A single gigaproject jolts the entire Hungarian construction industry

Despite the weaker second and third quarters thanks to the good Q4,

the total value of construction starts in 2024 was around HUF 2,800 billion, almost the same level as in 2023.

However, it was still significantly lower than the 2021-2022 figures, and at constant prices it was still the lowest value of starts in recent years. The last time the value of construction starts was lower than the 2024 level was in 2016.

Multi-unit housing projects boost building construction

Between October and December last year, construction projects with a total value of around HUF 500 billion were started. For the whole of 2024, the value of building projects entering the construction phase was almost HUF 2,000 billion. However, last year's starts were lower than the annual figures for 2021-2023; the difference with respect to 2023 was 5.9%, while with respect to 2022 and 2021 it was 15% and 13%, respectively.

At constant prices, an even a lower value than in 2024 was last recorded in 2015.

The reason for the better Building Construction Activity-Start in the fourth quarter was clearly the multi-family segment, which posted record growth compared to the previous quarters.

However, non-residential construction in Q4 was low, almost the same as in Q3 (just over HUF 200 billion), which is still a very modest level compared to the quarterly figures of previous years.

At constant prices, non-residential construction starts have not been as low as in the fourth quarter of 2024 in the last 11 years. Looking at 2024 as a whole, the value of construction starts was just over HUF 1,300 billion at current prices, the lowest since 2021. At constant prices, the last time non-residential construction starts were lower than in the previous year was in 2014.

The largest building construction projects started in Q4 2024 included many multi-family residential projects, such as several phases of Kincsem by Bayer, the next phases of Park West and City Pearl. The highest value projects also included the start of construction of several industrial and logistics buildings (Waberer's logistics centre in Ecser, Phoenix Pharma's logistics warehouse and office in Győr, Félegyházi Bakery's production facility in Kiskunfélegyháza, Fémalk's industrial plant in Dunavarsány, and phase 4 of Hankook's tyre factory in Rácalmás).

Civil engineering had a good final quarter last year

In the fourth quarter of 2024, more than HUF 330 billion worth of civil engineering work was started, approaching the exceptionally high level of the first quarter. Thus, the total value of the EBI Construction Activity Report's Civil Engineering Activity-Start in 2024 exceeded HUF 800 billion, more than in 2023 and close to the value of 2021. It is true that almost all of Q4's Civil Engineering Activity-Start was due to the start of the Mohács Danube Bridge project.

Around half of the activity starts in Q4 2024 were related to road and rail projects, at a level similar to Q1, greatly exceeding the q2 and q3 prints.

The situation was similar for non-road and non-railway construction. The weak figures in the middle of the year were followed by a higher number of construction starts in the last three months of the year. However, looking at 2024 as a whole, projects worth less than HUF 400 billion were started in road and railway construction, not even reaching the level of 2023. At constant prices, the last time activity starts were lower than in the previous year was in 2015.

The better Q4 figures, however, are nuanced by the fact that the growth was mainly related to a single project.

almost all of Q4's Civil Engineering Activity-Start was due to the start of the Mohács Danube Bridge project.

Most projects started in Central Hungary

Looking at the last four quarters, about half of the projects started in Central Hungary. Within this, almost 40% of the work started in Budapest. Eastern Hungary had a share of 23%, while Western Hungary had a share of 26%. Among the regions, the share of South Transdanubia increased (to 14% from 5%) thanks to the Mohács Danube Bridge project. The share of the Northern Great Plain fell, to 9% from double digits.

Multi-unit residential construction has picked up

In the fourth quarter of 2024, the construction of multi-family dwellings practically exploded. The value of work started reached almost HUF 300 billion, almost doubling the previous record of the EBI Construction Activity Report. Thanks to the outstanding last three months, 2024 was ultimately a record year,

with the value of multi-family construction starts exceeding HUF 600 billion, surpassing 2023's activity start by 66%

and representing a growth of around 45% at current prices compared to 2021 and 2022. At constant prices, the value of multi-unit construction starts in 2024 was higher than in 2023 and 2022, and about the same as in 2019 and 2021. At the same time, it remains below the 2017 and 2018 figures.

The acceleration in multi-family construction in Q4 2024 is not surprising. Developers may have responded to the pick-up in demand that was already evident last year and, in line with market expectations, prepared for an even stronger increase in demand this year. Subsidies in 2025 (maturing government bonds and interest payments, private pension fund savings that can be used for housing purposes only this year) could significantly boost the willingness to buy a home this year.

As for completions in the multi-unit residential segment, around HUF 400 billion worth of construction work was completed in 2024, exceeding the Activity Completion indicator of the EBI Construction Activity Report for the last three years. The value of multi-family housing completions last year was the second highest after 2020.

Regionally, Budapest continued to have the highest number of multi-family housing starts, accounting for more than 70% of the value of construction starts in 2024, compared to less than 60% previously.

Eastern Hungary accounted for 10 per cent of new condominium starts, while Western Hungary accounted for 18 per cent, with significant falls in both cases.

Office projects show marked decline

The second half of 2024 turned out extremely weakly for the office market. Between July and December of last year, the value of office construction starts fell sharply to less than HUF 20 billion. Although H1 2024 managed to reach the values of H1 2022 and H1 2023, there was a strong overall decline in 2024.

The value of the EBI Construction Activity Report did not reach HUF 130 billion in 2024, a 24% contraction over 2022,

while it was 68% and 66% below the outstandingly successful years of 2023 and 2021, respectively. After 2015, even at current prices, only in 2020 will office projects start at a lower value than in the previous year.

At constant prices, the office market has not seen such a low activity start as in 2024 in the last 11 years.

The start of the MBH Bankholding HQ and the central office next to the Rossmann warehouse were the two office construction projects with the highest value last year. The decline in market-driven office projects has not yet begun. On the contrary, government contracts have enabled the segment to grow in recent years.

For example, the fact that the renovation of the former Ministry of Finance building in Buda Castle, the historic reconstruction of the headquarters of the National Bank of Hungary (MNB), and phases 1-3 of the reconstruction of the former Archduke Joseph Palace will all start simultaneously in 2021 has boosted the start of activity in that year.

Or in 2023: the start of renovation work on the Ministry of Agriculture building and the Palace of Justice building, as well as the start of construction of the BudaPart and Zugló City Centre offices, all contributed to the high start of activity in that year. A large part of these buildings will also house government agencies and companies.

In terms of office completions in 2024, the activity completion indicator was close to HUF 300 billion, the highest value ever measured in the market. For example, the headquarters of the National Bank of Hungary and the reconstruction of the Ministry of Finance building were both completed.

2025 could be another record-breaking year for office completions, as several office buildings in BudaPart and Zugló City Centre could also be completed.

The EBI Construction Activity Report is the result of a collaboration between three research companies, with iBuild contributing with project research and the project database, and ELTINGA Real Estate Market Research Centre and Buildecon Construction Economics Research contributing with the development of indicators and aggregation algorithms.

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