A cautionary tale of losses in Budapest

MaxIII said:
...... good chance that Budapest will boom 2009 - 2010.
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Four or five years ago everyone was saying that Budapest will boom 2006-2007

MaxIII said:
Also the the markets in UK and Ireland will be static or even fall - this would be offset by the growth in Hungary.
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Its a bit naive to assume that possible market falls in Ireland and UK (both of which are ultimately influenced a great deal by US economic conditions) will magically be counterbalanced by growth in CEE, which is also influenced by US events, albeit to a lesser degree perhaps.
 
ubiquitous said:
Four or five years ago everyone was saying that Budapest will boom 2006-2007
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This is true of some of the international 'investment' agencies but the local agencies I was in contact with at the time didn't say this.

As of now, there is no real prediction of a boom in the near future. I agree that 2009-2010 is a very arbitrary date. An upsurge is very likely to happen at some stage, but it's almost impossible to predict when local buyers will get back on their feet after several years of financial constriction due to the austerity measures.
 
budapest said:
This is true of some of the international 'investment' agencies but the local agencies I was in contact with at the time didn't say this.
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'Investment' agencies
'Investment' is a word open to substantial interpretation.

To wash its face, your 'investment' should deliver some kind of attractive return: a correct rental income + some capital growth.
If not, it's not an 'investment' (but an expensive hobby)!
 
Hi Folks, just to give an update.
Property has still not sold
Current price is 17MHUF, so the losses will be greater than I had even originally anticipated
Agent is getting a huge number of viewings, but everybody is being put off by the facia of the building. So perhaps this is a cultural thing, another item for consideration when "investing" in Budapest.
While I overlooked the look of the building (and stupidly believing the standard line "it's about to be renovated"), it is obvious that the local populous set a lot more store by the look of a building than I had previously imagined. All feedback on the actual apartment is generally quite positive, but in all the time the property has been on the market, not one bid

I am continuing to drop the price as and when the agent advises, so hopefully there will be some closure soon, but I suppose it just re-emphasises the thrust of my original post
 
Did you consider using another agent - just in case the agent is getting the price lowered 'for a friend'. Do you think that your situation is reflective of other attempted property sales in Budapest?

ninsaga
 
I am extremely happy with the agent actually. I don't think she could be trying any harder. I know that she is getting a lot of viewings, she keeps in touch with me constantly and is a huge step ahead of previous agents I have dealt with. In addition she advised early on that some remedial work was required and manged that for me without charging, (sent photos while the work was being done, sent on the agreement for the work etc). She herself has been very surprised that given the amount of viewings, not even one bid has been received. She has been working on this sale for a good while now, and on most occassions I have suggested the drop in price
I would suggest that this experience is probably common for anyone with a property that has a downside - i.e. wrong location, or shabby building, or shabby apartment, or some other turn-off.
As budapest often quotes, well presented apartments in refurbished buildings in the right part of town sell quickly, but there is obviously so much choice out there that even the slightly imperfects are left on the shelf
 
Sorry to hear that it still hasn't sold, amgd28. The facade is a problem as is the location of the building, slightly away from the nice part of Hajos and also the positioning of the apartment with the building. As you say, there is a good supply of slightly problematic apartments for sale at the minute but at that price, it should sell quite soon. Hajos utca is a popular street - even properties on the part closest to Bajcsy.

I know I've mentioned this before, but have you exhausted all possibilities in terms of re-mortgaging in Hungary? It is such a bad time to sell this type of property, even though it should theoretically be quite easy to rent out for a good return, if furnished well. Renters don't mind an unrenovated facade as much as buyers do and when the building is eventually renovated, you could put it on the market.
 
Hi budapest,
No I'm still committed to selling. When taking into account voids and maintenance etc I'm not convinced that renting is a decent alternative to selling. Also given the fact that the house committee have indicated that there is absolutely no hope of the facia of the building being refurbished in the near term (2-3 years), I am much more inclined to take the losses on the chin and move on.
Appreciate the advice though and will keep people posted if there is any movement
 
Hi, amgd28,

Sorry for your trouble. I hope all will work out better for you. I've just bought a property in Budapest, too, but I'm not trusting any agent there.
Could you please tell me the name of the woman who is selling your apartment? You say she is quite trustworthy, and I could need her services for renting or, eventually, selling mine in the future.

Thanks and good luck.
 
Hi Amgd28

If you must sell - has an exit review (all potential buyers) been conducted by your agent on the main reasons or the top three items that have caused the potential buyer not to proceed.

Once you have something tangible (instead of keep lowering the price and increasing your debt - loss) you can then best evaluate a way to overcome the problem(s).

Offset the price reduction into something exciting and different and not just price reduction which looks as what it is : desperation for one reason or another.

If it is truly the outside which seems to be a difficult issue to overcome, tackle it head on and let the buyer know how long it has been like this and a not to distract it from your apartment instead, as this is what you live-in - eventually it will be renovated, but get them to see pass this.

Or look at what will make your sale different and attractive. Offer to cover all costs (limit) add a car, bike, annual public transport pass whatever it might take to add a USP (unique selling pint) take the buyer(s) mind away from the outside and get them 'inside' and focused which will strike the cord to tip the sale.

Find the root issue and tackle head on !!

Kind regards

Chris
 
My work takes me to Budapest frequently and the people I come into contact with there are bemused by the attitude of the foreign (particularly) Irish property investors and how they appear to have more money than sense. They tell me that they can't understand how they are prepared to pay so much over the perceived local value of an apartment without any proper research into its location, condition or resale value if you need to sell it on. An analogy would be if places like Darndale were being swamped by amature Swiss property speculators snapping up houses at inflated prices simply because they were cheaper than the cost of a house in Zurich or Geneva. Realistically you'll never be able to recover your costs by selling it back to a local so your market is somwhat limited, even the potential rental income some of the agents mention is way beyond what the locals would pay especially if its in one of the less desirable districts.
I'd heard a lot about the beauty and charm of Budapest before I went there but my own personal opinion on the place is that its a filthy city with a lot of unsavoury characters just hanging around train stations, public buildings, street corners etc, not somewhere I'd ever go for a romantic weekend away and certainly not somewhere I'd invest in.....
 
I'd heard a lot about the beauty and charm of Budapest before I went there but my own personal opinion on the place is that its a filthy city with a lot of unsavoury characters just hanging around train stations, public buildings, street corners etc, not somewhere I'd ever go for a romantic weekend away and certainly not somewhere I'd invest in.....[/quote]

Whatever about the budapest property market I am wondering if I have been to the same city as you! IMHO it is a beautiful city with really friendly inhabitants and I would feel as safe wandering around its streets at night as any other capital city I have been to and in fact had less unsavoury drunken/aggressive characters than london, dublin,prague moscow,paris but that is merely my opinion based on my own visits there.. It does however have the most manic drivers I have ever seen so thank god for the metro!!
 
If it's any consolation amdg28 nearly every investment I touch turns to sh!t - and that is following the rules - so you're not the only one!
 
Hi Folks
An update: Offered 15.7M HUF today, raised to 16M HUF to throw in all the furniture.
I have accepted.

So as this equates to 61K, it is an expensive lesson, but I'm glad it's over!!

Thanks to all for the advice, and I hope some people benefit by thinking twice before making rash investment decisions

For those asking for the agent, name is Dora Toth, Duna House. PM for contact details
 
Budapest and Darndale! That's certainly a comparison I have not heard before!

amgd28, glad things are progressing for you! Best of luck in your future investments!

UrbanDev, MaxIII and his unusual analysis was banned quite a while ago.
 
Thank you for the information, Amgd28 Best of luck to you in the future.
 
Last year i bought 2 studios in district 6. When i went to see them i was so impressed that i foolishly bought a third in my sons name due to complete in march 09. I have so far paid the deposit. My studios are not let yet and my management company have blanked me because i dared to complain about their service so i am looking for another management company. I am really worried about the letting of these 2 apartments and wonder whether i should walk away from the 3rd apartment and lose 12k or continue to buy and rent or sell offplan now! any advice from anybody?
 
jillym, in which development are the apartments located? Have you furnished yet and if to, to what standard?
 
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