Between 2000 and 2004 Hungary witnessed a dramatic surge in investment into everything from roads and airports to office blocks, malls and apartment buildings, and investor confidence in the property market in this European nation grew rapidly – but what goes up must come down and in direct contrast to these years of expansion 2006 was a very bad year for the property market in Hungary.
The situation as it stands at the start of 2007 is that residential property prices in Hungary are falling, this market sector is stagnant, all those local citizens who could take out mortgages already have and so the mortgage market has now shrunk to half the size it was at the peak of interest levels, all those who wanted to move house have, Hungary has joined the European Union already meaning that there is unlikely to be another surge of investor interest and those international buyers who were attracted to the market have now either bought or changed their minds.
The general consensus of opinion is that the residential property market in Hungary is not a good place to invest in 2007 for a short term return on investment although opportunities do exist to bulk buy under priced stock for sustainable rental income in the short term and medium to long term capital appreciation. During the boom years many property development projects received approval and got underway and a number of these construction projects have come to completion at a time when demand is at an all time low. Developers who find themselves in such situations are not averse to taking offers on mass units of completed stock which can give an investor immediate leverage in a market such as Hungary’s.
Those looking for a more stable and secure platform on which to base their property investment decisions could consider the retail market. . . the retail sector of the commercial property market in Hungary currently offers international property investors an interesting entry point as it is a sector undergoing significant change and development and it is a sector suffering from a lack of required space whilst an intensification of international retailer focus on Hungary is pushing up the affordability barrier.
More simply put, there is a positive demand/supply dynamic which investors know can translate into immediate potential for rental profit and a good base upon which to build long term capital gains. There is active international retail focus in Hungary squeezing out smaller retailers in most sectors, in the main employment and population centres consumer spending patterns have been strong - and despite short term predictions of a contraction in real GDP growth rate there are longer term predictions that the retail market is due and can support considerable expansion.
For an investor this means that there is an entire commercial property market segment under long term expansion in Hungary which can not only offer impressive immediate income which is predicted to increase in the short to medium term, but it offers a long term, solid investment approach for capital gains and strong yields.
Rhiannon Williamson researches and writes about real estate property investment potential on a nation by nation basis providing property investors with a central website for their profitability investigations and due diligence analysis. To learn more about property in Hungary and around the world in 2007 visit her site http://www.amberlamb.com