Mitigated impact of the economic recovery on the commercial real estate sector

The sustained effect of the pandemic on tourism, the increase in the number of people working remotely and the expansion of e-commerce have mitigated the impact of the economic recovery on the commercial real estate sector in Hungary, according to a semi-annual report of the National Bank of Hungary. (MNB) released Thursday.

Demand for office space remains weak and the vacancy rate is expected to increase as transfers occur, according to the report.

The vacancy rate on the office market fell slightly to 9.1% in Q3 against 9.8% in Q2, as there was no delivery, but the rate should be “around 10%” over the next few quarters, still well below the vacancy rate. by more than 20% during the global financial and economic crisis of 2008, Tamas Nagy, director of the central bank, said in presenting the report.

The vacancy rate on the industrial and logistics real estate market increased by 2 points to 4% in the first half, mainly due to deliveries.

Investments in commercial real estate amounted to 600 million euros in the first half, up 15% compared to the same period a year earlier. A few large transactions accounted for 58% of the total.

Nagy said lending conditions for investors in the commercial real estate market are expected to ease, albeit “on a selective basis.”

He noted that 46% of commercial real estate loans were subject to a repayment moratorium at the end of June.

The general moratorium on repayments will end on October 31 and the participation of borrowing companies will be limited to companies whose turnover has fallen by 25%.

Nagy said local lenders are sufficiently capitalized to handle a potential increase in NPL ratios for commercial real estate market credit.

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