Boston, MA -- (SBWIRE) -- 10/04/2013 -- On a regional level, in spite of the damage suffered, the Hungarian commercial real estate sector fared relatively well in the immediate aftermath of the global financial crisis. However, 2013 sees the country in an altogether different position. Mired in recession with a stagnant pipeline, invisible investor sentiment, rising policy risks and with the dwindling probability of an IMF deal this year, the country has one of the worst outlooks for the sector regionally. While the short-term outlook is less than enviable, there are pockets of optimism to be found, particularly in Budapest, and the longer-term opportunities offered by strong socio-demographic fundamentals.

Full-year 2012 data has revealed persistent weakness across the office, retail and industrial sectors, and the outlook for 2013 has little optimism as challenging fundamentals persist. Nevertheless, the worst appears to be over for the Hungarian economy, with better than expected Q113 real GDP figures, an uptick in industrial production in April and the country's exit from the EU's Excessive Deficit Procedure being welcome developments. However, we do not expect a strong resurgence in economic activity as the government's erratic policy making and high corporate tax rates deter domestic and foreign investment.

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Key Points:

- Although official quarterly figures for the Hungarian construction segment indicate a gradual slowdown in year-on-year (y-o-y) contraction, we believe that the Hungarian construction sector will become a victim of the poor macroeconomic conditions domestically and register yet another year of sharp contraction in 2013.
- The retail segment remains the only highlight of the Hungarian commercial real estate market as its office and industrial counterparts continue to struggle. While the sector has not escaped unscathed, it has weathered the storm considerably and comparatively well.

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