Diverse trends, selective focuses and energy-efficient solutions will define the real estate market in 2025, according to DLA Piper Hungary's annual real estate intelligence report. Here is a summary of some of the key trends featured in the Hungarian Real Estate Intelligence Report.
Alternative solutions in the office market
The Budapest office market is still awaiting clear signs of recovery, and market players remain moderately optimistic and cautious. Tenants are constantly re-evaluating their office space needs, and there is a noticeable increase in interest in high-quality, energy-efficient and sustainable buildings. In addition to premium locations, amenities that enhance employee and tenant well-being are becoming increasingly important. By contrast, letting lower-grade office buildings is proving more difficult.
Although leasing faces challenges, we are seeing more and more office buildings are coming onto the market. It’s encouraging that the pricing gap between buyers and sellers appears to be narrowing. If M&A activity in the office market increases due to exit intentions and repricing, we can expect to see a return to normal acquisition and investment financing transactions.
In connection with office developments, we’ve encountered numerous cases where tenants, in particular from the healthcare and education sectors, require alternative uses for space. These tenants often have special needs, which can result in increased development costs and longer construction periods. In the case of currently unused or inefficient “B” category office buildings, developers often consider conversion options, such as residential or hotel use. However, our experience shows that such projects pose significant challenges, including the location of the property, disproportionately high development and renovation costs relative to the intended use, technical limitations of the conversion options, and a strict regulatory environment.
Changing dynamics in the logistics and industrial property market
The logistics and industrial property market has been strongly fuelled by the dynamics of recent years, and further large-scale logistics sites are expected to come onto the market in the coming period. Several built-to-suit projects have recently been completed, and developers are increasingly open to opportunities beyond Budapest, primarily in rural submarkets located near major industrial hubs.
While the logistics segment has shown signs of stabilisation and structural transformation in the recent period, industrial developments have largely driven activity in the sector. The market players and experts we surveyed expect the logistics segment to gain new momentum in the coming years. Nearly all players emphasised that the upturn in the sector is still closely linked to the recovery of the automotive industry and the growth in e-commerce, both of which are fundamentally influenced by the current global market situation.
Revival in retail, entertainment and magnetic rent
Retail market participants have been striving to modernise their existing buildings and improve their energy efficiency to prepare for an increase in the number of customers returning to shops. Although a full recovery is yet to materialize, a slow but steady upturn can be observed in the retail segment. As a result, retailers are gradually regaining confidence in retail space, which has led to an increase in demand for premium retail space in particular.
In our experience, convenience and experience-based developments, such as food courts and cinemas, have become standard expectations among shoppers. We have also seen electric vehicle manufacturers actively engage with retailers about installing electric charging stations. These developments can contribute to enhancing the customer experience and at the same time provide a new revenue stream for retailers.
The hotel market continues to strengthen
The Hungarian hotel segment has continued to perform well over the past financial year, with occupancy rates remaining positive and fundamental market factors expected to stay favourable. As a result, the hotel market is likely to remain to attract attention from both international investors and domestic market players.
Particular attention is being paid to the renovation of prestigious, historically significant buildings, which could attract new premium hotel chains to Hungary. In addition, there is also growing interest in luxury apartments for rent with additional services.
The hotel development and investment projects of the clients surveyed in the DLA Piper Hungary report were almost exclusively in the four-star or higher category. Nevertheless, several market participants have noted a noticeable increase in demand for lower-budget accommodation that is also affordable for a wider range of tourists.
Growing interest in mixed-use projects
At the same time, there is a growing interest in mixed-use projects in the office and hotel development sectors. These investments can help to mitigate the risks associated with single-use properties. This trend is strongest in the more developed European markets, but Hungarian developers are also actively exploring such opportunities. At the same time, the sales potential of these projects in Hungary is often questionable, and current market demand is difficult to assess and quantify at this stage.
The key to energy efficiency: Rooftop solar panel systems
Meeting sustainability requirements is crucial across every segment, and ESG considerations are becoming increasingly important, coupled with a growing demand for energy efficiency.
In cooperation with our energy team, we’ve been involved in several investments aiming to increase the energy efficiency and green energy use of office buildings, for example by installing rooftop solar panel systems and selling the electricity generated to tenants. Similar green energy solutions are being explored by logistics developers and investors, often motivated the need to secure energy supplies required for new developments.
By Tamas Balogh, Counsel and Real Estate Service Stream Leader, DLA Piper Hungary