All players of the real estate market pay great attention to the movements of the exchange rate of the Hungarian Forint (HUF) versus other currencies. In the first of the sequence of four analyses, experts of international real estate agency Colliers International Ákos Balla, Head of Valuation and market analyst Krisztián Murai examined the way office and industrial real estate markets react to current challenges, most of all, the changes of the EUR/HUF rate.

As for the office market, Balla and Murai agreed on the fact that landlords are facing a great oversupply as competition, while they have to make a positive cash flow. As a result, rents have already dropped, and are still under downward pressure. For an average tenant, rents make up only 1-2% of the revenues; therefore the main challenge for companies is to face the negative international economic environment, as well as the change of their own turnover. In the case of leasing contracts expiring in the near future, tenants have wider range of opportunities. A new trend on the market is the proactive approach on the landlord side to flexibly renegotiate contracts for shorter lease periods of two-three years. However, in the absence of buyers selling is almost impossible.

On the industrial real estate market, tenants of built-to-suit (BTS) properties have mostly signed long-term lease contracts, therefore it is hardly feasible to change contract conditions in the meantime, rather after the expiry of the lease contract.
For the end users of speculative industrial and logistics real estate market, the fluctuation of exchange rate in rent fees is relevant, but it is only one of many risk factors they face. At the moment, the most important is the business activity of the tenants. On the contrary, logistic suppliers and transportation companies are heavily affected by this problem.

“In my opinion, the role of advisory services offered by real estate agencies has greatly increased as a result of the uncertainty of the market, while the value of professional and decision support tasks will gradually rise.” – Ákos Balla emphasized.
According to the valuation executive, after the period of an unrealistic market expansion it is a must to return to the tenants’ needs. In this situation the role of market research and appraisal will be more significant for real estate developers, investors and banks alike, and will bear more importance for their decision-making.