Thursday, 24 June 2010
Budapest: the New Prague for Real Estate Investors
When Hungary and the Czech Republic joined the European Union back in 2004 they set the standards for economic achievement that the rest of the new entrants could only dream of achieving.
Both Hungary and the Czech Republic not only embraced their new membership status, they went out of their way to create an environment so conducive for inward investment that both countries are now thriving.
As has been well documented, the stunning Czech Republic city of Prague became of such intense interest to international real estate investors even before the Republic joined the EU because it boasts almost inimitable charm, attraction and opportunity. I say ‘almost’ inimitable because Hungary’s capital city of Budapest is equally well endowed with stunning ancient architecture, cultural attraction and a unique and timeless appeal.
As a direct result Budapest is suddenly becoming one of the hottest European cities for tourism and the business environment is so buoyant right now that the numbers of expatriates heading to the city for work is at an all time high. These factors mean that the demand for real estate to rent is outstripping the current supply of well located and appointed property and prices in Budapest are starting to soar.
Where once Prague was the European capital city attracting the most overseas real estate investor interest, Budapest is now surpassing the investor levels Prague has enjoyed. And one of the real reasons for this is the fact that property prices in Budapest are up to 25% less than those in Prague, and the past couple of years have seen price gains in the most desirable districts of Budapest reach 15% annually.
The opportunity to profit to the max is huge currently, but at the same time the window of opportunity is likely to be narrow for those wishing to buy into the projected period of rapid growth. Those real estate investors who are buying right now have the strongest chance of realizing the greatest gains. Over the medium term the demand for property in Budapest will not slacken but the property price margin increases will slow down as prices reach parity with the Czech Republic.
After this period of time it is likely that prices will continue to rise in line with local affordability and that potential rental income will still be impressive. This will continue to bring investors to the market place which means an investor can purchase in Budapest with confidence that he will be able to resell his real estate assets when the time is right for him to release the gains he has accrued.
If you compare the potential fortunes of Budapest with Prague you will see just how much room there is in the market for growth and return, and how far demand can actually go for property for sale and rent in this stunningly beautiful Hungarian city.