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

Re: Report

Stephen - You're not asking Val to breach copyright law, are you? This would be very strange for a solicitor! Or perhaps you would be surprised at the idea that a $900 report might be copyrighted?

Re: Report

Rainyday

I'm not a copyright law expert at all. However, I think (but stand to be corrected) that relatively small excerpts can be copied without offence if the source is indicated.

Nor am I sure if Ireland and UK are the same.

Stephen

Re: Report

Hi Stephen - And is a 'sizeable extract' the same thing as 'relatively small excerpts'? Now you'd want a really, really great lawyer to prove that they are the same thing.

Re: Report

Rainyday

Point taken! Still, if we could find a way to hear more about that report it would be interesting, since a lot of people (myself included) seem keen to work out where to invest in Eastern Europe.

I notice that "Euro Property" has a recent article entitled "Irish try their luck in continental hot spots" which says (and this is a short quote!):

"Irish investors are expected to spend almost 2bn Euros on UK property this year, but their appetite is changing as they vie for a slice of the Continental property pie. Central Erope is the latest target, with Poland in particular attracting strong interest".

So why is everyone on this board pushing Hungary so hard? Are the really savvy Irish investors keeping info to themselves.... Or setting up diversionary red herrings ....

Stephen

Quick stat

"From 1989 to 2002, foreign investors established over 30,000 companies and invested nearly €26.5 billion in Hungary, accounting for nearly one-third of all foreign direct investment (FDI) in the countries of Central and Eastern Europe during this period".

Not one of the diversionary red herrings, but genuinely believe Hungary has the most potential amongst current accession states, above just one reason why!! Hope your search going well Stephen. Probably the best move you could make is to actually visit perhaps your top 2 choices - flights and accom are generally such good value - and there is no better way to make your decision.

If you do decide to take in Budapest do see other links for my personal e mail address - and I can point you in the direction of our company web site - might be useful.

Rgds,

VaL

Re: Quick stat

Val

Many thanks for that. Yes, it has to make sense to visit to get a feel for things. The truth is that there are probably many East European cities well worth investing in, and doubtless Budapest one of the best.

Would be delighted to look at your site. Could you e-mail details?

Stephen
info@barneslaw.co.uk

Eurozone and OPI

Were any of you at the Eurozone and Overseas Properties Investments exhibitions over the weekend in Jurys and Maynooth?

I was at the Eurozone exhibition.

Some points:

Hungary:
average salary in Budapest €10,000
prop price €170,000
monthly rent €850

Ballsbridge:
average industrial wage €28,000
prop price €500,000
monthly rent €1600

Bangalore, India
average salary of sw eng with 5 years exp €12,000
prop price €50,000
monthly rent €250

From what I gather these properties would be of a similar quality and fitout. From what I hear (from people very much in the know) €50,000 would buy you a very nice 3 bed house in Bangalore in the Ballsbridge equivalent. Bangalore is where a huge number of quality (R&D and Design and Devlopment) technical jobs are moving. Before you think I am incredibly naive in thinking about Bangalore just bear in mind that I understand risk and reward and that I would be prepared for a downside.

Any comments about the exhibition or about Bangalore?

Re: Eurozone and OPI

These figures seem misleading.

I doubt if there are too many people in Budapest earning €10,000 per year and spending €10,200 per year in rent.

I also doubt if anyone on the average industrial wage of €28,000 can afford to pay €19,200 per annum to rent a property in Ballsbridge.

Average wage levels mean very little in any discussion of premium investment properties and achievable rents. What you need to look at is the average salaries earned by your target market (eg young professionals), the typical rents they are expected to be willing to pay, and the macroeconomic factors that are likely to affect these figures in the long-term.

Extrapolation

Tommy,

my post was ill-formed. I wasn't really suggesting that someone on €10,000 could pay €10,200 in rent. I was only pointing out some factoids.

A large part of the population of Ballsbridge would be higher professionals (doctors, dentists, vets, ...). At a guess the average salary of such a person in mid-career is 3.5 times the average industrial wage (28,000) which works out at ~ €100,000. Using this assumption and extrapolating to Hungary and the Eurozone property (Vadasz) I would say that the aforemtioned professional in Budapest would earn €35,000. Assuming such a professional couple with joint income of €70,000 they would be able to raise 2.5 times first salary plus 1.25 times second salary which means: €130k. Hungarian banks will currently lend only up to 60% of market value this means that the property such a couple could buy is €220k with a deposit of €90k, which is massive given that. The interest rate payable is 10% (!) and this corresponds to very approx €2000 in repayments per month over 20 years (making a simplistic calculation that 10% corresponds to a repayment of €15 per €1,000 borrowed).

The question then becomes ... if the above is correct what does it mean?

rent in budapest

Tommy.
you are right a guy who makes 10K per year can not invest more the 3-4K for accommodation.. but
- a large number of people over there are already making much more then 10K the average includes also people living in the village and making 100euro per month.
- most of the people who are renting apartments are not locals, the locals have a tendency to buy.