Flexibility and Repositioning: Where Is the Hungarian Real Estate Market Heading in 2026?

The residential real estate market is expected to be the most active segment of the Hungarian property market in 2026, while the hotel sector is set to remain a key investment target. In contrast, the office market continues to be characterised by caution, with quality, sustainability and operational efficiency becoming decisive factors in an increasingly selective leasing environment. These conclusions are among those set out in the 2026 edition of DLA Piper Hungary’s Real Estate Intelligence Report.

For the first time, the report also examines the expectations of market participants – including developers, investors, analysts and landlords – based on the results of a comprehensive market survey. Almost 60% of respondents hold senior executive positions, while more than 40% manage or own portfolios comprising at least 21 properties. Around 70% of respondents expect the strongest growth in the residential sector, followed by hotels as the second most promising segment. Meanwhile, expectations for logistics and industrial real estate have moderated, while the office market shows signs of slow stabilisation.

While more than half of market participants anticipate stable yields in 2026; however, shifting tenant demand and the regulatory environment are still perceived as key risks. Amid ongoing uncertainty, investors are increasingly prioritising assets that offer predictable and stable income streams.

 

Alternative Solutions and Function-Change Developments Shaping the Office Market

In 2025, the office market remained in a phase of gradual consolidation, characterised by sustained caution among market players. Respondents gave the lowest overall sentiment rating of all real estate segments covered in our market report. This is reflected in a further decline in speculative developments, with most new projects supported by pre-leasing agreements, built-to-suit (BTS) solutions or developments already substantially pre-let.

Overall office development activity has remained subdued compared to previous years. Instead of new projects from scratch, the focus has shifted towards modernisation and repositioning of existing stock. In order to mitigate risks, market participants are increasingly open to exploring mixed-use concepts – 52% of respondents have considered the development of mixed-use buildings – as well as the conversion of older, “B category” office buildings into residential or hotel use.

While short-term expectations for the office market remain cautious, the shrinking supply of prime office space resulting from limited new developments, combined with the growing emphasis on quality and sustainability, may create more favourable opportunities for developers and investors.

Over the past 12 months, leasing activity has primarily focused on lease renewals rather than new agreements: among 30% of respondents, renewals accounted for 61–80% of leasing transactions, while 40% of market players reported experiencing a slight decrease in rental levels.

 

Shifting Dynamics in the Logistics and Industrial Property Market

Logistics and industrial developments continue to play a significant role in the Hungarian property market, although expectations for the segment have softened compared to previous years. Based on survey responses, logistics and industrial assets now rank fourth in terms of growth prospects.

Development activity remains concentrated around Budapest, though several regional locations are also attracting growing interest. According to market participants, future expansion remains closely linked to industrial investment trends, the performance of the automotive sector and the continued growth of e-commerce. Institutional investors are increasingly focused on stable income and high occupancy rates, leading to more frequent portfolio reviews and restructurings. Overall, the majority of respondents reported that rental levels have remained broadly stable.

 

Reviving Retail: Refurbishments and Repositioned Projects

Investor activity in the retail sector increased in 2025, particularly in regional cities. Respondents identified retail as one of the most attractive investment segments, signalling renewed momentum across the sector, with expectations that investor interest will remain strong in the coming period.

Rather than pursuing new greenfield developments, developers are increasingly focusing on the refurbishment and repositioning of existing assets, both in Budapest and in regional locations. Changes in the regulatory environment – particularly amendments to the so‑called “plaza stop” legislation – continue to be a key consideration for investors and play a decisive role in investment decision-making.

According to the report, rental levels have remained broadly stable over the past year, while leasing activity was again dominated by lease renewals.

 

Residential and Hotel Development Set to Be the Key Winners in 2026

Based on the survey, the residential real estate market is expected to deliver the strongest growth momentum: nearly 70% of respondents consider it the leading segment over the next 12 months. Consequently, the majority of development activity and capital inflows are likely to be directed towards residential projects.

The hotel sector continues to stand out as one of the most attractive investment targets for both domestic and international investors. Approximately 65% of respondents view the sector’s short-term outlook positively, while investment activity in hotels recorded the most significant growth among all segments. Recently completed large-scale hotel developments in Budapest reflect a clear strategic shift: expansion focused purely on increasing capacity is increasingly being replaced by more complex concepts centred on premium quality, distinctive positioning and brand experience.

Interest in the hotel market is expected to strengthen further, keeping the sector among the most attractive investment opportunities in the period ahead. At the same time, investors are applying increasingly disciplined criteria, prioritising projects capable of delivering predictable income even in the current changing market environment. As a result, demand is likely to remain strongest for premium, well-positioned hotel developments with differentiated concepts.

 

New Energy Models and ESG Compliance Across All Segments

ESG considerations and energy efficiency have become fundamental across all real estate segments. Fewer than 5% of respondents indicated that ESG criteria play no role in their developments, underscoring the strong and widespread demand for energy-efficient properties.

Grid capacity constraints remain a recurring challenge for developers, prompting the growing adoption of alternative energy models, particularly in office and industrial projects. Market participants are increasingly deploying “behind-the-meter” energy solutions, battery energy storage systems (BESS) and co-location models as part of more sophisticated energy strategies.

 

Financing

Both our experience and feedback from active market participants confirm that real estate financing remained fully accessible in 2025. More than 80% of respondents reported that developers continue to benefit from adequate financing conditions, while over 90% indicated that lending terms have either stabilised or eased.

At the same time, transaction timelines have lengthened noticeably in the current market environment: 69% of respondents observed that deal execution takes longer than in previous periods. Across all segments, compliance with ESG criteria and the availability of robust energy efficiency plans have become key factors in credit assessments.