The volume of new office completions in Hungarian capital Budapest is expected to reach 200,000–250,000 square meters (sqm) in 2008, up from 193,000 sqm in 2007, despite economic growth falling to an 11-year low, according to a report published by real-estate consultant Eston International on Thursday.
“For 2008, we continue to foresee the completion of 200,000–250,000 square meters, as the drop in developer activity will instead set back the volume of completions in 2009–2010,” the report said.
Eston noted that the office market does not seem to be sensitive to the drop in the GDP growth rate, which came in at a mere 1.3% in 2007, while the U.S. subprime crisis may only have a slowing effect on development projects planned to be launched in 2008.
As a result of the high number of developments due for completion in 2008, the vacancy rate of offices is expected to rise from the current 12.6% to more than 15% by the end of 2008 and to above 20% by the end of 2009. The stock of A-category rented offices reached 2.2 mln sqm at the end of 2007, Eston added.
Eston also said that the year 2007 saw rental contracts for office areas reach 320,000 sqm, two-thirds of which were new deals.
Office rents stagnated in 2007 at a monthly average of EUR 13–16 per sqm for new A-category areas, and EUR 9–12 per sqm for older A and for B category offices.