With a prime central European location, a welcoming economy and a real estate market poised for growth, Budapest is an attractive proposition for investors around the world.
While bargain prices and impressive yields are commonplace, there are plenty more reasons to invest. When investing through the Hungary Golden Visa Program, you can acquire prime real estate in one of Europe’s fastest-growing property markets, plus a renewable five-year EU residency.
As a resident of Hungary, you can live and work in the country and get visa-free access to the rest of the Schengen Area for 90 days in every 180-day period. Obtaining a residency card takes just 60 days – and you have up to three months to complete your real estate investment after your residency is approved.
So, for anyone looking to expand their property portfolio along with their horizons, here are some of the reasons why Hungary’s capital, Budapest, is a great choice.
Why Budapest is a prime location for real estate investment in Europe
From cost of living to climate and culture, here are six reasons why Budapest is a prime location for real estate investment.
- Welcoming market
Hungary is very welcoming to overseas investors. Not only can foreigners buy property in Budapest, but the government offers several support schemes to ease the process.
The Golden Visa residency-by-investment program is a relatively affordable way to get on the property ladder while getting the full benefits of EU residency.
- Attractive city
Budapest is a charming and culturally vibrant city with architecture spanning the Baroque, Art Nouveau and Gothic styles. It boasts a large and growing culinary scene and is often cited as having some of the best nightlife on the continent.
- Cost of living
Budapest ranks 94th out of 363 countries in the European Cost of Living Index, making it cheaper than famously affordable cities like Bratislava, Vilnius and Riga. It is also considerably less expensive than almost all major European cities, including Barcelona (111th), Rome (142nd) and Berlin (218th).
- Impressive rental yields
Budapest benefits from a strong investment market, with rental yields above 5%. That means the city delivers more to investors, on average, than an investment property in Paris, Stockholm, Prague or Copenhagen.
- Strong real estate growth
Hungary’s real estate market has grown considerably in recent years, with average prices up by 23% between 2021 and 2022 and 24% on the previous year. While this growth is beginning to stabilise, a further increase is expected, with 5.25% CAGR up to 2028.
- A cost-effective choice
Budapest ranks fourth among the cheapest European cities for home ownership when accounting for utilities and other cost-of-living factors. This puts it above Prague, Krakow, and many other well-known affordable cities.
At the same time, the cost of purchasing new-build property in Budapest is approximately EUR 5,700 per sqm, once again making it considerably cheaper than Berlin (EUR 16,000 per sqm) and Prague (EUR 8,000 per sqm).
Budapest real estate as an investment opportunity
Hungary’s housing market saw a price increase surge of 24.8% between the first and second halves of 2022, taking values to the highest rate in the country’s nine-year property cycle. At the same time, property prices in Budapest increased by 20.4%.
It is predicted that the Hungarian housing market is about to split with older, inefficient builds set to lose value and the prices of newer energy-efficient properties set to increase. Estimates suggest that the 2022 price index for residential properties with below-average consumption increased by 1.2%, while those with above-average consumption fell by 1.3%.
This factor, coupled with a steady increase in new build construction presents ample investment opportunity for those in a position to proceed with Budapest real estate investment in the near future.
The economic outlook
Hungary’s economy stabilised after rapid growth, with real GDP declining by 2.4% year on year in the second quarter of 2023. However, recovery is already showing, making for prime investment conditions. By 2024, the country’s economy is expected to have increased by 2.4%, with further growth of 3.6% the following year.
As it is Hungary’s largest city, home to around 20% of the country’s population, any economic growth is often felt most keenly in Budapest.
Demand for housing: renters and buyers
Demand for rental property in Budapest is currently high, with rents rising by 14% since last year. While many real estate construction projects are underway to ease demand, the renewal rate of housing stock in Hungary is low by European standards.
Completions of residential properties fell 20% year on year between 2022 and 2023, which once again contributed to rising rental prices. For investors, this can mean impressive yields between 5% and 8%, depending on location and property type.
Increasing demand and rising prices have also spread to other provincial towns, driving prices above the national average in recent years. Last year, provincial real estate values increased by 31% compared to a little over 20% in Budapest across the same period.
Foreign investment in Budapest real estate
The Magyar Nemzeti Bank’s National Housing Report shows that the ratio of investors buying housing in Hungary increased across 2022. Overall, 42% of buyers and 33% of transactions involved investors rather than traditional homeowners.
The report concludes that as the ratio of selling investors falls short of buyers for investment purposes, the “stock of homes purchased as an investment may steadily grow in the higher inflation environment.”
Understanding the Hungary Golden Visa Program
The Hungary Golden Visa programme enables investors to capitalise on the favourable conditions of the country’s real estate market while obtaining the benefits of European residency.
To apply, you must acquire residential property in Hungary with a value of at least EUR 155,000. This investment can be into a completed residential property or a 20% deposit on an off-plan development. The remaining balance is then due on completion.
You can apply for your visa immediately and then have up to three months after approval to invest in real estate. You’ll usually receive your residence card within 60 days of your application. As soon as you have it, you can start benefiting from the full benefits of EU residency, including:
- Travel freedom: Schengen Area access for 90 days out of 180 days.
- Tax benefits: No full-time tax residence requirement.
- Family security: Family members can be included in your residency application.
- Hassle-free process: No interview, language, or professional experience required.
Conclusion
With the sharp price increases in Budapest’s real estate market subsiding, the country is actively courting new foreign investment. This presents incredible opportunities for investors looking to start or expand their property portfolios with EU real estate.
At the same time, investors through the Hungarian Golden Visa programme get the added benefit of long-term EU residency, visa-free travel, safety and security for their families, and tax advantages.
When you make your investment with Knightsbridge, our expert team will help you navigate the complex residency-by-investment process, ensuring your compliance with essential requirements and enhancing your likelihood of success.
Our dedication to excellence and client contentment is a source of pride. We value establishing enduring relationships with our clients grounded in trust, integrity and professionalism.
Reach out today to arrange a complimentary consultation. We eagerly anticipate the opportunity to support you on your path of investing in Budapest real estate and securing European residency.
