Development of investment real estate market in Hungary
Due to a stable governmental situation in Hungary, it has a good climate on the investment and real estate market.
In the area of tourism, this is reflected by a constant increase in tourist numbers. The average occupancy rate of the 3 * - 4 * hotels in Budapest is 65% and is permanently rising. This results in good returns from income and hotel properties.
An increasing demand for accommodation possibilities is noticeable in the field of 3* and 4* hotels, but also in the field of 5* hotels in Budapest as well as in other tourist regions of the country. This demand is to be covered by the construction of new, high-quality hotel properties. In addition, good returns for such properties can be expected due to Hungary's application for Olympics. Source: http://www.touristiklounge.de
The economic situation in Hungary is largely stable. Economic development shows a positive potential with a projected increase to 3%. This also prompts foreign investors to increase investment in terms of income and commercial real estate. Source: International Telecommunication Union, The ICT Development Index 2014.
This positive development is seen not only in Budapest in the segment of attractive investment real estate, such as office and business properties with yields of 6.5% - 8%, but also in other economically growing regions of the country.
The continuous development in the commercial and office real estate market with good returns also affects the interests of foreign investors who are moving out of the countries such as England, France, Germany and investing in the income real estate in Central and Eastern Europe, where they can expect higher yields.
District investment project Palatine City in a West Hungarian city, where in a former industrial area, in a close cooperation with city government a mixed use project of living, working, and studying space will be created. Source: www.palatine_brochure_24 + 4_05.07.14.compressed.pdf
However, investors and property buyers are advised to turn to the real estate brokers (www.immotrading.at), which are already established in Hungarian real estate market. As a result of unofficial brokerage activity, foreign investors can encounter many negative surprises, such as missing mandates and brokerage agreements, etc.
The real estate market, however, is not yet overheated and will also be interesting to investors because of its mild tax measures, such as reduction of corporation tax to 9%.
The Hungarian government would like to make the country more attractive to entrepreneurs. As a result, the government announced that it would lower corporation tax to the lowest rate in the EU. Source: https://www.unzensuriert.at/content/0022423-Koerperschaftssteuer-Senkung-Ungarn-will-business-friendly-state-Europas
In the scope of residential space (rehabilitation or new construction of the property or rented housing), Hungarian government offers a value-added tax of only 5% instead of the normal tax rate of 27% for developers.
Budapest, for example, has good universities frequented by many non-local students. In 2014-2015 alone, the number of students in Hungary has increased by 32%. For this reason, there is a great demand for student rooms or apartments, which is to be covered by an investment program of the Minister of Human Resources Zoltán Balog as well as by a national university development strategy.
A total of 123 universities and 37467 people are involved in this government's development strategy. During this development phase, new buildings will be built with a total of 4000 new rooms and 8000 beds. 12000 rooms for 29000 beds will be renewed or renovated.
The cost of this development strategy amounts to HUF 192.6 billion. Development expenditures will reach HUF 24 billion in the first stage alone. According to the timetable, investments are to be made in 2018-2020.
Another 32 colleges with an investment volume of 68 billion are also affected.
A further 40 universities are expected to get an investment of 50 billion in 2020 and 2021.
In the last stage, by 2023 the investment of HUF 52 billion is to be implemented in 44 universities for improvements and sanitation measures.
For foreign investors there are also other interesting tax or financial incentives in this area.
By acquiring real estate projects (demolition - new project or old building redevelopment project), residential real estate / housing estates can be created and used economically (rental, lease, sale).
With acquisition of property and takeover or creation of new Kft (company), the foreign investor can also apply for a residence permit in Hungary.