Guide to buy Real Estate in Budapest

Transcription

1 Guide to buy Real Estate in Budapest

2 Introducing Budapest Budapest, the capital of the Hungarian Republic, is situated in the centre of the Carpathian Basin in Central Eastern Europe. It is divided into two parts (Buda and Pest) by the River Danube. The city covers an area of 525 square kilometres. Its population of about 2 million inhabitants accounts for 20 percent of the country s total population. The Real Estate Market in Hungary According to several analysts and market researchers, the Hungarian real estate market is an ideal investment destination. Currently, the real estate prices prevailing in the country are low compared to those of other EU member states but the market also offers a wide range of opportunities in the market segments of used and newly built real estate objects. Trends and figures The data of the Hungarian Central Statistical Office clearly demonstrate that the local real estate market reached its peak in 2003 and 2004, just before the country joined the European Union. This fact attracted a lot of foreign investors to come and invest in Hungary on the one hand because of the low prices, on the other hand because of the high demand for real estate This lively, dynamically developing city, with the innumerable cultural events, enter tainment possibilities, relaxation facilities and famous spas it offers, is an ideal place to live or invest in. Since the unification of its two parts, i.e. Buda and Pest, in 1873, the city has developed into a friendly, dynamic, cosmopolitan metropolis. Useful links about Budapest and Hungary Information about the city Situation of the economy Information about Hungary Investment and trade Government portal english National Bank of Hungary Finding real estate Total of new dwelling constructions issued Number of dwellings put to use (built flats) Despite the austerity measures announced by the government in the summer of 2006, which resulted in falling purchasing power and real wages, the real estate market now seems to have recovered after a slight decline. There is oversupply in the market segments of both used and newly built real estate objects, thus buyers can choose from a wide selection and in some cases have the opportunity to get discounts. According to local and foreign analysts, getting closer to the adoption of the Euro in Hungary, prices will start to rise, thus now is the ideal moment to buy a flat in Hungary. Popular areas Purchasing trends have not changed in the past years, the most preferred districts in Budapest are the 13th and 14th. In these two areas dozens of new apartments have been built or are currently under construction. In Buda, the leading position has been held by the 11th district for a long time because its relatively good prices. Other districts of Buda (1, 2, 12) are considered to be more residential and expensive for local buyers, however, the demand for properties in small condominiums is also on the rise. The city centre (districts 5-6-7) is also popular, especially with foreign buyers. While district 5 is rather an official-residental place with the Parliament and several government offices in the area, districts 6 and 7 constitute a livelier place with lot of entertainment facilities. The agglomeration around the capital (Érd, Budakeszi, Diósd, Páty, Szigetszentmiklós) is also an important destination: 10% of the respondents of our survey are searching for real estate there. 2

3 Financing Special credit or loan options financed by banks are very popular among Hungarian citizens since the majority of potential buyers can t afford to pay the whole price of a new flat without taking out a loan. According to Duna House s last survey, 75-80% of the respondents think that they would take out a loan to buy new property. It is also interesting that only a minority of potential buyers have clear ideas and plans about specific properties. The loan market in Hungary offers a wide range of products, under some options it s (theoretically) possible to buy a property without any money present. Special rates or other discounts are also available Popular flat types In spite of the austerity measures of the government, the number of customers purchasing flats for less than HUF 10 million (EUR 42,000) is falling: slightly more than 3.5 % of the respondents would choose this type of flat, however, it is important to know that in this price category the supply of newly built flats is limited in the capital, although blocks of flats (panel houses) are already on sale for this amount of money. The most popular price category is the one from HUF 15 million to 20 million (EUR 62,500-83,000), almost one third of the respondents would buy flats for this price. About 25% of the questioned potential buyers would pay HUF 10 to 15 million (EUR 42,000-62,500) i.e. nearly 60% of the respondents would be able to spend EUR 42,000-83,000 on newly bought property. How to take out a loan? Taking out a loan in order to buy a used or newly built flat is now fairly simple: banks and credit institutions are in fierce competition for clients, offering various offers and discounts, e.g. on monthly interest rates. Foreign buyers and investors may also obtain loans for solutions and offers please contact Duna House Loan Centre at the address of Duna House Head Office where you can get independent and free service concerning all loanrelated cases in Hungary with full administration. For more information visit our website at Useful contacts about Budapest and Hungary This only refers to the mainstream market; nevertheless, it s good to know that the market in the premium segment is remarkable even if, of course, buyers are less active there. Approximately 15% of the participants in our survey said that they would be able to spend at least HUF 30 million (EUR 125,000). Premium apartments located in the city centre or in the Buda Hills are especially worth renting or simply buying; the supply is limited and the price level of these special flats with excellent location and nice view is constantly on the rise. Several unique flats of this type are for sale at Duna House. Most buyers prefer flats with at least rooms; nowadays the so called garzon flats (similar to bedsitters) are not as popular as they were 3-4 years ago. Some years ago, demand for garzon flats was very heavy, especially in the newly built buildings. A reason for this was the relatively low price. Although garzon flats could be a good choice, most of the potential buyers now think that if they are constrained to take out long term (20 to 35 years) loans, they wish to have more suitable properties; thus after the breakthrough in the loan market demand for flats of 1.5 or 2 rooms started to rise drastically. The main factor of consideration is that there be at least two rooms, even if they are located on only 30 sqm. At the same time, longer periods enable buyers to take out more loan and thus to buy bigger properties. Office of Hungarian Investment and Trade Development Agency (ITDH) in Milan Via V. Monti Milano Tel: (02) Fax: (02) milan@itd.hu Ministry for National Development and Economy Honvéd utca Budapest Tel: (+36-1) P.O.Box: H-1880 Budapest Pf ugyfelszolgalat@gkm.gov.hu Duna House Head Office (complete real estate related service) Rákóczi út Budapest Tel: (+36-1) Fax: (+36-1) info@dh.hu 3

4 Buying resale: 1. Viewing properties with your English/Italian/Spanish speaking real estate agent 2. Negotiations 3. Signing pre-contracts and paying the booking deposit 4. Opening a bank account 5. Lawyer: pre-contract 6. Travelling back home and transferring the earnest money 7. Signing the final contract and paying the earnest money 8. Transferring the balance to the lawyer s trust account 9. Taking possession of the property, paying off balance Buying newly built: 1. Viewing the site with your personal English/Italian/ Spanish speaking real estate agent 2. Choosing the right apartment using layout plans 3. Booking the apartment with the EUR ~2,500 deposit 4. Lawyer 5. Opening a bank account 6. Paying: stage payments 7. Pre-contract, final contract 8. Taking possession of the property Home Management maximizing profit Duna House offers Home Management services especially for foreign real estate owners so that they can maximize the return on their investment. These services include the management, maintenance, operation, utilization of the real estate and the collection of the rent according to the client s needs. The major question is what will happen to the market when the plenty of garzon flats bought 3-4 years ago in the garzon-boom emerge on the supply side just because they are not big enough any more for their owners. Nevertheless, investors have tried to follow the changing trends: often two or three one-room flats were merged into one bigger property, or former studios were divided into two or more rooms. How to buy? In Hungary non-residents may purchase real estate in the following ways: either as private persons, non-resident individuals may acquire Hungarian real estate (excluding arable land and natural areas) provided they obtain a permit granted by the local director of the regional public administration office, or as companies (usually in form of Bt, i.e. limited partnership or Kft, i.e. limited liability companies). EU citizens do not need to obtain such a permit if the property to be bought is to be their first residence. To conclude the purchase it is recommended to spend a minimum of three working days in Hungary. As the biggest real estate franchise network in Hungary, Duna House has a wide range of properties to suit most budgets from approximately EUR 35,000 upwards. High quality investments start from approximately EUR 90,000. Furthermore, you should calculate approximately 10% on top of the purchase price to cover all costs related to buying second hand property. Approximately 10-15% of the purchase price of the estate is to be paid at the moment of the stipulation of the pre-contract. The remaining amount shall be paid before the buyer enters into possession of the property; the details are laid down in the contract. Taxes are of 2% of the value of the property for the first HUF 4 million and of 6% for the remaining part (10% in the case of villas), these are to be paid within 6 months after the takeover of the property. The lawyer s fee is around 1-2% of the value of the purchased property. Our staff is ready to help you in all aspects and cases of buying property in Hungary. Don t hesitate to contact us! 4

5 Market outlook and prices The market has recovered since the austerity measures announced in 2006, despite the decrease in real wages. The market of newly built flats started to thrive again but potential buyers have become more conscious of what they want to buy and have more information about the market. Easily obtainable loan options help the business but the forecast for the near future is not highly optimistic. Investor behaviour indicates these processes clearly: investors try to follow the changing trends but they have slowed down in some fields, so has the building boom of Buying tips There are several forms of ownership right, i.e. usage rights, freehold, rental rights etc. but we shall concentrate on the freehold ownership rights. In Hungary there is a fully modernized and computerized land registry system which keeps track of all the properties in the country. The system is based on the Austrian Grundbuch system and is highly efficient. The land registry is open to the public and anyone may obtain a copy of the ownership information registered. In the used property market there is a standard oversupply, and the overpricing is also notable. In several cases sellers make advertisements with prices 10-20% higher than the market price level, calculating emotional factors into the offer. That causes plenty of stuck properties especially outside the fashionable districts, and later on property holders must rethink the offer. Nevertheless, there will be special areas in which sellers could raise prices, especially in the city centre, and in the case of unique flats. The supply of newly built flats is abundant, but the decrease of building will and the more suitable loan options plus the stronger potential demand could compensate the falling demand caused by the austerity measures; in this way some investors and sellers (especially in trendy areas) could increase prices. Despite all the above mentioned facts, Hungary and Budapest constitute a very good place to invest and buy real estate in. A reason for this is the (currently) relatively low prices compared to other EU cities and even to the region. Another reason is that well situated properties are becoming more valuable every year. It s a common and accepted theory among analysts that in the mid-future Hungarian real estate prices will move close to the regional and EU average. Now you can make purchases on a relatively cheap market and later you can reap substantial profit. Till then renting your property is also a good solution since a lot of foreign workers and Hungarians live in rented flats. The Hungarian real estate market is cheap compared to EU countries and to the region. Used flats are available from EUR 850-1,000/sqm, prices of newly built flats start at EUR 1,100-1,400/sqm. In this handout we have tried to collect different types of properties from all price segments. The reliability of the information contained in the land registry is guaranteed by the state, to the extent that unrecorded claims may exist, but still a bona fide purchaser who acquires a property without knowledge of such claims nevertheless acquires a clear title. The transfer of property rights has to be laid down in a written, authentic form (contract) that has to be countersigned by a lawyer or bear the signatures of the seller and the buyer certified by a notary. The contract has to be deposited at the Land Registry within 30 days from the date of its signing. Duna House professionals offer full help in the course of the complete buying process from selecting the adequate property to the moving. 5

6 What do we offer? More than 14,000 properties for sale: wide selection of new and used properties for sale in Budapest and also in the country, all with controlled ownership status, from standard level to upperpremium category Newly built flats in more than 200 projects: we find you the best place to live or to invest in and rent out from thousands of newly built flats in our database Loan centre: free credit consultancy and administration, we find you the best financing scheme from the offers of 20 banks Duna House the leading real estate network in Hungary Duna House is the leading firm in the Hungarian real estate market. Its wide range of activities include real estate brokerage, franchise solutions, project marketing, real estate financing and real estate investments as well as the consulting and management activities related thereto. Duna House Holding currently consists of 9 companies with a staff of nearly 900 people who provide wide-range and Customer-oriented solutions. All our staff is committed to provide the highest quality services. Duna House pays exclusive attention to the satisfaction of its Customers, ensuring high level education of the employees for providing highquality and wide-range supply. In 2007, Duna House was awarded Best real estate network prize by the Hungarian Real Estate Association, and it also received the famous Superbrands award as evidence of our efforts in serving our Clients and Partners on a very high and professional level. Insurance and financial consulting: our specialized staff can handle all aspects of insurance requirements: negotiating the best coverage, attaining the best pricing, resolving claims. Home management service: especially for foreign real estate owners so that they can maximize the return on their investment. Management, maintenance, operation, utilization of the real estate portfolio and the collection of the rent according to the client s needs. Everything in one place: you don t need to wait hours in the bank, standing in the queue in administration offices or browsing the advertisements for hours we do everything for you, in one office. As a flagship of the Holding, Duna House Franchise started to build its network in Budapest in the spring of Our firm has showed the fastest and most dynamic development in the Hungarian real estate market, now we have already 92 offices throughout the country with nearly 800 agents who are committed to provide the best professional services to our Customers and to making sure that they will leave us or return to us with satisfaction. Our nationwide network offers the same professional quality and widerange supply in each office. Our major objective is that whichever office of our network a Customer turns to, s/he shall get the same service and can choose from more than 14,000 properties for sale, located in all parts of the country, and be able to manage every process required for the transaction at the same place. Address: H-1072 Budapest, Rákóczi út th floor Telephone: (+36-1) Telefax: (+36-1) info@dh.hu Internet: 6