The currently closed hotels of Budapest have become the main target of foreign investors who think they can get a building for half or a quarter price during the pandemic; however, hotels insist on their pre-Covid prices. Accordingly, no deal has been made yet, but what can be expected later on?
Just like everywhere in the world, as a result of the pandemic, tourism has practically ceased in the Hungarian capital as well. The hotels are closed, the staff are sent away – with very few exceptions who try to keep their employees until the end of the virus. Therefore, it would be logical for the hotel owners to offer for sale their unutilised buildings which do not bring any profit in the current situation but instead cost a lot due to their maintenance.
Based on this line of thought, a multitude of foreign investors emerged in the hotel market of Budapest; however, no business has been done so far.
“There is no crisis, just blocking!” – this is how Tamás Flesch, the president of the Association of Hungarian Hotels and Restaurants, thinks about the situation, and as a co-owner of the Continental Group, he runs a hotel management company. According to the tourism expert, such sales are not indispensable to be realised yet due to the current credit moratorium; thanks to which, the development loans do not have to be repaid yet, so there is nothing to force the owners to sell. According to Flesch,
this situation is so stable that no large sales can be expected in the upcoming weeks or months.
The tourism expert also added that the ongoing hotel constructions in the capital will not stop either, because the sector is confident that life will return to normal next year and tourists will return to the Hungarian capital. This is reassured by the fact that numerous hotels are still being built in the downtown of Pest bordered by the Danube and the Grand Boulevard.
As the Hungarian news portal Privátbankár reports, the situation is different in the case of those hotels whose construction has only been planned so far, as they are no longer lent by financial institutions – in contrast to the practice of recent years, when money has flown into tourism developments that used to hit revenue peaks.
Even though Hungarian, European, Chinese and Arab investors are still present in the Budapest market; “it looks like the Hungarian capital has been “removed” from the investor arena” – added Péter Kraft, a tourism expert.
Based on his experiences, potential buyers offer a 20-40% lower than the pre-epidemic price; however, such a discount is not given by the owners.
As a result, several investors have moved to other European cities, such as Berlin and Paris, as the price drop is already experienced there.
Still, there are some unrealistic examples in Budapest, like the Continental Hotel in Dohány Street, which, together with three smaller hotels, was offered for EUR 80 million before the pandemic – now the owners are asking for EUR 130 million for the same group. Similarly, the newest hotel on the banks of the Danube in Pest, Vision, has been put up for sale for 35 million euros, which seems a bit exaggerated in the current situation of the real estate market.
The Indotek Group realised the largest hotel sales of the last 1.5 year. The investment company bought the Sofitel hotel in the downtown of Pest, as well as the most elegant hotel of Budapest, Gellért. The reconstruction of the Sofitel has just begun and will last for two years, while the complete renovation of Gellért bought for EUR 80 million will also start soon.