Large-scale restructuring processes in the urban space of Budapest

the expanding of the utility network. As a reaction to demand for affordable building plots and sincethe voucher privatisation (restitution) of agricultural land has resulted an estate structure not in favourfor agricultural exploitation, private investors and investment societies (e.g. Quaestor, Pilis-Invest,etc.) arranging a large pool of small investor money, entered the market by acquiring major landholdings. There are a number of private land development companies, who besides developingbuilding plots are also involved in building as well (e.g. Simex, Hectar 68).Except for OTP Ingatlan Rt., the real estate development arm of the National Saving Bank (OTP) alldomestic developers in the housing sector are new companies, formed in the last 8-10 years or evenmore recently. Until the late 1990s entry into the market was difficult, due to lack of experience in thehousing development business, the reluctance of banks to provide interim finance to start upenterprises, weak demand for new housing – especially during the early 1990s – and until 2000 thelack of affordable mortgage finance instruments. Some, however, have established their credentialsduring the early years of transition through a series of small scale projects. The chemistry of theirsuccess appears to be a mixture of competent management, strong relationship with the localgovernment where they operate, innovative financing and marketing techniques.In the Budapest area there are about 350 companies active on the housing development market.Among the largest players are OTP Ingatlan, Interestate, AL Holding, Balusztrád, Autóker Holding,Reax Invest, Mester Nívó, Trigránit to name a few. A number of these companies were founded byindividuals with experience in the financial sector and/or with a legal background. Successful businessowners in other sectors (e.g. IT, automobile trade or media) have been attracted to real estate,especially land development and housing construction. Among the mainstream players larger firmstend to become volume builders either by dominating a locational segment (e.g. Quadrat in the 9 thdistrict, Mester Nívó in the 4 th district etc, Case Study 11) or by aiming at project size (most Israelifirms, local construction giant Vegyépszer, OTP Ingatlan, TriGránit, etc.). A special category isrepresented by developers catering for a special market segment. There are a handful of small scaleinvestor/developers specialising in conversions (attic spaces, existing apartments, villas or oldindustrial buildings). The average scale of these projects is small, targeting the upper segments andconcentrate on the historic city centre and the high prestige Buda districts.Case study 11Success of a Hungarian construction company as a developer in Middle-FerencvárosBefore the political changes the National Saving Bank (OTP), financier and developer of the newlybuilt dwellings in Middle-Ferencváros, was authorized to select the construction company. A bigNorth-Hungarian state owned company was the”routine partner” of the bank. It had a branchcompanyin Budapest that was operating relatively successfully despite the worsening economicconditions of the late 1980 and early 1990s. This branch company started to gradually lose its ties toits mother-company, finally the management, together with its workers "bought themselves out", andthe Quadrat Ltd. was founded in 1989. In 1993, at a next tender, Quadrat's offer was more favorablethan that of the former mother-company, thus the new private company was chosen by OTP.Quadrat started to build under the contract bound with OTP. Gradually, OTP's privileged position inresidential building has been weakened, e.g. interest payment obligation was introduced on short-termloans raised by its development section. Poor quality marketing activities of the bank continued toreflect its monopoly situation, demand for the new apartments in the deteriorating area was relativelylow, landscaping of the courtyards was yet missing, thus the selling of apartments went on desperatelyslowly. After the political changes OTP realized the expanding market in office development, decidedto focus on commercial building and to withdraw from financing and building dwellings inFerencváros.For Quadrat, as a construction company, this meant losing the secure customer. In order to survive,the company decided to widen its scope of activities by undertaking tasks ordinarily performed byseparate actors in market economies: investment, real estate development, building, marketing andselling at its own risk. Through good organization of all of these activities, e.g. marketing, was carriedout on the site in nicely furnished new flats of different sizes, plans of the buildings and dwellings werecontinuously redesigned according to the customers' will, "customer pre-financing" was introduced,43