Hungarian Residential Properties Attractive for Foreign Investors

Residential

Compared to other cities, gross yields in Budapest, calculated from purchase prices and revenue from rent, are among the highest, which means the Hungarian capital is still a great destination for those investing in residential property. To provide potential investors with sufficient information, residential property developer Living partnered with the Eltinga research center to conduct a joint study, presenting the opportunities the residential property market has to offer in Hungary in general, and in Budapest in particular.

In recent years, prices on the Hungarian residential property market have increased considerably, by nearly 250%, and the rise was the most significant in Budapest. The joint study has shown that despite this price increase, the residential property market in Budapest is still a great choice for foreign investors, as the Hungarian capital offers not only attractive prices, but also great services when compared to international opportunities.

According to data by the National Bank of Hungary (MNB), the value of apartments has significantly increased in recent years in Hungary. Between Q1 2014 and Q1 2023 there was a 231% increase in residential property prices, which means that in the past nine years, the annualized yield from the increase in value was over 14%. In Budapest, the rise in prices was even sharper than the national average. In the capital, prices per sqm shot up, and in Q1 2023 residential property cost nearly 4 times as much as it did in early 2014 – this increase meant a 16.4% annualized yield for property owners.

Location Within Budapest Highly Important

However, investors should consider the rate of increase not just in HUF, but in other currencies as well. Prices of new apartments vary in Budapest, especially in central locations that are popular among investors. Here the prices are typically higher than the city average: for example in the priciest part, in District V, a 40 sqm home costs about 258,000 EUR.

However, some locations are popular with investors and are easy to rent, yet they are less expensive than the average.  One such area is District XIII, where the price per sqm is lower than the Budapest average, and a typical, 40 sqm new apartment may cost less than 140,000 EUR. District XIII is a major location of the Budapest office market, which makes it even more popular and generates continuous, strong demand for properties. In addition, the district is currently undergoing transformation, and the value of certain apartments is expected to increase at a higher rate than the market average, the study notes.

"At Living, it is our priority to develop residential properties that meet market demand as we aim to serve both domestic and foreign clients. The results of our joint study with the Eltinga research center also substantiate that there is a reason prospective international investors are interested in the Hungarian property market: what Budapest has to offer in terms of price and available services, is very competitive," says János Martin, Wing’s deputy CEO and Living’s director of Residential Development.

"Foreign investors looking for apartments in great locations in Budapest that are expected to generate a high yield do find LIVING developments attractive. Moreover, our LIVING Service packages make life easier for foreign property owners, as we can manage everything from furnishing the apartments to renting out and managing the properties," he adds.

Important Considerations

Foreign investors should weigh their options before investing in residential property and explore the differences in prices and potential yields in attractive cities, Living notes. For example, while the price of new residential properties in Tel Aviv in 2022 was almost EUR 15,000 per sqm, it was only about EUR 1,700 in Bucharest. While there has been a significant increase in prices in recent years in Budapest, in an international context it is still considered a relatively inexpensive city: in Budapest, Zagreb, and Warsaw, the price per sqm of new residential properties was below EUR 3,000 in 2022.

It’s not only low prices that can attract investors to the Hungarian capital. Gross yields, calculated from purchase prices and revenue from rent, are also among the highest.

In addition, as in other cities abroad, services available on the Budapest market allow foreign investors to realise yield from their property with no effort. Property management companies can deal with every aspect of the management of the apartments, from furnishing to finding tenants to handling rent and utility fees.

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