New player enters the Hungarian real estate market
13th Dec 2023
RE/MAX Go is a newcomer to the Hungarian real estate market, but as a member of the RE/MAX network, which is already present in 89 countries worldwide and operates 641 offices, with 50 years of professional experience and market-leading know-how, RE/MAX Go is the first office in Hungary to be launched under the "RE/MAX Commercial" brand, dealing specifically with commercial real estate. On the occasion of the opening, the founders and managers of the Hungarian office spoke about their plans and expectations for the market during a professional evening with an office opening.
In Hungary, residential property consultants often also take on commercial property, which is unfortunate, as commercial property in most cases requires specialist knowledge and expertise. RE/MAX Go is designed to address this need, and in addition to its traditional real estate brokerage functions, another important objective of RE/MAX Go is to exploit and develop synergies between the existing residential and the new commercial network within the RE/MAX network in Hungary.
"We are delighted that with the opening of the RE/MAX Go office, all the services of the Commercial division are now available in Hungary, which we expect to become a key part of the network that closed 55,000 transactions last year, worth more than $22 billion worldwide," said Bence Keszthelyi, Managing Director of RE/MAX Hungary.
The capital market - and stock market firms - have reacted quickly to the rise in yields, but in the property boom, valuers are holding out. The stock market always prices everything in immediately, but the real estate market could still depreciate from current levels. Four things argue for a higher inflationary environment to stay with us: de-globalisation, looser budgets, climate fears, demographics.
In the 2020s, we are likely to live with persistently higher nominal and real yields. Inflation expectations have not yet started, but real yields have and the latter is more important for the housing market. We now expect German real yields to be in the range of 0.5-1%, which will lead to sustained higher prime yields in the market and could easily even be overshot in the short term. Hungarian prime yields could develop as follows:
Dr. Péter Percz, Partner at RE/MAX Go, said that every economic downturn is usually followed by a boom, and they are starting now because they see a continued demand for the services they offer, and they want to be present when demand for real estate starts to pick up and transactions return. In his opinion, the synergies between the management of the agency and the backing provided by RE/MAX will result in a highly professional and quality service under the aegis of an international brand.
Dorottya Pápai, RE/MAX Go Partner and Director of Business Development at RE/MAX Hungary, added that the past years have clearly shown that there is a strong market demand for complex services. Clients turn to them for help not only in selling and renting properties, but also in additional areas such as economic, technical and market analysis of the property, i.e. the development of a situation picture that is appropriate for the current environment and the development of an individually tailored sales strategy. This is coupled with the individual specialisations of the expert team, i.e. answering and supporting questions on financing, utilisation, taxation and operation, not only during the sale, but also before and afterwards.
The experts stressed that the relevance of the firm and its range of services is demonstrated by the fact that its clients already include companies such as Erste Fund Management, Richter and KÉSZ Group. In addition, they work with a number of international and domestic companies both nationally and internationally thanks to RE/MAX's international network.
They expect to leverage their international background and advantages to play a prominent role in the firm's business operations, and therefore place a strong emphasis on strengthening international relationships, which will of course benefit their clients.
The firm also offers its clients advice on obtaining finance and tenders, in relation to which it was said that the market in 2023 was primarily dominated by interest rate subsidised loans, but it would be in everyone's interest to ensure that market loans from banks' own resources were also competitive. This is not the case today, but Péter Percz is confident that this will change in the near future.
Dorottya Pápai also highlighted another goal, which is to make sure that in Hungary, if someone is interested in this segment, everyone knows about their office, and also to be able to grow regionally. This is a very important time in their lives, as they are going from a start-up to a thriving company, so the most important thing in the coming months is to expand the office, while continuing to grow and effectively serve all our market activities.
Portfolio.hu
In Hungary, residential property consultants often also take on commercial property, which is unfortunate, as commercial property in most cases requires specialist knowledge and expertise. RE/MAX Go is designed to address this need, and in addition to its traditional real estate brokerage functions, another important objective of RE/MAX Go is to exploit and develop synergies between the existing residential and the new commercial network within the RE/MAX network in Hungary.
"We are delighted that with the opening of the RE/MAX Go office, all the services of the Commercial division are now available in Hungary, which we expect to become a key part of the network that closed 55,000 transactions last year, worth more than $22 billion worldwide," said Bence Keszthelyi, Managing Director of RE/MAX Hungary.
Where is the market heading? - macroeconomic outlook
Ádám Maróti, an expert at Hold Fund Management, who was invited as a guest speaker to the RE/MAX Go office opening event, said that although the real estate market seems to be going through a bad period lately, there have been similar periods before. It was the record low yield environment of the last ten years (2011-2021) that was considered extreme. Given the structural changes that have taken place, it is unlikely that the low yields of the last ten years will return, but it is also unlikely that we will see the record high yields of 12-14% that we saw previously. Presumably, a new balance between the two will soon emerge.The capital market - and stock market firms - have reacted quickly to the rise in yields, but in the property boom, valuers are holding out. The stock market always prices everything in immediately, but the real estate market could still depreciate from current levels. Four things argue for a higher inflationary environment to stay with us: de-globalisation, looser budgets, climate fears, demographics.
In the 2020s, we are likely to live with persistently higher nominal and real yields. Inflation expectations have not yet started, but real yields have and the latter is more important for the housing market. We now expect German real yields to be in the range of 0.5-1%, which will lead to sustained higher prime yields in the market and could easily even be overshot in the short term. Hungarian prime yields could develop as follows:
- office: 7.00%
- shopping centre: 7.25%
- industrial: 8.00%
What will the new office bring to the market?
When a new office is launched, the question arises: what were the milestones that led to the decision to do it now?" said the moderator of the discussion, Gergely Ditróy, Portfolio's Business Development Director.Dr. Péter Percz, Partner at RE/MAX Go, said that every economic downturn is usually followed by a boom, and they are starting now because they see a continued demand for the services they offer, and they want to be present when demand for real estate starts to pick up and transactions return. In his opinion, the synergies between the management of the agency and the backing provided by RE/MAX will result in a highly professional and quality service under the aegis of an international brand.
Dorottya Pápai, RE/MAX Go Partner and Director of Business Development at RE/MAX Hungary, added that the past years have clearly shown that there is a strong market demand for complex services. Clients turn to them for help not only in selling and renting properties, but also in additional areas such as economic, technical and market analysis of the property, i.e. the development of a situation picture that is appropriate for the current environment and the development of an individually tailored sales strategy. This is coupled with the individual specialisations of the expert team, i.e. answering and supporting questions on financing, utilisation, taxation and operation, not only during the sale, but also before and afterwards.
How will this office be different from the existing commercial real estate ecosystem?
Balázs Domján, Chief Operating Officer of RE/MAX Go, pointed out that in addition to its own consultants, RE/MAX Go works with quality partners (e.g. in the fields of environmental, technical consulting or operations), thus offering a complex service covering the entire transaction cycle. Dr. Péter Percz added that a so-called "niche" market segment has been identified, according to which there is a place for a new, high-quality advisory firm such as RE/MAX Go in the transaction category between EUR 1 and 10 million, primarily in the SME sector. Dorottya Pápai said that they are affiliated with an international brand, RE/MAX, the world's largest real estate brokerage and real estate advisory network and that all the founders have more than 15 years of institutional real estate experience, which guarantees a high level of commercial real estate knowledge. In addition, their clients are further assured by their membership of national and international professional bodies such as MAISZ and RICS, as well as their very rare corporate professional indemnity insurance.The experts stressed that the relevance of the firm and its range of services is demonstrated by the fact that its clients already include companies such as Erste Fund Management, Richter and KÉSZ Group. In addition, they work with a number of international and domestic companies both nationally and internationally thanks to RE/MAX's international network.
They expect to leverage their international background and advantages to play a prominent role in the firm's business operations, and therefore place a strong emphasis on strengthening international relationships, which will of course benefit their clients.
What is happening in the market? Has interest already started?
The agency started its operations in the summer and since then it has a large number of orders and several ongoing sale and lease transactions. They see a recovery in the €1-10 million category they cover in the second half of the year. Until the third quarter of this year, the market dynamics and buyer interest were very low, but in the fourth quarter there are signs and trends that something is starting to happen in the market, which is why the founders of the agency are confident that it can gain even more momentum next year. Demand for energy modern properties remains strong, with the market for new build properties down due to the weakness in the construction industry, so renovations will be a focus, and there will also be examples of function changes, with the firm being approached by more and more people with both these types of needs and properties, even for smaller asset values.The firm also offers its clients advice on obtaining finance and tenders, in relation to which it was said that the market in 2023 was primarily dominated by interest rate subsidised loans, but it would be in everyone's interest to ensure that market loans from banks' own resources were also competitive. This is not the case today, but Péter Percz is confident that this will change in the near future.
What are your plans for the future?
According to Balázs Domján, the goal for the first full year is to finalise the operational infrastructure and expand the office organically. "We will move to our larger office in January and will be hiring at least 5 new consultants in six months to a year, to whom we can offer a full training package, excellent office working conditions, a team that works well and efficiently together and an existing quality client base and real estate portfolio." The firm's profile, range of services and properties can be viewed on the firm's website.Dorottya Pápai also highlighted another goal, which is to make sure that in Hungary, if someone is interested in this segment, everyone knows about their office, and also to be able to grow regionally. This is a very important time in their lives, as they are going from a start-up to a thriving company, so the most important thing in the coming months is to expand the office, while continuing to grow and effectively serve all our market activities.
Portfolio.hu
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