Last Updated on April 4, 2017
Steady improvement in the economy combined with revived confidence amongst buyers has ignited a boom in the real estate market of Hungary’s capital city of Budapest. While the recent refugee crisis may have dominated headlines, there are clear indications that the city’s tourism and property market have emerged unscathed from the controversies.
Budapest’s real estate market witnessed a 50% reduction in transactions between 2008 and 2013 due to the global recession. Lack of buyer confidence led to big-ticked purchase decisions being deferred indefinitely. The economic recovery has resulted in renewed buyer interest with a 40% increase in real estate transactions for the first six months of 2015 as compared to the first half of 2014.
The combination of low interest rates, high rental yields, and government subsidies has led to an increase in number of people purchase real estate as a rental investment. Despite a 20% rise in property prices in Budapest over the past year, the city continues to remain an attractive investment option, especially for foreign buyers.
With the tourism sector booming, foreign investors seek to rent out their properties to tourists and other visitors. A stable market that offers attractive and reliable returns, Budapest is a preferred destination for the risk-averse international real estate investor.
Further, there is another class of investors that are attracted to Budapest’s property market—investment immigrants. Hungary’s fast-track residence program offers permanent residence within six months instead of the mandatory five years to individuals investing at least €250,000 in government bonds. Hungarian residence entitles the investor to visa-free travel to all EU countries as well as other developed nations.
There is steady demand for this program amongst Chinese investors who, in addition to bond purchases, seek attractive real estate investment opportunities in the country. Further, Budapest is an attractive destination for wealthy pensioners seeking a quiet and relaxed retired life without going too far from modern conveniences and amenities.
The purchase process is a simple one requiring buyers to seek authorization from the public administration office before finalizing the purchase. Further, the purchase contract requires the assistance of a solicitor for a fee of around 1-2% of the purchase price.
Demand from foreign investors is so high that local purchasers and investors are being crowded out due significantly high valuations. Today, an investor shelling out €250,000 can purchase a 100 sq. meter penthouse while those with a budget of €750,000 can buy a 600 sq. meter home with a swimming pool. Wealthy millionaires can buy a six-bedroom villa with a pool and spa in the hills overlooking Buda for a price tag of €2.5 million.
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