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Commercial real estate surged in Hungary in 2008

Well located prime office properties in the city remain popular with overall take up 3% higher than in 2007 with 35% of the activity in the last three months of 2008 showing a surge when the same market in other countries contracted.

This year is also looking positive. Pre-lease agreements in general had a very significant share in last year's demand therefore the 2009 pipeline of office space is already up to 28% occupied before completion, according to the latest research from CB Richard Ellis.

However, developers are expected to be more cautious in 2009. 'We are entering a new era in the office occupier market. Developers will think twice before kicking off a new project. We will see much more planning ahead before completion starts than in the previous years. But this helps the market to avoid long-term imbalances,' said Adrienne Konthur, Managing Director of CB Richard Ellis, Hungary.

The logistics real estate market also reached a new peak in 2008 in terms of supply and demand. Several developments were completed and successfully let. Annual completion level in 2008 was the highest ever recorded, and more than twice of the completion level registered in 2007.

During 2008 the modern industrial stock grew by 30% but deteriorating economic environment could result in the logistics market suffering a significant slowdown in the course of 2009, analysts said.

Falling industrial output and recession in Hungary's most important trade partner countries have already impacted the demand for industrial-logistics space: Expecting lower demand, developers will re-think their strategies meaning less aggressive expansion in this sector.

On top of this the general property investment market is expected to slow down in common with other countries in central and Eastern Europe. In Slovakia investment volume has dropped by 80%, with the Czech market falling by 60%. While less mature markets like Croatia saw no recorded transactions in the second half of 2008.

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