There is a good supply of property available in Budapest. Our recommendation is to consider older classical apartments over new build or off-plan developments.

Whilst on first glance some of the off-plan deals seem attractive even with some of the discounts on offer the price per square meter can still be far in excess of the cost of buying and renovating an older flat. The headline sale price should be ignored –it is the cost per square meter that is important. A brand new studio flat for Euro 30,000 sounds attractive but you can be still paying way over the odds on a square meter basis.

 In addition, many developments currently being marketed to the UK are not in districts we would consider suitable for foreigner purchase. Many are in more outer lying residential districts which would be totally unsuitable for renting to either the higher paying ex-patriots (who are the ideal tenant) or for shorter term holiday rents. There are some developments on the river with marina facilities which are fine for people with boats but are not necessarily too convenient for the centre.

There are many more classical flats which are more centrally located and have more appeal both for longer term tenants and for holiday lets.

It is unlikely that property prices will not increase in the next few years but should they stagnate wage costs are sure to rise to nearer the European average. Consequently renovation costs can only go up. An older property needing renovation has much more potential for capital growth. We would also suggest avoiding buying properties that have already been renovated as the taste and style of most locally done renovations leave a lot to be desired. The quality of work is usually good but the choice of fixtures and fittings-especially kitchens and bathrooms-would usually not be too appealing for more Western tastes.

There are now no restrictions on foreign buyers but anybody looking to buy more than one property is recommended to start a company as they might be deemed a “speculator” if they tried to buy two properties in their own name, especially if the two properties are in the same district. As a Hungarian company, property purchase is very simple. For foreign individuals permission is needed from the Mayor’s office of the local district. This is rarely withheld, though, unless the “speculator” situation arises.

An investor should consider what type of tenant they require. To get the best yields will naturally require the highest standard of accommodation which, in turn, will require higher initial expenditure. Local people pay the lowest rents but do not expect the greatest standards. It is unlikely these rental levels would be sufficient to attract a foreign investor. The next level would be foreign students who can pay more than the local people but would not expect super-luxury flats. Again the location of the property then is paramount as there are many universities and colleges in the centre so anything further away would not appeal to this class of renter. Perhaps the best tenants are the ex-patriots but this can cover a multitude –from people travelling around looking to stay for a while on their travels, perhaps to write a book-through to fully employed ex-patriots at all levels of employment (and consequently a variety of budgets) up to high-ranking diplomatic staff.

In 1999 yields were in excess of 20% but as purchase prices have increased and more flats have been renovated and are available for rental, yields have naturally fallen. A general safe quote for current yields is between 5% and 8% but a quality flat, properly marketed can still achieve rates above this. For example we currently have our own flats rented out at a yield in excess of  9%.

We recommend any potential investor to take independent advice as to not only which district they should consider buying in, but also in which street and even in which building a flat may be as there is wide variety of standards and conditions.

With our many years experience of buying, renovating and renting our own apartments in Budapest we are well placed to offer consultancy services to any person or company looking to buy in Central Budapest.

We are able to source properties for you and put you in contact with a range of necessary professionals, lawyers, accountants etc, in order for your purchase to go ahead in a trouble free manner, and then design or advise and then manage any renovation works needed. All of the companies in our network are local companies working in the local market.This ensures there is no "mark-up" of prices which frequently occurs when property is marketed to foreign investors.

Always check the price in Hungarian Forints-be wary of property only advertised in Euros.

Please contact us if we can offer any further information:

Info@Derbyhouse.com