Graphisoft Park After Tax Profit Up 9% in 2021

Graphisoft Park that includes industrial and office facilities in Budapest produced a rental revenue of EUR 14.7 million in 2021, the pro forma net profit reached EUR 4.84 million, which is almost EUR 140,000 higher than the forecast. Accordingly, the Board of Directors plans to propose to the General Meeting the payment of EUR 4.4 million dividend, or approximately 43 eurocents per ordinary share, corresponding to 90% of the 2021 pro forma profit.

According to the executive summary of the interim management report, “due to the fact, that properties in Graphisoft Park are rented by stable companies engaged mainly in research & development activities less affected by the crisis caused by the coronavirus epidemic, the utilization of the office park decreased only slightly in 2020 as a direct effect of the crisis.”

In the second half of 2021, occupancy began to increase again based on tenant demand, rising to 96% by the end of 2021, while the average vacancy rate in the Budapest office market remained around 9%, partly due to increased office supply. “As a result of the favorable occupancy rate and the continuous extension and renewal of the leases, we expect a further increase in revenues of approximately EUR 300,000 in 2022, so in addition to the expected rental revenue of EUR 15 million, the pro forma net profit could reach EUR 5.1 million, which is an additional 5% increase compared to 2021,” the summary points out.

Due to the coronavirus, the changing use of offices and the rise of the ‘home office’ have a noticeable effect on the overall demand for offices. At the same time, there were still no significant space reduction needs among the Park's tenants, and smaller reductions provided an opportunity to meet the growth needs of other tenants and to move in more new, smaller tenants, resulting in an overall 2% increase in office occupancy over the past six months.

The document highlights that in view of the current high occupancy level and the new needs of tenants in the future, “in 2022, we will start preparing the construction permitting process for the approximately 4,000-sqm building that can be developed by merging the development area purchased by the Company in 2021 and the existing southern development site, in order to be able to start the development in case of significant tenant demand. Based on the experience of recent years, many new start-ups have chosen Graphisoft Park as their location, so in the new building, like many of our other smaller buildings, we want to provide space for some start-ups or startup companies already in growth.”

The archaeological and territorial planning works required to prepare for the project have already been completed during the previous year. The experiences of the recent period show, that as the high level of uncertainty regarding the vacancy of offices resulted by the coronavirus epidemic has eased, personal presence and joint work will be also noticeable in the long run, in addition to the rise of the home office and hybrid work. Besides the home office a few days a week, it is worth keeping the employees’ dedicated workplaces and providing them the community spaces they need to work creatively and innovatively.

The costs of this are insignificant within the total cost of highly qualified and talented employees. In case of companies at the forefront of innovation, it is especially important to keep highly qualified, talented employees and to keep employee turnover low. The inspiring green environment provided by the Park gives a lot of help in this, as well as the office buildings dominated by airy, open spaces, which at the same time make it possible to meet the new requirement of social distance. The architectural concept works, continuing to ensure the Company’s profitable operations, the summary says.