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In the land of the Magyars

01.05.2008
Author: Laura LETHEM
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The charm of Central Europe inherent in Hungary, supplemented by relatively low real estate prices, the splendor of Budapest architecture combined with a choice between the classic and the modern, and resort areas with their spectacular scenery are readily available thanks to a lull in the market. All this, of course, should be used.
When in 2004 Hungary joined the European Union, it experienced a huge increase in interest from foreigners. The number of tourists from Europe has grown dramatically thanks to the opening of budget airlines, and soon the first buyers of real estate appeared here, making a purchase for the purpose of subsequent rental. Budapest, an elegant city with boulevards of the early XX century and the embankments of the Danube, was predicted to be as popular among foreign investors as Prague, the capital of the Czech Republic.

Bad and good news
Indeed, at first everything was exactly like this: both inexpensive real estate objects throughout the city and apartments in a classic style, for which Budapest is famous, were in demand. As a result, the increase in real estate prices in some areas ranged from 10 to 50%. However, over the past two years, the Hungarian economy has experienced many problems, and hopes for its stability and growth have not been fulfilled. Thus, the unemployment rate was high, and the exchange rate of the Hungarian currency, the forint, on the contrary, was quite low until recently.
However, for investors, this short economic downturn also had positive consequences: thanks to him, the cost of living and real estate prices are still low. Many apartments, even in new complexes, are actually not much more expensive than a few years ago, and you can buy beautiful real estate in good areas of one of the European capitals on very favorable terms.
Realtors note stabilization and slow growth in the real estate sector, which is considered more stable than in previous years. According to reports, real estate in the central districts of Budapest and its suburbs is still selling well, as the value for money in this area is very attractive for investors buying real estate for rent for rent. Although there has not been a sharp economic upswing here, as in other former socialist camp states, this pays off by being protected from major downturns or market corrections.

In search of classics
Budapest is divided into 23 districts. The most popular are the 5th and 6th, where the famous city boulevards are located, business and financial centers, most embassies are located, and the architecture of the early XX century is distinguished by special elegance. Real estate in these areas is in the greatest demand among foreigners.
"There are a lot of shops, bars and good restaurants in the 5th and 6th districts," says Rebecca Joy from Aquavista real estate agency. "Opera and Parliament are also located here. The local buildings are a typical example of classical architecture, with high ceilings, double doors and elegant stucco. This is usually what foreign buyers are looking for."
You should expect a price of about $120,000 for a modest one-bedroom apartment and at least $180,000 for a spacious two-bedroom apartment in a good neighborhood. Cheaper options are not so good from the point of view of architecture or require repair. It is necessary to make efforts to find an offer for sale after reconstruction – most of these options were sold out as soon as Hungary announced its accession to the EU, and no longer changed hands.
However, if you search, you can find such offers – for example, an exquisite one-bedroom apartment for $ 130,000 and a spacious but not modern three-bedroom apartment for $ 200,000.

New wave
Budapest also boasts several luxurious, fashionable complexes in the spirit of London's Docklands district. Locals, especially young people, prefer new facilities, and, according to Richard Lill from the Arena Estates agency, foreigners are increasingly interested in real estate in new areas, hoping to rent it out. "The developing 8th, 9th and 13th districts are becoming more and more attractive now, where new government buildings are being built and infrastructure is rapidly improving," he says.
The existing prices for off-plan objects, that is, at the initial stage of construction, range from $75,000 for a studio apartment to $110,000 for a two-bedroom apartment in a nice apartment building in the 13th district near the new government offices.
In Budapest, rental income averages about 6% per year of the value of real estate, but in prestigious areas it can reach 8-10%, according to local experts.

Districts-quarters
Popular metropolitan suburbs with good communication with the business districts of Budapest are also being built up. Thus, Hollingworth and Associates is putting up for sale several new residential complexes. In terms of design, they may seem quite standard compared to more fashionable areas, but they will also cost literally half the price. Perhaps this option is the most profitable in terms of renting.
The representative of the company, Carolyn Hollingworth, claims that the suburbs of Budapest have great prospects: "When the highways are completed, access to the city center will become much easier, which will increase demand and lead to a rise in prices. The quiet 16th, 18th, and 21st districts are full of affordable modern housing and are close enough - daily commuting will be convenient and inexpensive."
For example, apartments in the Holmi Residence complex offered by Hollingworth and Associates cost from $76,000 and are located in the 18th district, near the airport and the Holmi Forest - one of those that the government predicts will grow. The average income from renting out housing, according to the company's estimates, will be about 6% of the value of real estate per year. Completion of construction is planned for 2009. The company offers a similar project Ibiza Gardens in the suburb of Chapel – the 21st district, previously considered industrial, but, like the London Docklands, turned into residential quarters overlooking the river. One–bedroom apartments here cost about $90,000, with two - $120,000.
Another direction is the student quarter in the 7th district and the 9th district, another suburb where numerous real estate renovation projects are deployed. "The Irish are now buying property in the 9th district," says Rebecca Joy. "And the places that interest them often become trending."

Expanding horizons
In Hungary, as in any country with an emerging economy, it is necessary to consider all alternatives. You may have never heard of Gyor, but it is a city with a history and interesting offers for investors.
The bustling university and industrial Gyor is becoming an increasingly important business center. It is conveniently located in the north-western corner of Hungary, near Austria and Slovakia, and has excellent road connections with Budapest. It is planned to build the largest residential complex in the country (about 6000 houses) Varosret. The aim of the project is to attract qualified workers and well–off students to the region. If you want to rent out real estate or are looking for an object for long-term investment, Dream Homes Worldwide offers you new apartments for just $60,000.

Hungarian Sea
Those whose goal is a small and inexpensive holiday home should definitely pay attention to the surroundings of Balaton – the largest freshwater lake in Central Europe. There is a great opportunity to live right by the water, go sailing, swim and walk in the surrounding forests for just $60,000. You can buy a house in the village for $20,000, but it will be "a little better than a hut." If you need a building in the best condition, count on prices from $40,000 for a small two-bedroom country house requiring minor repairs, and up to $200,000 for a solid building on the very shore.
"The Balaton market is still undeveloped, so there are a lot of profitable offers here," says Rebecca Joy. So, a three-bedroom mansion 700 m from the southwestern shore of the lake is for sale for just $170,000. A spacious four-bedroom house on the north shore costs $200,000. She adds that Lake Balaton is no less beautiful than the Italian lakes, but it has one important advantage: you will not be able to find anything on Lake Como at the same price.

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