Lower interest rates boost property investment growth
Colliers analysts have published a forecast for 2025, predicting an increase in property investment in Hungary. However, the development of the Eastern and Central European markets will depend heavily on efforts to improve the quality of real estate. This involves implementing ESG technologies at all stages of property design and management.
Regional property market trends
Investors are becoming increasingly demanding in terms of the quality of real estate and compliance with sustainable development principles. Particular attention has been paid to the markets in Hungary and other Eastern and Central European countries. In 2024, capital inflows into the region totalled around €7.5 billion. Despite the rise in activity, this figure is 30% below the ten-year average.
Analysts expect investor demand to pick up in the second half of 2025. This will result from a number of factors:
– lower interest rates;
– reduced lending costs for facilities.
Yields on prime real estate are rising in the region. In Budapest, for example, this figure is around 7% for industrial and logistics buildings.
Analysts estimate that the volume of transactions in the region will reach EUR 10 billion this year. Poland and the Czech Republic are already experiencing significant growth in investment processes. Hungary is not yet characterised by high investment activity.
Experts are generally positive about the prospects for the regional market. However, the sector is quite sensitive to macroeconomic processes and global shocks. Central and Eastern Europe is proving resilient, especially compared with Germany’s recession. The region’s property market is showing signs of stabilising prices. In addition, analysts note an inflow of institutional capital, which is mainly focused on value-added transactions.
Sector dynamics in Hungary
No major office projects are planned for the Hungarian market this year. Several projects are currently under construction, with 70% of the space already leased. Experts are noticing a change in investor behaviour. They are willing to pay more for new properties provided that they are of high quality.
The situation in the Budapest market is as follows:
– about 100 thousand square metres will be put into operation in 2025;
– the amount of new space will increase to 256 thousand sqm in 2026;
– according to preliminary data, the occupancy rate is close to 90%.
Experts note that the office property sector in the region is stagnating. Activity has fallen to its lowest level in 20 years.
In the industrial property sector, 640 thousand sqm should be delivered, and another 220 thousand sqm are under construction. Land is the main priority for foreign investors, and large companies such as BMW and BYD are interested in it.
There are also plans to build several shopping centres and retail outlets in Hungary. The key location for these properties is the countryside.