A Short History of Property Development in Óbuda

Property development in northwest Budapest's Óbuda - trans. "Ancient Buda" - has a long and colorful history. Construction of a Roman garrison town in the early first century A.D. was followed by a pair of amphitheatres, a market square and a sizeable aqueduct, the ruins of each all remain standing today. In the 13th century, King Béla IV built his castle here and by the 15th century, Jewish linen weavers and silversmiths were building workshops and a synagogue. The Ottoman conquest in 1526 once more changed the cityscape, reducing Óbuda to farmland. In the 18th and 19th centuries, it again became an important commercial center and a hub of textile production. Under Communism, in the 1960s, most of the old town was bulldozed to make way for vast uniform housing estates. Now the latest wave of development has seen the completion of shopping plazas, several major office buildings and an industrial park as well as an upswing in residential construction.

Commercial development has been concentrated at the transit hubs at the northern and southern ends of Óbuda with a bit of a dead zone in between. A trio of large and popular office complexes sit to the south, in the area surrounding Kolosy Square, just north of the Margaret Bridge: Obuda Gate, Buda Square and the neighboring Szépvölgyi Business Park and Szépvölgyi Irodapark.

Óbuda Gate is the oldest. Completed in 2001 with nearly 14000 m2 of office space, it boasts views of the Danube and such tenants as Sony, L'Oréal, Ford and Unisys, each paying some EUR 15 per m2. A few blocks north is Buda Square which holds nearly 18000 m2 of offices with Shell and Motorola among its tenants. The building was recently sold to the Polonia Property Fund for upwards of EUR 30m. A short walk west sit the two Szépvölgyi developments claiming almost 60,000 m2 of offices between them. Szépvölgyi Business Park, completed in 2004, has already reached 100% occupancy as the Hungarian home to Xerox, Gillette and the Saudi Arabian Embassy. Rent averages EUR 14.8 per m2. The larger Szépvölgyi Irodapark offers smaller configurations but lower rent at EUR 12.5 per m2, on average.

"Óbuda was a major industrial center in the early part of the last century," said István Törökcsei, founder of Equilor Investment Ltd., whose office is in Szépvölgyi Irodapark. "Now it's becoming fashionable to convert former industrial sites for office and residential use."

One partial conversion close to Kolosy Square is the 15,000 m2 Sun Palace, an apartment complex being built by the Engel Group along the Danube on the site of the former Goldberger textile factory and due for completion in 2007. Portions of the development that consist of restored industrial buildings are being billed as four-meter high "loft" apartments, while most of the flats will be more conventional one- to four-bedroom apartments.

Kolosy Square is also a hub of retail activity with a host of smaller shops, an indoor farmer's market, restaurants and taverns and the Új Udvár shopping plaza, best known for its multiplex cinema and children's amusement center.

In the "dead zone" of crumbling structures north of Kolosy Square, one glimmer of life is the newly completed Mathilde office building, now offering 1200 m2 at EUR 13.5 per m2, with some offices offering a view of the ruined 2nd century Roman amphitheatre.

12 blocks north along Bécsi út, near the terminus of the Arpád bridge, stretches Óbuda's "power box" retail strip which includes the Praktiker DIY, the 15,000 m2 Stop Shop strip mall and the 35,000 m2 Eurocenter shopping plaza. Success has been mixed, said John McKie, Head of Retail at Cushman & Wakefield Healy & Baker.

"Praktiker is doing well," McKie said, "but Eurocenter is a poor performer. Stop Shop does better, but it had to offer Media Markt and C&A exceptionally good deals to bring the anchors in."

Estimates range between EUR 6 and EUR 7 per m2 at Stop Shop paid in rent by the two anchors, with ground level shops paying between EUR 15 and EUR 25. Meanwhile, shops at Eurocenter - which include an Interspar hypermarket - purportedly pay an average of EUR 15 per m2, far less than they did when the mall opened in 2000. Eurocenter changed owners in 2001 and later revamped its tenant mix in response to market demand.

McKie expressed pessimism regarding the prospects for further retail development in Óbuda, despite the presence of large housing estates and new luxury housing on nearby Tabor hill. He cited traffic congestion and a lack of urban planning to enhance retail areas as reasons for his gloomy outlook.

"There's been talk of a Tesco north of Eurocenter," he said, "but I really don't see much happening there."

Local resident Gábor Varga took a different view. Varga, who is a member of the management board at Euler Hermes, the market leader in the field of credit insurance, lives and works in Óbuda.

"I love it," said Varga. "I live on a quiet street near both my workplace and great shopping at Eurocenter. In the two years I've lived here I've seen a number of new developments and the reconstruction of major streets. People complain about the traffic, but it's no worse than anywhere else in town."

New development of the hi-tech variety is the theme of plans for the 27-hectare area of an old gas factory built near the site of an early Roman settlement in the Aquincum section of Óbuda, south of the Újpesti railway bridge. City architects, along with urban planning and real estate advisory Ecorys Hungary Kft, have been busy making preparations to augment the existing Graphisoft Park, a technology center built on 7.2 hectares of the former gas factory's land. Graphisoft itself has announced the construction of a 6000 m2 bio- and nanotechnology lab and the opening of a new Microsoft support center to host its global technical product support operations.