| Investing in Budapest Small Timers, Big Profit |
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| - - - - - - - - - - - - - - - - - - - - - - - - - - Buying or Renting a Home in Hungary - - - - - - - - - - - - - - - - - - - - - - - - - - |
| international real estate investors, international real estate, real estate development, Hungary, Budapest, real estate, investment, market trends, real estate market, prices in Budapest |
| © 2008 Budapest-Propertyfinder.com | About us | Contact us |
| Disclaimer: the article serves merely information purposes. Due to its extent, it is neither an all round information nor shall it be qualified as legal advice. |
Multinational investors are not the only players in Budapest's multi-layered real estate
market. Hungarians have profited greatly by shrewdly buying and selling flats in the
capital over the past seven years.
So attractive are these opportunities even small-time investors from Ireland, Britain,
and Spain are buying in Budapest.
Originally, foreigners purchased apartments to cull rental income. But now many Irish
and Spanish investors are buying and renovating with an eye on moving to Budapest,
possibly after Hungary adopts the euro, about two years from now.
"There are more foreigners buying in Budapest with more and more money," said
Slavica Pilic, owner of the Budapest-based design and renovation company Gnostix.
"They are becoming more demanding as well. They are not just building investments,
they are building homes for the future."
Still bullish
Even though real estate prices have inflated dramatically since 1998, roughly when the
boom began, realtors say there are still opportunities.
According to Éva Bognár of Bognar & Partner, even high-priced areas like District 5
(whose riverside area is the priciest real estate in town) hold bargains for
discriminating buyers.
"It depends on the seller," said Bognár. "Some individual sellers will set a price they
think is fair, but it's beneath market value. And other people are careful about selling at
a competitive market price. Almost every sale is different."
market. Hungarians have profited greatly by shrewdly buying and selling flats in the
capital over the past seven years.
So attractive are these opportunities even small-time investors from Ireland, Britain,
and Spain are buying in Budapest.
Originally, foreigners purchased apartments to cull rental income. But now many Irish
and Spanish investors are buying and renovating with an eye on moving to Budapest,
possibly after Hungary adopts the euro, about two years from now.
"There are more foreigners buying in Budapest with more and more money," said
Slavica Pilic, owner of the Budapest-based design and renovation company Gnostix.
"They are becoming more demanding as well. They are not just building investments,
they are building homes for the future."
Still bullish
Even though real estate prices have inflated dramatically since 1998, roughly when the
boom began, realtors say there are still opportunities.
According to Éva Bognár of Bognar & Partner, even high-priced areas like District 5
(whose riverside area is the priciest real estate in town) hold bargains for
discriminating buyers.
"It depends on the seller," said Bognár. "Some individual sellers will set a price they
think is fair, but it's beneath market value. And other people are careful about selling at
a competitive market price. Almost every sale is different."
For this reason, Bognár says she is still
bullish on District 5 and Andrássy út.
Many developers see potential in the
riverside area of Buda. Indeed,
Habitat's Khazei sees District 11's
riverside area, now a veritable industrial
wasteland in south Buda, as a future
growth area.
Moreover, Khazei claims the entire
Danube riverside has yet
bullish on District 5 and Andrássy út.
Many developers see potential in the
riverside area of Buda. Indeed,
Habitat's Khazei sees District 11's
riverside area, now a veritable industrial
wasteland in south Buda, as a future
growth area.
Moreover, Khazei claims the entire
Danube riverside has yet
to be exploited to its full potential. "Budapest has a unique status," he said. "It is right on
the river. It's a major artery for both tourists and industrial traffic, but neither side of the
river is developed properly."
"You have pockets of development, but no continuation."
Other developers are gambling on housing styles rather than districts. GTC's Riverloft
development company is currently completing a massive project in District 13, which
will feature spacious loft apartments in refurbished factories.
the river. It's a major artery for both tourists and industrial traffic, but neither side of the
river is developed properly."
"You have pockets of development, but no continuation."
Other developers are gambling on housing styles rather than districts. GTC's Riverloft
development company is currently completing a massive project in District 13, which
will feature spacious loft apartments in refurbished factories.
According to GTC's Ingeborg Kistamas, GTC expects luxury lofts to become as popular
in Budapest as they have been in hip Manhattan areas like Tribeca and Soho.
Lastly, outside forces, like bank financing, are expected to change the sector's
dynamic, particularly among homeowners. Recently, OTP Bank and several others
implemented leasing systems that allow individuals to borrow money for real estate
acquisitions with a small amount down.
But right now, without proper mortgage insurance offered by banks, analysts say the
market could either expand or collapse if the leasing system takes hold. Expansion
will come if more and more Hungarians begin buying houses and apartments; and a
collapse could come if insurance-less leasers begin defaulting en masse. "This is a
danger," warns Khazei.
Clearly, Hungarian real estate is at a crossroads. But veteran players like Ballymore's
Coehlo believes that for a discriminating investor the risks are minimal:
"In my 20 years working in property, I've never seen prices drop.
The property sector always grows."
-Sources:
John Nadler, www.amcham.com and
Martin Padfield, www.hungaryproperty.net
in Budapest as they have been in hip Manhattan areas like Tribeca and Soho.
Lastly, outside forces, like bank financing, are expected to change the sector's
dynamic, particularly among homeowners. Recently, OTP Bank and several others
implemented leasing systems that allow individuals to borrow money for real estate
acquisitions with a small amount down.
But right now, without proper mortgage insurance offered by banks, analysts say the
market could either expand or collapse if the leasing system takes hold. Expansion
will come if more and more Hungarians begin buying houses and apartments; and a
collapse could come if insurance-less leasers begin defaulting en masse. "This is a
danger," warns Khazei.
Clearly, Hungarian real estate is at a crossroads. But veteran players like Ballymore's
Coehlo believes that for a discriminating investor the risks are minimal:
"In my 20 years working in property, I've never seen prices drop.
The property sector always grows."
-Sources:
John Nadler, www.amcham.com and
Martin Padfield, www.hungaryproperty.net
Variously referred to as "The Queen of the Danube", "The Pearl of the Danube" and the
"Paris of the East", Budapest is a thriving, lively city rich in culture, yet at the same time
looking forward enthusiastically to the future. Recently Budapest has become a "must
see" city for lovers of culture and party-goers alike. With flights from the UK from as little
as £18 it is accessible and affordable. The picture below tells the beauty of this city.
Budapest is at the same time vivacious and quiet, beautiful and business-minded,
grandiose, elegant, intimate - and very hospitable. The city is a harmony of fascinating
contrasts: ancient ruins bearing witness to its 2000-year past alongside modern
shopping malls; organ concerts and operettas; religious services and casinos.
Budapest is also famous as a spa city, with more than 120 springs yielding 50,000
cubic metres of thermal water daily for use in baths and thermal hotels. It is also a
hugely popular place for conventions, welcoming over 150 large-scale congresses and
conferences annually. But this is no backward-looking city. There is hardly a hint of its
recent communist past, and increasingly wealthy Hungarians have taken to market
economics with great ease. Most people above the age of 14 have mobile phones, and
satellite TV is the norm. A walk around the business districts 6 and 13 will reveal a
frenzy of activity with new shopping and leisure facilities, residential complexes and
improvements to the infrastructure happening all around.
A City People Want To Live In
It makes sense to buy property in places that have a sustainable reason for people to
want to come to live. Cities where companies can move to and offer their staff a great
lifestyle are going to attract more companies to move in. This creates demand for
property and so the cycle goes on. This is one of the secrets behind the inexorable rise
in London property prices in the last forty years – it is a magnet for people to move to. I
believe that Budapest is such a city.
Budapest has:
Perhaps the most revealing statistic is that just over 31 million people visited Hungary
as a tourist in 2000 (the trend is up) against a population of just over 10 million. And the
majority of these people go through Budapest. This confirmed my confidence that this
city is really on the global map.
Low Cost of Living
Budapest is still one of the cheapest cities in Europe – according to a study compiled
by the Economist Intelligence Unit. It has the lowest cost of living of any major
European city.
This is naturally reflected in property prices. Real Estate prices in Budapest are
currently 25-35% lower than in comparable European cities like Prague. With some
catching up to do, that’s good news for investors who enter early.
Capital Growth Already Underway
No investor always gets into markets at the bottom and out at the very top. The secret is
to get the timing right so you get a good run as the market goes up.
"Paris of the East", Budapest is a thriving, lively city rich in culture, yet at the same time
looking forward enthusiastically to the future. Recently Budapest has become a "must
see" city for lovers of culture and party-goers alike. With flights from the UK from as little
as £18 it is accessible and affordable. The picture below tells the beauty of this city.
Budapest is at the same time vivacious and quiet, beautiful and business-minded,
grandiose, elegant, intimate - and very hospitable. The city is a harmony of fascinating
contrasts: ancient ruins bearing witness to its 2000-year past alongside modern
shopping malls; organ concerts and operettas; religious services and casinos.
Budapest is also famous as a spa city, with more than 120 springs yielding 50,000
cubic metres of thermal water daily for use in baths and thermal hotels. It is also a
hugely popular place for conventions, welcoming over 150 large-scale congresses and
conferences annually. But this is no backward-looking city. There is hardly a hint of its
recent communist past, and increasingly wealthy Hungarians have taken to market
economics with great ease. Most people above the age of 14 have mobile phones, and
satellite TV is the norm. A walk around the business districts 6 and 13 will reveal a
frenzy of activity with new shopping and leisure facilities, residential complexes and
improvements to the infrastructure happening all around.
A City People Want To Live In
It makes sense to buy property in places that have a sustainable reason for people to
want to come to live. Cities where companies can move to and offer their staff a great
lifestyle are going to attract more companies to move in. This creates demand for
property and so the cycle goes on. This is one of the secrets behind the inexorable rise
in London property prices in the last forty years – it is a magnet for people to move to. I
believe that Budapest is such a city.
Budapest has:
- 237 monuments
- 223 museums and galleries
- 35 theatres
- 90 cinemas
- 2 opera houses
- 12 concert halls
Perhaps the most revealing statistic is that just over 31 million people visited Hungary
as a tourist in 2000 (the trend is up) against a population of just over 10 million. And the
majority of these people go through Budapest. This confirmed my confidence that this
city is really on the global map.
Low Cost of Living
Budapest is still one of the cheapest cities in Europe – according to a study compiled
by the Economist Intelligence Unit. It has the lowest cost of living of any major
European city.
This is naturally reflected in property prices. Real Estate prices in Budapest are
currently 25-35% lower than in comparable European cities like Prague. With some
catching up to do, that’s good news for investors who enter early.
Capital Growth Already Underway
No investor always gets into markets at the bottom and out at the very top. The secret is
to get the timing right so you get a good run as the market goes up.
