Key Post: First Time Investor...thinking about Hungary!

I guess the only thing to do

is go out there. I have a friend who has a friend who lives and works out there(budapest). I have been in touch with my friend about getting in touch with his friend(this is getting complicated) and I should hear back from him soon. If he has anything interesting to say I will post it here.

I have kept an eye on different sites (casaro, hungarinvest etc.) but I suppose you can't really get unbiased information unless you go out there and see for yourself, or read up on message boards like this one.

After all I have read I have come to the conclusion that if the property is purchased with the aim of gaining from capital appreciation then it is probably a wise investment. I attended an open day held by budapestinvest recently and I found that you could easily be seduced by the difference in prices between new appartments in Budapest and their equivalent here in Ireland. But that doesn't necessarily mean they are good value.

I have been considering this for a while now and it is coming near to the time when I must make a decision one way or the other. So I guess it is coming near time when I should visit Budapest and see what is on offer.

Piggy - have you gone to Budapest yet? If you have - did you arrange with any real estate agencies to show you around or did you go on spec?

Cheers,
Shnaek

Re: I guess the only thing to do

Hi Shnaek,

No...didn't go, although I was supposed to go the first week of August. I still think it's a good idea, but totally agree with you, it's only really a good bet in terms of capital appreciation. I'm a first time buyer so I need rental income. A couple of developers really put me off the idea. Also, as I don't have equity here I had to approach an Hungarian bank who agreed to finance 60% over a maximum of 10 years...not the best, but I believe it quite unusual for a Bank over there to offer a mortgage to a foreigner for investment purposes.
Haven't discarded the idea altogether, but I don't see the point in going over again unless I want to view with the intention of buying.

Piggy.

Hungary

Hi Piggy,
Very interesting that bank entertained you despite not having equity in Ireland. I am currently looking at this as well and would like to know which bank you contacted and what they required from you prior to granting loan. I am hoping to head there in the next month so interested in which bank will help. Maybe we can all meet up there !!!
Thanks,
horse

Re: Hungary

Hi Horse,

Bank was Raiffeisen...(www.raiffeisen.hu). Didn't provide them with anything extra. Told them everything...including the fact that I was a first time buyer and why I couldn't get the mortgage here for an investment property. Like I said, if you have property already would be much better off trying to secure a mortgage here.

Best of luck,

Piggy,

Re: Hungary

Hi Piggy,

In regards to the property management query earlier.
I do not as such use a registered management company.
When I got on the ground over there I formed a lot of contacts.
The local property industry is quite small really.
I got put in contact with a mature foreign student who has a small number of properties that he manages and got him to take care of my property.
A year long contract was drawn up.
There are risks involved with not using a registered management company but these guys can have a large number of properties on their books and if you are not a priority to them then problems with rental can arise.
A management company was recommended to me by a reliable source and I may use them in the future but can't comment on them yet.

(Investabroad Holdings, Real Estate & Property Management Company Kft. Tel:+36 1 483 1580 Email: pro_man@ediport.hu)

Re: Hungary

Thanks Dasher.

Investing in Hungary

I have read everybodys suggestions and advice about investing in Hungary & thought I'd add my experience for those who are interested. I was born in Budapest, but did not grow up there and I do not live there now. Regardless, I formed a company to buy my first apartment there last year. I speak fluent Hungarian.

The purchase process was easy and quick, but I paid cash. Learning Hungarian is not necessary-English is a popular 2nd language there. I am very satisfied with what I purchased & expect the value to rise year after year. My advice would be to be very careful who you trust with your investment after the purchase. I had a very very bad experience with Casaro Hungary Kft and their management company Weiss & Son. But I am fortunate to have knowledgeable family who live there who are able to help me recover from the damages Casaro has caused me.

I honestly don't know how a foreigner could have survived such an experience without inside help. I still believe Hungary is a great place to invest, just be real careful whom you trust. Just because a company has a large presence on the internet, doesn't mean they are the only ones in business and worthy of your confidence.

Re: Investing in Hungary

Just as a matter of interest shaker...what was the problem you had with Casaro? It could prove very helpful to anyone considering an investment with them.

Piggy.

Also -

Shaker - have you any companies that you as a local would recommend? I am thinking of going out there soon and it would be great if I knew what companies were best to get in touch with. Cheers

Investing in Hungary

Gee-how much time do you have??? I admit I'm kinda reluctant to trash anybody or any business on the Web, no matter how much they deserve it. I'll try to be brief & see how that goes. First of all, Casaro is not really a Hungarian company as they claim to be. The owners are Israeli who speak no Hungarian & English not very well. Staff is Hungarian. Basically, they did not do anything to which they had contractually agreed, but lead me to believe that they did. Their bookeeper missed very important tax deadlines for which I have been fined. When I found out what was (not) going on, they flatly cancelled the contract & have kept my money. Now they refuse to speak to me. Interesting to note that nearly all their staff left them earlier this year due to the way they treat their clients. I would like to file a complaint against them, but an attorney would be required. I have heard that there are several lawsuits against them worldwide, but this is only heresay.

Investing in Hungary

The people who left Casaro earlier in the year formed HungarInvest. I have worked with several of them & so far am very pleased. They seem to really have the clients interest foremost and they charge far less than Casaro. They are all Hungarians who speak English very well. But they do not do property management. For that, I have been referred elsewhere, but its too early for me to give a recommendation. Just remember my advice-if someone agrees to do something for you in Hungary, you HAVE to follow up on them (at the risk of being a pest to them) to be sure they have done it. Don't take it for granted that they will follow through on their own. Good Luck!

Budapest

I am also interested in real-estate investment in Budapest, and have been doing a good deal of reading.

I have been put off lately by reports that supply exceeds demand in residential lettings, and so letting prices are continuing to fall. Furthermore, there are quite a few massive public housing projects in the pipeline which may further decrease lettings. The refore in term of yield it seems Budapest is not a good idea in the short term. With regards to house flat prices, the general consensus it seems that they will continue to rise about 10%-13%. Some have suggested that Prague may be a better bet. Any comments on any of these observations will be welcome.

Cheers,

Bear

Re: Budapest

Maybe I'm speaking out of my posterior (quite eloqeuntly mind you ) but I thought Prague was mighty expensive these days, is it not?

Hungary

Hi Piggy and any1 else who is reading,

I am very keen to invest in Budapest too but have been worried by things I read. The good points: Firstly I love this beautiful, dynamic city, you can sense the revival and positive energy of its people. Secondly, it is well organised and seems less corrupt than many other emerging East European capitals. Thirdly, in the long term it has a potential of being the major economic gateway for Bulgaria, Romania, Turkey and the Ukraine, which may well give property prices a real push.

The things that worry me are the following. From what I can see, in the short term, real estate prices in Budapest are not going to go up dramatically. It seems, we have missed the boat on that one *sigh*. There are simply too many buildings being chopped up and sold as apartments. This also has an effect on rental income which is bottoming up and declining. Lastly, for lack of parking space and accessibility to city centres, some multinationals have begun to invest just outside Budapest, which may mean that a city centre investment may not be the best thing. Having said that it seems that V, VI, VII, and IX would certainly go up in prices even if there would be a slow down or even arrest in growth of both value/rental (but you need to invest wisely, small flats are still much more favoured than big ones).

Prague has, apparently, better potential for economic growth, and therefore better property/rental return, various predictions all point out that rents increases are accelerating. To some degree Prague and Budapest are competing for being the regional economic centre, and Prague it seems, is winning, for now, that race. Of course it all depends on what you want to do, and what sort of return you are looking for.

I would be interested to hear what other people think, as I too am keen to invest, of course with some caution. This is the reason that although some friends who are in the know in the financial investment sector recommend Moscow (prices are now starting to accelerate in both property value and rental), I would be very reluctant to put my money there (corruption, mafia, etc.).

I am very keen to share and learn from others concernig investment in Budapest,

Yours,
Bear

Re: Hungary

Bear

If you were to buy in Budapest or Prague, would you go for a local currency loan (ie Forint / Koruna) or for a loan in Euros? (Assuming, of course, you had the option of both).

Certainly in Poland loans in the local currency carry a far higher interest rate than loans in Euros.

Property fund

Like so many contributers, I'm quite interested in property investment in Budapest. What I wondered though, is if anyone has considered setting up a fund to invest on a larger scale than one might on their own? I read one person's reference to an existing fund where the minimum investment was 200k. This for me would be prohibitavely high. My idea of a reasonable entry level would be more like 50k or even less. Prehaps some other regulars to this board would be interested at least in discussing this further. I can post an email address if people wish to discuss this further with me personally. Any financial people out there able to shed any light on the likely problems/obstacles involved in setting up such a fund??

Budapest v Prague

Bear,

Regarding Prague v Budapest - you might be interested in a report published by Euractiv.com ranking Czech Republic second behind Hungary in terms of ranking for risk/stability and also ranking Hungary 1st and C R second in terms of The Most Potential in Real Estate in Emerging Europe.

Rgds,

Val (valpower1503@hotmail.com)

Re: Budapest v Prague

Val

Do you have the exact web page for the analysis? There is interesting comment at www.euractiv.com on the European Bank of Reconstruction & Development's views on the accession countries recent performance (which is reasonably kind to both Czech Republic and Hungary, but far less so to Poland), but can't find the rankings you refer to which sound very interesting.

Stephen

Report

Stephen,
You will find the report referred to in a couple of sites, but definately on
Cushmanwakefieldeurope.com/servlets/cw-research/marketresearch

Hungary's EU integration website also quotes part of the report - www.kum.hu/euint

In general a search on EU enlargement will throw up very valuable information!

Rgds,

Val

Re: Report

Val

Many thanks for the web site reference. At $900 plus for the report it's quite expensive and I guess aimed at institutional investors with deep pockets. Are you by any chance able to paste a sizeable extract? Would be really interested to see what they say!

Kind regards

Stephen