Gross Rental Yields in Budapest
In 2015, developers initiated takeovers of projects that previously stopped due to concerns in the Budapest housing market. Developers also launched an initiative to build smaller projects for investment purposes. With strengthening gross rental yields in Budapest, international investors hope to capture a share of the ever-improving rental market.
Mortgage Interest Rates in Budapest
Interest rates on mortgages in Budapest remain low. The interest rate on Hungarian forint mortgages ranges anywhere from 5.5 percent to 6.5 percent. Swiss franc mortgages are as low as 4.9 percent or lower. Many lenders in Budapest offer loan-to-value ratios from 70 to 80 percent and several borrowers and investors do qualify for mortgages with higher LTVs.
Another Class of Investors
A new class of investors is starting to emerge in Budapest and beyond, investment immigrants. Under Hungary’s fast-track program for residency, Investors that buy government bonds in excess of 250,000 receive permanent residency in six months or less instead of the traditional five-year waiting period. The demand for this program among wealthy Chinese investors continues to rise as they seek to capitalize on lucrative real estate investment yields.
International Investor Demand
Foreign investor demand in Budapest is so high that many local purchasers and investors are finding it difficult to enter the market. Although local real estate investors present strong offers on dwellings, they are unable to match the offers from wealthy foreign investors. The downside to this scenario is that local investors may pull all of their money out of the Budapest housing market and seek investments in other regions outside of Hungary. Although foreign demand is sky high, real estate trends show that local money is what sustains strong housing markets over time.