Due to the economic downturn of the coronavirus pandemic, a new surprising phenomenon can be discovered in the Hungarian real estate market. As a result of the decline in tourism, some hotels are offering their vacant rooms for long-term rentals.
Even though average hotels cannot make use of this possibility, several small hotels consisting of studio apartments add their units to the growing supply. According to experts, the process can be explained by the tourism decline
as a result of which, more and more owners are trying to rent out their studio apartments and Airbnb homes for longer period.
As we reported it previously, the real estate market of Budapest reacted to the pandemic immediately. Even though the supply of apartments is growing exponentially in the real estate market, a continuously decreasing tendency can be experienced in the case of prices.
In Budapest, the number of apartments offered for less than EUR 285/month (~HUF 100,000) has increased by 215% within a month.
According to one of the owners, first, they try to rent the rooms for three months; however, since they do not know what will happen in the forthcoming months, this period might be extended later on. Of course, this option is not so attractive for those who are looking for long-term rentals; therefore, the uncertainty is counterbalanced with low prices. Accordingly, 30 m2 apartments are offered for EUR 142-200/month (~HUF 50,000-70,000) plus overhead, which is quite favourable in case of an apartment that had been previously rented for EUR 50-100 (~HUF 18,000-35,000) per night.
As the Hungarian news portal Index reports, a similar situation can be observed in the case of those apartment hotels where properties of independent owners were managed by brokerage companies taking responsibility for their short-term rentals. In Budapest, these intermediaries used to manage hundreds of apartments.
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At the beginning of the crisis, they were trying to convince owners not to withdraw their flats or take private actions (eg.: advertising their flats separately) as this structure has provided their subsistence so far; in case of bankruptcy, there will be no one to reorganise the process after the storm is gone.
Now the representative of the concerned company has revealed that the transition process is going well – thanks to individual negotiations, the majority of owners left their properties in the system, while the brokerage company is trying to rent them out for long-term. However, this no longer requires as many employees as before; as a result of which, layoffs have been carried out. Concerning prices, the company experiences a continuous decrease.
Interestingly, unlike the hotel owner, the brokerage firm does not expect any amelioration by the end of summer; therefore, properties are offered with one-year contracts.
According to the manager of the company, the demand may return to the previous level in 5-10 years; and until then, only the best quality apartments will be demanded for short-term rentals.
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