Growth is important, but we also have to make profit

- You haven’t been present on the Buda side yet. Why now and why this location?
- As the city center gets expensive, more and more businessmen are looking for an alternative. We are not far from the green belt of Buda, next a pedestrian area filled with restaurants and cafes, where the environment is not as hectic as in the 5th District and the air quality is also better. Many who live in Buda are unwilling to commute to Pest and loose an hour of their life because of traffic, so they are looking for an office closer to their home. The Business Center of NEW WORK Offices in Budaörs is fully occupied as well, thus we are also thinking of opening a South Buda office soon.

- What are the advantages of BSQ Business Center?
- The total area of the BSQ Business Center is 3600 sqm which we will renovate in three phases and open to our tenants. As you can see the first phase has just been finished and ready to provide customized office services to 133 entrepreneurs, IT professionals, accountants, and so on. This Center is the first one of our next generation Business Centers, as it has an integrated 360-degree reception service, which means that we are hosting the main reception of the whole building, while also operating the meeting and conference facilities on the ground floor with an extra open space for co-workers. After complete refurbishment more than 380 people will be able to work in the new Business Center.

- In your inauguration speech you said you were curious about how BSQ Business Center turned out. When did you last visit Buda Square?
- Nine months ago, when I signed the lease contract. I took a step back from the operational management. My colleagues are professionals and know how to run the business. I trust them, and they have never disappointed me; our designer Andras V. Lesták has created an office atmosphere which is environmental conscious, makes you feel comfortable and welcome with a hint of industrialism and some huddle. I really like it.

- The market is still booming, but some are afraid that it won’t last long. What do you think?
- I think nobody can answer that question, but all markets basically show the same trend of raising rents, shortage of quality space on affordable rents and shortage of labour. Whoever is concerned about it, will sooner or later be right but we don´t know at which point of the future we will be there. On the other hand, the market share of serviced offices is around 3.5-4% basically in all CEE markets. When in London and Frankfurt it´s 12% to 15 % and forecasts showing further demand up to 30 % in the upcoming years. I have been an entrepreneur for 35 years now and believe what Henry Ford said is very true. “If you always do what you always did you will always get what you´ve always got.” In a nutshell, wherever the market develops to we have to adjust our business model accordingly due to the needs of our customers and the rapid growth demand for flexible office solutions.

- Was this the reason to become a listed company? Is future growth based on fresh capital?
- First reason for this was to establish a solid fundament by cash and management power which allows the company to exist sustainably. Second reason was to be flexible for inviting third party investors as we sensed demand for such. In the first round we will be giving out new shares and 20% of the equity shares will be replaced, which brings us 2 M EUR fresh money. Next step we think about a bond of 5 MEUR to be issued beginning of 2019 to be prepared for the challenge of further growth. This sounds ambitious but all what we do is moving forward step-by-step according to plan. At the end of the day growth is important, but we also have to generate profit.

- What are your plans for the next one or two years?
- The company will have approx. 40,000 sqm leaseable office space by the end of the year in the region and we would like to increase this further. In 2 years’ time from now we will have 100.000 sqm under our management. This will of course only be then possible if we grow in all CEE capitals. In Budapest we will grow up to 25.000 sqm by end of next year. Beside this the main focus is now on the Polish market with 6 cities and currently approx. 10 Million sqm office space. We have already opened our first Business Centers in Prague and Kiev this year, to be followed by Bucharest and Belgrade next year.

- Does the structure of the Polish market differ from ours besides the size?
- 80% of tenants in Budapest are local small and medium-sized enterprises; the rest is internationally-owned companies. In Warsaw the situation is the opposite, multinational companies are dominant among our tenants. They also have a well-developed country side office market, just think of Krakow, Katowice, Lodz, Wroclaw, Gdansk etc. What is the same in all our offices: we believe in sustainable, long-term business relationships. For that reason, we create our business service environment to be friendly and professional at the same time I've already talked about interior design: passion is our main driver.

- What do you think how long does the slow but continuous increase of rents last in the Budapest market?
- Construction costs and rising prices for land increase the fee, that is unavoidable, but we have to consider what level tenants can manage to pay. In addition, the Hungarian office market is very price-sensitive. Anyway construction situation is similar across Europe, surprisingly even in Ukraine. They went to work to Poland, and the Poles went to Germany and Britain. Sooner or later a new balance will develop. My money is on 2020 for Budapest to get balanced.

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