The Budapest municipality has vowed not to waive its pre-emption rights over a plot of land sold by the state to UAE investor Eagle Hills, which plans a €5bn real estate development on the site, Mayor Gergely Karacsony announced at a press conference on 22 January.

The state sold the plot to Eagle Hills for HUF51bn (€120mn) two days earlier, as part of the intergovernmental agreement signed in March 2024.

The liberal mayor claimed that the government is obstructing the city's right to purchase the 85-hectare site surrounding the Rakosrendezo train station in Budapest, located 4 km north of the iconic Heroes' Square.

While the land is owned by state railway company MAV, the city holds pre-emption rights due to an existing ownership stake in the site through a utility company.

This gives Budapest the first option to buy the property at the same price offered to the foreign investor, and Karacsony emphasised the city's commitment to upholding these rights.

Remarks by the city's liberal mayor came in response to comments by National Economy Minister. Marton Nagy said that the real estate could only be sold to a buyer designated by the UAEs, with the prior consent of the Hungarian government, under the 2024 intergovernmental agreement.

However, legal experts argue that pre-emption rights cannot be circumvented in this manner, and any legal challenge could potentially delay the sale process, hence the project for years.

Fidesz strongman Janos Lazar, Minister of Transport and Construction, cynically suggested that Budapest could exercise its pre-emption rights if it matched the UAE investor's offer. However, in his letter to the mayor, he referenced a €12bn figure instead of €5bn, raising questions about the actual scale of the investment Eagle Hills has committed to.

Dubbed "Mini-Dubai" before being rebranded as the "Grand Budapest" project, the development, led by Mohamed Alabbar – whose company also built the Burj Khalifa in Dubai – will include luxury apartments, office buildings, and potentially Europe’s tallest skyscraper, projected to stand between 250 and 500 metres tall.

Critics noted that by classifying the €5bn project as "national economic interest", the government granting the developer significant autonomy over what can be built on the site. Furthermore the state vowed to carry out  €800mn worth of infrastructure projects around the area. 

At Wednesday's press conference, Karacsony asserted the city would exercise its pre-emption rights to "prevent a harmful investment the government is trying to force onto Budapest residents," and reaffirmed plans to implement an earlier project, "Park City," which prioritises public spaces and amenities and affordable housing projects.

The local council is set to convene next week to decide whether to exercise its first right of purchase.

In related news, Valasz Online reported that a private equity fund linked to Prime Ministerial Advisor Arpad Habony and construction mogul Istvan Garancsi recently acquired part ownership of the contested site. This, in theory, grants them pre-emption rights to purchase the land. The ownership change occurred just days before the state finalised the sale to the UAE investor.