The significant beneficiaries of the mentioned trend are companies who provide so-called “CEP” services (Currier-Express-Parcel), out of which many international firms are already represented in Hungary. To put this into context, 42% of the total delivery of e-commerce purchases in Hungary were delivered by parcel (CEP) companies in 2015. Besides that, other factors have to be taken into consideration as well, such as the volumes of the foreign and domestic purchases, parcels, express and curriers packages etc., which further contribute to the business activities of mentioned companies.
From the perspective of commercial real estate, the upswing of this particular segment is clearly noticeable: DHL Express, owned by the German postal company, recently announced its cooperation with Budapest Airport in order to develop a brand new, 13,000 sq m logistics centre within the area of the airport. The facility will replace a smaller property previously occupied by DHL Express. UPS Hungary Ltd. will also begin operations in a newly developed building in the proximity of the airport, in Vecsés – the new center with 5,200 sq m operational area will similarly replace a smaller base. Additionally Cushman & Wakefield in close collaboration with its exclusive client DPD Hungary Ltd., -being one of the most decisive CEP provider in Hungary- have recently completed the expansion of the firm’s logistics base with the addition of another operations HUB located in South-Buda.
The increase in business volume of the e-commerce sector and CEP providers and the associated swings in the commercial real estate segment have a clear impact backed up by industrial property market indexes, such as the development pipeline. Professionals at Cushman & Wakefield forecast further momentum in the field of e-commerce, escalating competition between CEP providers, and rising commercial value of industrial/logistics tenements suitable for such activities.
Gábor Halász-Csatári, Associate, Head of Industrial Department at Cushman & Wakefield in Hungary added: “The positive market sentiment, the stable demand, and the businesses’ aim to expand their activities and the efforts of existing tenant’s in order to gain new businesses, all project further speculative and “BTS” (build-to-suit) developments. Alongside the existing and stable developer scene the last 12-18 saw the appearance of new international market players, now also in possession of significant property portfolios. This creates a highly competitive environment on the landlord side while also offering alternatives to prospective tenants. The growth of the Budapest stock boosted by the speculative and “BTS” developments over mid and long-term is clearly shifting the demand towards greenfield sites also causing an increase in such type of transactions and causing a moderate but steady rise of land prices.”