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Budapest's dramatic Danube panorama includes
seven bridges, a castle perched high above the city, grand architecture on the
Pest side, rolling green hills on the Buda side and one of the hottest property
markets in Europe. Text by Carolyn Banfalvi
BUILDING IN BUDAPEST'S UP AND COMING NINTH DISTRICTMany people don't realize just how big the 525km2 city of Budapest
actually is, but fortunately most of the action is concentrated within a handful
of downtown Pest districts and a few areas in the Buda hills. Hungarians lament
that all foreigners know about their country is goulash and paprika, and it does
take time to get to know Budapest and to understand its quirks (like milk that
comes in plastic bags, the difficult language, paying your bills at the post
office and having cars parked on pavements). But most ex-pats agree that it's
worth the trouble to live (or invest) in vibrant, beautiful Budapest.
Hungarian property is a well established market for foreigners, particularly
among Germans who like to buy houses at Lake Balaton. But the latest wave of
investment has come from the Irish. They've even been known to buy property
without ever travelling to Hungary, according to one potential investor. 'Because
Ireland is so small and because of the property boom in Dublin, all of these
people find themselves sitting on houses that are worth more than they ever paid
for them, so they are re-mortgaging and using that money to invest in property
in other countries,' says SP Mahoney, director of the Hungarian and Romanian
Department of Enterprise Ireland. 'Budapest is very attractive to them
because it's bigger than Prague, it's attractive, and it's
an interesting place to be.'
BUDAPEST'S
FAMOUS CHAIN BRIDGEBut it's not an easy system to navigate without help. It's vital
to have a trusted Hungarian-speaking friend or translator to help along the way,
and it's even more important to find a good lawyer specialising in real
estate. Many real estate agencies in Budapest are used to helping foreigners
with the entire process, like Duna House, ATA Ingatlan, Central Home and Flott
Invest. To get an initial idea of what's out there, check out www.ingatlan.com,
an online database of properties listed by multiple agencies and individual sellers.
Hungary doesn't have a multiple listing service, so the properties that
you will see from any single agency are just a small fraction of the market.
DISTRICT NINE, ONCE ONE OF THE CITY'S WORST SLUMS,
IS NOW ONE OF THE BEST UP- AND-COMING AREAS
BUYING IN BUDAPEST
There are a few basic types of real estate in Budapest: detached or semi-detached
houses in the Buda hills, apartments in newly constructed buildings, downtown
apartments in classic buildings built between 1880 and 1948 and the crumbling
blocks of socialist-style apartments in the city's outskirts (stay away
from those!). When checking out apartments in old buildings, be aware that many
of Budapest's buildings were severely damaged during the Second World
War and were hardly maintained during the Communist era. If in doubt about a
building's structure, bring in an architect for advice. Most apartments
in the old buildings will also need some sort of cosmetic renovations, which
can raise the property value by 20% according to some estimates.
EYES OPEN
Keep in mind that there is still a significant black economy in Budapest, and
it's common for both buyers and sellers to want to make deals off the
record.
If you are buying an apartment, find out what the monthly building fee (kšzšs
kšltség) is. The fee supposedly covers building cleaning and maintenance,
but corruption is common among maintenance companies, which often charge disproportionately
high fees for the services that they provide—or don't provide.
The services that most real estate agencies offer are severely lacking compared
to Western European or American standards. Smaller agencies do little more than
meet you at the property, let you look around and then disappear. Be prepared
to use multiple agencies.
Finding the apartment is just the first step. Dealing with the paperwork,
deeds and contracts can take longer than the actual apartment search, and there
are significant fees that will need to be paid in addition to the price of the
property (legal fees, taxes, property transfer fees). Since May, when Hungary
joined the EU, it has been possible for those living in the country for at least
four years to buy property without special permission.
For now, all other non-Hungarian citizens must apply for permission, through
their lawyer, from the local authorities (the …nkorm‡nyzat and
the Kšzigazgat‡si Hivatal), which can take up to 30 days. Regulations
regarding the purchase of agricultural land are even tougher.
An important part of the process is checking the legal status of the property
and making sure that the person selling you the property is actually the person
who owns it.
The land registration office (TerŸleti Fšldhivatal) keeps a database
of all property deeds, which will also tell you if the owner has any outstanding
debts on the property, which must be paid before the sale. Financing can be tricky
in Hungary, but bank loans and mortgages are available for EU citizens.
Once you settle on a property and agree on a price, you'll sign a purchase
contract, which is a guarantee that you will buy the property and that the seller
will sell it to you. At the same time, you'll pay at least 10% of the
amount as a down payment. You will then usually have up to three months to pay
the remaining balance or secure the loans to do so. You can only take possession
after the seller receives the entire sum.
Most foreigners buy property in Budapest with the intention of renting it
out, according to Zsolt Ollé, a founder and managing partner for both Real
Home Agency and ATA Ingatlan. In downtown Pest, foreign buyers increased notably
the year before EU accession. 'Their main intention is to make money on
rent and, of course, on the capital growth,' says Ollé. A plus for
prospective buyers is that prices have not significantly risen since EU accession,
and according to a study published last year, Budapest apartments are still half
the price of a similar Dublin apartment, metre for metre.
DES RES
It's getting harder to find fantastic deals in areas that were once hotspots
for foreign investors, like districts five, six, one, and 12. Of course, deals
can be had anywhere if you look hard enough, but the ninth district (also known
as Ferencv‡ros) is one of the best up-and-coming areas. R‡day utca—a
bar, caféand gallery-lined pedestrian street—has become one of the
city's hottest areas. District nine was once one of the city's
worst slums, and it still has its share of dubious neighbourhoods, but it has
successfully improved its image and rejuvenated several areas since the end of
Communism. It has attracted some massive building projects, and lately, much
private foreign investment.
Walk along the Danube, which forms the district's western border, and
you'll see empty lots with big pictures of new buildings soon to come.
The Danube Bank is the area with the greatest potential for development and is
where one of Budapest's biggest real estate projects is being undertaken.
A new Hungarian National Theatre was built there in 2002 and the new National
Concert Hall recently opened next to it. Still to come is a project called the
Millennium City Centre, which will include hundreds of new residential apartments,
office buildings and conference facilities for 6,000 people. There are also university
campuses nearby, making the rental market healthy and popular with students.
More information can be found at the following:
www.dunahouse.hu
www.ataingatlan.hu
www.centralhomehungary.com
www.flottinvest.hu
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