Property investment in Budapest

Property investments in Hungary, and particularly Budapest, have been quite popular among many foreign investors for many years. By itself, this fact alone is a perfect indicator for the stability of the Hungarian real estate market when compared to other European markets, and also for the business potentiality that the Hungarian capital offers global investors who choose to invest in the city. The main reasons which makes Budapest this popular in real estate investments includes: availability of international universities, its strategic location, that is, in the heart of Europe, its tourist attraction sceneries, low cost of living, easy processes of owning properties alongside an active encouragement from the government through incentives, as well as the constant appreciation of property prices.

Now, from a statistical viewpoint, the property rental market in Budapest is hugely active, which presents the investors with both short and long term rental benefits. In the last couple of years, there has been a steady and steep increase in property values, especially in the regenerated areas in the city, which in turn led to extremely high profits for property owners. A major factor that has contributed to this increase is the limited number of available rental properties in Budapest, which is also attributed to the small sizes of the city’s most central areas. Due to this, you will find that in the most sought-after areas of the city, there are no new constructions planned, resulting to a situation whereby, there is a high demand for rental properties in the center of the city on one side and a limited supply of the same on the other.
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Being centrally located, the Hungarian capital, Budapest, is a lively cultural and business center and one of the largest cities in Europe and is occasionally referred to as the ‘Paris of Eastern Europe’, due to its extraordinary sights. Property prices in Budapest have increased over the last couple of years, as the country is trying to establish itself again from the global financial crisis that began in 2008. During this period, the city suffered from low-interest rates, lack of incentives to investors, both local and foreign, and also from low property supplies, which in turn soared the prices across the city. But the market has seen prices increment of around 20% since then and also promises a brighter future for property investors.

In all honesty, investing in the property market in Budapest has proven an intelligent decision to many investors, since it balances between low risk, stability and high yield. Foreign investors who invested in the real estate market in Budapest after the crisis in 2008 are today seeing a significant appreciation of property prices, which to them, might just be a bonus considering the fact that they rented their property the entire time during that period, since the rental market in Hungary, Budapest in particular, wasn’t affected by the micro effects that much. As well, on a regional collation, Budapest can be compared to cities such as Prague and Warsaw where the prices of properties are substantially higher. Therefore, when you look at it from the appreciation perspective, purchasing a property in Budapest is the best decision as it will bring you much higher returns when you sell it. Moreover, contrary to the other regions’ governments, the Hungarian government blocked the country’s borders during the most recent immigration crisis, thus guaranteeing a higher level of security and also a homogenized population, which are all favorable to property investors.

The other benefit is the presence of some of Europe’s most famous universities in the city, where foreign students attend to gain advanced degrees in areas such as veterinary, engineering, medicine, psychology, business management and many more. These professions take years to be completed and based on the country’s inflation, the tuition fees have increased in recent years, and so are the rental prices. This has led to more and more students buying properties in the city during their 3rd or 4th year into their degrees, which has enabled them to save on rental charges, finance their academic tuition, and most importantly, own a property in Budapest after they complete their studies. By them owning some property ensures the growth of the real estate sector in Budapest and Hungary in general, and the investors will have many clients to sell their property to. What’s more, from a risk management perspective, property investments in Budapest is a low-risk opportunity due to the massive economic growth experienced in the country. 
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On the downside, there are a few barriers to property investment in Budapest, and especially for new investors. They include:

• Difficulties in understanding the market – Appreciation of the property value, the expected yield and the rental opportunities are all positive indicators in the real estate market, as long as the property is strategically located. But, the main issue is – knowing where to buy the property and also foreseeing potential market changes, and as you know, different locations will have different yields. This may be a challenge to some investors as they might not be able to select the most suitable location to own some properties. Therefore, to make the right decision, you should consider involving a local real estate company who will help you identify your ideal locations. 
• Maintenance costs – As you may also know, properties may have some structural problems which require to be fixed every now and then. In Budapest, the most common and expensive problems are associated with the heating systems which is why you should always ensure that you inspect the system before buying the property. 
• The time period before sale – In Hungary, if you want to avoid paying higher taxes when selling a property, it is advisable to hold it for five years before making the sale, which may be too long to some investors.

So, in conclusion, we can say with the highest degree of certainty that buying a property in Budapest is the best investment move you will ever make as an investor. The property market in this city is at its best as the number of expatriates, tourists, students, and visitors who are coming to this city have risen in recent years. This has, therefore, increased the number of investors buying properties in Budapest, which makes the city the ideal place to invest in. As a matter of fact, the city is growing and pretty soon, everybody will want to own some property in it, and those who have moved the first and already have bought some properties will be the happiest and the luckiest people in the country.
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