EUROPEAN INVESTMENTS

A country of 10 million inhabitants, 2 million of Hungary’s residents live in its cosmopolitan capital Budapest which sits on the river Danube. The city is an extensive World Heritage site regarded by many as one of the most beautiful cities in Europe, often referred to as the “Paris” of the Central European region due to its architectural style consisting of many stone-built with baroque sculptural styles, comparable to the Haussmanian styles of Paris.

The Hungarian currency, the Forint is relatively weak at the moment and there is a real long term trend of investment from local occupiers and foreign investors for newly built, high standard apartments or recently refurbished ones located in central Budapest.

Hungary has nowadays one of the lowest prices per sqm in Europe for prime and central residential assets and there is room for high growth and capital gain.

With the economic and financial crisis, new development projects are extremely rare and explain that recently built apartments with high end quality finishes are both sold and rent easily.

Prices in Budapest are currently at the lowest level since the crisis and have reached a level that we consider as to be the lowest possible because as is marginally below construction cost. Opportunities exist now to enter this market at the right time to benefit from this notable discount. As a comparison, the same apartment as the one in Paulay we are selling will be priced at 10,000 € – 15000 €, that means 8 times more.

The country’s industrial network has further developed over the last decades with main industries being varied; mining, metallurgy, construction materials, vehicles, chemicals, pharmaceuticals, textiles and food processing. A high concentration of Hungary’s industry has headquarters in Budapest; this fuels an extremely active leasing market in the city as companies require properties in which to house their expats.

Over the last 5 years, increase in the prices of residential buildings has been moderate and there was little to no speculation. After the crisis, price levels decreased to a comparable level only slightly above the level 5 years ago. Combined to the level of the local currency at its bottoming out stage, there is room for significant growth in capital value if the investment is done today from abroad.

Compared to the other European major capitals, Budapest is one of the most affordable cities.

We believe that demand will increase significantly in the next 5-10 years due to the concentration of industries and the arrival of new activities delocalised in Hungary with its need to house expats. Budapest is also proving to be an increasingly popular tourist hub, with outstanding history, natural beauty and unique architecture. Increasingly it is envisioned that visitors from abroad will buy pied-a-terre in the city, and this combined cause will push the prices up in the mid-long term.

Hungary has recently voted for a new government this summer with an emphasis on ushering in the reforms necessary for Hungary to catch up with Western European governance and similarly best practices in economy.

Historically, taxes have always proven to been extremely low in Hungary.

Transfer tax is within a range between 2% and 4%.

Income tax is at 16% and is also the rate for capital gains tax.

There is no inheritance tax and no wealth tax.