HUNGARY Law and Practice Contributed by: Attila Ungár and Júlia Várkonyi, Lakatos, Köves & Partners
1. General 1.1 Main Sources of Law
energy, and significantly increased operational costs for construction companies, which started to revise bids and contracts to include escalation or force majeure clauses in order to address the risk of fuel surcharges, labour impacts and sup - ply chain disruptions. Greenfield investments in industrial properties/ new developments remain active due to the entering of Chinese, Korean and Japanese man - ufacturers in relation to the EV manufacturing/ related battery industry. Substantial state sub - sidies are available to attract such investments. The office market is still waiting to see how the home office/physical office balance will end up, but managements of tenants are making efforts to drive back their workforce, and the general expectation is that the home office trend has reached a steady level and will not drastically alter office occupation ratios going forward. Office vacancy rates have been increasing; new office stock has come to the market in 2023/24, but there will be a gap due to the limited number of ongoing constructions. ESG requirements are becoming more important for both investors and tenants. New developments obtain the appropri - ate green certificates, and it remains to be seen how existing office stock owners will address this. The logistics market has seen substantial growth during and after the COVID years, but specu - lative land acquisitions and developments only take place if there are committed new tenants. Although the ratio of home ownership in Hungary is one of the highest (close to 95%), institutional housing properties might become a new asset class because of the so-called “golden visa” programme (a special investment visa requiring investment into real estate funds that also have
The foundations of the general protection of real estate rights are provided by the Fundamental Law of Hungary, according to which every per - son has the right to property. The main source of Hungarian real estate law is Act V of 2013 on the Civil Code. Real properties are registered in the centrally organised land registry, which is regulated by Act CXLI of 1997 on Real Estate Registration and FVM Decree 109/1999 (XII. 29) on the Imple - mentation of Act CXLI of 1997 on Real Estate Registration. Other legislation relating to real properties includes laws on agricultural land, leases of residential properties, construction of buildings, monument protection, condominiums and taxation. 1.2 Main Market Trends and Deals The commercial transactional real estate market slowed substantially after the start of the war in Ukraine in 2022, and activity has not returned since then (similar to other CEE countries). The reasons are multiple (country risk, limited exit possibilities from assets, high interest rates, etc), but the most important is the lack of price adjust - ment compared to Western European markets. It is difficult to determine yields due to the limited number of transparent transactions. Construction activity reduced substantially after the start of the war in Ukraine due to high prices for raw material and energy, the lack of new state projects in the absence of EU sources and the uncertainties of the commercial transactional real estate market. The war and the corresponding market changes have had a considerable impact on the supply of raw materials (such as steel or petroleum-based materials), transportation and
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