The capital's attempt to encourage business without sacrificing the urban environment provides lessons for other CEE cities By Gary Morrell With Hungary looking to integrate into the European Union, its capital, Budapest, has a new plan to urgently address the dilemma of encouraging economic development while improving the living environment and maintaining the unique, historical character of the city. The capital city, with a population of roughly 2 million, is one of the largest in Central and Eastern Europe. The conflicts and compromises Budapest addresses in attempting to be commercially competitive, sustainable and liveable provide lessons for local officials throughout the region. Budapest's current zoning policy is based on a city hall working group's study, which was released a year ago and defines areas for commercial, industrial, residential redevelopment and green areas. The new policy also addresses transportation, construction regulations and utilisation of space along the Danube River. Erzsebet Beliczay of the Hungarian Traffic Club, an environmental group, argues that the zoning plan does not pay enough heed to environmental considerations. She says that the policy, if it is to be effective, should provide a "prescription for local municipalities to give environmental impact in the controlling of noise, air pollution and parking regulations." Although the city's plan is based on a current rate of 4.5-5 percent annual economic growth, Beliczay said that rate is not sustainable. She noted that traffic congestion is already serious, and said that, without major improvements in transport, Budapest is already too built up to grow much further. Transport is becoming even more important as the city experiences the phenomenon of urban sprawl. While commuting was unusual in the recent past, Budapest estimates that 500,000 people now live outside the city and commute to work there everyday. And within the city, it is the outlying areas that are being developed. The city anticipates dynamic commercial growth in Obuda and Ujpest, in the north of the city, where a there must be a balance between existing housing conglomerations. In the historic central districts of Pest the study calls for the renovation of the mixture of residential and commercial buildings and a solution to serious road congestion. Budapest Mayor Gabor Demszky favours banning cars from some of the main streets to the south of the centre and creating walking areas. Further south, commercial development of the 11th and 9th districts is anticipated, and proper utilisation of the former industrial areas on the banks of the Danube is stressed. The south of the city will be earmarked for industrial purposes. Demszky says Budapest must be a "liveable World City." This means staying competitive with other EU cities, to attract foreign investment, while maintaining a liveable environment for inhabitants and visitors. Preservation a consideration In seeking to become a regional centre, Warsaw has developed a central business district, consisting of skyscrapers, which resembles Chicago or Frankfurt. However development programmes for Budapest are limited by the need to preserve the unique, urban turn-of-the-century atmosphere in the city centre. Unlike Warsaw, many historic areas of Budapest survived the destruction of World War II, so most construction and renovations downtown need special approval. This desire for historic preservation is behind restrictions on the height of buildings in central Budapest, to maintain the views of historical buildings and the surrounding hills. The highest building, at a mere 15 floors, is the Bellevue Plaza, built on the shell of a former office block so as not to transgress current planning regulations. Victor Orth of the property division of Arthur Anderson argues that this regulation is in fact detrimental to the environment. "The authorities could introduce a floor-area-ratio system, where in exchange for moving back two metres, the developer would be allowed to build higher in compensation," he said. "This would allow a wider side-walk, better utilisation of space, more light and more green." Orth notes that Vienna has roughly 1.7 million people, but over 5 million square metres of class A and B office space. Budapest, on the other hand, has a larger population and just 1 million square metres of A and B office space, despite its robust economic growth. "Even if there are down cycles, which there are, and even if rents drop slightly, stabilise and then begin to rise as a result of the EU accession, there is clearly a market need for additional new class A office space in the future and even now. Construction must continue, lest the city fall behind," Orth said. A need for office space questioned But Beliczay of the Traffic Club argued that brown-field investments on old sites, instead of green-field construction, would help prevent the spread of urban sprawl. She cited a report on Budapest's poor transport that says real estate values could actually drop, and office buildings languish unoccupied, if the city proves to be a frustrating place in which to live and get around. A further hindrance to office construction, according to Beliczay, is the city's lack of green space. "In the central 5th, 6th, 7th and 8th districts of Budapest there is currently less than one square metre of green space per person, which is well below recommended health levels. This is in spite of the fact that Budapest covers a larger geographical area than most capitals." This large area, in combination with the economic force for development, creates a tendency toward urban sprawl and commuting. "The average citizen already uses more services and travels more," said the study. It notes a "need to confront the increasing problem of traffic congestion and the related problems of noise and air pollution." City hall wants more underground parking areas in the city and improvements in the public transport system. But parking lots are built one at a time, and are usually added into construction projects by private builders. Public transport projects generally require larger investments, predominantly of public money. The Traffic Club has said that short-sighted attempts to save public funds could create a long-term policy of encouraging the use of cars over public transport.

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