Hungary’s capital is one of the most popular city break destinations in Europe and offers some of the best property returns.
Great food, a strong economy and a growing tourism industry make Budapest one of the best places to invest in Europe. This beautiful city has been showing some of the most robust 12 months returns in Europe of late. Foreign investors have been moving into Hungary from all over the world, attracted by a welcoming government, rising demand and the prospect of excellent returns.
With stunning buildings, a strong cultural identity and a thriving arts scene, it’s easy to see why Budapest is dubbed the Paris of the East.
Straddling the banks of the Danube, Budapest is one of Europe’s gems. Beautiful architecture contrasted against the striking backdrop of the Buda Hills has helped to turn this into one of the most popular cities in Europe. People come here from all over the world for the food, the nightlife, the spars and the culture. A visit to the ballet or an afternoon spent visiting the city’s numerous galleries highlights just house vibrant and diverse the mix of arts in the city are.
With the government offering support for foreign investors, this is fast becoming one of the hottest tickets for property investors.
Hungary sits at the heart of Europe. Since it joined the EU, the economy has boomed, driven by its cultural, spiritual and economic centre Budapest. It’s the sixth largest city in the EU and deserves its reputation as the ‘Paris of Central Europe’.
Tourism is booming. The summer of 2019 saw record numbers of visitors. 2.5 million guests spent more than six million nights during the first part of the year. Occupancy rates hit 80% in hotels, rising to 88% in Spa hotels. People came from all over the world, with Germany and Russia increasing particularly strongly.
People came both for regular city breaks as well as the many events taking place across the city. The Maccabi European Games saw an influx of visitors from Israel, while the Sziget festival is rapidly earning itself a reputation as one of the best music festivals in Europe.
During winter months, tourists also flock to the famous Christmas market and the piping hot spas fuelled by warm natural springs. These waters were what drew the first settlers to Budapest, and they are central to the city’s appeal today. They mean that regardless of the time of year, Budapest sees a regular flow of visitors.
The city itself is split into two halves, neatly dissected by the Danube. The greener quieter Buda offers a more pleasant, and easy-going way of life. Meanwhile, the bustling Pest offers more commercial appeal. Where you decide to base your property purchases will depend on what you’re looking to achieve.
As with everywhere else in Europe, Hungary’s economy suffered during the pandemic. However, the underlying data is strong. Before the crisis, its economy was growing rapidly, and it looks set for a healthy recovery. According to some of the most recent data, the economy began to recover in Q3. Analysts predict a 4.6% growth in 2021 as a vaccine becomes more widely available. Growth is expected to continue at a healthy 3.8% through 2022.
The future looks positive. However, property prices are still relatively affordable compared to other top European destinations. Prices had risen rapidly in recent years but had shown signs of levelling off in 2019 before the pandemic pushed prices down even further.
Therefore, entry into the market is relatively low and, with the economy moving into the recovery phase in 2021, property may be relatively undervalued. Bargains may be available for those investors who can move quickly.
The cost of living is also relatively low compared to other major capitals. This makes it an attractive destination for many foreigners who come here to live or retire. Budapest represents an opportunity for a more affordable but high-quality lifestyle for those living in more expensive cities around Europe.
Our experts say
“Budapest offers the perfect proposition for property investors. Demand is high, and supply is limited. Additionally, policy is favourable, barriers to entry low, and the economic forecast looks good. The city has seen its status as a tourist destination and commercial hub grow rapidly over the past few years.
It’s a city which really draws you in, and property is still affordably priced and has plenty of room for capital appreciation – making it somewhat of an emerging market – as yet undiscovered many.
For many investors, one of the biggest attractions of Budapest is the opportunity to own property in a bustling and popular capital, without the high price tag you would find across the rest of Europe”.
– Matt Lavin
How to get there
From northwest Europe, the M1 motorway from Vienna and Bratislava enters Hungary just before Győr. A trip from Vienna to Budapest would take around 3hrs by car. To the South West, the M7 motorway leads to Croatia. The M5 motorway leads south towards Szeged, where there are nearby border crossing to Serbia and Romania.
Train travel in Hungary is comfortable, safe, affordable and accessible from many European cities. Direct international trains travel from Budapest to locations including Munich, Prague, Vienna and Warsaw.
Budapest is served by three airports, the largest of which is Budapest Ferenc Liszt International, located around 16km from the city. It’s the most used airport in the city, supporting flights from airlines including Ryanair, BA, Air China, Air France, Emirates, and many other international airlines.
Cruise ships travel along the Danube to the Black Sea with many calling at Budapest. Additionally from mid-May to September, a thrice weekly ferry operates between Vienna and Budapest via Bratislava and takes around 6hrs.
Budapest offers a generally mild climate with temperatures that rarely would make one uncomfortable – with average highs of upper 70°F in the country’s warmest months and a temperate average low of mid 20°’s in winter.
A typically Mediterranean climate, pleasant sunny days tend to start around March with temperatures rising to over 20 degrees come late April. Rain and thunderstorms are not unusual in May and June but tend to be short-lived.
Summers are warm and fine, with daylight averaging 9 to 11 hours a day and warm temperatures.
Early autumn tends to be an incredibly popular time to visit Budapest thanks to the warm and pleasant weather with temperatures rising to a high of 24°C (75.2°F) and fall to lows of 19°C (66.2°F) during the day. Winters are colder with December – February experiencing the coldest months. Snowfall can be fairly frequent, but not particularly disruptive.
The scene is set perfectly for property investors. The economy is strong, prices are affordable, and demand is high. It should come as no surprise that Budapest had the highest ROI for investors of any location in Europe. This helped spur a surge of investment which doubled in the space of six years.
A stable rental market has delivered attractive yields of between 7% and 12%, while property prices were increasing by between 12% and 18% before the pandemic. With most Hungarian citizens’ purchasing power being somewhat limited, the government has been very supportive of foreign investment. Government support is available, and any foreigner can buy property in the city. Financing options are also attractive and can be up to 60% of a property’s value.
A steady supply of tourists and people looking to move into the city means demand is always there. The outlook becomes even more appealing thanks to the type of properties people are looking to buy. Hotel occupancy rates are close to capacity with several developments scrambling to keep up with demand.
As such, tourists often choose to rent out apartments rather than book a basic room for themselves. This means there is a steady supply of demand for short term and holiday rentals.
While the tourism market is already strong in Budapest, there is a sense that international travellers are still only really beginning to discover the city. While visitor numbers in 2020 were naturally depressed thanks to the pandemic, they are set for strong recovery as life returns to normal.
Although many people will point to the thriving tourism market, Budapest is overwhelmingly the centre of Hungary’s economic life. This makes for a constant supply of young professionals moving into the city looking for rental accommodation.