Orban’s Glitzy Office Development Puts Spotlight on Cronyism

(Bloomberg) — The concrete-and-glass office complex next to Budapest’s City Park was a bet on the post-pandemic revival of commercial real estate. But Hungary’s lackluster economic recovery and rampant inflation led to plunging demand, and the development looked destined to lose money.

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That was until Prime Minister Viktor Orban stepped in.

A fund linked to Orban’s son-in-law, Istvan Tiborcz, agreed to sell the buildings to the government, according to documents obtained by graft watchdog Transparency International and seen by Bloomberg. Now scrutiny of the transaction has become the latest weapon for Orban’s new political adversary.

Opposition leader Peter Magyar, the most serious political challenger to Orban in more than a decade, held up the investment as an example of the sort of cronyism that has landed Hungary at the bottom of Transparency International’s corruption rankings among EU member states.

The office complex, called Durer Park, is one of three sites in Budapest where the government is buying commercial property for a total surface area that’s several times the size of Hungary’s national football stadium. Magyar put the overall price at as much as 650 billion forint ($1.8 billion). The government declined to comment on what it paid for the developments.

Orban’s administration says the investments will improve working conditions for state employees who have limited work-from-home privileges. They’re also intended to cut costs associated with inefficient and aging buildings where many ministries and agencies are currently housed.

In a statement to Bloomberg, the Economy Ministry said the deals were “favorable” while Cabinet Minister Gergely Gulyas told reporters in June that the investments would break even in about 10 years. It was “irrelevant” who the sellers were, he said.

The opposition is seizing on the investment as a form of largesse to the premier’s own family at a time when Hungary is raising taxes and cutting spending elsewhere to rein in years of fiscal profligacy.

Magyar has surged in public opinion by railing against perceived corruption and mismanagement after 14 years of nationalist rule. His Tisza party is running neck-and-neck with Orban’s Fidesz in the latest polls ahead of the 2026 general elections.

“Why did he buy from his son-in-law, Istvan Tiborcz, totally unnecessary office buildings for 650 billion forint at a time when the government announced a 130-point austerity program affecting healthcare, education and culture?” Magyar asked during an interview with state TV on Sept. 26.

The deal is part of a series of big-ticket government purchases that have included an 80% stake in Budapest Airport earlier this year for about €2.5 billion ($2.7 billion). Last year, the government extended more than $1 billion in loans via state banks for 4iG Nyrt., a company Orban wants to become a national telecom champion, to purchase Vodafone Plc’s local business.

Under Orban, Tiborcz has become one of the country’s richest people with a string of luxury-hotel deals.

BDPST Zrt., Tiborcz’s investment vehicle, said in a statement to Bloomberg that the fund that owned Durer Park has an “independent management” that makes decisions autonomously.

Orban has repeatedly been accused of cronyism, and has repeatedly denied he has influenced business deals. Concern over corruption has contributed to the continued withholding of €20 billion in European Union funds.

“I don’t concern myself with business deals,” Orban told a media briefing this month at the European Parliament, where he was excoriated by European Commission President Ursula von der Leyen. “How and who completes a project isn’t a matter for the government and I also don’t want to deal with it.”

Durer Park is the smallest of the three office projects, with a cost of 120 billion forint, according to 24.hu news website, which was first to report the purchase earlier this year. It’s where the Economy Ministry plans to shift some of its people and the headquarters of some state-owned lenders it controls.

It’s composed of two office buildings with green roofs and 207 apartments built with environmental sustainability standards in mind, according to Granit Asset Management, which manages the Fonix private-equity fund that owns the property.

Granit Asset Management is part of Granit Bank, which is owned by Tiborcz’s BDPST, according to public records.

“This was a speculative investment, that is to say it had no preliminary lease or sales contract,” the asset manager said in a statement to Bloomberg. It echoed that its decisions are taken independent of its owners. The office buildings were sold at a “realistic market price in a regional comparison,” it said without disclosing the cost.

The other two sites are less central. One is by a new neighborhood toward Budapest’s southern tip on the bank of the Danube River, in which Fonix also has a stake. The landscape is dotted with cranes hanging over modern high-rise apartment buildings, with the 28-floor recently inaugurated headquarters of energy company Mol Nyrt. towering over the area.

The third is close to where the government has plans for a €5.8 billion Dubai-style hub in a re-development of an area around dilapidated railway tracks. That one is destined to be the new headquarters of the tax authority.

The reported square-meter prices reflect the costs of smaller, prime commercial real estate in downtown Budapest. Office vacancies rose two percentage points to 13% in Budapest in 2023, the highest level in nine years, according to central bank data.

For Durer Park, the initial 100 billion forint price tag was eventually raised by 20% to account for the EU’s highest inflation in Hungary last year, 24.hu reported. The Economy Ministry told Bloomberg that the price increases were justified by bespoke arrangements for housing its state banks.