Increase in demand for newly built apartments in Budapest
Experts say that real estate investors in Budapest tend to look for newly built apartments to rent rather than renovating old apartments and selling them for a high price, which used to be the trend in the capital, reports Világgazdaság.hu.
A few years ago, investors were more likely to look for old and run-down apartments in Budapest, which could be purchased for a really low price. Then, they nicely renovated these flats and sold them for a higher price. However, the real estate investment market seems to have gone through a significant change. Nowadays, investors tend to look specifically for newly built flats that are easily rentable for a high price.
Even though, the prices of newly built apartments have increased by 5-10% since last year, and are expected to increase further in the future.
It seems that as real estate prices increased, Budapest runs out of old flats that were worth buying and renovating, because the profit from selling them is no longer worth all of this trouble.
Investors are looking for easier cases, and prefer newer flats that can be rented almost immediately for a good price, said Ákos Balla from Balla Ingatlan [Balla Real Estate].
Other reasons for this change can be the increased construction material prices and the serious labour shortage, which make the renovation process significantly more expensive than it used to be.
What makes an apartment easy to rent for a high price
Location, location, location. In order to rent a flat for a good price, it needs to have an excellent location. The closer you get to the city centre, the higher the rental prices are. In District 8, smaller apartments can be rented for HUF 120-175,000, and bigger apartments cost HUF 180-190,000 per month.
Even one-room-apartments cost around HUF 100,000 in the centre.
In contrast, bigger (1.5-2-room) apartments in District 14 can be rented for HUF 110-120,000 and apartments of the same size can be rented for HUF 80-120,000 in Kőbánya.
Interestingly, since rental prices increased the most in the centre, potential tenants are willing to move further away from the centre for a cheaper price. Consequently, investors started to look around in the outer districts of Budapest.
Due to the high prices, the city centre is now dominated by short-term rentals.
If investors want to rent the apartment for a high price, besides the good location, the apartment also has to be in excellent condition. Since renovating is no longer worth the trouble, investors are looking for newly built flats to ensure good quality and conditions.