Hungarian real estate is a good investment opportunity for foreign investors; nonetheless, foreign participation in Hungary’s real estate market dropped significantly in the last two years.
Budapest is still one of the cheapest capitals not only in the EU but also among OECD members. The average price of a newly built apartment is one million forints (~EUR 2786) per square metre. Therefore, investing in Hungarian properties can be profitable in the case of subsequent leasing or sale. According to Károly Benedikt, Head of Marketing & PR at Duna House Group, the average gross rental income is expected to be around 3.5−5.8% per year. This number can vary depending on the location and condition of the house.
Proportion of non-EU investors
Last year, more than 131,000 properties were sold in Hungary. However, foreign buyers outside the European Union submitted only 2,200 applications, mainly for apartments in Budapest. (Foreign investors who are not citizens of the European Union, the European Economic Area or Switzerland have to acquire an official government permit to be able to purchase any property.)
This means that the proportion of foreigners of the Hungarian real estate market was around 0,168% last year, which is a more than 40% decrease compared to 2019.
This change occurred due to the coronavirus pandemic and the related international travel restrictions, writes Hvg. Nonetheless, the first signs of a declining trend have already been observed in 2019.
According to statistics published by the Prime Minister’s Office,
the majority, almost 40%, of foreign investors in the housing market were Chinese citizens,
writes Világgazdaság. Not only did they form one of the most prominent group of foreign buyers, but they also concluded the contracts of the highest value.
The greatest demand has been observed in the case of apartments in the 13th, 10th and 9th Districts within Budapest.
The proportion of investors from Israel and Russia was 8% in both cases. Ukrainian buyers were present in the Hungarian real estate market with a proportion of 5%.
Buyers from Israel most often opted for apartments in downtown Budapest. The majority of Russians settled in Hévíz, and our eastern neighbours mainly settled in Mosonmagyaróvár and Dunaújváros.
American, Turkish, Serbian, Algerian, Australian, Tunisian and Venezuelan investors were also interested in Hungarian real estate.
Investors from the EU
As far as EU citizens are concerned, most of the buyers were German in both 2019 and 2020, and their most popular destinations were the capital and the holiday resorts on the shores of Lake Balaton,
explained Károly Benedikt. Although the number of investors from the neighbouring countries has dropped, potential buyers from Romania, Slovakia and Austria still constituted a significant proportion of foreign investors. They typically chose lower value properties in the border areas.