The commercial real estate market in Hungary has reached the bottom of the cycle with a recovery expected to be slow with improvements not seen until 2011, according to King Sturge.

The improvements expected to be seen in 2011 will start with the industrial sector, followed by the office market and then the retail sector.

The current high vacancy rate (25%) in the office market will fall in 2011, due primarily to a significant decline in new property supply allowing the market to slowly absorb the available space in the next two years, bringing the vacancy rate down to 16% by the end of 2012, King Sturge states.

The industrial sector has a vacancy rate of 19.4%, which is partially the result of the ‘Rynart‘ bankruptcy which saw vacancy rates jump from 9% to 17% in 2008. King Sturge states that the industrial sector will be the first to emerge from the crisis as a recovery in western Europe will support Hungarian exports.

The retail sector entered the crisis on a more solid footing, according to King Sturge, however retailers are suffering from declining consumption and high unemployment with any improvement unlikely. Rents in most shopping venues are declining due to many older local shops closing down, giving the remaining retailers in the market a strong negotiating position with retail space being leased on High Streets for between €35/ m