Buying A Property In Hungary

Hungary was the most developed, liberal and wealthy nation in Eastern Europe, it has the fastest growing economy. As a result, those foreign nationals that took advantage of the liberalization that has begun to occur in the real estate laws of that country have enjoyed a profitable status over the course of the past three years.

The Hungarian national government has made a consistent and concerted effort to attract foreign investment into that country. In this regard, the government of Hungary has worked deliberately to liberalize the real estate laws in that country to make real estate investment and other types of economic involvement in Hungary more attractive to foreign nationals.

Investment Property in Hungary

Many foreign nationals have joined together with Hungarians in a whole host of different types of real estate investment enterprises. These trans-national joint ventures have been found in a wide array of different types of real estate holdings. For example, multi-national partnerships have been formed in the industrial, commercial and even residential real estate arenas.

Most real estate analysts that are familiar with Hungarian real estate market recommend that a foreign national interested in investing in real estate in Hungary should look to older properties in more established neighborhoods or zones. This recommendation holds true whether a foreign national is seeking to invest in commercial or residential real estate.

These real estate experts and analysts are reporting that the appreciation of these older properties are appreciating significantly, after undergoing a modest amount of rehabilitation after being purchased. Indeed, these analysts report that the value of these older properties — both commercial and residential — are appreciating upwards to 30% annually … an incredible return.

The Hungarian capital of Budapest has derived the greatest amount of foreign investment in real estate in the past decade. Because the Danube River runs right through the city, a river that is an important European waterway, the capital is a natural for real estate and related types of investment.

Residential Property in Hungary

When it comes to single family homes, as has been touched on previously, those homes in more established neighborhoods — older properties — generally are more solid investments for a foreign national. The value of these properties — following even only a modest amount of remodeling work — rises a substantial amount each and every year. Currently, the value of these types of house is increasing in value at the rate of 27 to 30% each year.

There are some newer housing developments on the drawing board and under construction in different parts of the country. While there are some attractive points to these properties, as a rule, these homes — once completed — simply are not appreciating in value as are the older residences.

Residential Real Estate – Apartments in Hungary

The demand for apartments in Hungary is very strong in this day and age. Foreign nationals make up a considerable portion of the number of people who can be found purchasing apartments in Hungary during the course of a given year. Additionally, and interestingly, the Irish make up the most significant block of foreign nationals who are buying apartments in Hungary.

For the most part, foreign nationals have be found investing and purchasing apartments in the more major cities and urban areas in the country. With the entry of Hungary into the EU, coupled with the strong economy of the country in recent times, a growing number of foreign nationals are drawn to the company for economic and business reasons and purposes.

In this regard, when foreign nationals are found to be entering Hungary for business purposes, these men and women are taking to purchasing apartments for their housing needs. In the brisk apartment market in Hungary, the costs associated with these units is moderate when contrasted with similar apartments in other cities in Europe. Indeed, apartments throughout Hungary generally are classified as affordable when contrasted with the overall residential real estate market in the European Union in the 21st century

Holiday Property in Hungarian Holiday Resorts

In many ways, the 21st century has represented the true dawn of the tourism industry in Hungary. During the 20th century, tourism really was not a top industry in Hungary. Indeed, not that many people around the world included Hungary on their list of must-visit countries.

Since Hungary’s passage from communist control, since Hungary broke free of the Soviet yolk, there has been a significant increase in the number of people who now are making Hungary a destination point for holiday travel. Many people are beginning to appreciate the true historic splendor that is Hungary.

A number of foreign investors have come together in the development of resort properties for travelers to the country. In addition, a growing number of foreign nationals (again, with the Irish coming in at first place) have taken to buying apartments which are being rented to travelers who intend to spend an extended period of time in Hungary.

Not only are these apartments being developed in the urban areas of the country, but a number of such developments have been undertaken in some of the more rural areas of Hungary. Many foreign nationals have found themselves attracted to the placid lifestyle and serene beauty of these more rural regions in the country.

Specific Steps to Buying a Property in Hungary

Hungary left the Soviet and communist era behind with a much stronger economy that had other nations that formerly were kept behind the Iron Curtain. As a result, Hungary has continued to enjoy an economic advantage over many countries in Europe in recent years. Most financial analysts and economic experts maintain that Hungary will enjoy a GDP that will exceed by 50% annually over what is being experienced in other EU nations over the coming few years.

One sector of the overall Hungarian economy that has been experience significant growth and activity is the real estate market. Thanks to efforts made by the Hungarian government to liberalize and streamline its real estate laws, including those laws that pertain to foreign ownership of real estate, more and more foreign nationals are investing in Hungary.

Historically, foreign nationals could not invest in real estate in Hungary. However, at this juncture, a foreign national can invest as an individual in real estate in Hungary. With that said, prior to making the purchase of real estate as an individual, a foreign national must obtain permission from the Hungarian Land Registry to purchase real estate in that country. Again, this step must be taken only if a foreign national intends to hold title to real estate in Hungary in his or her individual capacity.

The process of preparing an application for the Land Registry is a simple matter. With that said, there can be up to a month’s wait before the Land Registry will act on an application to purchase real estate.

Some foreign nationals forgo the Land Registry application process by establishing a limited liability company in Hungary that can take ownership of real estate without the requirement of registering with the Land Registry Office. A competent lawyer in Hungary can complete the documents necessary to create a limited liability company within a day — and can have them filed immediately with the appropriate governmental authorities.

Once a foreign national determines which route he or she will take in regard to the purchase of real estate in Hungary — with as an individual or through a limited liability company — the next step in the real estate sales transaction process is the execution of a preliminary sales agreement. Generally the buyer is obliged to post a deposit at this juncture, usually in the amount of about 10% of the overall purchase price of the real estate. After the initial agreement is signed, the buyer embarks on obtaining his or her financing while the seller makes certain that the property is capable to being legally conveyed to the buyer, makes certain that there are no legal encumbrances attached to the real estate. The seller must make certain that the buyer can take possession and ownership of the real estate free and clear of any impediment.

The last step in the real estate sales process is the execution of the final sales agreement and the conveyance of the deed from the seller to the buyer. The deed will then be registered with the Land Registry Office which will make necessary changes in the legal records pertaining to the property to reflect the new ownership of the real estate.

Economy Of Hungary

Hungary has experienced a series of sweeping changes, which have transformed it from a Socialist country to a thriving market economy with its door firmly in the door of the European Union. Even during it’s as a Soviet satellite state, Hungary was the most developed, liberal and wealthy nation in Eastern Europe. Under socialism, it maintained a steady rate of development and with the dissolution of socialism in 1989; the city has entered the post-industrial age with a leading role of blue-collar workforce. The Hungarian Economy continues to grow, and inflation is at a low level relative to the rest of the emerging markets in Central and Eastern Europe.

Hungary was the first Country in Central Europe to join the World Bank and IMF in 1982. Over 30 Billion euros have been injected into Hungary since 1989, and the growth rate of FDI in 2003 reached 45%. Hungary was the first Country in Central Europe to join NATO in 1999, and became a full member of the European Union on 1st May 2004.

Various Property Investment surveys have shown that in the last ten years properties have grown in value, on average, more than 350 percent. Between 1999 and 2003 Budapest property prices increased by 60 percent, and between 2003 and 2005 the economy has seen a growth rate of 15 to 20 percent. In the Budapest property market, rental incomes have provided minimum yields of 7 percent, rising to around 10 percent. There are a number of solid reasons and indicators to suggest that Hungary’s economy should continue to grow at current rates. Property investors can feel secure that there is still much more to gain from buying Hungarian property. Politically Hungary is stable and its system of government is transparent, which has led to numerous companies moving all or part of their European workforce in the country. Since the beginning of the 1190’s the inflow of foreign operating capital has been the main source for the modernisation of the economic structure and for the improvement of competitiveness in Hungary.

With the introduction of cheap flights from major airports from around the world, tourism is increasing at a remarkable rate, and Ferihegy will soon become one of the busiest airports in Eastern Europe. In the first ten months of 2004 discount airlines brought 338’000 visitors to Hungary, and Budapest is among the ten most preferred International destinations. One important factor contributing to Hungary’s continued economic success is the drive towards adoption of the Euro, set for 2010. Government policy should remain sensible and stable in coming years as this target of further European integration is aimed for.

Nowadays, Hungary is a full member of OECD and the World Trade Organization. As an ancient European capital city, Budapest has many of the charms of other major European cities, which, coupled with the dynamism of the economy in the decade and a half since communism, makes the still very low property prices extremely attractive, for both investors and those looking for second homes in a European capital of culture.