Calculated based on purchase prices and rental income, gross yields in Budapest are among the highest compared to other international cities, making Hungary's capital city still an interesting location for those looking to invest in residential real estate.

 

While prices for apartments in Hungary have risen sharply in recent years, apartments in Budapest are still quite affordable according to international standards. In order to provide potential (Hungarian and foreign) investors with sufficient information, LIVING, Hungary's leading residential real estate developer, has collaborated with the ELTINGA research center to conduct a joint study presenting the opportunities that the residential real estate market in Hungary, particularly in Budapest, has to offer.

 

In recent years, prices on the Hungarian residential real estate market have risen significantly, by almost 250%, with the increase being most observed in Budapest. The joint study by LIVING and ELTINGA shows that despite this price increase, the residential real estate market in Budapest is still a good choice for foreign investors, as the Hungarian capital not only offers attractive prices compared to international options, but also excellent services.

 

According to the Magyar Nemzeti Bank (MNB, the Hungarian central bank), the value of apartments in Hungary has risen significantly in recent years. Between the 1st quarter of 2014 and the 1st quarter of 2023, residential property prices rose by 231%, which means that the annual return from the increase in value has been over 14% in the last 9 years. In Budapest, the price increase was even higher than the national average. In the capital, prices per sqm skyrocketed and in the 1st quarter of 2023, residential property cost almost four times as much as at the beginning of 2014. This increase meant an annual return of 16.4% for property owners.

 

However, investors should consider the rate of increase not only in Hungarian forint (HUF), but also in other currencies (e.g. euro or dollar). Prices for new-build apartments vary in Budapest, especially in central locations that are popular among investors. Here, prices are typically higher than the city average: In the most expensive part, the 5th district, for example, a 40-square-meter apartment costs around EUR 258,000.

 

However, some locations are popular among investors and easy to rent, but cheaper than average. One of these areas is the 13th district, where the price per square meter is below the Budapest average and a typical 40-square-meter new-build apartment can cost less than EUR 140,000. The 13th district is a sought-after location in the Budapest office market, which makes it even more popular and enables a continuous demand for real estate. In addition, the 13th district (located directly on the Danube) is currently undergoing a transformation and it is expected that the value of certain apartments could rise above the market average.

 

The results of the joint study with the ELTINGA research center also prove that there is a reason why potential international investors are interested in the Hungarian real estate market: What Budapest has to offer in terms of prices and available services is very competitive. Foreign investors looking for apartments in great locations in Budapest, which are expected to generate a high return. 

 

Foreign investors should weigh their options before investing in residential real estate and explore the differences in prices and potential returns in attractive cities. For example, while the price of new residential property in Tel Aviv in 2022 was almost EUR 15,000 per square meter, in Bucharest it was around EUR 1,700. While prices in Budapest, have risen significantly in recent years, the city is still considered relatively affordable by international standards.

In Budapest, Zagreb and Warsaw, prices per square meter for new residential properties in 2022 were below EUR 3,000.

 

It is not only low prices that can attract investors to the Hungarian capital. The gross yields, calculated based on purchase prices and rental income, are also among the highest. In addition, the services available on the Budapest market, as in other cities abroad, enable foreign investors to achieve a return on their property without any effort, concludes the CEO of ImmoTrading GmbH, based in Vienna.