The Budapest luxury real estate market in 2016

The Hungarian real estate market has witnessed significant and steady growth alongside an increase in the number of foreign investors. Starting in 2014 and continuing steadily into 2016, real estate prices have risen exponentially, with luxury real estate properties in Budapest becoming a more popular niche market with many foreign investors.

During the first quarter of 2016, the total turnover in the market was more than 10% higher compared to the corresponding period in 2015. A large percentage of the investors in Budapest, Hungary’s capital, are foreign buyers representing about 40% of the buyers’ market. From these 40%, more than half are investors from Russia or china, and the rest are mostly buyers from Israel, Ukraine, Egypt, and the USA.

Main reasons to invest in Budapest luxury real estate

As covered in the article reviewing Budapest real estate in 2016, the market was severely affected by the global economic crisis and went into a stalemate which lasted for several years. Starting in early 2014, and continuing to this day, the property market started its swift recovery period and it is now booming. The good news for buyers are that although prices are currently on the rise, and the forecast by all analysts is that prices will continue to soar, their “starting point” was set objectively during the period in which the market was most affected by the global economic crisis, so they are still substantially lower than prices in other neighbouring capitals, while expected to continue rising. This crucial fact is one of the main reasons foreign investors are looking favourably at the Budapest luxury real estate market (as well as at the more standard properties), as there’s no argument that the real estate market in Budapest offers great value when compared with other capitals in both Central and Eastern Europe, such as Prague, Warsaw, Vien, or Bratislava, in which property prices are substantially higher, with not much more room to grow, while rentals are pretty much the same or lower, thus investments in other cities in the region offer lower yield and a more risky appreciation forecast.

 

Another reason foreign investors focus their sights on Budapest is the favourable exchange rate, which makes buying a property in Budapest cheaper. In the second quarter of 2016, the avg. exchange rate was:

  • €1 = 315HUF
  • $1 = 280HUF

So the strength of foreign currency when investing in Hungarian real estate if very dominant and gives high value to buyers bringing money from the abroad.

The third main reason which attracts investors to buy properties in Budapest is that it’s objectively considered as one of the world’s most beautiful cities. This is indicated by the numerous UNESCO sights,  numerous international students attending it’s universities, and the ever growing number of tourists and expatriates which pass through – or choose to live in it. The affect of the city’s popularity on the real estate market is that with more and more people looking to work/study/visit/live in Budapest, the demand for properties for rent is constantly growing, which in turn causes rent prices to rise, brining higher returns to landlords. In addition, this positively affects the dreaded vacant period, which in Budapest in most cases is very small to non-existent, since there’s always a demand for apartments to let. In recent years, the constant demand for apartments to let has expanded and now it’s showing a steady increase by senior international companies’ managers, diplomats, rich businessmen and women, wealthy expatriates, and even famous movie stars for renting luxury real estate in Budapest, whether in the more central parts of the city in Pest, or in the more peaceful and luxurious parts located across the river, along the leafy hills of Buda.

which locations are investors interested in?

Budapest has 23 districts which are divided on both sides of the Danube river. Each one with it’s own characteristics and unique advantages. The prices of properties for sale across the districts vary dramatically. It’s important to remember that since the districts in some cases merge into each other and are only differentiated by a house number, it’s advisable to keep an eye on opportunities which are located in the vicinity of these borders, as although the surroundings and amenities are the same, the price per sqm may even be 50% lower.

Some of the districts in Budapest are more popular with students, young professionals and Hungarians moving to Budapest that are looking for a more cheaper accommodation solution. So for investors interested in purchasing luxury real estate in Budapest, and that are aiming to attract afterwards premium tenants  looking for higher class accommodation and that can pay the higher rent levels, it’s important to understand in which district to invest, and then – in which part of the district, as the districts themselves have an inner division which affects both the sale and the rent prices.

Generally speaking, the heart of the city, district 5, has some of the most prime locations in Budapest, and property prices in this district might even reach in some cases to €4000 per sqm. The VI district is quite popular with diplomatic staff, since many embassies reside along Andrassy avenue. And Buda has some very nice Villas that are popular with senior management figures with families who reside in Budapest. (There’s also an american school in the area, which is another factor in making this part of the city more popular with families of expatriates). Below you will find listed the districts which are more popular for luxury real estate investments in Budapest. You can find more comprehensive data about the various areas in the article about districts in Budapest, which covers also districts which are not mainly aimed at the luxury niche. (such as district 8, which has several hidden gems for investors looking for long term appreciation of the property, but is not suitable for investors looking for a short term yield or building a portfolio of luxury assets in Budapest).

Buda side:

Buda is the western segment of Budapest, located on the west bank of the Danube, it’s known for it’s rich historical landmarks, leafy green areas, hillside topography, and some of the more luxurious estates and villas.

 

District 1

The two main areas of the 1st district: Buda Castle and Víziváros, are part of Unesco World Heritage and home to numerous sights, monuments and museums, as well as luxury estates, high standard apartments and villas situated in prestigious neighbourhoods with an historic atmosphere.

 

District 2

The 2nd district of Budapest is the more upscale villas area of the Hungarian capital, due to its great location (it is easily accessible to the city center while offering a more relaxed surroudnings) and beautiful green parks. The more prestigious parts of the district are Rózsadomb, Szemlőhegy, Felhévíz and Rézmál, which also offer luxury accommodation solution for  many world renowned Hollywood movie stars spending months in Budapest while on location for filming.

 

District 11 (Újbuda)

District 11 is one of the most diverse areas of the city, as it also one of the biggest areas in Budapest. However, plenty of amazing sights, for instance the famous Gellért Spa and Gellért Hill are located here.

 

District 12 

District 12 in Budapest is one the more peaceful, green, and luxurious areas of the city, and home to many of its most richest people. This part of Budapest is filled with luscious green hills, which are ideal for a weekend hiking trip and a break from the busy week. With regards to properties, district 12 in Budapest is known for it’s grandeur villas, mansions and up-scale private homes.


Pest side:

Pest is the eastern, flatten part of Budapest, and the beating heart of the country. Within its borders reside the Hungarian Parliament, Opera house, famous squares and avenues.

 

District 5

Even though the 5th district of Budapest is one of the smallest of the 23 districts located in the city, it is considered to be the heart of the Hungarian capital.  Luxury apartments in this district are situated mostly near the Hungarian Parliament (situated at Lajos Kossuth square), around St. Stephen’s Basilica, and along the Fashion street (Vaci utca).

 

District 6

Budapest luxury real estate in district VI are mostly found along the famous Andrássy Avenue, dotted with magnificent neo-renaissance palaces and elegant villas that were built in the 19th century and the early 1900s, and are part of the World Heritage Sites. There are plenty of embassies located in the 6th district near Hero’s square, which makes it popular with senior embassies staff, giving this area its unofficial name: „Diplomats quarter”.

 

District 7

District 7 is one of the smallest districts of Budapest. This inner part of the city was the historic Jewish quarter, nowadays, the area is famous for its cultural atmosphere, many tourist attractions, and its vivid urban night life venues. Property investors can find here buy-to-let type of investments, as well as prestigious luxury apartments in the more central parts along Kiraly utca and near Deak quare.

 

District 13

District 13 is located in the Pest side of the Danube. Újlipótvásor is the most prestigious neighbourhood in this district and due to its mostly Bauhaus style architecture, it is highly popular with real estate investors looking for a more solid investment.

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