Syngenta has signed a prelease agreement in Office Garden II for 2600 sq m (2200 sq m office & 400 sq m storage area)

Syngenta is the newest tenant in Office Garden office park. The transaction was conducted in the form of tenant representation, with pre-lease agreement.

As leading agricultural company in the world Syngenta has dedicated itself to sustainable agricultural solutions via innovative technologies, research and development. The company employs more than 25,000 people in more than 90 countries.

Tenant’s choice, Office Garden office park is located in one of the most dynamically developing regions of Budapest, in Újbuda, near the Danube bank, at Lágymányosi Bridge and Fehérvári Road, in the block bordered by Szerémi and Budafoki roads. The second phase of the development will be handed over in 2010 Q3 with 17,000 sq m.

“Due to our dynamic growth our present headquarter in South Buda cannot further satisfy our increased space requirements any more therefore we intended to find our new central office in this vicinity. Office Garden office park and Office Garden II meet all our requirements covering sufficient number of parking lots for our great number of company cars and several hundred square meters of warehouse space. The office park with its “greenâ€? concept represents that sustainability to which our company has dedicated itself since the beginning. The high standard features of the building and the owner’s flexibility helped us make a good choice with Office Garden within a short time.” - says Tibor Czigány, managing director of Syngenta.

During the negotiation the tenant was introduced and represented by Eston International (tenant representation).

RERA (Real Estate Research Association) completed its latest Budapest office market report related to Q2 of 2010

Professional commercial property market alliance, RERA, (established by 3 property advisors Colliers International, EHL Hungary and Eston International) completed its 2010 Q2 Budapest office market report.

Office market volume

RERA examined a total of 2.3 M square meter of modern office volume in their Q2 analysis, whose composition has slightly changed in comparison with the previous quarter. RERA reclassified the Budapest office buildings in the past three months based on each house’s technical specifications, and those that could not comply with the established strict criteria have been removed from the examined stock - nearly 75 000 sq m. Thanks to this revision, for the first time it was possible to precisely define the proportion of ‘A’ and ‘B’ categories on the market.

According to RERA data-
base, the technical ’A’ category buildings comprise 71.3% of the total market exami-
ned. Similarly to the previous quarter, the buildings exclusi-
vely occupied by their owners and those premises that have been developed or technically adapted specially for their present tenants are not included in the examined stock.

New deliveries

Nearly 62,000 sq m of new office space was de-
livered in the 2nd quarter, which indicates a 22% increase compared to the previous quarter. The Budapest office stock, therefore, rose by a total of 112,000 sq m in the first half of 2010, showing a 28% growth in the modern office stock, in comparison to the corresponding period of year 2009.
From among the offices handed over this quarter, the 2nd phase of Népliget Center is proud to be 60% occupied, along with GTC Metro, the new HQ of Budapest Bank, which is fully let. Both are outstanding achievements given the current market conditions. Váci corridor grew by 31,000 sq m, comprising half of the total deliveries this quarter.

Vacancy

The average vacancy rate in Budapest is 26.19% according to RERA calculations, which shows a further slow growth compared to the previous quarter, although it is expected to stagnate in the following quarter. On the most popular submarket, Váci Corridor, the vacancy remained still below 20 % (19.3%), mainly due to the successful lease of GTC Metro. Apart from the Periphery, a slight increase in all submarkets can be observed, although, Periphery still retains the highest rate compared to other submarkets.

Occupier / Letting activity

The volume of published market deals exceeded 57,000 sq m in Q2. The submarket of North-Buda is to be highlighted at 12,430 sq m, which was the highest figure and comprised 21.8% of the total take-up.

Based on RERA calcu-
lations, the office market is increasingly looking up, which can be mainly demonstrated by the growing proportion of new leases (56.5%).

The size of new leases was averaging between 400-500 sq m.

It is worth mentioning that deals signed for spaces below 400 sq m made up 70% of the total transaction volume. In addition, lease renegotiations and renewals are still representing a significant volume, accompanied by reduction in the leased space in more and more cases.

The biggest new lease of the quarter is associated with the name of Ericsson Hungary, which is moving to its new office to the 2nd phase of Népliget Center (6,300 sq m) in the beginning of the next year. Capital Square proved to be the most popular office building of Q2 2010 as 5 new tenants chose it as their residence.

Net absorption

Net absorption is a fundamental figure of the office market, which reflects the demand for new office space. The basis of this index is the total speculative office space (both existing buildings and those under development) that was vacant in the beginning of the quarter and was then occupied by the end of the term, excluding those, where tenants moved to a similar size space within the existing stock. In the first two quarters of 2010, net absorption came up to 63,700 sq m, which was 57.3% of the total occupier activity and showed a quarterly upward trend.

The market adjusts towards equilibrium according to preliminary data, as the 111,200 sq m of office leases approached the total office space handed over in the first two quarters (112,130 sq m), however net absorption solely covers 57% of new deliveries, which means the volume of vacant space is further increasing.

Market conditions

It has been one and a half years since the global financial and economic crisis reached Hungary and made an impact on every aspect of the economy. Although with a short delay, the aftermaths of the crisis shocked the real estate sector. New developments were suspended and both the private and the public sector kept back their intention to move.

The first signs of recovery showed up in the first half of the year but the impact of the crisis on financial markets and directly on companies’ financial situation did not pass away. Both consumer and business sectors were encouraged to make savings and cut costs in the past period making an attempt to reduce expenditure. Office market vacancy saw an unprecedented rise and the extreme oversupply resulted in a 10-30% decrease in rent fees.

Tenant activity dropped significantly in every sector, and the number and volume of contracts for new areas decreased sharply. In Q1 2010 almost half of office lease contracts were actually lease re-negotiations. Since the office rent fee is a relatively significant portion of company expenses, a paradox has occurred: some lessees see a business opportunity — generated by the crisis — in re-negotiations, while on the other hand, other companies were indeed forced to modify their actual lease conditions.

In the following section, we analyse the extent to which the two different situations require dissenting attitudes by lessors, lessees and advisors.

Tenants

For prosperous companies not having fundamental financial difficulties in paying their current lease fee, the low rental fees in the market offer good opportunities, to bargain over more favourable conditions during lease re-negotiations. Among ESTON’s 2009 tenant representation assignments, there was a client with a year 2012 move intention, who – recognising advantageous market opportunities – wished to fix the current low prices in the lease contract. Such companies typically tend to have a clear mid- and long-term vision, a stable background and they are committed to co-operate with the landlord. Some of the small and medium sized enterprises however are in such a dire financial situation that they can barely afford the increased lease fees now reaching 30-40% of their income. Besides their expenses having risen to extreme heights, the future of a company is often so uncertain that a long-term contract does not make business sense to them, even with discounted lease fees. In addition, those lessees having layoffs resulting in 20-50% downsizing may be forced to reconsider the conditions of their lease contract as well. One possible solution for them may be ‘sublease’, which is sub-letting the office space they do not need.

Lessor reactions

Lessors are also in a difficult position, as in the current competition for lessees it is a challenge to keep existing contracts, let alone achieve new ones. Given that long-term lease contracts are of value and importance for an office building, it would be logical to assume that lessors react positively in cases when a reliable, long-term lessee requests a lease fee reduction. These situations are usually easy to handle and the parties can easily reach a compromise.

The position of insolvent lessees is a great deal more complicated, and whether a company can continue its work or has to shut down might depend on the flexibility and understanding of the lessor. If a compromise cannot be reached, it might happen in rare cases that the lessee may move out of the office and thus break the lease contract.

ESTON consultants have found that lessors often react too late, only after the lessee already signed a new contract for another building, and they make hasty offers at a lower price. This situation could have been prevented early on with a little consideration and a slight fee reduction. If, however, the lessee does move out, the lessor faces high expenses and unforeseeable risks. Assuming that the office space will be out of use for a few months, the most important factor is the absence of the previously continuous income stream, and its additional consequences. The agency fee, paid partly by the lessor is another, although smaller problem. Moreover, the given office space rarely meets the needs of a new lessee, therefore the re-modelling costs shall also be paid by the lessor. This is likely to be higher than repainting the walls and changing the carpet, which could have been offered free of charge to the old lessee in return for his loyalty.

The role of the advisor

Advisors are able to work out market-based structures for lessees capable to make longer term (3-5 year) commitments. Through these arrangements, costs can be saved even without renewing the contract but within the framework of the existing agreement by offering discounts allocated all over the contract period.

When meeting a desperate lessee, the most important task of the advisor is to identify and prevent unrealistic offers from both parties, and also to propose constructive arrangements in order to achieve a ‘win-win’ solution.

In these delicate situations the most important goal is to keep the parties on good terms with each other, and to mediate between them, bringing the two positions closer to each other or, perhaps, to resolve the conflict of interest. By describing the potential losses resulting from the dissolution of the lease contract and affecting both parties, the advisor can eventually help the parties achieve an agreement.

Each negotiation is a psychological ‘game’ where it is the advisor who can utilise the appropriate communication skills, as he is aware of the objectives of both parties. That is why engaging an expert advisor can lead to an agreement and mutual benefits for both parties (such as lengthening the lease period, a temporary discount in fees, fixing the minimum and maximum of turnover rent).

For further information please contact our experts or visit our site at www.eston.hu and read the full issue of Property Watch under „Our publications�.

An independent professional jury of 18 has selected brands that deserve Business Superbrands award. In 2010 Eston International has been awarded internationally acknowledged Business Superbrands status that best reflects business (B2B) brands’ reliability.

“Being awarded as ‘Business Superbrand’ means high acknowledgement and another proof for the fact that the high quality and the continuous effort to improve are not only reflected by regular positive client feedback and by the property professionals but also recognised by the committee examining ‘superbrands’. I am proud of Business Superbrands award and truly believe that both professional vocation and the knowledge and collective success of Eston team have contributed to Eston’s becoming an outstanding brand.� – says Adorján Salamon, president & CEO of Eston International.

International Superbrands programme started in Great Britain for 15 years, the programme has been working in Hungary since 2004, the Business Superbrands programme for acknowledging business brands works for 3 years now. The award that can be gained by most reliable brands is a guarantee that choosing a Superbrand is a right choice.

Superbrands award’s value is clearly understandable through the fact that the nominees are selected each year by an independent committee; neither application, nor tendering is possible.

RERA (Real Estate Research Association – founded by Colliers International, EHL Hungary and Eston International) published its new report, in which it examines Budapest office projects currently under construction.

30% REDUCTION IN OFFICE CONSTRUCTION ACTIVITY

If everything goes according to plan - 152 045 sq m modern office space is expected to be delivered for the whole of 2010, which is just 70% of the total volume delivered in 2009. While 64%-more office space will enter the market during the end of the first half year than during the comparable period in 2009, this is largely due to deliveries postponed from last year and a significant decrease in new handovers during the second half of the year. Preleases have already been signed for one third of these spaces, which therefore should not have a significant effect on the vacancy rate.

While no new projects commenced construction during the first half of 2010, many developers are actively working on new, quality projects which they hope to launch in the next 1-2 years.

Several of these projects are being designed to achieve an environmental sustainability certification, as developers increasingly both understand the need to integrate sustainability goals into a project from conception and anticipate a sustainability premium from tenants and investors.

In particular, both SCD Group’s “Officium� scheduled for delivery at the end of 2011 and Skanska’s “Green House� which should commence construction at the end of 2010 in the Váci út Corridor are being designed to meet specified sustainability goals.

During the second quarter of 2010 the 2nd phase of Madarász Offices (17 000 sq m) and the 2nd phase of Office Garden (14 697 sq m) will finally be delivered after slight delays, bringing the total new supply for the quarter to approx. 76 000 sq m of office space.

Previous RERA analysis here.

RERA (Real Estate Research Association) published its quarterly Budapest office market report related to the first quarter of 2010.

Professional commercial property market alliance RERA (established in January by three property advisors: Colliers International, EHL Hungary and Eston International) completed its 2010 Q1 Budapest office market report.

Office market volume

Base sample examined by RERA comprises a total of 2.3 M square meter of modern office volume, which does not incorporate buildings exclusively occupied by their owners and those premises that have been developed or technically adapted specially for their present tenants.
 
New deliveries

The growth of Budapest office market accelarated between 2006 and 2009 due to a significant volume of new office space delivered to the market. In 2005, new handover volume was only 71,000 sqm which increased to a total of 182,000 sqm by the next year and rose further to 300,000 square meters by 2009. As a consequence of economic turbulences this growth started to drop back in 2009, which resulted in a narrow 50,500 sqm of new modern office space delivery for Q1 2010, even which was fully projected for 2009. Some two-third of this volume (33,011 sqm) was handed over in Inner-Buda significantly exceeding the submarket’s performance in the previous 3 years.
 
Vacancy

Vacancy rate on the ever popular Váci út office corridor remained below 20% (18.2%), while CBD vacancy rate jumped up to 23.5%, thanks to new office buildings handed over in this location. As expected, the so called periphery submarket sees the highest vacancy rate: 40.5 %. RERA average office market vacancy rate shows 24.9%, an increased figure in comparison to the previous quarter.

Occupier/Letting activity

Based on RERA figures, the volume of published open market deals exceeded 54,000 sqm. The submarket of Váci út corridor was the most active, where more than third of the total quarterly take-up (37.6%) was realized. The second was the submarket of Inner-Buda (20%), followed by South-Buda (16.5%), while other submarkets gained only single-digit shares out of the total take-up.

Weak demand is well attributable to the fact that new office leases were conse-
cutively below 2,000 sqm in the 1st quarter.
As expected, lease renewals were signed for considerably large spaces around 5,000 sqm, such as Ernst&Young’s lease renewal in WestEnd Business Center.

These facts clearly show that tenants with larger office space requirements rather chose renegotiation in the first quarter of 2010 as well. During data collection several office buildings reported that they rather accepted to reduce leased area sizes prior to the expiry date.

RERA, apart from the current statistics, aims to pay particular attention to the categorization of each office building by quality and location aspects in the next, Q2 report, which is likely to show a more complete market overview from an entirely new point of view.

In addition, RERA will assign a leading part to ‘net absorption’ in the next quarter, which would show the decrease or increase of leased stock in total, quarter on quarter.

Responding to client demand Eston International decided to further extend the scope of its professional consultancy services by Technical Inspection

Eston International has started its new service covering project follow-up & technical inspection. This includes local supervision as regular as stipulated in the loan agreement during the building process; technical and financial statements within the scope of project financial tracking and technical inspection services without limit of value throughout the country.

Technical inspection process starts with an initial report prior to the first loan instalment, to supervise and ensure that all the relating conditions are met and the signed contract is adequate. Following that, reports are prepared every month, during which all further withdrawals can be approved based on the local inspection and the obtained documentation (mostly invoices).

After the finishing construction phase, a final report is to verify that the project was completed according to the preliminary schedule, budget and technical specification.

Éva Martonosi, chief executive of the new technical inspection service field and head of Eston’s Valuation division stated: “I am delighted to have been given the opportunity to fulfil the arising market needs, and beyond our regular services we are able to provide a new one from now on. The technical inspector actively participates in the construction process already from phase zero and gives his/her best to the success of the investment or development which means a warranty for both (contractor and creditor) parties.�

Eston International Property Advisors, present on the market since 1993, considers the technical inspection field as a new challenge, which has already increased the company’s assignment portfolio with orders worth several billion forints since the beginning of the year.

You can read further information about Eston Valuation Division here.

“To keep tenants is the key consideration of the almost sure survival. Many have said, many have known, but for those who want to implement these, the understanding of the rank of tenants’ needs is an essential ingredient, and have to be handled with care.�- says Zoltán Petrik, Head of Property Management at Eston International.

Those who want to keep their tenants in nowadays have to be prepared to put the resounding phrases into practice. The task is not easy as due to continuous rationalizing or rather worse downsizing, many decide to shrink their leased space or simply vacate it. This could also happen by taking legal consequences for stepping out from definite term agreements.

Landlords who act with understanding have to allow for all these possibilities, but in many cases it may not be sufficient. The role of Property Management (PM) companies being in charge for properties became crucial in this process. The sector was responsive to it and become the pulling force of the current real estate market.

According to Zoltán Petrik, one of the key factors of the PM services is the elimination of bad habits: „You need to think together with tenants, approach them proactively and put an end to the “I am the owner, while you are just a tenant� thoughts. Those, who are able to rationalize all the cost elements of the lease structure either on the service or on the maintenance side, have far more chance in the negotiation process, as in a particular case they have such reserves/surplus which could be used to compensate the decrease in rents.�

It also needs to be seen clearly apart from these that the quality of service from the book reading habits of the receptionist, through handling minor parking problems up to adequate cooling in the offices was never as “valuable� as nowadays. If a tenant is not quite pleased with the day-to-day services, then a reduction in rents will be insufficient to keep it. Comfort, as an idea is not included in the annual rental conditions of tenants, although at a given case it could be really important at a meeting of the board directors where decisions are made about moving.

Quantifiable cost rationalization, increase in time spent on tenants and perfect services. These could be solutions for keeping lease agreements alive besides the openness and flexibility of the Landlord. In an ideal case a good Property Management Company should know these well. Representing Landlords’ interests, but in such way which is interpretable for tenants as well, speaking their language, and showing measurable advantages. You have to give in to tenants’ demands as the worth of a continuous income stream has multiplied nowadays, although it should not be overlooked either that a good Landlord together with a well-prepared Property Management Company makes an unbeatable couple. A good Property Manager is able to assure real fundamental to this.

There were no significant changes in the investment market in the past half year, although in the latter part of the year several market experts reported an upturn in investment activity across the Central Eastern European region.

The largest investment deal in Hungary was the sale of Tesco’s Hungarian logistics portfolio to W.P Carey & Co LLC. The investment firm, which is listed on the NYSE, mainly specializes in sale and leaseback transactions helped Tesco with approximately €63 million to release value from its portfolio.

At the end of 2009, investors showed great interest in the new Allee shopping centre in Budapest, developed by ING. In December, ING Real Estate Development was in serious negotiations with Allianz SE (Societas Europaea) on the sale of its 50 pct stake in the shopping centre; the 100 million transaction was closed in January 2010.

The investment transactions concerning small and medium properties have been significantly restructured – as notified in advance in our previous report – due to changes in property acquisition duty, therefore several deals due at the end of 2009 will be closed only in 2010.

Due to lack of benchmark transactions, the exact yields are still unknown, in our estimation premium office yields were around 8% at the end of the year.

While the period before the crisis was characterized by plenty of people looking to invest and there was fierce competition for both “good� and “bad� products, the number of buyers and inquirers have both fallen back by now. Furthermore, only exceedingly good products become marketable. Weaker investment products are not likely to sell, or only with a high yield premium.

It can be said from the buyers’ perspective that the market has been realigned compared to the preceding period. End users have shown increased willingness to buy in the first half of the year and their market presence enhanced during the year, a tendency which is expected to continue in 2010.

Mostly premium investment products of Poland were in much demand within the Central Eastern European region. Concerning Hungary, investors are still very reserved, and their current market strategy consists of surveying and waiting for opportunities.

Another problem preventing liquidity is that some investors, owing to the previous loose credit policy of the banks, financed their property acquisitions high, as high as 80% LTV. As a consequence of the 25-30% decline in capital value, 20% of investors own equity completely disappeared (negative equity). Arising from this, selling cash-flow producing properties is not a rational step for them with these current, estimated price levels, in case they are able to retain their financing.

However, in the case of non-cash-flow producing properties the bank usually obligates investors who have run out of money to provide extra capital. If this is not accomplished, the bank has the right to take the property, although in Hungary, this is not likely in the case of commercial properties, as most of the banks do not have the appropriate apparatus for their management.
This hopeless situation will continue until the low rents move upwards or until high yields evolve from scarce money and credit moves downwards.

Hungarian real estate funds came into focus again as the base rate stayed at a very low level, 6.25% at the end of the year, an equivalent of the level of 2006. From the four biggest property funds, Raiffeisen and Európa Property Fund, which transitioned to close-end funds in April, speculate on a price correction on the market that would take place in the following 3-3.5 years, till maturity. Therefore they would only sell their properties at an exceptionally good price.

Meanwhile, marked differences emerged between the two open-end funds, Erste and OTP Property Investment Fund. Although both of these funds are in the process of collecting deposits, OTP supposedly could not stop the outflow of capital, or actions to raise capital were not successful enough, as 90% of its portfolio consists of properties. Erste is in a more advantageous situation as it has raised capital and its property portfolio is only 54%, therefore it may turn up as a buyer on the
market.

In addition, the current level of the base rate could enable new funds to be formed on the middle term.

Due to tight finances, difficulty of borrowing and over-supply in the office market, the market for development plots is still frozen. Positive events on the international money markets indicate that the investment market could begin to gather momentum again in the second half of 2010.

For further information please contact our experts or visit our site at www.eston.hu and read the full report under „Our publications�.

The second half of 2009 did not show many new actions from retail market point of view. The crisis had already changed the playing cards of developers, therefore the situation of market players did not vary significantly in contrast with the first half of the year.

In Újbuda, Allee (45,000 sq m) shopping mall was opened exactly according to plan in November. Looking back, it still has an unbroken record of success, which can mainly be explained by its central location.
The triumph of Allee is unquestionable from an investor’s point of view as well, as nearly 2 months after the handover, from many inquirers, finally Allianz SE bought a 50% stake in the property.

Among the developments that were supposed to be finished by the end of 2009, Corvin Atrium and Europeum Hotel and Retail Complex have been postponed. Although Europeum reached shell and core status, the opening has been postponed in absence of adequate quantity and quality of tenants. Apart from this, the hotel operator, Marriott, will certainly open the 4-star Courtyard Hotel with 235 rooms in spring of 2010.

Among office developments comprising small retail units, a total of 2,200 sq m of Eiffel Square Office Building was added
to the retail supply, from which Costa Coffee leased 300 sq m, while newspaper distributor chain Inmedio rented 260 sq m.
Starbucks, market leader in coffee bars operating in the same price range, may also enter the market soon, according to market rumours.

Costa, owned by British restaurant-, hotel- and club-owner Whitbread Group PLC, aims to lay the foundation of its Eastern
Europe expansion firmly in 2010 by having given a cash offer to the acquisition of the Polish company Coffeeheaven at year’s
end. They offer 24 penny (~74 HUF) for each share, and would take the lead in the operations of 90 existing coffee shops, 4 of
them in Hungary.

Since November, coffee fans have been given a chance to refresh themselves in BookCafe as well, which is in a very prestigious
location, in the restored Paris Department Store, operated by Alexandra Bookstore.

The ‘books & coffee’ concept is not a new-fangled idea, but the method of selling books while offering other complementary services for customers at the same time is a continuously growing phenomenon.

First KÖKI Terminal (50,000 sq m) is expected to be handed over among the mixed-used developments in Budapest, and will reach shell and core status at the end of 2010, according to the developer. The other projects have been partly rescheduled compared to plans of the previous half year, as follows.

The small retail units along the streets of Budapest were put in a more difficult position than shopping malls by the crisis.
Several unique initiatives have been started across the capital to lure customers. Noticeable as a new phenomenon, the number of participants and the significance of theme streets have increased. This is also owing to the fact that local authorities offer generous discounts to those tenants who fit out their retail units in accordance with their business profile requirements.

“Design District Budapest� has been founded recently by linking together the design shops of the 5th district, embracing little boutiques selling unique fashion goods, home accessories and other design specialties. Their main goal was to tempt some of the mall shoppers back again to the streets of the city centre. The traders of Király Street have joined forces as well to
popularize the area by offering collective commercial sales and campaigns in order to occupy a worthy position in the system of
theme streets.

Retail catering units have also chosen cooperation instead of competition. The bars and restaurants of Hajós Street advertise
themselves together despite their different profiles, hoping that this way they will be able to follow the lead of Ráday Street, Liszt Ferenc Square, or Jókai Square.

The boom of downtown retail units is in close correlation with regional development and positive changes in the cityscape.
Development has not stopped in the 11th district in the least, after Allee was completed in Buda. Within the scope of BARTÓK cultural city centre program, at the intersection of Bercsényi Street and Bartók Béla Street they are bringing back the coffee shop spirit of the 20’s in the following years. Based on the preference system of the local authority, new, differentiated rents have been defined based on business qualities to motivate new galleries, clubs, workshops or quality service providers and restaurants to settle in. In case of meeting all of their criteria, renting a ground-floor, street-front retail unit complying with
European standards and with highly preferred profile could cost as much as 6 €/sq m/month on the side of Bartók Béla Street,
close to Gellért Square.

The local authority in the 2nd district has also worked out an action plan to re-create the centre of Inner-Buda. Upon
completion of community investments, quality transformation and profile changes can be expected for some of the area’s retail
units. These retailers have also joined together to advance traffic reduction and developments as soon as possible. According to the expectations of the district, the number of baby & mother care shops, quality (children’s) bookstores, toy stores, shoe & leather goods shops will increase as a result of gradual changes in shop functions.

To sum up, retailers in the capital are expecting from the rehabilitation of the region to revive ailing high streets, by this
means the shops as well.

Development has not stopped in the countryside either in the recent period. Renovation and creation of pedestrian shopping streets is under development in several larger cities of the countryside, mainly from EU funds/sources.

There were no surprises regarding new shopping malls here either. Dunacenter (12,000 sq m) was handed over in Győr,
which is equally owned by CA Immobilien and Holler Ivan Group Real Estate Foundation. Zala Park (17,800 sq m) debuted in Zalaegerszeg as the first development of ConvergenCE outside the capital, creating approximately 250-300 new jobs. Strip mall developers shifted 1-2 years in their development schedule in comparison with the first half of the year. STOP. SHOP projects are continuously keeping pace with Family Centres, although in the end no new malls were delivered in the
second part of 2009.

There has been no major change in retail rents since the first half of the year, as like in other segments, landlords tend to
offer individual discounts and longer rent-free periods to attract anchor-tenants.

For further information please contact our experts or visit our site at www.eston.hu and read the full report under „Our publications�.