Oversupply in the office market, returning demand in retail properties and hotels expected in 2025

By: Trademagazin Date: 2024. 11. 22. 11:51

The Hungarian commercial real estate market is currently characterized by a decline in transaction numbers and a wait-and-see attitude, but experts at BDO Corporate Finance expect a recovery in the segment next year. Oversupply and increasing vacancy rates in the industrial-logistics and office markets may pose a challenge, while the returning demand in the retail and hotel markets shows positive signs. Flexibility will be key for investors in 2025, as each segment of the market has different growth prospects, noted Viktor Máté, the new director of real estate advisory at BDO Corporate Finance.

The domestic commercial real estate market is currently characterized by a decline in transaction numbers and a wait-and-see attitude, which is primarily caused by the high interest rate environment and yield expectations. The investment volume in the first half of the year was EUR 160 million, which was 19% lower than the same period last year.

“In comparison, we believe that the segment is set to see exciting changes in 2025. Based on the latest data, the industrial-logistics sector, the office market, retail properties and hotels are all following different paths, so it is worth taking a closer look at the opportunities they hold for investors and tenants”

– underlined Attila Szegedi, who supports BDO Corporate Finance’s Real Estate Advisory activities as an external expert.

The scissors are opening on the commercial real estate market

According to BDO Corporate Finance experts, the industrial-logistics sector will continue its expansion in the capital and larger cities next year, with 340 thousand square meters of new space expected to be delivered in the second half of this year alone. This dynamic expansion of supply poses a clear risk of oversupply, which could lead to an increase in vacancy rates. Therefore, for those planning to invest in this part of the market, it is advisable to monitor the development of rental rates and the demand for new developments.

The vacancy rate in the Budapest office market could reach 15% by the end of 2024. The long-term effects of home office and hybrid working have left their mark on the sector, as tenants are increasingly rethinking their space requirements, as a result of which rental rates are expected to stabilize or even decrease.