The National Bank of Hungary has published its Commercial Real Estate Market Report, finding that the rise in prime yields ended from 2024 Q2 across all commercial real estate (CRE) segments, but subdued GDP growth in the second half of 2024 did not translate into stronger market activity. The report highlights falling investment turnover, expectations of higher vacancy in Budapest’s office and industrial-logistics markets, and a pick-up in CRE-backed project lending from a low base alongside tighter lending conditions for some segments. RICS survey results from January 2025 continued to show high uncertainty, with half of respondents still seeing recession conditions and half seeing an initial recovery. In 2024, Hungarian CRE investment turnover fell to around EUR 400 million, down 28% year on year, with domestic investors accounting for 73% of flows, while average turnover in the CEE region rose by 69%. Budapest office vacancy increased by 0.8 percentage point to 14.1% in 2024, while industrial-logistics vacancy declined by 0.7 percentage point to 7.9%, but both are expected to rise moderately given recent demand and planned completions, including relocations that are freeing up occupied space. Banks disbursed 36% more CRE-backed project loans in 2024, with two-thirds linked to construction; new issuance rose for all property types except hotels and office buildings. Lending Survey responses indicate that banks tightened terms for office buildings and logistics centres in 2024 Q4 but no longer expect further tightening in 2025 H1, while system-wide exposures to CRE-backed project loans are described as moderate and the non-performing loan ratio remains low.

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