The cyclical situation of the commercial real estate market improved in 2025 H1, but stagnating economic activity did not provide a favourable environment for the sector to recover. Looking ahead, domestic GDP is expected to grow by 0.6 per cent in 2025, falling short of previous expectations, which suggests that a meaningful upturn in the commercial property market will continue to be delayed.
In terms of the macroeconomic developments determining the performance of commercial property segments, performance indicators for the hotel sector improved as tourism expanded, and the number of foreign and domestic guest nights in hotels continued to rise in 2025 H1. Retail sales also increased, supporting the improvement in vacancy rates observed in this segment in the recent past, both in rural areas and in shopping malls in the capital. At the same time, declining industrial production has slowed down and restrained activity in the industrial-logistics segment on both the demand and supply sides.
In the Budapest office market, vacancy rate fell by 1.3 percentage points to 12.8 per cent in 2025 H1, while in the industrial-logistics market, vacancy rate rose significantly by 5.5 percentage points to 13.4 per cent. As a result, the vacancy rate in the industrial-logistics market in Budapest and its environs exceeded the office market indicator for the first time since 2014, due, among other factors, to the negative net market absorption in 2025 H1, which has not been experienced in the past ten years. Within the volume of office space under construction, the proportion of office buildings built for owner use, primarily state use, is high. As a result, the average pre-lease level for developments is favourable, but the relocations will free up areas currently in use, which will lead to an increase in the vacancy rate. Overall, given the demand levels seen in recent quarters and the planned new completions, there is a risk of oversupply in both the office and industrial-logistics markets, and vacancy rates are expected to rise further in both segments. This indicator in the office market may rise to 16–17 per cent by the end of 2026, which is above the average in regional and historical terms. In the industrial-logistics market as well, vacancy rate is expected to rise further, by the end of 2025 the indicator may exceed 15 per cent.
In 2025, investment volume in the domestic commercial property market amounted to approximately EUR 300 million, which is 67 per cent higher than the low base volume from the same period of the previous year. High-value transactions (exceeding EUR 50 million) played a significant role in the development of volume in the first half of the year, with two such sales accounting for 46 per cent of volume. At the CEE regional level, investment volume rose by 60 per cent in the first half of the year, with typically stagnant prime office yield levels (for properties in the best locations and of the highest quality). The proportion of transaction volume attributable to domestic investors decreased in the first half of the year, accounting for 58 per cent, down from 73 per cent in 2024, thereby making the market more balanced. Prime office investment yields typically stagnated in the more mature Western European office markets and in the CEE region, supporting the stabilisation of property values. In 2025 H1, capital values calculated on the basis of prime office yields and rents rose by an average of 3.5 per cent in the CEE region and 1 per cent in Budapest. At the same time, the start of a meaningful recovery in the commercial property market remains fragile, as evidenced by the example of the USA, where the commercial property price index, which began to rise in 2024, turned downward again in 2025 H1.
In 2025 H1, banks disbursed 19 per cent more CRE-backed project loans than in the same period of the previous year, with two-thirds of this related to construction loans. The volume of project loans originated increased in year-on-year terms in all commercial real estate segments except for industrial-logistics properties. According to the MNB’s Lending Survey, in 2025 Q2, driven by increased competition, 11 per cent of the banks eased lending conditions in all commercial real estate segments with the exception of office buildings. However, looking ahead to 2025 H2, there are no plans to change standards for project loans, while 10 per cent of the respondents expect tighter standards for office buildings due to the slow resolution of the cyclical and structural challenges affecting the segment. Overall, domestic credit institutions’ CRE-backed project loan exposure is less than one-half of the peak level seen after the 2008 crisis, both in terms of total assets and regulatory capital. In addition, approximately 70 per cent of the portfolio has conservative LTV ratio of less than 50 per cent. In view of the continuing risks in the commercial property market, from 1 January 2026, the MNB strengthens the shock resilience of credit institutions with sectoral systemic risk buffer requirements.