Alpár Kató | Feb 20, 2019 | 1
Nations outside the EU buy properties in Hungary
VS.hu states that buyers from non-EU countries, mainly from Russia and China look for real estates in the more expensive and refined locations. Many of them aim to make an investment: choose the property, bargain, make the business and then leave the country.
In the early years of 2000s the estate market of Budapest was full of Israeli, Dutch, German, English, Irish and Spanish buyers. Non-EU nationals in 2011 purchased about a thousand estates in Hungary, but a growing tendency can be identified, because the number became 1828 in 2014. Also, in that year 1127 properties in the capital were sold, mostly to Chinese, Russian and Ukrainian people. Besides the capital city, Russians buy properties out in the country as well.
Chinese people living in Budapest make up Central-Europe’s biggest Chinese colony, with growing demands on the estate market, even though many of the ‘90s first-wave merchants moved somewhere else. VS interviewed László Kis, real estate expert, who claimed that Chinese people look for detached houses or apartments, predominantly in districts I, II, III and XII. Erika Sárvári from Otthon Centrum (Home Centre) says that they are interested in chic properties with Jacuzzis and swimming pools, for example like the mansions of Rózsadomb, many of which they bought. Moreover, district V and Újlipótváros are also popular, not only for the Chinese, but for Russian, Ukrainian and Belarus people, too. She says that the average price of these properties is about 50 million forints, but only the sky is the limit. Still, this was different once. Earlier, Chinese people sought for the cheaper properties in districts VII, VIII, X, in the area of the Józsefváros market, district XVI, around the Pestlőrinc Sárkány (Dragon) Centre, or on Üllői and Gyömrői streets. When the price was reasonable and the property appropriate, it was sold immediately.
According to Miklós László Grőger, agent of the Chaoyang Real Estate and Loan Centre, who was also contacted by VS, there are two types of Chinese buyers: people of the first one buy properties near their working place (mainly in districts VIII, X, XVIII, XV), whereas the people of the second type make purchases in the neighborhood of internationally acknowledged schools (mostly in district II). However, many of the buyers live in their freshly bought estates only for a short period of time, which is followed by granting the property on lease. The important thing is to become the owner of the place, whether it is used as a restaurant, shop, hotel or hostel. Grőger also says that the investment is definitely worth the money, compared for example to the Austrian prices. Buyers in Hungary have to pay only the sixth of the prices paid in Austria.
All of the interviewed experts agreed on the Chinese people being good customers who pay in time, and usually in cash. László Kis even recalled an event that was told him by a colleague when a family paid for a luxurious home ten-millions of forints in cash from a plastic bag. It is also told that chances of selling a property are better when there is a ping pong table around. However, the experts and agents asked by VS also mentioned that the Chinese customers are always grouped, and they are really pushy and try to bargain the prices, whereas other nationalities do not.
The customers vary from millionaires looking for opportunities to invest money, to restaurant and shop-runners and even youngsters, who would like to try out themselves. The ones with less money go for flats, but as “the institution of home” is a matter of prestige for Chinese people they tend to buy bigger houses, where even generations of the family may live together. They also care about whether the place is newly built or renovated.
Selling properties to people coming from outside the EU is a business for the government as well. In order for such a person to become able to purchase in Hungary permission of the capital government offices is required. In fact, they rarely reject these requests, because the fulfillment of them makes profit for the state: a duty of 50.200 forints has to be paid after each one. This, however, is different for citizens of the EU countries, as the process is easier in their case.
Since 2012 the government offers settlement bonds for foreigners in the cases of purchasing property. The law says that people from Third World Countries, i.e. non-EU citizens, who pay 300 thousand euros for a special state bond with a duration time of five years would receive residence permit. This permit can be upgraded for a settlement permit after six months, which will then allow free travel to the countries of Schengen and provide healthcare service, education, fringe and social benefits in Hungary. Similarly, Portugal and Spain also give out these kind of permissions in case of investments in form of estate purchasing.
However, the end of 2014 brought huge scandals of corruption regarding the programme. Since then, in order to avoid misuses, the rules of receiving settlement permission became stricter. VS refers to an article by Heti Válasz, which mentions the possibility of these bonds to be sold by offshore companies who thus would benefit even more than the state.
Copy editor: bm