Hungarian Property Investments

Major Investment Opportunites for Residential and Commercial Property

Buying Property for Investment in Hungary

Property prices in Budapest over the last year surged by 15-20%, and in some districts prices went up by as much as 30%.
Yields of 6-8% are being achieved. Real estate prices in Budapest are currently 25-35% lower than in comparable European cities. Properties in the most expensive areas of Budapest are as much as 3 times cheaper than the average prices of similar properties around Europe. Expectations are that property prices in Hungary will continue to rise at a steady 15-20% annually. There are a number of key drivers behind these expectations:

Foreign Investment

Hungary has attracted $25 billion in foreign investment in the post-communist era. In the whole of Eastern Europe, only the Czech Republic and Poland attract more investment from abroad. Poland has less than double the foreign investment, yet nearly four times the population. Thus, per head, Hungary is second only to the Czech Republic in this area.

Hungary has gained the confidence of some of the world’s largest companies: General Electric, Coca-Cola, Citibank, Ernst & Young and IBM have all invested in Hungary. In fact, foreign Investors have established around 30,000 companies in Hungary since 1990. Property prices in Budapest will reflect this new investment.

Economic Growth

Economic growth in Hungary has been strong since 1989 and continues to be stable and very positive – notching up 3-4%
annual growth rates from 2001 while traditional EU countries have struggled to manage 1%.
Industrial production is up almost 8% on a year ago.

Plans are in place for Hungary to opt into the Euro currency by 2010 ensuring the future stability of the economy and the
financial security of Hungarian property.

Strong Financial System

The International Monetary Fund (IMF), wrote in their 2002 Financial Sector Assessment Programme report that:

'Hungary, which is in the final stages of transition to a market economy, has one of the most developed financial systems in Central and Eastern Europe.'

Liberal Tax System

Tax on profits from selling a property is 16% (there is tax on profits of 16% and on sales of 2%) which is far more attractive than UK Capital Gains Tax. There are also legitimate ways to not pay any tax whatsoever on the sale of property. At 18% the Hungarian government has set corporate tax at an aggressively low rate.

Secure Legal Framework

Hungary has a reputation for offering private business a predictable legal system and private property rights are fully protected. With Hungary now a member of the EU it must, by law, tear down most of its barriers to foreign ownership of property – excluding agricultural land.

Leadership Track Record

Hungary was the first Eastern European country to:
1. Join the World Bank & the IMF.
2. Sign up for NATO in 1999.
3. Apply for EU membership.

Tourism

Just over 31 million people visited Hungary as tourists in 2000 against a population of just over 10 million.

Focus on Budapest

Hungary has only one major city – Budapest. Budapest only accounts for 20% of the population, yet accounts for over 60% of the country’s commercial activity. This means that for the foreseeable future, there will be a necessity for residential accommodation in Budapest as the inevitable influx from the country to the city takes place.
Over 70% of all FDI into Hungary is directed at Budapest itself.

Accessibility

Budget airlines have embraced Budapest. Flights from the UK cost as little as £18.
Due to its geographical position, Hungary is the logistical centre of the booming Eastern European region.

Strong Heritage

Budapest's tradition of excellence in the Arts and Culture is underlined by its:

237 Monuments
223 Museums and Galleries
35 Theatres
90 Cinemas
2 Opera Houses
12 Concert Halls

Budapest has been designated by UNESCO (United Nations Educational Scientific and Cultural Organization) as a
world heritage site.

It is a famous spa city, with more than 120 springs yielding 19 million gallons of thermal water daily for use in baths and thermal hotels. Budapest also has the most Nobel Prize winners per head of population than any other country.

Progressive Attitude

Budapest is a hugely popular destination for conventions, hosting over 150 large-scale congresses and conferences annually.
Most people have at least one mobile phone and satellite TV is the norm. New shopping and leisure facilities, residential complexes and generic improvements to the infrastructure underline the typically progressive Hungarian thinking.

KPMG Quote on Hungary

“KPMG selected Budapest as the location for its first office in Central and Eastern Europe. That was in 1989, when political events created new opportunities for foreign investment in the region.

“Hungary in the last decade has experienced a series of sweeping changes, which have transformed it from a Socialist country to a thriving market economy with its foot firmly in the door of the European Union.

As a symbol of how far it has come in the last decade, Hungary’s flag flies in front of NATO headquarters in Brussels and Hungary and has become accepted and appreciated among international organisations such as the OECD, the WTO and others.

Due to its early open policy toward foreign investment and central geographical location, Hungary has been the preferred location among Eastern European countries for foreign direct investment (FDI) since the beginning of the transition to a market economy. Hungary has been the region’s favorite country for foreign investors, with 40% of all FDI in the region ending up in Hungary. There are some 25,000 firms with foreign capital operating in Hungary, producing about 32% of Hungary’s GDP, 45% of them manufacturing value-added product and employing 25% of all private-sector workers.

Pro-privatisation policies on behalf of the Hungarian government as early as 1989 have helped attract capital. Foreign and domestic-owned firms have been treated on the same legal basis since 1993. Government at both national and local levels have offered special concessions and financial incentives as well as tax breaks for investors.”