12.8% Average gross wage growth Jan-Nov 2017

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1 City Report Q4

2 3.9% 2.4% 4.2% GDP Growth Q3 Inflation Unemployment rate 1,87 4.8% 12.8% 4.8% Spending power, 215, Retail Sales Warsaw Agglomeration Average gross wage growth Jan-Nov Industrial production Investment market The annual transaction volume reached a level of 1.9 billion, the highest annual volume since 27. was the fifth consecutive year with a steady growth of investor appetite and thriving transactional volumes. Domestic purchasers generated ca. 4% of the acquisitions, being the most active purchaser group by origin. Nevertheless, several new market entrants carried out their first acquisitions in the country including: Nepi/Rockcastle, GalCap, Goldman Sachs, CIC, Corpus Sireo and Starwood Capital. Within the total volume, offices had a share of 43% followed by retail assets with 36% and industrial with 14%. Hotel transactions generated 4% of the annual volume whereas the balance was made of assets sold for redevelopment purposes. During, prime yields have compressed sharply in every asset class, standing at 6.% for offices, 7.5% for logistics and 6.% for shopping centres. COPYRIGHT JONES LANG LASALLE IP, INC. 218 Budapest City Report Q3 Q4

3 Prime yields in Q4 6.% 6.% 7.5% Shopping Center Office Industrial Hungary investment volumes 213-2,1,, 1,8,, 1,5,, 1,2,, 9,, 6,, 3,, Hotel Industrial Office Other Retail Key investment transactions in Sector Property Size (sq m) Seller Buyer Retail Aréna Plaza 68, Lanebridge Nepi Rockcastle Logistics Logicor portfolio 167,9 Blackstone CIC Retail Polus Center 4,19 CBRE GI CPI Office Eiffel Square 23, KGAL Confidential Hotel Sofitel 357 rooms Accor Starwood Office Westend Business Center 27,4 Morgan Stanley OTP RE Fund Retail Campona 4,195 CBRE GI CPI Office Nordic Light 26,2 Skanska Erste RE Fund COPYRIGHT JONES LANG LASALLE IP, INC. 218 Budapest City Report Q4

4 Quarterly summary Four new office buildings were completed in the last quarter of ; in Váci Corridor - Balance Loft with 6,5 sq m and Skylight City with a total size of 18,91 sq m, in Buda South the new HQ of Ericsson with 24, sq m and Office Garden III with 18,51 sq m. The modern office stock in Budapest comprises 3,415,55 sq m. The vacancy rate decreased 2 bps year-on-year to a record low of 7.5%. The quarterly gross occupational activity amounted to 144,36 sq m whereas net demand reached 98,5 sq m. Both indicators were above the 1-year average level of the corresponding period. Prime office rental levels remained unchanged at 22.5 sq m/month in Q4. Completed Office Buildings in Q4 Balance Loft (CPI) Skylight City (WING) Office Garden III (GRT) Ericsson House (WING) Source: CPI, GRT, WING Stock and new supply (sq m) by submarket in 1,, 9, 8, 7, 6, 5, 4, 3, 2, 1, Váci Corridor Pest Central Buda South CBD Buda Cental Buda North Pest Central South North Pest Non Central Periphery Total stock (sq m) New supply (sq m), BRF COPYRIGHT JONES LANG LASALLE IP, INC. 218 Budapest City Report Q4

5 annual take-up (sq m) by submarkets 16, 14, 12, 1, 8, 6, 4, 2, Váci Corridor Buda South Buda Central Pest Central South CBD Pest Central North Buda North Periphery Pest Non Central Net take-up (sq m) Renewals (sq m) Future supply (sq m) & Timing by submarket 16, 14, 12, 1, 8, 6, 4, 2, 12.9 Key leasing transactions in Q4 Submarket Building Size (sq m) Type Buda Central Hillside 1,23 Pre-lease Váci Corridor Promenade Gardens 8, Pre-lease Váci Corridor Kinnarps 8, Renewal Váci Corridor Twin Office Center 7,21 Renewal Váci Corridor Skylight City 5,98 New , BRF, BRF COPYRIGHT JONES LANG LASALLE IP, INC. 218 Budapest City Report Q4

6 Leading shopping malls in Budapest Name Opening Size (sq m) Owner Allee 29 46,5 ING Red, Allianz Arena Plaza 27 68, NEPI Rockcastle Árkád 22 & , ECE Mammut 1998 & 21 56, Lonestar MOM Park 21 29, Morgan Stanley, Wing, CC Real WestEnd , Granit Polus retail market overview In, the volume of retail sales was 4.8% higher than in the previous year. During, more than 3 million online orders were placed by Hungarian customers based on the recently published report of GfK., this means a 2% growth in the turnover year-on-year. Shopping mall renovations and refurbishments are clearly observable on the market. Recent refurbishment projects included Duna Plaza and Mammut,. Furthermore Shopmark also announced that the mall will be fully renovated between February and August 218. New openings in Q4 included Spar opening new assets in the countryside and renovating many units to create a modern environment and to provide a wider range of services to its customers. Samsonite opened its new Hungarian unit in Premier Outlets Biatorbágy at the end of. Rental ranges ( /sq m/month) 7-8 High Street 7-13 Retail Parks 75-8 Prime Shopping Center COPYRIGHT JONES LANG LASALLE IP, INC. 218 Budapest City Report Q4

7 Shopping centre stock and future pipeline in Hungary Purchasing power per capita in Hungary sq m 1,4, 1,2, 1,, 8, 6, Hungary: 6,24 Budapest: 7,649 4, 2, F 219 F, GFK Volume of shopping centres in Budapest by size 13% 31% 21% 35% Very large (>6, sq m) Large (4,-59,999 sq m) Medium (2, - 39,999 sq m) Small (<19,999 sq m) COPYRIGHT JONES LANG LASALLE IP, INC. 218 Budapest City Report Q4

8 Quarterly summary During the fourth quarter of, four new warehouses were delivered to the Greater Budapest industrial market with a total size of 45,7 sq m. CTP completed a BTS building in Biatorbágy of 16,5 sq m, whilst East Gate Business Park was expanded by a 14,25 sq m unit. Airport Business Park delivered a new 8,4 sq m asset for DHL and the Freeport of Budapest finished a 7, sq m building. The modern industrial stock in the Greater Budapest market stands at 2,43,22 sq m. The vacancy rate decreased to a new record low of 4.%. Total leasing activity amounted to 211,25 sq m in Q4, which is almost twice as much as the 1-year average level, whereas net take-up totalled 134,36 sq m which was 64% more than the volume of Q4 216 (81,95 sq m). Vacancy rate (%) 12% 1% 8% 6% 4% 2% % Q1 216 Q2 216 Q3 216, BRF Q4 216 Q1 Q2 Q3 Q4 Industrial stock (sq m) and vacancy by submarkets 8, 7, 6, 5, 4, 3, 2, 1, South West East Airport North Inner city Whs stock Office stock Total vacancy 8% 7% 6% 5% 4% 3% 2% 1% %, BRF COPYRIGHT JONES LANG LASALLE IP, INC. 218 Budapest City Report Q4

9 Completions in Quarter Submarket Park name Size (sq m) Q1 South Freeport of Budapest 7,2 Q1 South Freeport of Budapest 12, Q1 South ProLogis Park Budapest-Sziget 7,3 Q1 South ProLogis Park Budapest-Sziget 14, Q2 South BILK 8,79 Q3 West Inpark Páty (NIPÜF) 23,7 Q4 Airport Budapest Airport Business Park 8,4 Q4 South Freeport of Budapest 7, Q4 West CTPark Biatorbágy 16,5 Q4 North East Gate Business Park 14,25, BRF Average transaction size (sq m) Total take up by submarket in 7, 6, 14% 2% 5, 4, 3, 18% 1% 3% 2, 1, % Airport Inner city North South East West, BRF COPYRIGHT JONES LANG LASALLE IP, INC. 218 Budapest City Report Q4

10 Contacts Barbara Huszár Research Analyst barbara.huszar@eu.jll.com Ferenc Furulyás Managing Director ferenc.furulyas@eu.jll.com JLL Office Szabadság tér Budapest Hungary Phone number Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.