Hungary’s real estate sector remains strong despite regulatory changes and delays in digital systems, according to Ban, S. Szabo, Rausch & Partners Partner David Kiss. Industrial projects and planned infrastructure around the nationalized airport may boost the economy, though growth is uncertain amid frozen EU funds.
“The situation in Hungary is not without challenges,” Kiss explains. “From a legal perspective, one of the most difficult aspects is the constantly changing regulatory landscape. It can be tough to keep up, especially for law firms and individual lawyers who need to adapt to these changes on an ongoing basis. At the same time, this constant flux adds a layer of complexity and makes our work more dynamic – we’re not doing the same thing we did yesterday or even the day before.”
Focusing just on the recent period, Kiss notes that one of the most significant changes has been the new act on real estate law. “It has made it harder to navigate our daily work,” he adds. “We’re keeping up with the changes, of course, but one of the biggest concerns for us as lawyers is the government’s attempt to introduce an electronic system for handling real estate cases. The issue is that this system isn’t operational yet, even though regulations tailored for digital processing have already been in force since January. It’s understandably hard to comply with rules designed for an online system that doesn’t exist in practice.”
Despite these hurdles, Kiss says, the real estate sector is performing quite well compared to others. “The construction sector, on the other hand, is facing a downturn, particularly residential and office construction, which has really slowed down. There aren’t many new projects at the moment, and this decline is noticeable in the broader economy.” Interestingly, he continues, “despite the stagnation in construction, the real estate sector remains active, especially in the industrial segment. Thanks to Hungary’s geographical location, warehousing and factory-related developments are thriving. Built-to-suit warehouses and factory buildings are now a significant driver of the real estate economy.”
Looking ahead, Kiss believes that “one potential driver of economic growth is the nationalization of Hungary’s only international airport, which happened last year. It was a major transaction involving several shareholders who had to come to an agreement.” Now that the airport is under national control, he says, “we expect to see major infrastructure developments – public roads, railways, and hotels, that will improve connectivity to the airport. At least, that’s the government’s plan. In parallel, there has also been a noticeable increase in hotel capacity, particularly in Budapest but also across the country, which could give a boost to tourism.”
“As for the rest of the year, summer is typically a slower period, and it’s hard to predict how things will progress,” Kiss points out. “We hope to see some growth, but the signs are not too encouraging. There’s only a small chance the Hungarian economy will grow significantly this year. One key factor here is the continued freeze on EU funds, which have traditionally been one of the main drivers of our economy. However, with elections coming up next year, there is a chance the government will introduce measures aimed at stimulating spending. That pre-election boost could end up supporting the economy, at least temporarily.”
