BRICKS & MORTAR: Budapest's shopping mall market is buzzing

BRICKS & MORTAR: Budapest's shopping mall market is buzzing
Interior of Futureal Group's new shopping mall in Budapest. Construction started on May 16.
By Levente Szilagyi in Budapest May 17, 2018

Property developer Futureal Group began construction on May 16 of a 155,000 sqm shopping mall with 54,000 sqm of gross leasable area (GLA) in the southern parts of Budapest. The Etele Plaza will be the third-largest shopping and entertainment centre in the capital, and the biggest mall on the Buda side when it's completed in 2020, the developer said.

The economic crisis slowed development, but the booming property market has now brought back investors, and prices are still very attractive compared to other prime cities in Central Europe.

Back in the mid-1990s, smaller shopping centres were built in outer zones of the city, serving mostly local consumers. The late 1990s brought a breakthrough in developments and a wave of projects coming to market.

Shopping malls with 40,000-50,000 sqm were built mainly in the Budapest city centre. These have become very popular due to their easy accessibility and closeness to densely populated residential and business areas. Budapest counts some 30 shopping centres and a handful of these are large malls with a GLA of 40,000-50,000 sqm.

Etele Plaza is situated at the junction of a transport hub in southern Budapest, at the meeting point of Metro line 4 with direct access to downtown Budapest, a national/international railway station and the M1 and M7 highways that lead towards Austria and Croatia, respectively, and the site can also be accessed by bus and tram.

The centre will have a leasable area of 54,000 sqm and room for 200 stores, including the largest fashion brands, restaurants and cafes. The mall will also feature a multiplex cinema, restaurants, and a gym. The area is one of the most densely populated areas of the city with 235,000 living in the proximity of the mall is and the average purchasing power is 125% of the national average.

Last week, German developer ECE announced the construction of a €200mn shopping centre in the north of Budapest. The centre will have a leasable area of 52,000 sqm and room for 170 businesses, making it the sixth-largest shopping mall in Budapest. The centre, to be built on the site of a former textile factory, is expected to open at the end of 2021. 

The investment, however, may suffer delays as ECE may have to renew its permits. The government commissioner for trade policy told the press that the development will not happen in its present form as the company holds a permit from 2013 but rules changed in 2015, when the government introduced a ban on new shopping malls. ECE will need to obtain new permits to start the construction, he said.

ECE is one of the largest developers on the market with more than €600mn investments in Hungary since 1996. The company currently operates five shopping malls with a combined leasable area of 210,000 sqm. It owns the second-largest mall in Budapest, Arkad, and four in other big cities around Hungary.