Budapest Andrassy Rose New Build Apartments

I bought 2 apartments on the 5th floor, including parking spaces, in this development in Andrassy Rose, District VI in November 2004.

The development is at nr.84 Rosza street. At the time I paid approx 2000 euro/sqm - looks crazy now!

I signed the preliminary contracts in 2005 believing that these apartments would be completed Dec 06 but they have only begun construction now and the completion date is now approx early '08.

Got fed up with constant delays and looked at not proceeding with signing the final contract. My attorney at the time advised that I would pay a penalty of 10% of the total purchase price ie. 20,000euro.

Not happy with his advice I hired another attorney who has since advised me that the construction company are looking for 5% penalty to have my money returned. Has anybody else any knowledge or experience of opting out of their contract and if so with what results?

Should I hang on in and buy the apartments or cut my losses now?

Were they too expensive in the first place and what is the rental potential in this area?

Any advise would be greatly appreciated!

Of course I don't know the exact contract you've signed, but if the building really was due for Dec 06 and the developer will only finish it in a year, the penalties the developer owns you should be in the same order as your step-out penalty.

What's scary with this project is that it's already on sale for over 3 years, and not even 50% is sold. Not a good sign!

Hi Emptypockets,

The apartments were too expensive to start with. 500,000HUF/sqm is crazy for this area. Although I wouldn't recommend them either, several new builds on Sziv utca (much nicer street than neighbouring Rozsa) are selling for closer to 350,000/sqm and still good availability. Andrassy Rose doesn't seem to be anything more than a standard new build, so not sure why they priced it so much higher. Building design seems better than neighbouring developments but technical specification is very ordinary. Rental potential isn't bad in this area for new build apartments, but I'd be a bit concerned in terms of what you paid compared to future capital appreciation potential. Just my opinion, but if it were me, I'd probably take the €10,000 hit and invest in a different development.

UrbanDev said:

Of course I don't know the exact contract you've signed, but if the building really was due for Dec 06 and the developer will only finish it in a year, the penalties the developer owns you should be in the same order as your step-out penalty.

What's scary with this project is that it's already on sale for over 3 years, and not even 50% is sold. Not a good sign!

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Thanks for the reply. I've never managed to get a copy of the preliminary contract but my new attorney tells me that it is pretty biased in favour of the builder. Bought these through an Irish agent off-plan but he has been telling us that they have increased in value by 10-15%. The Hungarian Attorney who was supposedly working for me was singing from the same hymn sheet! I fired him when I found out at a property seminar that I could buy new builds in the same area at 1400-1500/sqm 2 years later!!!!

I am still being told by the Irish and Hungarian selling Agents that there are only 2 apartments left - why do you say that there are only 50% sold???

The builder has offered to pay back the remainder of the deposit money when he sells my 2 apartments again - I don't believe that will happen any time soon! Any further advice appreciated from any quarter.

Emptypockets said:

I am still being told by the Irish and Hungarian selling Agents that there are only 2 apartments left - why do you say that there are only 50% sold???

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On the latest list I've seen from the Coral Holding, there were only 3 appartments "for sale" and 16 more listed as "reserved". I compared it with a previous list from 6 months before, and nothing had changed. From my experience I know that when a "reservation" do not become a "sale" after this time, most "reserved" apartments come back in the market, soon or later...

yeah, see what you mean, Urbandev, still bugs me that a large construction companey refuses to return a deposit to a client after they have broken their own construction schedule.They know it could take me years to recover my monies by going through the courts. Last question, open to everyone,is there any Hungarian regulatory organisation that would have any influenence over their construction companies, or any other suggestions on putting pressure on these guys?????

Putting pressure on the construction company is not something I would recommend.

Remember you own 2 apartments in the development. Playing heavy with them will only mean you have one option - that is pulling out.

You neither have the resources nor the incentive to take this legal .

It seems like it is the price that really is the issue not the delay - you mention the crazy price before the delay issue but loads of properties were bought in ireland last year that have suffered far greater falls than your deposits. Giving you an out for 10k is a favour that they probably do not need to do.

"You neither have the resources nor the incentive to take this legal"

Thanks for your answer but I have the resources and the incentive to take this legal if needs be! This isn't the first investment I have made in Budapest however, I believe anybody who invested in these apartments has been misled from the start. They were never going to start on the date I was told, they were never going to be completed on the date I was told and they have not increased in value as I was told before I signed the preliminary contract. I only found out accidentally at a property exhibition from an Hungarian Agent that the project had not even got a demolition permit never mind a construction permit 12 months after I paid my deposit. It certainly doesn't appear unreasonable to expect my deposit back in these circumstances.

Emptypockets said:

"You neither have the resources nor the incentive to take this legal"

Thanks for your answer but I have the resources and the incentive to take this legal if needs be! This isn't the first investment I have made in Budapest however, I believe anybody who invested in these apartments has been misled from the start. They were never going to start on the date I was told, they were never going to be completed on the date I was told and they have not increased in value as I was told before I signed the preliminary contract. I only found out accidentally at a property exhibition from an Hungarian Agent that the project had not even got a demolition permit never mind a construction permit 12 months after I paid my deposit. It certainly doesn't appear unreasonable to expect my deposit back in these circumstances.

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My point was not speicific however most apartment buyers do not have the resource to take on large foreign construction companies on their own patch who have been thru it all many times before, their legal teams know the best way to defend the case. Unless you have a legal insider who says you have a cast iron case then going legal against these guys is a waste of your time and money. These companies have budgets set aside for legal cases.

No one can say for certain any asset in circumstances above is going to increase. Otherwise the builder would keep them all or the agent would buy them all.

Hi Maine
Yes I agree with alot of what you are saying but I am pretty determined to fight my corner in this case. Apart from the legal side not many companies, property agents or attorneys like adverse publicity, especially when it is based on truth. Apart from my own prediciment, I think it's amazing that some of the claims that estate agents make can go unchallenged! Maybe I'll start attending a couple of property seminars and present a somewhat different picture than what is usually available!!!!!

empty, I guess that your pockets are not empty if you plan to fight with the developer (-:
in most contracts I have seen there is a date for handing over (or a date for completion of the construction work) and then the developer has a certain delay period, following which he needs to pay a penalty and a certain period that if the building is not delivered by that time (or it is known that the building will not be delivered ) you can terminate.
the price which you paid is way too much, I know that kandar is selling in sziv street (parallel to rosza) for 1700 euro and SB is selling in the 6th district part of rosza for 1400 euro / m2.
I am not familiar with the general regulation which exist in Hungary , I believe there should be a certain limit for the developer to handover even if the contract does not limit you but...
if they offer you to refund you today for most of the money and the last 5% when they sell I believe you should go for it, the cost of litigation and travel to Budapest might be more then the 5% but... make sure that you will have some remark in your favor on the title of the property otherwise they might sell the property without letting you know and you will end up chasing them for a long time

lee-m,

I would take that offer if it came but they are not offering me back any more money until they sell the apartments ie. they want to hold onto 10% of total price. Anyone out there come across any bargains in the Budapest property market recently??!!!!

OK, I got the picture now, still it is very likely that they will sell the apartment sometime and refund you, while if you will take them to court it will take a lot of time and money, I would suggest first to send a lawyer letter to them and then to negotiate in order to try and get back the money ASAP, in any case bear in mind that if you signed the final contract your name should appear on the title and can only be erased with your consent - which you only give in return the refund, if it is only a pre contract then there is no remark on the title but they need to cancel your contract before selling to a 3rd party, the contract is your security since re selling without the cancellation is a criminal offence...
to make a long story short, I tend to avoid courts at any cost and I will suggest the same to you

re .Rosza Street thanks for all the advice and information.