MNB: the commercial real estate market is also at risk due to the increase in energy prices

Turnover in the food sector continues to shrink, which poses a risk for retail

Tamás Nagy, in the central bank’s autumn report on the Commercial Real Estate market, mentioned the rise in construction costs as well as the weakening of the forint exchange rate as risk factors. According to the director of the MNB, all of these together predict a worsening of the prospects for the real economy.

Regarding the development of the most decisive segment, the office market, he said that rental demand is stabilizing at the lower level that developed after the coronavirus epidemic. Rental demand has been a third behind the pre-epidemic level for several quarters. “This relatively weaker demand met this year’s new office handovers”, as a result of which the vacancy rate rose from 9.9 percent in the first half of the year to 11 percent in the third quarter, he said, adding that this is still below the critical level.

At the same time, he indicated that with the developments that are still “in the pipeline”, about 11 percent of the existing office stock could be renewed or put on the market again. If rental demand is similarly low for these new handovers, the vacancy rate will probably continue to increase.