparent group (between the Czech Republic and Japan). 9 Hotel performance improving Hotel performance figures for the last 3 years have been improving, showing significant growth in both occupancy and room rates. In 2013, occupancy was up by 1 percentage point and the ARR by 2.5%, contributing to a 3.9% rise in RevPAR. International demand, which represents almost 85% of bed nights is strong, particularly the tourism component of it. The general occupancy among Budapest hotels has returned above the 65% level for 4* and 5* hotels.
7 It s all about timing! Contrary to markets such as London, Paris and even Warsaw where there is very high competition among investors on prime assets and therefore bidding frustration and fatigue, today Budapest offers a window of opportunity as the market depth remains limited. Even for the best assets, proactive investors can conclude deals which would be difficult to secure in a more competitive environment. With the increasingly positive outlook for the country, the easing of financing and the increasing interest of foreign and national investors in the real estate segment, we expect the market to show a sharp recovery of activity in the coming months. As recently witnessed in Spain and Italy, the repricing materialised in a 6 to 9 month time frame and the current Hungarian market configuration therefore offers a rare acquisition window. 7
8 Office market Belgrade Zagreb Bratislava Bucharest Prague Budapest Warsaw Bullish occupier market - record take-up in H with almost 250,000 m 2 of office space leased Decreasing vacancy rate standing at its lowest level in the past 5 years Stabilised rents - with reduced tenant incentives in some successful buildings and submarkets Weak development pipeline shortage of prime category office space could push rents up High quality standards The development of Budapest s modern office market began at the beginning of the 1990 s. Both international and local real estate developers have progressively developed a modern stock of Class A and Class B buildings, which currently totals 2.57m m 2 of speculatively built office space and a further 640,000 m 2 of owner occupied premises. With this volume, Budapest has the second largest office market in CEE behind Warsaw. MODERN OFFICE STOCK IN CEE AND SEE CAPITALS 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 Office stock (m2) The quality of the Budapest office stock is in line with Western-European standards and the modern Class A office buildings meet the technical requirements of large, international tenants. The latest handovers of new developments are certified under the LEED or BREEAM rating systems in the planning and construction phase, while older buildings have started to apply for the operations and maintenance certifications. MATURE SUBMARKETS WITH EXCELLENT INFRASTRUCTURE The city of Budapest is divided into two easily identifiable parts by the Danube river, namely: Buda and Pest. While Buda is the wealthier residential area, Pest is the administrative and cultural centre of the city with governmental buildings, ministries and headquarters. Budapest has a well developed, efficient and dense public transportation network. It has 4 metro lines and numerous bus, tram and suburban railway lines, which provide excellent access to every part of the city. The infrastructure network of Budapest has been continuously developed. Most recently, a new metro line was completed (M4) connecting Buda and Pest and several busy and strategically important tram lines are also being upgraded and extended (tram line 1, 3, the merging tram network of Buda including line 17, 19, 47 and the reconstruction of Széll Kálmán Square). No doubt that once these developments are realized, they will add a significant boost to the commercial property market of Buda. The Budapest office market is divided into 9 submarkets, which all have different characteristics in terms of stock quality, availability, rental levels and development pipelines. The majority of the office stock (63%) is located on the Pest side, owing to Pest s administrative role and favourable public transport network. Record breaking occupier activity The largest occupiers of the Budapest office market are well-known, international tenants, who entered the Source: JLL Research, September 2014
9 Photo: Millennium City Center Hungarian market in the early 2000 s. Almost all of them have expanded in the past 10 years and their long-term plans in the country are reflected by the recurrent renegotiations and extensions of leases. Leading occupier groups include: Banking, financial services, insurance FMCGs SSCs/BPOs ICT Media and telecommunication Business services Public sector There is a significant requirement from small and micro enterprises as well, mainly from local companies who make up almost 20-25% of the total leasing activity. Most recently, we have seen a rise of successful Hungarian ICT firms (Prezi, LogmeIn, Ustream) occupying prime office space. Although the composition of demand changed after the crisis, occupier activity hasn t collapsed as gross take-up amounted to approximately 370,000 m 2 on average over the past 5 years. What is even more noteworthy is the record breaking take-up in H with almost 250,000 m 2 of gross and 130,000 m 2 of net take-up. Most significant transactions in 2014 included: The pre-lease and expansion of various GE subsidiaries totalling more than 9,000 m 2 Vodafone s expansion of more than 5,000 m 2 The opening of Emirates new SSC of more than 3,000 m 2 9
10 Lowest vacancy rate of the past 5 years After the global economic downturn, the volume of vacant office space increased rapidly in Budapest due to the backlog of the development pipeline. Nevertheless, strategically located, modern, properly managed office buildings did not suffer as much as could have been expected. Several buildings, delivered after the crisis, succeeded in securing % occupancy within a reasonable period of time. The likes of Eiffel Square, Green House, Office Garden II, Infopark E and Corvin Offices are good examples of successful projects. By mid-2014, availability shrank to 17.6%, the lowest rate of the past 5 years. In other words, vacancy is back to its pre-crisis level and based on our forecasts the decline will continue. Considering the bullish occupier activity paralleled with a very limited, partially pre-let development pipeline, it s easy to see that the only way is down for the vacancy rate. The biggest winners in the present market conditions will be the high quality, Class A buildings, which will continue to attract tenants from older, lower category buildings. Promising prospects the only way is up A limited number of properties are scheduled for delivery by the end of 2016, totalling some 80,000 m 2. As these are already 40% pre-let, there should be a shortage of high quality office supply in the near future. While development activity should recover, we foresee market conditions to be more favourable to landlords and a progressive easening of the rental pressure which has been characteristic of Budapest in the last few years. In addition, the fierce price competition, which was observed during the past few years, will slowly diminish and tenant incentives and rental levels should return closer to the pre-crisis levels. Due to the financial crisis and recession following, there has been stagnation in the past 5-6 years on the real estate market in Hungary, with low take up figures, high vacancy and limited number of transactions on unattractive yield levels for developers and sellers. However, in comparison to Western- Europe, the office space per capita still shows significant room for improvement in Hungary. As for the future, I am optimistic, in H there has been increased interest for capital investment by international real estate funds in addition to growing interest from local investors. Capital investments are starting to flow into the region, and hopefully, Hungary will be one of the target countries. The environment is positive for the investments, as the prices are down and the perspectives on returns seem promising as well. Increased activity in all fields underlines my expectations, since the net take up in office leasing shows a 28% increase in the first half of 2014 in comparison to H Furthermore, investment volume is expected to be around 600m with an increasing share of institutional products in comparison to the 2013 annual volume of 320m. The spirit of investments can be raised, since the recent Eurostat data forecasts an increase in the Hungarian economy, according to the numbers the Q domestic GDP has grown by 3.7%. Árpád Török Chief Executive Officer TriGranit Development Corporation
11 Industrial market Occupier market showing strong momentum: 3PLs are back Vacancy is falling Rental pressure is over A market where 6 highways meet The centre of the Hungarian highway system is centred in Budapest where 6 highways meet, connected by the city ring road (M0). This provides quick and easy access to any part of the city, meaning that there is almost no substantial difference in terms of the accessibility of the submarkets. Similar to the office market, the development of Budapest s modern industrial stock started in the late 1990 s. At that time most of the assets were owner occupied, but as Hungary s accession to the European Union became certain, the need for leasable modern warehouses boomed. Photo: ProLogis Park Budapest Sziget 11
12 In terms of quality, the majority of warehouses are in line with Western-European standards and can be fitted out for logistics or, light industrial purposes. Typical technical standards of warehouses include: Warehouse Concrete/steel building structure Internal clear height 10 m ESFR sprinkler system Skylights and smoke vents Interior fire hydrants / hoses Gas fired dark radiators heating system to 5 C with outside temp. of -15 C Floor loading capacity of 5,000 kg/m² With an average one rack point load of ~6,000 kg Average lighting level of 200 lux Electrical loading docks with levellers and drive-in doors Source: JLL Research Office Flexible layout with sufficient social areas Mezzanine above loading dock area at Clients request Heating maintenance system to 20ºC with outside temp. of -15ºC Average lighting level of 400 lux Parapet cable trunks for cable systems actively monitoring the market for better options in terms of lease conditions and have pushed landlords into achieving better terms. Although demand has relapsed in recent years, the setback was not that large. The average demand for the period was at 150,000 m 2 / year, only 17% below the typical average for the period The volume of renewals increased significantly in recent years, which was simply the result of the major leases signed in early and mid-2000 rolling over, along with early renegotiations by occupiers to secure preferable terms from landlords that were keen to secure them in the context of increasing vacancy. Looking ahead, we expect occupiers to be especially active in Nearly 180,000 m 2 industrial space was let during the first half of the year giving grounds for optimism. Demand from 3PLs is picking up sharply, with the largest transactions of the first half of 2014 being signed by DB Schenker, DHL and UTT. What will happen with vacancy and rents? First of all, given the Budapest industrial market s small size, we need to bear in mind that even a relatively small occupier exit or entry can cause a wide swing in the vacancy. Until mid-2008, the vacancy rate used to fluctuate between 8-10%, considered as a healthy level, providing a sufficient number of options for occupiers to choose from while guaranteeing a stable level of rental rates for landlords. In mid-2008, the largest occupier in Budapest, Rynart, went bankrupt, releasing some 100,000 m 2 of space to the market at once; suddenly adding 8% of vacancy. Occupiers are back In general, most of the industrial space (built for letting purposes) is leased by logistics service providers or, companies dealing with light industrial and manufacturing activities. The most important clients of 3PLs are the automotive, food and pharmaceutical industries. Besides them, food retailers (hypermarket chains, discount food retailer chains) and drugstore chains also operate large distribution centres across the country. During the past few years, tenants were MODERN INDUSTRIAL STOCK IN CEE AND SEE CAPITALS Belgrade Zagreb Bratislava Bucharest Prague Budapest Warsaw 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 Industrial stock (m2) Source: JLL Research, September 2014
13 Since then, the vacancy rate has fluctuated between 20 and 22% in almost every quarter. Since mid-2014, the rate fell back due to absorption in both older, lower quality parks and in prime modern parks. The current robust leasing and expansion activity of major occupiers, points in the direction of further vacancy decrease by year end. Taking into account that there are no on-going speculative developments in Budapest, we foresee a shortage of high quality industrial supply in the mid-term. Rents have reached a level where any further decline would simply make the maintenance and operation of parks unfeasible for landlords. Adding to the signs of a pick-up in leasing activity, we foresee a positive trend ahead for landlords with the reduction of rental incentives and the stabilisation of rents at around / m 2 / month. The industrial property market is clearly on an upward cycle. Occupancy is increasing as a result of expansions and new business, however yield compression is just starting, so Hungary provides attractive investment opportunities. After the difficult past few years, occupier activity is firmly gaining momentum in our parks and we see an increasing interest from 3PLs again, as well as from manufacturers. We will close 2014 with positive results. László Kemenes VP Country Manager Hungary & Romania ProLogis Photo: ProLogis Park Budapest Harbor Park 13
14 Retail market Retail sales are shooting up, consumption is increasing Shopping centres are being upgraded: tenant mixes and layouts are improving High street market is developing further: uniform Váci Street brand, flush of luxury retailers in Il Bacio di Stile at Andrássy Avenue New shopping centre in the pipeline Budapest, the retail hotspot Budapest is the centre of the Hungarian retail market. The Hungarian capital has approximately 1.8m inhabitants, the largest concentration of population in the country. Moreover, it has the wealthiest residents. Based of GfK s latest purchasing power study, the average Budapest purchasing power per capita was more than 30% higher than the Hungarian average. average Hungarian customer. Unlike secondary cities in the Hungarian regions, Budapest offers more than just giant shopping centres. The last few years have seen a revival of the high street scene with luxury and premium brands: the beautiful historic scenery of Andrássy Avenue, part of the World Heritage, the recently refurbished and branded Váci Street and the premium corridor of Fashion Street, offer a retail experience for locals and tourists in the heart of the city centre. Evolving tenant mixes and exciting new projects Although there are no on-going shopping centre developments in Budapest at the moment, existing centres are constantly upgrading their tenant mixes and layouts to attract more customers. This way, the best are getting even better. The tenant mix of Westend, Aréna Plaza and MOM Park has improved notably during the past 2 years and the footfalls of Allee, Mammut and MOM Park have shown significant increases. When a new brand enters the Hungarian market, they tend to look for a unit in one of the top 6 shopping centres. This was the case for Marc Cain, Michael Kors, Napapijiri, Gap, Superdry and Budapest s retail market has a long history. While Western-style shopping centres were almost unknown in the regions until the late 1990 s, Budapest was an exception. In line with international trends, the first rudimentary shopping mall developments in the capital were handed over in the 1970 s (Flórián Üzletház, Skála Nagyáruház), but their GLA barely reached 20,000 m 2 at that time. The first wave of truly Westernstyle shopping centres was realised in the late 1990 s and early 2000 s, to the delight of Hungarians, and quickly overtook outdated high street retailing. The popularity of shopping centres hasn t toned down ever since and they remain the retail destination of choice for the Photo: MOM Park
15 There are definitely tangible improvements in the retail market in Hungary suggesting the worst years of the crisis are now over. Turnover performance is improving generally giving retailers confidence to enter new markets and open in new locations. Certain retailers like Spar, Inditex and H&M who have been present in Hungary for a number of years expanded extensively even during the crisis, increasing market share. More exclusive brands like Michael Kors, La Martina and Furla entered in the past 12 months, opening 1 or maximum 2 stores in selective Budapest locations. Retailers now have a better understanding of the complexities of the market, meaning they are more selective about the locations they choose and the conditions they are willing to accept. This is leading to a polarisation within the sector, with the better shopping centres seeing improvements in retailer demand and performance, while less clearly defined schemes are falling further behind. As the market becomes more sophisticated landlords must ensure their retail assets stay relevant to the changing demands of targeted tenants and customers, as well as meeting investor criteria. Along with maintaining a strong awareness of local and international retail market trends it is becoming more important to ensure the asset meets institutional standards from every aspect. And just as retailers are adopting more sophisticated and often regional expansion strategies, investors need to formulate clear asset management strategies for their assets implemented by experienced teams on the ground. Sports Direct to mention a few, unless their luxury positioning dictates an Andrássy address. In order to keep up with shopping centres, high streets are also transforming and developing. Units along Váci Street now have a uniformed branding and the pavement was refurbished. A new multibrand luxury department store, Il Bacio di Stile, opened on Andrássy Avenue, with a poignant mix of luxury retailers from Saint Laurent to Bottega Venetta. What s next? From 2007 to mid-2013, retail sales volumes suffered tremendously. Since July 2013, this negative trend was reversed and year-on-year monthly retail sales volumes have shown a positive trend. We foresee a slowdown of the growth during the second half of the year, nevertheless annual retail sales are likely to reach approximately 1.9% in Growing household consumption supports the expansion of retailers and also encourages potential new brands to enter the Hungarian market. There is however still room for improvement for the Hungarian retail market. While retail units on Váci Street are almost 100% occupied, there are still several vacant units available on Andrássy Avenue, where the fluctuation of tenants was especially striking in recent years. We are now seeing a stabilisation of the mix with additional retailers due to enter some of the existing vacant units, following a full redevelopment / refurbishment. Once delivered, Andrássy Avenue s flash will become even more evident. As for shopping centres, the upgrade of existing schemes will continue further but, the market will also receive stimulus from the potential launch of a new shopping centre development by local developer Futureal. The construction of Etele Shopping Centre, a 43,000 m 2 shopping centre near Kelenföldi Railway Station, is expected to kick off in late Taking into account that the shopping centre density of Budapest is one of the lowest in CEE at 445 m 2 / 000 inhabitants, that there is still room for development in the Hungarian capital. Jane Petrie Director, Head of Retail Central Europe AEW Europe 15
16 Submarket focus: Váci Corridor Densely built-up area with high quality offices and relatively well maintained residential buildings Close to city centre Largest office submarket with 25% of the total stock, the fourth biggest district in terms of population (~118,000 inhabitants) Includes the whole area of District 13, divided into two sections by Árpád Bridge and Róbert Károly Avenue (Northern and Southern sections) Excellent public transportation network: M3 metro line connecting the Northern and Southern sections, numerous bus, tram and trolley lines, quick access from Buda through Árpád Bridge No.1 option for occupiers As Váci Corridor is the largest office submarket, it is no surprise that it attracts the most demand. During the first half of 2014, 28% of the total Budapest takeup was recorded here, amounting to almost 9% of the submarket s stock. The largest transaction of the first half was also concluded there (29,000 m 2 renewal), along with the most significant pre-lease of the year so far (8,400 m 2 ). Due to its central location, large stock and excellent accessibility (both by car and public transportation) this submarket is usually never eliminated when an occupier starts to monitor the Budapest office market. The composition of Class A and B buildings is approximately 60% and 40% respectively, meaning that regardless of the budget of the tenant, Váci Corridor can meet all kinds of requirements, including the additional benefit of its easy accessibility. There is no surprise that Váci Corridor is popular among all types of occupiers from banks to FMCGs, consultancies or SSCs. Pulse of the office market Váci Corridor is by far the largest office submarket of Budapest with 25% of the total office stock. Due to its excellent location (right next to the city centre), easy accessibility and high supply of affordable plots, it became the hot spot for landbanking and office developments by the mid-2000 s and has since been going through a rapid evolution. The progress of the submarket has continued during the past five years ( ) as 23% of the new supply was delivered there. Growth is not over: between H % of the future supply, totalling nearly 80,000 m 2, will be delivered in the Váci Corridor, which clearly reflects that it will remain the darling of developers in the future. LARGEST OCCUPIERS: Hungarian State (post office, tax office, national healthcare desk) Exxon Mobile Budapest Bank (GE Money) Citibank AXA Bank Unilever Diageo KPMG
17 M3 1 Eiffel Square 2 West End Business Center 3 West End City Center 4 V17 5 Green House 6 Capital Square 7 Vision Towers 8 Átrium Park 9 Center Point 10 Váci Corner 11 Váci Greens 12 BSR Center 11 M M3 M M M3 3 4 M3 1 17
18 Photo: Váci Corridor Investors appetite building up Váci Corridor has always been on the radar of opened-eyed investors, especially as it is the best alternative to CBD properties. It is a central submarket but, unlike the CBD, it offers a wide selection of suitable ticket sizes for funds and institutions. There are numerous modern, recently built, large office buildings with stable and high occupancy rates and well-known international clients or, secure entities of the Hungarian State. The list of these buildings is expanding as the pipeline is delivered. Having a look at recent transactions, we see that two recently completed, successfully let offices were transacted in 2014 and further deals are in the pipeline. Furthermore, the benchmark for the recently compressed prime office yield at approximately 7.3% is a transaction concluded in this submarket, highlighting that prime is no longer exclusive to the CBD. Towards a brighter future The resounding success of Váci Corridor is about to continue further. Almost 50% of its pipeline is already pre-let and, due to the lack of adjacent large floorplates, it is presumable that most of the remaining areas will be absorbed by the time of their delivery. However, the growth of the submarket will not stop soon as there are numerous development options within it (some with building permits, others just in planning phases) comprising more than 500,000 m 2 of GLA.
19 Submarket focus: CBD The heart of the city with 5* hotels, prime office buildings, three high streets (out of which Andrássy Avenue is part of the World Heritage) Commercial centre of the city Includes the whole territory of District 5, the first section of Andrássy Avenue (between Bajcsy-Zsilinszky Street and Oktogon) and Kálvin Square Fourth largest office submarket comprising 11% of the total stock Various means of public transportation: 4 metro lines, trams, buses, trolleys Continuously improving area due to numerous municipality developments The No.1 spot to go to One can find everything one is looking for in the CBD. Highly prestigious residential properties, 5* hotels, a wide selection of luxury brands, spectacular tourist attractions, countless restaurants and theatres and of course: offices. LARGEST OCCUPIERS: Hungarian State (ministries and other bodies) Raiffeisen Bank Citibank PWC BNP Paribas LogMeIn Aegon Volksbank Although the submarket comprises only a small territory, it has a high concentration of 5* hotels with approximately 55% of the 5* accommodation located there. All of the large hotel chain operators are active in the market including: Four Seasons, Sofitel, Kempinski, Marriott and Le Meridien for example. When it comes to shopping, the CBD does not disappoint either. Andrássy Avenue, Váci Street and Fashion Street are well known high street retail destinations, offering a wide selection of luxury, premium and mass market brands. Due to its compact size, shopping centres are absent in the CBD and although there are only a handful of shopping galleries, Il Bacio di Stile and Paris Department Store are worth mentioning due to their amazing architectural designs and sortiments. The CBD is Budapest s administrative and entertainment centre, hence the favourite spot of tourists, local residents and officials. On top of the various ministries and bank headquarters, Budapest s prime office segment is also concentrated in the CBD, including Bank Centre, Roosevelt 7/8 and the recently completed Eiffel Palace, where the prime office rent reaches 20-22/ m 2 /month for the best units. 19
20 7 M3 M2 6 M1 M M1 8 9 Andrássy Str. M1 1 Roosevelt 7/8 Office building 2 Four Seasons Hotel Gresham Palace 5* hotel 3 Vörösmarty Sqr. 4 M1 10 Fashion Str. 11 M1 M2 M3 3 Sofitel Budapest Chain Bridge 5* hotel 4 InterContinental Budapest 5* hotel 5 Bank Center Office building 6 Szabadság tér 14. Office building 7 Eiffel Palace Office building Váci Str. 8 Andrássy Palace Office building M2 9 Il Bacio di Stile Retail gallery 10 Le Méridien Budapest 5* hotel 12 M3 11 Kempinski Hotel Corvinus Budapest 12 Buddha-Bar Hotel Budapest / Klotild Palace 5* hotel 5* hotel 13 Kálvin Center Office building M3 M4 13 M4