Enclosed Shopping Centre and Retail Park Development in post communist Budapest, Hungary

Paul Collins and László Morsányi

ERES from European Real Estate Society (ERES)

Abstract: Hungary has made huge strides in its endeavour to re-establish a thriving market economy after 40 years of a state led command economy. It is now a member of NATO and wishes to accede to European Union membership in the next three to four years. Along with the two other leading ex Soviet-bloc states of Poland and the Czech Republic, Hungary has also seen the renaissance of its property market. Whilst some private ownership remained during the communist period, widespread private ownership has now been re-established and much new development to so-called ëwesterní standard has been constructed. The first wave of new buildings in the early 1990ís were in the office sector to serve West European and American front-line businesses who were looking to make there mark in the new economy. Then from the mid 1990ís, Hungary, and in particular Budapest, witnessed the development of a considerable number of both in-town enclosed shopping centres and edge of town retail parks. Whilst a number of communist party showpiece shopping centres were developed towards the late 1970ís and the early 1980ís, nothing can be compared to the scale, colour and variety of the new provision that has now made its impact on the stock and pattern of Budapest shops. These retail developments have been almost wholly developer led and constructed in locations and on such a scale, not really envisaged or properly planned for by the policy planners of most municipalities. The early days seems to have been marked by a desire to reap new sources of local revenue which appears to have been as important, if not more so, than a properly planned approach. Also of interest has been the fact that many units within some of the enclosed shopping centres have been ësoldí to retailers, rather than let on lease, as has been the normal practice in American and West European centres. Some concerns are beginning to be registered that not only are many of these outlets primarily the preserve of the nouveau riche of Hungary, but the sheer scale of provision along with that still in the development pipeline, represents a potentially massive oversupply. More latterly, the property market has also sought to serve the demands of Hungaryís restructured industrial economy and the growing demand for imported goods, with the provision of new factories and distribution premises. The housing sector has also been active, spurred by the recent availability of new forms of mortgage finance and more attractive interest rates. The paper will examine some of the major trends in the provision, use and ownership of property over the last fifteen to twenty years, with particular reference to the development of enclosed shopping centres and retail parks. The paper will also attempt to speculate on what future prospects may hold.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2001-06-01
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