The coronavirus has completely rewritten the real estate market, according to a report by the MNB
Utilization has already increased in the short term and the long-term effects are uncertain. Hotels are living in large numbers with a moratorium on repayments, tenants are negotiating fee reductions with office buildings, and malls are emptied. The main processes in 2019 and the year 2020 are completely different in the commercial real estate market – said Tamás Nagy, Head of the Department of the Magyar Nemzeti Bank (MNB) at the central bank’s online press conference.
Due to the coronavirus, a sharp rupture occurred in March this year, hotels were closed, and curfew and opening restrictions immediately felt their impact in the retail sector. Transport problems and factory closures also had a negative impact on the sector.
The big question is whether there will be long-term effects in addition to short-term effects. Investments lagged behind, shifted in hotels, with a 40-80 percent drop in retail sales and malls. In the office market, many companies sent their employees to home offices, and tenants in many cases asked publishers for rent changes.
Utilization is already growing. At the end of 2019, the vacancy rates in the office market fell to 5.6 percent, this year the rate has already increased, by the end of March it was around 6 percent. In the coming years, the MNB also expects that the vacancy rate may increase to roughly 8 percent. Last year, the demand increased even more, many people renewed their leases, and there were also pre-leases and new leases. Some of the pre-leases could be canceled this year, which could also have increased vacancy. If these are terminated, the vacancy rate could rise to 7 percent. The picture is mixed in the commercial real estate segment, store turnover is declining, but logistics may increase due to online purchases. The supply in the hotel market may increase, especially in Budapest, which may mean oversupply in the short term.
What this can mean for a customer viewing a real estate ad space. In the current situation, it can be thought-provoking when it is worth buying a property, to wait for the purchase now, or to immediately cut into it and find a suitable property for ourselves. No one would really dare to give a suggestion or advice. However, prices may fall for a while now, although it is not known when the turnaround will occur.
We recommend that anyone who wants to buy a property should not wait long for this, but we recommend that when viewing the advertised purchase price, try to negotiate the price in case the seller goes in due to the current stagnation in the property market.
Sellers, on the other hand, are advised to call the buyer’s attention to the fact that everything is relative and what may be so much today, it may not be available for that tomorrow, it may be much higher.
