Why Foreign Property Investors Still Love Budapest (x)
Hungary has world-class architecture, stunning buildings, with countless prime quality real estate developments in progress; corporation tax is low as is the cost of labour, the country is one of the EU’s few low-tax destinations and foreign investors have taken notice. The Financial Times considered the year 2014 as having been a turning point for Hungary’s property market. Strong macroeconomic performance, combined with loose monetary policy restrictions and a greater risk tolerance from investors contributed to lifting the housing industry out of its financial crisis-era stagnation. The Telegraph - based on the findings of the Global Property Guide - ranked Hungary among Europe's top 20 places to invest in property. In addition, Budapest is at the forefront of other lists, too. It ranked as the 12th of 150 cities listed in Knight Frank’s Q1 Global Residential Property Index, and it is among the most attractive investment cities according to CBRE’s 2016 EMEA Investor Intentions Survey.
"Budapest remains a highly attractive investment location. International buyers are active on the market, and at an annual return of around 7% they will continue to remain interested" - summarizes András Cornides, Investment Consultant of Tower International Ltd, a company offering real estate services and residential property management in Budapest for foreign investors. New Waves of Foreign Investors Inward-bound direct investment by foreign non-residents totalled a staggering €1.16 billion in 2015, according to figures published by the National Bank of Hungary this year. Compared to last year, investor interest by non-EU citizens has largely risen, growing by 50%. European investors still play a crucial role; whilst German institutional investors have become more active, American venture investors also carry increasingly significant weight.
“Before the financial crisis we mostly had waves of Irish, British and Spanish buyers. In recent years we still have EU investors but now there is also a significant amount of non-EU buyers that have emerged from the Ukraine, Russia, Middle East, and the Far East. For many of these buyers investment in Hungary also means easier access to the EU"- explains Cornides. Preferred Investment Models In Q1, half of the foreign transactions was concentrated mainly on 60-80 sq. m apartments located in central Pest. The price of a decent apartment there starts from US$150,000 before renovation, which doesn't add significant cost due to cheaply available good quality labour. "Many investors buy to rent for long term; their target audience are international expats, university students and local Hungarians. Another investment possibility is to buy cheap, renovate and rent the unit out, or alternatively offer it for resale for profit. As prices have been steadily increasing, some investors have also been buying property in Budapest with the aim of reselling it in a relatively short term with a mark-up" - points out the property consultant.
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