Few transactions were completed in 2008. In all, Colliers International recorded a volume of € 411 million for the entire real estate market. In this quiet market, the office benchmark yield increased only by 60 basis points from 5.9% in 2007 to 6.5% at the end of 2008. “We expect yields to soften in 2009 because investors, who face stricter financing conditions and have other investment opportunities, will demand significant price reductions before coming back to the market,” commented Hamish White, Partner and Head of the Investment division at the Hungarian office of Colliers International.

“It was a difficult year in 2008 as the owners of quality real estate adopted a wait-and-see attitude. Most of the transactions completed in 2008 were started in 2007. But, amidst the difficult circumstances, Colliers managed close to eight transactions last year which puts us quite in tune with the market,” added White.

The Budapest real estate investment market is now in competition with all the European cities for attracting investors. “The fundamentals of the Hungarian market have little weight currently. Investors see that they can purchase prime office buildings in London at yields circa 7.5%, therefore why pay more for buildings in Budapest, even for quality ones. Owners who will have to sell should factor this in their price expectation; yield will continue to soften back to those of 2002/2003,” concluded Rémi Couture, Head of Research.