The cramped, cobblestone streets and busy boulevards that snake through Budapest’s Eighth district have long been considered one of the Hungarian capital’s worst pockets for property investment.
Bombed heavily in the second world war and further damaged during the Hungarian revolution in the 1950s, this gritty, densely populated area on the Pest side of the Danube was for decades plagued by high crime and economic decay.
In contrast to the city centre, where heavy state funding following Hungary’s ascension to the EU in 2004 stoked a surge in foreign investment, the Eighth district spent decades struggling to gain its cultural and financial footing.
Yet like Hoxton in London’s East End or Kreuzberg in Berlin, the area known locally as Jozsefvaros, or Joseph Town, is today in the midst of a nascent revival. Plummeting crime rates have attracted contemporary art galleries and trendy cafés. Renovated metro lines shuttle scores of tourists and young people into the area to enjoy its vibrant nightlife. The core of the Eighth is the Palace district, where the crumbling 1860s-era buildings now feature restored museum facades and university buildings.
Property developers, sensing an opportunity, have followed suit. They are spending tens of millions of euros renovating once dilapidated 19th-century buildings or building freestanding condominiums. A stroll through Mikszath Square off Baross Street in the heart of the district today finds cranes and scaffolding hovering over building sites.
“It’s not unlike many real estate stories in eastern Europe,” says Zoltan Szemes, managing director of Capital Real Estate Budapest, which concentrates on high-end dwellings in established areas but has expanded its listings to the Eighth district. “At first you see a lot of interest and money flowing into the city centre but, as prices there rise, investors look for other areas to put their money and there’s real potential in the Eighth.”
The changes are also attracting large-scale development. For example, the Hungarian developer Futureal is spending €800m building Corvin Promenade, a 229,000 sq metre mixed-use complex due to be completed late next year. Designs for the development include more than 2,500 residential apartments, 150,000 sq metres of office space, a cinema and a sprawling high-end shopping centre. Homes at the complex cost up to about €250,000 and include units with floor spaces ranging between 75 sq metres and 130 sq metres. The buildings will have a concierge service, a private gym and an underground parking garage.
“There’s a stronger sense of renewal that wasn’t present for many years,” says Attila Dery, chief analyst for estate agency Otthon Centrum, one of the largest residential real estate brokerages in Hungary. Dery says foreign buyers, which made up about 10 per cent of the market over the past few years, increasingly see the district as a place to invest.
Upmarket homes for sale can be found in districts adjoining the Eighth. Otthon Centrum is marketing a five-bedroom, two-bathroom apartment in the Sixth district for €671,198. The renovated 19th-century apartment measures 363 sq metres with a large living room and two balconies.
A three-bedroom home is being offered in the Fifth district for €512,903 by Property-Hungary.com. The third-floor property measures 169 sq metres and has balconies that overlook the Danube.
Though it lacks the kind of high-end housing found in the city’s wealthier districts, the Eighth has architectural integrity. Art nouveau dwellings are sprinkled among the Italianate, gothic revival and neo-Renaissance styles that populate the area.
Zoltan Mezo, managing director of At Home Network, an international estate agency with offices in Budapest, says many homes in the Eighth have been targeted by developers for top-to-bottom renovations. Some will be converted to rentals in an effort to tap into the district’s surging student population, says Mezo. “The Eighth is mostly filled with younger people who are looking for properties with history,” he adds.
Peter Bishop, a professor of urban design and architecture at the Bartlett School of Architecture in London, says the trend of revitalising urban or decaying areas and watching them blossom into an upmarket location is not new. “We’ve seen similar transformations in London’s East End or in New York’s East Village,” says Prof Bishop. “But the trend is accelerating as many urban areas grapple with sustained population growth and fewer locations to build new homes.”
Because some areas of the Eighth are still far from being completely gentrified, property deals abound.
Estate agency Metropolitan Homes Budapest is selling a three-bedroom 150 sq metre apartment in a newly renovated prewar building for €165,000. The property features French doors and hardwood parquet floors throughout and sits on the top floor of a six-storey building with two separate balconies offering views of central Budapest.
Property-Hungary in Budapest is selling a one-bedroom, one-bathroom apartment in the Eighth for €150,670. It is located in the Palace district near the National Museum and measures about 92 sq metres in a newly renovated 19th-century building.
Budapest’s overall property market is still recovering after the banking and credit crisis of 2008.
But, says Gabor Borbely, associate director and head of research at real estate services company CBRE Hungary, “we’re finally seeing stronger signs that buyers are slowly coming back into the marketplace”.
● Foreign home buyers are limited to owning two properties per district in Budapest
● Properties in Hungary are sold in forints or euros
● Home buyers from outside the EU are required to obtain a permit of sale, which costs about 50,000 forints, or €170
● Lawyers’ fees cost about 1 to 5 per cent of the property’s purchase price
● According to Hungary’s Central Statistical Office, the overall crime rate in the Eighth district fell 16 per cent in 2012 compared with 2011
What you can buy for …
€500,000 A new 90 sq metre two-bedroom duplex apartment in a 19th-century building near the city centre
€1m A four-bedroom, 200 sq metre apartment with high ceilings in central Budapest
€3m A five-bedroom villa with a pool, sauna, and garage, just outside the city