A conference held in London has revealed that investing in Hungary’s housing sector could see a boom over the coming years as people realise its lucrative potential. Such comments were made at the Central and Eastern European (CEE) Property Investment Briefing, which was co-organised by RICS and attended by some of Europe’s largest investors.
With property investment in the CEE the meeting’s main agenda, several key speakers discussed potential opportunities in this market. Dr Neil Blake, the CBRE’s head of EMEA and UK research, highlighted that investment in the CEE still has a long way to go before reaching the levels noted in Western Europe. There are numerous reasons why investment has failed, including both economic and political risks, the fact there is less capital moving into the area, and fewer high-quality investment products; however, despite this, there are many benefits of the region that could be taken advantage of. The current economic growth prospects of the CEE are higher than Western Europe, for example, and there is strong internal demand for properties and housing.
One of the meeting’s first roundtable discussions focussed on the fact the CEE may be small but it is an attractive prospect. Europa Capital’s head of central Europe, Robert Martin, revealed that the region sees high yields on property investment. Combined with rising economic growth, the CEE should be looked at as a potential region to make money. It is no surprise that the market is much smaller than the markets in Western Europe, or that a lack of transparency makes it harder for overseas inventors to enter the market. The latter problem means companies often need to have teams present in individual nations; however, it was keenly expressed that as economic growth rises, so does the demand for housing.
Hungary and Romania in particular could be crucial countries to look at. After 2008, a larger number of investors started to consider Poland and the Czech Republic as developed and stable markets to be taken advantage of. The same could now be said of Romania and Hungary. While the two nations are still behind, the past year has seen significant improvement in investment potential; in addition, Hungary has seen political problems, resulting in many of its assets being largely undervalued.
The key to investment is, of course, buying the right products. It is here that many of the conference attendees mentioned that student housing offers great potential. Experts also agreed that there is an increasing amount of capital streaming into the CEE from new places; for example, Asian investors are being attracted by the high yields, although this is not always clearly apparent as capital is often brought into the area through asset management firms located in Western Europe.
Overall, it seems that the potential for high-yielding investment in the CEE, including property in Hungary, is growing. While there remain a number of hurdles to surpass, there is likely to be a lot more interest in this country over the coming years as the economy continues to grow.