Development cycle discussion
Demand fundamentals are strong in the office, industrial, retail and hotel sectors with rental growth, low vacancy, high room occupation rates and strong projected demand for quality, well-located product in Budapest and leading Central European cities. In order to successfully develop, lease, and sell assets, developers need to deliver product that is sustainable from an interior and locational perspective and in the provision of amenities. Development finance is more readily available and in these more mature markets companies are undertaking more prudent development strategies in line with better researched knowledge of market conditions and longer-term demand. Further, location is a central issue for building users and the expectation is that developments need to contribute to the wider city and environment. In this way the market can be seen as operating in parallel to meeting wider environmental concerns. However, labour and development costs are increasing and well-located development plots have become increasingly scarce. more difficult to source.
Is the Budapest office development boom sustainable? What are the possibilities for retail development? Could a commercial industrial development market emerge across Hungary? What are the development strategies of developers in the different sectors? Is the quality of development on par with Western Europe? How central is location and integration into the urban environment for a project? Is finance available on more favourable terms? How difficult is it to source development sites Are the labour shortages and rising construction costs putting a break on development?