Hungary bans construction of shopping centres

The Hungarian government has agreed to temporarily ban the construction of new shopping centres. In the next three years, building commercial buildings of more than 300 m² will be forbidden. With this measure, the government hopes to strengthen the position of Hungarian retailers.

Defending Hungarian retailers

“The goal is for the structure of retail to take a change for the better”, said government spokesman András Giró-Szász, who claimed that “69% of Hungarian retail is controlled by 1% of all retail enterprises, typically international corporations.” He said that exceptions could be granted by a special committee, but the conditions to be met are still unknown.

The Népszabadság newspaper claimed Aldi and Lidl would be the decision’s main targets: both continue to grow in Hungary, despite (or owing to) the crisis. Other important foreign players on the Hungarian retail market are British Tesco and French Auchan, who would also be banned from building new hypermarkets.

… but endangering Hungarian builders

Representatives of real estate agents, shopping centres and employers are not too amused with the ban. “An average shopping centre creates 1000 jobs”, says Gergely Árendás of real estate agent Wing. His sector has been in a crisis since the Lehman Brothers bankruptcy of September 2008. Last year, the number of new contracts went down a staggering 37%.

Ferenc Dávid, spokesman of VOSZ (the Hungarian association of entrepreneurs and employers) warned that the ban will “deliver a blow to the domestic construction industry”. György Vámos, secretary general of OKSZ (the Hungarian trade association) also warned that the most important victim of the new ban will be the construction companies.

Saturated market

For the Hungarian shoppers, this ban is not necessarily a bad thing: the Hungarian shopping centre market is saturated. There are over twenty malls in Budapest alone, and given the average occupancy rate of 80, there is still a lot of room for expansion within the existing buildings.

The difficult relation between Hungarian chains and international corporations is not new: recently the CBA chain announced to be interested in buying the local stores of Cora, Match and Profi – all owned by Belgian group Louis Delhaize – to earn a stronger position against the foreign competition.