Buying property in Hungary – investors’ profiles
With real estate prices currently still lower than in other major cities across Europe, and with a long term stable market that proved himself over the decade, many foreign investors are focused on buying property in Hungary, despite of (or more accurately – because of) the steady increase in prices that came alongside the increase in demand.
According to recently published market data, buyers from non-EU countries, mainly from Russia and China, are looking to buy real estates in the more expensive and posh locations in Budapest. While many of them choose to make a quick investment – in which they arrive to Hungary, choose a property to buy, negotiate the price, sign the purchase agreement and leave the country, some investors who decide to reside in Budapest opt for buying the more higher-end, luxurious homes.
In the early 2000’s, the real estate market is Budapest was mainly dominated by German, English, Dutch, Israeli, Irish and Spanish buyers. With the beginning of 2014, as the affects of the global economical crisis dimmed, there have been some changes in the trend of buyers, and these days, the vast majority of foreign buyers come from Russia, China, Israel, the Ukraine, and the USA. While most purchases are made in Budapest, Russian investors also expand their property portfolio and buy properties also in the countryside areas.
Chinese nationals who are living in Budapest make up Central-Europe’s biggest Chinese settlement, and represent a growing demand for real estate. Most Chinese investors are interested in detached houses or large apartments, predominantly located in the more upscale districts – I, II, III and XII, and are mainly purchasing the more chic properties and mansions, with Jacuzzis and swimming pools, that are mainly located in the luxurious Rózsadomb neighborhood and are more suitable for larger families.
As always, district V and especially the Újlipótváros neighborhood are still a popular destination for investments, mainly by Chinese, Russian, Ukrainian and Belarus investors. Property prices in these areas are usually starting at around 50 million forints, but have a tendency to skyrocket when it comes to the more unique apartments found in this ultra-prime location.
Foreign investors demographics in Budapest in the second half of 2016
An interesting anecdote here is that some of the trends in the real-estate market in Hungary today are quite different than what it was just a couple of years ago. In the past, Chinese investors were mainly interested in cheaper properties located in districts VII, VIII, X. The reason was that they resold these properties quite quickly for much higher prices as the property appropriated over a short period of time.
Considering the close proximity of Budapest to other major capital cities, such as Vienna or Prague, foreign investors put their focus on buying properties in Budapest since investments in Hungary so far have proven to be well worth the money, especially when compared with other major capitals, such as the Austrian capital. Foreign investors buying a property in Hungary pay a fraction of the price they would have paid in Vienna, while bringing in many cases higher yields and a steeper property appreciation.
Statistical analysis of foreign investors demographics shows that buyers’ profiles vary substantially, from rich and experienced investors looking for real estate opportunities in central and eastern Europe, through expatiates or students living in Budapest that buy properties in which they will reside for a period of several years, to younger less experienced investors looking to gain some practice in the real estate market and find Hungary a fertile and stable ground for making their first real estate investment.
One of the main catalysts for this change is the Hungarian government’s bank bond scheme which was introduced in 2012. This program encourages non-EU citizens buying a property in Hungary to also purchase Hungarian bank bonds, valued at 300,000 Euros, allowing a short route for obtaining a permanent settlement permit in Hungary, which provides many benefits, such as a free travel to other countries of the Schengen zone, sponsored healthcare service or education services, and employment across Europe.