At certain agencies, selling more properties to foreigners than to Hungarians in a month was not at all uncommon. All in all, it can be useful to check who exactly comprise the group of foreign buyers, where do they come from, and what kind of real estate do they primarily look for in the Hungarian capital.
The rise in the real estate market’s tendencies usually starts with investment purchases, which is followed by the increased interest of wider masses. In the group of investors, foreign individuals can often be encountered, who mostly prefer estates with favourable locations or with a lot of traffic. This intent made the centre area of Budapest soar as well, where, from 2014 onwards, more and more Hungarian and foreign investors have been looking for flats to buy.
Both the decrease in prices after the years of the recession, the decrease of the purchasing power of Forint and the globally low base interests contributed to Hungarian real estate becoming popular amongst foreign investors. Despite the ongoing rise in prices caused by growing demands, many foreigners are still looking for properties to buy in Budapest. 2/3 of buyers originating outside the EU looked for a property to buy in Budapest, especially in downtown areas. Half of the non-EU citizens who has shown interest in Budapest ended up purchasing a flat in districts V., VI., VII. or VIII.
Investors from the East
The fact that statistics only include non-EU citizens makes comparisons more difficult, so there’s no exact data available about those who live in the European Union. According to certain estimates, there are plenty of them as well, but without a doubt, the largest group on the hunt for new properties was that of Chinese people. They were closely followed by Russian and Ukrainian buyers, some of whom were also present as investors, while there were also examples of private individuals purchasing 10-12 flats at once.
The past year also saw developments where the investor was only willing to advertise his properties in the Russian language. In addition, plenty of local investors begin their development projects in the city centre with foreign enquirers already in mind; an appropriate example for this is Elizabeth Residence, a residential complex with 132 flats pertaining to the portfolio of Biggeorge Property City Collection, a development carried out on a vacant lot under Dob street 34. The developer is already advertising and marketing a portion of the flats as investment and rental properties, where the future occupier could lease them for a fixed rental rate and with a guaranteed return rate of 4.3 – 7%, or in a shared construction, could jointly put them up for lease with the owner, making up to a possible 12% return.
New groups of buyers from the West
Besides Chinese, Russian and Ukrainian citizens, other European participants are also present on the market. While before the recession, mostly Spanish and Irish buyers and investors were active, who, after 2009, left the market entirely. Since then, mostly Austrian, German, English, Dutch and Scandinavian enquirers are present. Italians should also be mentioned, who have lately started to look for a bigger number of investment flats and properties in the centre of Budapest than before. Outside the EU, Israeli and American participants are present on the market, who are equally active as developers and buyers. Although in smaller numbers, but Middle Eastern and Southeast Asian investors are also showing a growing interest in Hungarian real estate properties.
Hungary is more and more popular
2015 saw almost double the amount of foreign buyers come to the country compared to 2014, which statistic also demonstrates the popularity of the Hungarian real estate market. The number of Chinese buyers has grown the most rapidly, as they purchased twice as many properties as in the year before. This, in theory, could be explained by the elevated numbers of Residency Government Bonds issued, but those don’t require the possession of personally owned housing.
According to statistics, 2% of the total real estate transactions could have been finalised with the participation of foreigners, which, adding the number of EU citizens involved, could reach up to 5%. In certain downtown districts, even 10-20% of the properties sold could be bought by foreigners. It’s common for them to buy properties through Hungarian companies, so that their activity could remain hidden from international inspections.
A „hidden” group of investors
It’s worth mentioning the group of Hungarians living abroad, many of whom buy real estate as a form of investment, but oftentimes they’re not included in statistics. The other group of them take a temporary job abroad and plan to return to their native country in the foreseeable future. A separate group is that of foreigners who work in Hungary, who prefer housing of higher standards, compared to foreign investors who in turn generally look for flats with two or three bedrooms, in favourable and popular areas.
(Source: www.portfolio.hu)
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