Hungary and Budapest - Property market overview
 

Key points to note:

    ˇ         Stable economy: safe investment destination, Member of the EU.  Predicted to join the single Currency by 2010.

    ˇ         Capital appreciation:  Hungary and particularly the Budapest property market took off earlier than many of it’s neighbours. However, fuelled by strong local demand some areas have risen at 15% per annum over the last 3 years.

    ˇ          Rental yields: In 2004 yields were running between 8 and 10% per annum.

    ˇ         Good growth of tourism:  Tourism figures to rise year on year and this is expected to continue.

ˇ         Budapest Focus:  70% of the total foreign direct investment (FDI)  injected into Hungary is allocated to Budapest.  Budapest property continues to attract significant  attention.

  • Summary comments:

    Hungary has undergone a rapid transformation. The country has gained access to the EU and is predicted that by 2010 will have joined the single currency. Hungary has a become hot spot for foreign investment as it has an attractive and stable economy.   There are 30,000 firms with foreign capital operating in the country. In some areas capital appreciation has risen at 15% per annum over the last three years.  Hungary has been attracting vast numbers of tourist’s and the numbers are expected to grow year on year.  A stable country with growing local demand that will support a strong property market. 

     



    Detailed information - Hungary

     

    It is our goal to develop a range of investment opportunities for people who are looking at buying investment property.  Please find below information that we think is useful property investment advice.  The information ranges from web links to interesting web sites, news articles and property reports that we have found.  We do not necessarily agree with all the comments made. 

 

  • Country Information:

     

Map of Hungary

 

 

Budapest, capital of Hungary and one of the major cities of Central Europe is a city of tradition and dynamism.

 

Points to note about Budapest are:

ˇ          Budapest is situated in the center of Europe, at the crossroads of East and West, North and South.

ˇ          Budapest is the capital and by far the largest city of Hungary, a member of the European Union since May 1, 2004.

ˇ          Budapest is divided by the River Danube into two distinct parts: the hilly Buda on the West and the flat, metropolitan Pest on the Eastern bank of the river.

ˇ          The city is inhabited by nearly 2 million people, comprising one fifth of population of Hungary.

ˇ          70% of the total foreign direct investment (FDI)  injected into Hungary is allocated to Budapest.

ˇ          Budapest attracts an increasing number of tourists each year, offering a rich cultural heritage, scenic landscape, and a uniquely Central European architecture coupled with a wide selection of historic spas and a reviving café culture,

ˇ          Hungary's capital deserves its reputation as the 'Paris of Eastern Europe'.

 

  • Economic development

In Hungary almost two thirds of the GDP is produced by the service sector. Within this, financial, real estate, renting and business activities as well as public services (administration, education, health, social work) play a prominent role. Industry produces about one fourth of the GDP. Agriculture and construction have a relatively low share.  

 

Points to note:

 

ˇ          GDP (2004): $101.5 billion.

ˇ          Annual growth rate (2004): 4%

ˇ          Natural resources: bauxite, coal, natural gas, fertile soils, arable land.
Agriculture/forestry (2004, 4% of
GDP): Products--meat, corn, wheat, sunflower seeds, potatoes, sugar beets, vegetables, fruits.

ˇ          Industry and construction (2004, 32% of GDP): Types--machinery, vehicles, chemicals, precision and measuring equipment, computer products, medical instruments, pharmaceuticals.

ˇ          Trade (2004): Exports ($58.2 billion)--machinery, vehicles, food, beverages, tobacco, crude materials, manufactured goods, fuels and electric energy. Imports ($63.2 billion)--machinery, vehicles, manufactured goods, fuels and electric energy, food, beverages, and tobacco.

ˇ          Major markets--EU (Germany, Austria, Italy), CEFTA, CIS, U.S. Major suppliers--EU (Germany, Austria, Italy, France), CIS, CEFTA, U.S.

 

ˇ         Property Market

 

An early riser in the eastern Bloc: Foreign investment in Budapest real estate took off before most other eastern bloc countries, prices are increasing again, underpinned by strong domestic demand.

 

Hungary property prices still compare favourably with other European  capitals: As a guide average apartment prices in Budapest are circa €1,300 per square metre. This compares to Vienna, only 2 hours drive from Budapest, where property prices can be 3 to 4 times more expensive.

 

High volume of commerical build leading to lower rentals:  Offices and space for commercial purposes were in high demand in the beginning of the 90s as more and more multinational companies arrived in the country, driving up rents to $40 US per sq.meter or even higher. With the new office and retail construction (in Budapest alone it accounts for more than 400,000 sq.meters of offices and more than 300,000 sq.meters of retail space in the 90s) rents and prices went down reaching more realistic levels