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Since joining the EU in 2004, Hungary has evolved into one of the wealthiest and most stable economies in central Europe. On a commercial level, 45 of the world’s 50 largest multi-national firms now have a presence there, principally in Budapest which they treat as their continental headquarters. An estimated 75,000 foreigners now live in the city with a further 25,000 living elsewhere in the country. |
Tourism is also bringing more visitors to Hungary, which boasts a rich culture, fantastic architecture and beautiful landscape. In the first half of 2005, the country saw a 17 per cent increase in tourism, and revenue generated from tourism is predicted to more than double over the next five years. The net result is a bullish property market. Most activity centres on Budapest, a city split into two parts – Buda and Pest – by the River Danube. In the last four years 25,000 foreigners have purchased real estate in Budapest, by far the largest group made up of British and Irish buyers. Savvy investors are targeting high-quality, city-centre apartments that are in demand from an influx of relocated expats and wealthy locals looking for modern – but affordable – accommodation. Demand is also fuelled by a third of all apartments in Budapest requiring renovation and a shortage of plots for development. The most popular districts amongst investors in the capital are 1, 2, 5, 6, 7, 8, 9 and 13.
Outside of Budapest, other areas to consider include the family resorts around Lake Balaton. With the Number 7 motorway being extended from Budapest to the south-west, this is greatly opening up this area. Thermal spa towns such as Zalakaros are already booming, but the smaller ones such as Bazakerettye and villages near Lake Balaton such as Kistolmacs and Gyekenyes will become increasingly popular.
What’s even more encouraging for current and future investors is Hungary’s insatiable appetite for ensuring its continuing economic growth Since Hungary threw off the shackles of Communism in 1989, early bird investors have benefited from unprecedented property price rises. According to the Hungarian Central Statistical Office there were increases of 63% across the country between 1999-2003, while in Budapest alone property rose by 60% during the same period, between 2003-05 this growth rate has since steadied to a very respectable 15-20% with rental income continuing to boast a minimum yield of 6% rising to around 15%.
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Hungary’s ‘sustainability factor’ comes down to the fact that its economy is underpinned by a diversity of wealth-creating sectors, mostly from EU-integrated trading partners, which will allow Hungary to continue on its path of ‘real convergence’ with richer EU countries.
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Already behind Hungary’s success lies the confidence of the boards of many of the world’s most powerful companies, including General Electric, Coca-Cola, Citibank, Ernst & Young, Siemens and IBM, among numerous other well-known international heavyweights.In the past decade, a myriad more blue chip firms have set up factories and headquarters here, lured by a combination of incentives. Low operating costs, low corporate tax, a well-educated population, a progressive government and an ideal central European location have all contributed to make Hungary one of the most appealing countries to do business. There is little doubt that Hungary’s capital city is still the best place for investors to take advantage of the country’s flourishing economy.
Budapest
is a thriving, lively city rich in culture and history that has become an established business centre. With flights from the UK as little as £18, low cost airlines such as Wizz Air and Easyjet have made it accessible and affordable for both businesses and tourists. Cutting edge riverside developments like Sun Palace on the flourishing Buda side of the city, and Marina Part in rapidly developing District 13, are two of Budapest’s most ambitious apartment complexes, built specifically to cater for the top end of the marketplace. Boasting views across the Danube, on-site fitness centres, pools, landscaped gardens and restaurants, as well as being within walking distance of the city centre, will ensure these developments become two of Budapest’s most prestigious addresses.
Mortgages for individuals are as readily available as mortgages in the UK, subject to the usual status requirements. Foreign buyers can choose to take out a mortgage in three currencies. A mortgage in euros is the most cost effective, at around 4.6% against an interest rate of 7-8% for Sterling and 12-13% for Hungarian Forints. A 70% Loan-to-Value mortgage on either the purchase price or the market value is currently standard on products that include Residential Purchase, Buy-to-Let, Refurbishment, Commercial and Re-Mortgages on unencumbered property. A new non-status loan of up to 50% has also emerged. Property investors have particularly liked Hungary’s organised and transparent legal system.
By: Shabina Sanad
GOWEALTHY.COM © 2006
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