Monday, February 12, 2007


BUDAPEST is one of the more promising locations for investment, according
to Deirdre O'Regan. With a small portfolio of Irish properties, she felt future
returns would not match the past: "I know from my rents, which have hardly
moved in three years, that the best is over for the modest investor - so I
looked abroad."

Trawling the net and comparing prices and yields, she found Budapest
attractive, at least on paper. The reality was equally promising. "After two
visits, I bought an office owned by a travel agent. He paid two years rent
in advance, so I had that comfort. It was, as they say, a win-win deal."

The Hungarian owner got a lump of money and the Irish investor got a
property with a yield of about 7 per cent. Current Irish returns are about
3-4 per cent on similar properties. She did it all on the net, without an
agent - "found the property, corresponded with the seller and came out to
meet him".

The tale did not surprise Odran Young, owner of a medium-sized estate agency
in Dublin. He came out to live permanently in Budapest four years ago, lured
by the promise of bargains in a country weaning itself away - at a fast
pace - from a failed Communist system. Now he controls the only Irish agency
with a full-time complement of staff in the Hungarian capital.

We were in a restaurant in Liszt Ferenc, an enclave of boulevards and
restaurants. There is gaiety and business and music - it's an aria away from
the fabled Opera House whose baroque splendour has been restored with
dollops of eurodosh, a mere three years after Hungary emerged into the
eurofold of favoured nations.

Already, he can see the signs of creeping prosperity, a re-run of the
experience of the Irish republic. "When I came first, most of the cars were
old bangers, Ladas on their last legs.

Now most cars are hardly more than two years old. The cafes are full of
well-dressed young people. Then, there was only one restaurant on Ferenc
and four customers - me and three in our group."

A lot has changed since then, for both Budapest and Young. They have been
agents of each other's change. From his penthouse overlooking the musical
square, he counts 16 restaurants and cafe bars.

He is selling some of those refurbished baroque buildings and uses the
Hungarian capital to trawl for developments in Eastern Europe, notably in
neighbouring Ukraine.

Hungary has been good to him, turning him from a medium-sized player in
Irish property to a major wheeler-and-dealer of European property. Currently
he has several new developments on the go in Budapest, including a block of
"new build" apartments in the university district.

Of the 144 apartments, 80 have been sold off-plans. Not surprising given
that prices range from 60,000 for one of about 37sq m (400sq ft). A Dublin
equivalent, in quality and location, would cost upwards of 325,000. His
buyers are mainly Irish, with British and South Africans as runners-up in
the investment stakes.

Expanding his Budapest office this week to cater for the demand, he is
bullish about Hungary's economic prospects. Well, he would be, wouldn't
he?, given his own investment of time and monies.

But external factors support his projections, with rents and wages rising at
about 20 per cent in the past 18 months, while land values do not yet
reflect that surge.

"Property prices are cheaper here than in most of the neighbouring
countries - I can sell Budapest residential from 1,350 to 1,800 a sq m (32
to 167 per sq ft), whereas Sofia (Bulgaria) is 2,000 a sq m (185 per sq ft),
Ukraine is about 4,000 a sq m (371 per sq ft, payable in dollars) and
Krakow has gone very expensive at 5,500 a sq m (510 per sq ft)."

Still smarting under the rigour of communist control, major Hungarian banks
accept existing properties as collateral for further loans, "rolling-over"
the values, which was the financial base of the historic Irish property
boom. "It took some lobbying, but finally the forint dropped," Young
recalls. Some banks will now fund 70 per cent of a prospective purchase.

His forays into commercial property include shopping centres, entire office
blocks, former government departments - bought by syndicates of investors
whom he describes as " typically two or three Irish blokes, aged mid-30s to
mid-40s, punting with some spare cash". (His definition of "spare cash", is
elastic, given one buy of a shopping mall for 8 million).

THINKING big also drives the plans of Marty Carr, whose golf services
company is a significant partner in Zala Springs, about two hours drive from

On a greenfield site in the wine region of Balaton, the 18-hole course is
trumpeted as of "championship quality" with 7,200 yards of drives off the
tees, and around 468 acres of playing.

Why Hungary for golf? "Because it was there!" is Carr's succinct answer,
before supplying some figures. "Hungary has only seven golf courses, about
one course for every 1.5 million of population; the comparable figure for
Ireland is a course for every 12,000 people.

Scion of the golfing family - "I have the name but not the game" - Marty's
company, Carr Golf Services, manages six courses at home and partners
investors to develop major courses overseas.

"Golf, wine and baths" is the working motto for a spa market that is
currently fashionable. Zala Springs exploits the very Hungarian capacity for
enjoying bathing in thermal waters (sometimes outdoor in winter!) as well as
the region's vineyards.

Using golf as lure, investing partners have funded a new 397-unit resort.
Family apartments and townhouses range from about 60-215sq m (645-2,217
sq ft) costing from 128,000 to around 350,000 for detached golf villas on the
fringes of the course.

All are being sold off plans, with Carr claiming a 10 per cent uplift in
price for buyers of the first phase. Housing completion is scheduled for end
of 2007, with the course playable in spring of 2008.

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