Bad news for Hungary's construction sector, a rare weak start to the year

Weak start in 2025

The activity start at current prices was around HUF 570 billion in Q1 2025, the second lowest quarterly value since July 2020. At constant prices and adjusted for price changes, it was the second worst three-month activity start since 2015.

Building construction kicks off on a stronger footing

Compared to the previous two weaker quarters, building construction has slightly improved: the value of works that have started was well over HUF 500 billion, which is an 18% increase on Q4 2024.

This improvement was also evident at constant prices compared to the second half of 2024 and was due to the increase in multi-unit residential construction. However, non-residential activity continued to remain at low levels similar to those seen in the last two quarters of 2024. In the first three months of this year, non-residential construction work valued at slightly more than HUF 240 billion was started, marking the lowest quarterly figure since 2017. In terms of constant prices, no building construction works have started with such a low quarterly value in the past 10 years.

The biggest building projects launched in Q1 2025 were mainly logistics buildings: These included the CTP logistics halls in Vecsés (Phase 2) and Biatorbágy, as well as the HelloParks logistics hall in Fót. Construction also began on the second phase of Building A of the H2Offices development in Budapest and the Hungerit poultry processing plant in Szentes.

New civil engineering projects at critically low value

Civil engineering activity was extremely low in Q1 of 2025, with construction work worth only HUF 31 billion having started. This was not the lowest value recorded in the subsector since 2014, either at current or constant prices. Activity start-up in road and railways, as well as in non-road and non-railways, amounted to around HUF 16 billion respectively. Sadly, not a single civil engineering project was among the largest projects to enter the construction phase in the quarter.

Budapest in the lead among regions

According to the EBI Construction Activity Report, Budapest had the highest value of construction projects started in Hungary over the past four quarters. Although its share of total activity starts dropped slightly, it still stood at 32%, exceeding the typical 20%-30% range seen between 2021 and 2023.

In the Northern Great Plain region, which was previously in the lead, 14% of the projects started in the first quarter of 2025. Southern Transdanubia accounted for 16% of projects, while Southern Great Plain accounted for 11%. The lowest value was registered in Western Transdanubia and Northern Hungary at 5%, respectively. In Central Transdanubia, 7% of projects started, compared to 10% in the Pest region.

Multi-unit residential projects take off

The latest EBI Construction Activity Report for Hungary found that 2025 got off to a great start in the multi-unit residential segment, with the value of construction starts reaching almost HUF 300 billion in the first three months at current prices. This is a record since 2014 and exceeds the highest value of the previous quarter (HUF 209 billion). Even at constant prices, Activity-Start has grown by 39% compared to the previous quarter.

This increased activity comes as no surprise. The last quarter of last year saw a recovery, with developers responding to growing demand and preparing for increased interest at the start of this year.

The market has confirmed these expectations. According to ELTINGA’s Housing Market Report, Budapest saw a record number of new multi-unit dwellings sold in the last two quarters. Although much of the demand came from investors, the question is how long this can last. As demand may decrease following interest payments and maturing government bonds, developers may become more cautious with project starts towards the end of the year.

In terms of completions, the value of finished multi-unit residential projects in Q1 2025 was approximately HUF 76 billion, which is lower than in the previous quarter and in the same period last year. At constant prices, activity completion in Q1 2025 was the third worst since 2019.

Regionally, over the past four quarters, 70% of multi-unit projects entering construction were in Budapest, while Central Hungary accounted for slightly more than 72% of the value of such projects. Eastern Hungary accounted for 13%, while Western Hungary accounted for 16%.

Industrial buildings and warehouses

In Q1 of 2025, the total value of construction starts for industrial buildings and warehouses exceeded HUF 150 billion, which was slightly higher than in the previous two quarters. However, if we consider the period between 2022 and the first half of 2024, this was the second lowest value. Last year, in addition to projects in the automotive industry, several projects in the food industry started, such as the Pick plant in Szeged, the Master Good-Sága plant in Sárvár and the Félegyházi Bakery plant and warehouse in Kiskunfélegyháza.

As previously mentioned, the largest projects to enter the construction phase in the first quarter of this year included several logistics projects, such as CTP's logistics halls in Biatorbágy and Vecsés, and HelloParks' project in Fót. Construction also began on several plants: These included Unilever's deodorant factory in Nyírbátor, Phase 2 of Schneider Electric's smart factory in Dunavecse and Kométa's packaging plant in Kaposvár.

In terms of completions in this sector, industrial buildings and warehouses were completed at a value of HUF 250 billion in the first quarter of this year, which is the third highest value since 2014. The biggest completed industrial projects include the CATL warehouse and metalworking plant in Debrecen, and the HelloParks AN1 logistics hall in Alsónémedi. We expect to see further major completions this year.

The EBI Construction Activity Report for Hungary provides a quarterly analysis of the construction industry, including the volume of newly started construction work and the value of completed projects in each quarter, both in aggregate and by segment. The report is prepared by Eltinga and Buildecon, who are responsible for creating indicators and developing algorithms for aggregation, and iBuild, who conduct project research and maintain the project database.

Cover image (for illustration purposes only): Portfolio