Budapest Apartment advice

I can also confirm that Gozsdu will not be handed over in June. We inspected the development last week but it seems they are far from completion. Since Autoker has not clarified the new date of handover I do not want to guess but end Summer would be reasonable according to current situation.

As far as I know Szinyei Merse (handover started in early March), Marina II(started but not taken place yet ) and Marina III (April is specified but Tower M and L will not be ready to be handed over at that time)were postponed also. Autoker put more efforts into handover process in Marina and Szinyei Merse Haz. This is the main reason why Gozsdu will be handover over with delays...

Michael from OPI told me that over 170 Irish purchased apartments in Gozsdu. I agree with auto, do not rush with any of offers from Autoker, estate agencies, management companies. Thanks to delay, you have plenty of time to carry out this issue as efficiently as you can with investors in Gozsdu.

The main problem in this fine development will be the fact of oversupply. To manage the hihg risk of vacancy and low rent, you would be more careful than you had been ever before. I believe new solutions and practices should be found out in Gozsdu, otherwise, investors will face low return in the next couple of years even if prime location and good quality.

All in all, extra efforsts needs to be put regardless who is the management company that looks after your investment.

If you want to see what could happen when investors are not concerned about oversupply, take a look at Marina's renting market. Without well defined objectives, business strategy, renting massive amounts of apartments are very difficult.

Back to my main issue in Budapest (Location, location, location do not works well here), I want to give you the main highlights which help you:

First: value addings

- re-design the kitchen if it is normal and basic (modern design with high standard kitchen appliances, Siemens for isntance)

- re-design the bathroom if it is normal and basic (nice tiles and modern sanitery such as double sink with big mirror for a one bed)

- installing A/C because Budapest is a hot city Summer time

- installing electric shutters

- thermoplan glasses in the windows needs to be replaced because level of noise will be significant (Autoker provides normal glasses), this is the same when you have an apartment in Vaci where people are walking, talking, shouting all the time - Gozsdu will be similar to Covent Garden...

If you had any chance to make modifications in your apartment, I suggest you do it even if you have to pay extra for them. It is better to pay more now because added values will be compensated in re-sale price. Normal, basic apartments will be offered for sale and rent mainly. If you had a speical apartment, you would be in a great position.

2. Extra efforts to get a tenant sooner with higher rent

- interior design: modern city life will be popular
- do not put normal furniture with normal equipment (lights, decoration)
- LCD/Plasma TV set, DVD player (fixed on the wall, extra wall furniture to cover cabels...)
- maximise storage space (built-in wardrobes, bathroom, bedroom, lounge furniture)
- extra: washing machine with dryer, for instance

I do not suggest you accept furniture packages becasue same designed apartments are not welcome by tenants.

Finally, good investment does not mean good return if you are not willing to put extra efforts into it. Those people who think Gozsdu is good buy-to-let option, I would tell them try to rent and or sell 170 apartments at the same time with good return. It is almost impossible unless you do it as a professional in accordance with special market environment in Budapest.

There is always an issue with letting an apartment in a big development, due to competition from other owners, as indeed there can be an issue with selling when there are half a dozen sale signs on a project.

However there are ways of giving yourself somewhat of an edge, as Hungary says. The obvious one is to get the place furnished as quickly as possible, and on the market. A surprising number of investors will be still standing around waiting for someone to tell them what to do long after the smarter operators have tenants installed, so get out of the starting blocks early!

On the positive side, there is no doubt that Yom-Tov will get his apart hotel off the ground, and this will take a good few apartments out of the picture. Also it is likely that some apartments will not be furnished, but will either be offered for sale immediately or in a short period. I would estimate that a maximum of 100 apartments will hit the rental market, and of them, no more than twenty or thirty owners will have their acts together and will be ready to accept tenants at an early stage. Many of the management companies who will be involved will aslo struggle to deal with any kind of numbers of apartments at this level. Anyone who is reasonably alert should therefore get up and running in Madach fairly quickly.

The other way to get an edge is to furnish well, but not clutter. Best to use a good agency if you can find one to do this, but agree everything beforehand to avoid arguments later.

You can also offer inducements like a free couple of weeks or even a month, to be allowed for when the lease has been signed and deposit paid. The free period should be elibible for repayment if the tenant leaves within 18 months say, to be taken from the deposit. It works! It may go against the grain to give a free period, but its better than looking at an empty apartment for six months.

However it always seems to be the case that even large projects get filled at some stage, so don't panic, but do be proactive and keep on top of your business. Don't adopt a casual approach to this process, it doesn't work.

By the way, I wouldn't make comparisons between Madach and the Marina project; the latter is huge, and well out of the city centre. Madach has a serious edge in terms of location, particularly for the expat market.

I like the discussion so let us go deeper. I was thinking to share with you a view which is not common here in Budapest. With regard to Gozsdu, level of foreign owners are around 70%. I think high foreign ownership means high risk and high chance of low return. At the moment we are talking about Gozsdu only. But there are apartments for rent in Kiraly Udvar, Leda Haz. Further, new build apartments will be ready to be rented in and around Kiraly soon such as Fadesa House. In this area of district 7, hundreds of new apartments will be ready for rent. Renting market is not as developed as it should be such as limeted number of tenants, the fact of oversupply, non-standardised letting and management agencies with low educated human force, anomalies in price-value-quality (tenants need lovely furnished apartments but white walls at prime location with or without low quality furnishings has no value for tenants at all, quality of apartments: modern high-tech design and used material, space design, kitchen and bathroom style). All in all, Gozsdu has pitfalls by which good investment is not as good as it looks:

- 70% of foreign ownership: difficulties in renting and selling are expected in general
- oversupply in this area: extra risk in renting and re-selling potentials
- rent and re-sale potentials might be determined by success of other projects
- new apartments in district 6 such as City Home, Szinyei Merse, Andrassy Avenue have impacts on renting and selling potentials in this area of district 7
- Dorottya Udvar in district 5 and other new-classic developments in district 5 (due to the government's building will be renovated as apartment houses such Stock Exchange Palace at Vorosmarty Ter, Hungarian Television House at Szabadsag ter, etc.) will have new and special properties in Budapest
- Gozsdu is now unique but it can be ordinary in the future unless owners make the apartments extraordinary: (design, design, design)
- Location in downtown is not well defined and it is changing year by year (This area of district 7 was not a good location until 2003-2004)
- Kiraly and Hollo u. are OK but how about with Dob (below all expectations)

Auto, you do not want to make comparisons between Madach and Marina. To be honest, you should do it becasue Marina is now not well-located but what will happen in the next 5 years when Prestige City (Prestige Towers + Office complex, Water Park) and Marina project by Fadesa will be completed. The opposite can happen than expected in downtown where oversupply must be too high. This area in district 13 might be appreciated significantly while downtown will remain stable. You can see high gap between developments' prices in downtown today. Gap may become wider and wider between ordinary and extraordinary developments.

Is there anybody here who knows the quality in Gozsdu?

- heating and cooling system
- quality and standards of windows and doors
- quality and desing of kitchen and bathroom
- quality of parquet
- quality and design of light swithes, sockets,
- quality and design of court yard and the whole project (classic bulding does not a guarantee for high standard with high quality)
- quality of facilities

Until so far Autoker have not built really high standard residential developments. Cloepatra, Ceasar, Kiraly Udvar, Leda Haz, Marina Project are good quality projects but nothing special. I am afraid that they want to save money in Gozsdu as well. I mean they may not maximise the potentials in Gozsdu even if the price of apartments were very very expensive without knowing the quality and value exactly.

Back to renting market again. The first issue you think of rent itself. But how about fixed charge such condominium charge. I expect high condominium charge which is on the top of the rent. If facilites were included in this charge, it would be approx. €3 a sqm:

- 50 sqm apartment would have €150 fixed charge when it is not rented
- If tenant was in situation, tenant should pay this high charge

I mean low rent apartments could be rented with difficulties due to high utility costs. In general 30% of rent as utility charge is accepted by tenants. Over 30% the apartment looks too expensive:

- specifying rent depends on expected extra charges
- low rent apartments need to have low utilities

In summary, Success of Gozsdu depends on not only Autoker's attitude and plans but also investors' attitude and plans. If Irish/English investors would do the same as did it so far (purchasing an apartment without making modifications in basic plans given by the developer and try to rent it with normal way, thinking in relative figures in short term, etc.) Gozsdu will become an ordinary investment with high re-sale rate.

I have a very positive view but I am also sceptic because I do not see changes in Investors' view, however, they are in trouble at the moment: level of uncertainty in property market is higher than it was ever before.

Try to avoid pitfalls!

If it's true that Duna House/Home Management are putting together a furniture package for this, my instinct would be to stay well away. I've yet to see a HM-furnished apartment, which looks well. However, most management companies don't have any real design expertise.

I would also have some concerns with the argument that this is the best location in the city. It's certainly a good location in terms of its geographical positioning, but although it's quite nice, this area at the beginning of Kiraly utca runs the risk of becoming 'renterville' in the near future. It's also not really an established area and is surrounded on three sides by some very run-down streets and unappealing neighbourhoods. It certainly doesn't have the cachet of the city's more prestigious areas.

Investors who purchased here at the very beginning and at lower prices should theoretically do well out of Gozsdu Udvar, but those purchasing the remaining stock will find it difficult to make this investment work. For example, a standard 55sqm apartment in the older section is currently for sale from Autoker at €148,000 exclusive of parking, which costs another €24,000. To achieve an 8% return on the apartment alone, it would have to rent for €1,000 per month! Rental estimates from the management companies I've researched range from €450-€800.

Investors need to be really careful with all purchases in Budapest. There is likely to be a continued oversupply in certain parts of the market, which may get worse. The best way to make successful investments here is to research the market well and find the opportunities and niches. This would also seem to apply to the entire CEE region.

budapest said:

a standard 55sqm apartment in the older section is currently for sale from Autoker at €148,000 exclusive of parking, which costs another €24,000.

Click to expand...

Unless I'm mistaken, thats €3,125 sq.m, including parking!? Is that obtainable? (or sustainable?)

budapest,

€148,000 for one bed in Gozsdu seems to be very high. I was wondering of the quality and standard of this apartment. Ripoff is expected as far as I know about market price in Gozsdu especially if it was purchased in 2003-2004.

It's just a regular apartment on the less desirable top floor. My feeling is that as the project is coming to an end, the remaining properties in particular may have been overpriced to appease previous buyers. It gives the impression that their properties are worth a lot more now.

To be honest, the properties in Gozsdu are expensive but I have doubts what they are worth. Anyway, overpricing does not mean better value. This is just a simple technique how to catch the eyes. I am curious what quality they bring into Budapest property market. As said, Autoker has never ever built high end development. All Autoker developments are built at normal standard (except Romai Kert where qaulity is far below from normal standard). Comparing to DunaPest Residences and Prestige City, I am afraid Autoker do not want to give the same qulaity (heating cooling system/fancoil system, modern meters with IT system, high standard tiles and parquet, etc). Autoker has a standard quality more or less but Gozsdu should not be so standard. If so, price and value will be not in balance.

According to current stage, Gozsdu will not be handed over sooner than late summer.

Hello everyone, this is my first time on this site and to be honest it seems like a good way in getting some good advice before i make any decisions. I have noticed that a user by the name of budapest seems to be very well informed about any topic concerned with renting or buying an apartment in Budapest. I would like to direct my question either to him or anybody else that can provide me with some helpfull suggestions.
I am planning to move to Budapest either at the end of this year or at the beginning of next year and I am on the prawl for a dissent (nice) apartment in a downtown Budapest. To be honest I am completely lost to the fact which area of budapest is safe and which is not. From what i have read District V, VI and VII are supposed to be good and VIII is a no go!
To make things short, these are the features i am looking for:
1. preferably a 2 bedroom apartment
2. furinished (meaning everything)
3. between 60 to 100 sq
4. Safe Parking a must
5. price between € 400 - 600 a month (curious to know if water, electricity is included in the price of rent and if not how much does it cost on average in Budapest???)

I have decided to look for a apartment now, instead of waiting at the last moment.
Another important fact- i am planning to live in Budapest at least for a year, so if all goes well i would be renting it out for a good while.

Thanks in advance!!!

Hello Goranz,

A lovely place to live is in the neighbourhood of Raday Utca (District IX)
There's a way to find cool apartments within your budget.

Thanx for the advice Urban....
I did some more research and I have noticed from all other conversation that the other memebers held that Pest side seems like an area which does not get as much attention as the buda side. I have concluded that the pest side has good locations but poor public transportation, which dosent really concern me, but my question is what is the difference between does two sides of the city? Never been to Budapest so you can see my dilemma. I'll definitely take your advice for Distrcit IX

Thanx Again

Hello Goranz,

I have worked/lived in a dozen of cities and believe me: the public transport is one of the best in Budapest, in Buda AND Pest!: metro, trams, busses, troleys...
I would give as most importance difference that Buda has more green and "villa / luxe condo neighbourhoods" (uptown), and Pest more city feel (downtown).
Personally I like Pest much better than Buda, but I can imagine if you have children and want a garden, Buda is a better choice.
The posts by "Budapest" and "Hungary" are very interesting reading material.
"Budapest" is big fan of classical apparts in Pest, "Hungary" has a favour for new builds in Buda. Both have very good points to defend their (professional) vision.
Anyhow, the best thing is to come over and find out for yourself!

Thanx again Urban,
Budapest and Hungary do have different opinions and I have learned more from reading there postings and others than from googling for hours on end. Your right the best way to see what suits my style is to come and visit and i will be making a business trip on 7th May will be staying in Budapest for a week. The only reason I was curious to know which area is the safest was for the sole reason that I dont want to worry about getting my car stolen and any other property. Not that I"m saying that Budapest isn't safe but ever since i moved from Canada to Europe and lived in Belgrade Serbia for 3 years I have noticed that location is a important aspect when it comes to crime rates. Living in Germany has been great but BUDAPEST HUNGARY is something I am really looking forward to. Heard so many good things about Budapest from the people I have met. I'm not really concerned with peace and quiet zones, im not married and im single so night life and the feeling of being downtown would suit me best, but who knows opinions change.

I just have one question, I have read several advertisments for apartments on a site called ingatlan.com and there is phrase they use for a cost...for example: commom cost 11,750 HUF??? does common cost mean costs for utilities....ex. electricity, water, phone..etc.

thanx again

Hi Goranz,

The "common cost" is the condominium expense. The condominium expense is the cost of "running" the building as a whole including the common parts eg stairwells, lift, etc, as distinct from the cost of "running" the apartment (eg the utilities). It will comprise, amongst other things, the costs of the common representative (or house manager) and the costs of the cleaning lady (if there is one)! The expense is expressed as a monthly figure and it is paid by the tenant unless a different agreement is reached with the landlord. I hope this helps.

zsizsik

I understand that there is no "council tax", - like we have in the UK - true?

Generally speaking, there is no 'council tax' but from 2008, it is very likely that a property tax will be introduced. There are no definite details of what this might be just yet.

As of August 2007, it seems very unlikely that a property tax will be introduced in 2008. 2009 is a possibility though, but some people believe that the current government won't bring it in before the end of their term (2010).

We've invested in Madach Gardens and it's time to appoint a management company in time for the handover. Has anyone else made any progress? Looks like the selling agents are pushing Home Management.

You can be sure that if they push one particular party, there are some % in the air.
(BTW: Guys who seem quite ok are Marko Ing.- but their website is only in Hungarian )

Tara01 I am going to use Dezso who posts here a lot as Hungary.

Hi there, just an update for you, who bought at Gozsdu: our office is located very close to the development, and we got a client there as well who asked an update on how the works are going. The Király utca front looks very good, but they haven't started on the inner two phases yet, so according to the workman there, the technical handover won't happen before 2008. (I am an administrator, working for Bradley Edwards&Associates, a property investment and management company who only deals with foreign clients, and in comparison to other similar agents, they offer a very reliable service without ripping clients off). If you need any more information please contact me.