Highlights in Hungary are delayed real estate digitization, stricter ESG compliance, and regulatory deal flow complexities, according to Szecskay Senior Partner Judit Budai, with her projecting that sectors like IT, defense, infrastructure, and ESG compliance will dominate the agenda in the near future.
"One major expectation for 2024 was the long-overdue digitization of Hungary’s real estate and land registry system," Budai begins. "Unfortunately, this transition has been postponed once again, leaving the E-ING system introduction for later in 2025 while the underlying regulation already became effective, introducing certain material changes affecting transactions documentation."
She also reports that "Hungary has introduced a new ESG Act, which goes beyond the EU’s Corporate Sustainability Reporting Directive by imposing even stricter due diligence obligations and fewer exemptions." According to her, this means businesses will "need to integrate ESG compliance across their entire supply chains, impacting lending, reporting, and corporate governance. One of the key challenges is that advisor companies cannot immediately become ESG advisors – they must obtain a qualification, which is an entirely new requirement for lawyers and consultants alike." One positive element Budai highlights is that the “Supervisory Authority of Regulated Activities introduced a maximum ESG DD questionnaire which can only be extended with the approval of the authority.”
Continuing with legislative updates, Budai reports that "Hungary’s foreign direct investment regime remains in place, requiring approvals for strategic company acquisitions — while this has become a standard part of major transactions, merger regulations continue to present additional complexities." Specifically, Budai says that the "one recurring issue we face is that if the Hungarian Competition Authority has not previously defined a specific product market, parties may expect that the authority consults the relevant market and collects data via a questionnaire from competitors." As she explains it, "this can be an unexpected and time-consuming process, and many legal professionals don’t immediately foresee it as a problem. However, it is something that we are learning to anticipate year after year. The Hungarian Competition Authority has been working hard to define product markets, but this process can still lead to prolonged approval timelines."
Additionally, Budai reports that Hungary is "closely watching the EU AI Act, which is expected to introduce substantial compliance requirements for AI-driven companies. This legislation will require significant legal and operational adjustments in 2025, especially for businesses operating in the technology and AI sectors."
Taking a step back to focus on the broader geopolitical picture, Budai says that it is evident the Hungarian market is not operating in a vacuum. "We are closely monitoring global geopolitical developments, including the U.S. elections, the ongoing war in Ukraine, as well as tensions in the Middle East – all of these factors contribute to uncertainty in the investment landscape," she says. "However, one sector where we do expect to see significant activity in Hungary in 2025 is defense and security. Given the heightened focus on security across Europe, Hungary is likely to experience growth in IT and defense-related industries, particularly in technology-driven defense solutions," Budai reports. "These areas will likely attract both private and government-backed investments in the near future," she says.
Finally, looking ahead, Budai feels that the Hungarian legal market will remain active, but will also need to "continuously adapt to emerging regulations and global uncertainties. Sectors like IT, defense, infrastructure, and ESG compliance will dominate the agenda, requiring firms to stay ahead of regulatory changes." In conclusion, she stresses that we expect a steady deal flow – and as always, we will continue learning by doing."
