Published on 09 January 2007 at 11:55 am
Filed in Property News for Hungary » Is There Money to be made from Property in Hungary in 2007?
It’s a well known fact that the residential property market in Hungary is stagnating and even shrinking in terms of property prices in certain areas of the nation and that international investor confidence has fallen dramatically in this sector. Furthermore, traditional developers previously focused wholly on residential real estate such as InterEstate are now diversifying away from residential, and the mortgage market in Hungary has shrunk to half its size.
All this begs the question ‘is there money to be made from property in Hungary in 2007?’ Well, if an investor is hell bent on buying residential stock, then unless they can negotiate bulk buy discounts on unsold stock in recently completed buildings in the main employment and population centres and look to the long term for ROI the answer is probably ‘no’ – but if you turn away from residential and begin to look at the commercial property market prospects you’ll find there is some positive news for property investors in Hungary.
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Because the investment real estate market in Hungary is relatively immature and the country is considered to be an ‘emerging market’, none of the procedures associated with the property buying process in Hungary are particularly well developed.
This means that an investor interested in entering the property marketplace would do well to have the back up and assistance of a good lawyer and real estate agent from the outset.
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Property investment in Hungary is mainly centered on the capital city of Budapest where prices are currently at least 25% cheaper than similarly attractive European cities like Prague, and where property prices in the most desirable districts rose by up to 15% last year.
The Budapest real estate sector offers investors long term rental income generating opportunities as well as medium to long term capital growth potential. And those looking for an emerging market opportunity within an emerging market economy could consider targeting the tourism and second home markets in Hungary for profit and income as well.
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Even before Hungary joined the EU back in 2004, international property buyers were increasingly attracted to the wealth of affordable, beautiful and historic real estate available in Hungary - particularly in the capital city of Budapest and on Balaton which is Europe’s largest lake (pictured).
EU membership has seen the entire market economy in Hungary go from strength to strength - and with the Hungarian government committed to long term fiscal development and the encouragement of increased foreign direct investment, the property sector is one area of the Hungarian economy on course for significant growth.
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