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High on the Airbnb-fever: Hungarians dreaming of becoming a millionaire
According to hvg.hu a huge property market bubble is growing in Budapest: anyone with at least a free room to spare wants to get a slice of the short-term property rental cake through Airbnb. Three years ago American Airbnb had about 500 Hungarian members; today there are more than 5000 in Budapest alone, and their number is on the constant increase. The hype is based on the fact is that in recent years early birds could cash millions with a comparatively easy job. Many fail to see that this does not hold true anymore and embark on a risky undertaking nevertheless. Huge failures are sure to follow. The Airbnb-fever is also partly responsible for the exorbitant property and room rental prices in Budapest.
Tourism tax abolished and fast food restaurants excluded from merchants accepting “SZÉP cards”?
According to napi.hu tourism tax (ifa) and its automatic state supplement were originally introduced to act as a source of support for local tourism. Now they may be abolished, even though local governments may still be entitled to levy tourism tax at their own discretion. The supplement thus saved would amount to some HUF 10 billion a year and is planned to be spent directly on hotel or spa development projects.
Fast food restaurants may be deleted from the list of merchants accepting SZÉP cards because the original objective of the scheme was to channel spending to the accommodation industry and leisure activities. Today, the majority of monies spent using SZÉP cards goes to the catering industry which does not directly serve the sustainability of tourism.
Prices soaring in the outskirts of Pest
According to vg.hu the property boom that started last year in Budapest continues in two southern districts of Pest: Kispest (district 19) and Pesterzsébet (district 20) where there are currently more buyers than potentially available residential properties. This sent prices soaring to sometimes unreasonable heights.
Property agents hope that this may change by the end of summer, provided that foreign currency loan settlements and any appeals lodged by disappointed debtors are concluded and those affected can see their possible options for the future. A few years ago brick and mortar and brand new properties were most popular, today it is small and mid-sized apartments in high-rise concrete blocks, mainly in the price range of HUF 7-10 million.
40 per cent more properties changed hands
Index.hu reported that according to one of the largest property agencies almost 12 thousand properties changed hands again in Hungary in May. During the same period last year it was a mere 8500 which equals an increase of approximately 40 per cent within a year. However, there is a slight decrease compared to the previous month which is against the usual seasonal trends: in previous years the property market in May was usually busier than in April.
The boom of the previous two quarters seems to calm down for a while. One of the reasons is prices in Budapest have become rather exorbitant, the other is the new welfare measure called Family Home Allowance (Családi Otthonteremtési Kedvezmény, CSOK) expected to be introduced in July. There was no decline in demand, however with May registering the second highest demand figures this year so far.
Investor compensation: up to 30m HUF
According to index.hu the National Bank of Hungary (MNB) is about to initiate a law amendment to increase the compensation paid by the Investor Protection Fund (Beva) from its current EUR 20 thousand (approx. HUF 6 million) to EUR 100 thousand (approx. 20 HUF million). This would also mean that investment services providers should pay significantly larger contributions towards this fund than before.
According to the MNB the EUR 20 thousand is in line with the minimum requirements of the EU but the legislation of individual member states are free to provide stronger and more comprehensive protection to investors.
Another initiative of the MNB involves the merger of the Investor Protection Fund with the National Deposit Protection Fund.
Property market trends in the CEE region
According to hvg.hu in Hungary and Romania office rental periods average at 3-5 years, those in the Czech Republic and Poland at 5 years. In the first two countries the average vacancy period is 1.5 months per year, while in the Czech Republic and Poland it is 1-1.5 months and 2 months, respectively.
The economic crisis had grave effects on the property market but it did not hit rental fees of premium office premises as hard as the prices of properties offered for sale and of secondary financial instruments. Warsaw is the most expensive city (average rental fee of premium office premises: EUR 22-24/sq. m./month), followed by Budapest and Prague (EUR 20-22/sq. m./month) and Bucharest (EUR 18-19/sq. m./month). In an international survey of 50 cities globally, Budapest ranked 17th and was among the Top 5 most economical European rental markets.
CEE banks still more profitable than those in Western Europe
According to hvg.hu the economic upswing of the region may result in a moderate expansion of banks’ loan portfolios and even the level of bad debts can decrease in some countries, a recent analysis by UniCredit Bank revealed. Before the 2008 crisis return on assets in the region averaged at 2 per cent. In 2015-2016 it may reach 0.8 percent, as opposed to German, Italian and Austrian banks’ ROE of 0.4, 0.2 and 0.4, respectively.
Net interest income (i.e. traditional banking activities) are responsible for two thirds of total revenues collected by CCE banks but it will be vital to increase the share of other income sources, mainly those that are based on fees and commissions. According to the analysis loans will continue to be the most important banking product.
Delegation of German businessmen examines Hungarian investment climate
According to hvg.hu in the course of their two-day trip more than 20 German businessmen visit German sister companies in Budapest and in the country and review the opportunities offered by the cooperation of universities and companies. The Hungarian host from the Ministry of Commerce and Foreign Relations is confident that the visitors will gather impressions and information that will help them prepare new investments and reinforce their existing relationships with Hungary.
2014 was an exceptionally successful year for German-Hungarian business relations. Germany’s share in Hungarian exports has grown to 27.7 per cent so Germany is still Hungary’s most important export market and also the biggest investor in Hungary – almost 25 per cent of direct investments in Hungary come from Germany.
Largest Hungarian company database of all times
According to napi.hu the Hungarian Chamber of Commerce and Industry (MKIK) is about to merge the company databases of eight separate authorities by January next year. As a result, the data currently stored about individual entrepreneurs or companies by the Tax Authority, the Competition Authority, the Company Information Service of the Ministry of Justice, the Public Procurement Authority, the National Food-Chain Safety Office (Nébih), the National Office of Vocational Education and Training (NSZFH), the National Consumer Protection Authority and the Central Office of Administrative and Electronic Public Services will be available from one single source. The Chamber of Commerce is authorised to collect these data pursuant to various government decrees. After the merging process has been completed there will be no need to wait until late May or early June to obtain information about the previous year’s business results of your business partners.
Small apartments sell like hot cakes in Budapest
According to resourceinfo.hu postponed purchases started to appear on the property market in 2014 and the increase of demand even resulted in price increases in certain areas. There was a 24 per cent increase in demand for residential properties compared to the same period of the previous year and sales went up by 30 per cent. Properties in Budapest were sold 25 days faster than in the country. In the capital small apartments (35-40 sq. m.) were in highest demand and sold for an average price of HUF 150-240 thousand/sq. m. In the country, slightly larger apartments (50-55 sq. m.) were the most popular and sold for at about HUF 100-200 thousand/sq. m.
Raiffeisen to close branches and downsize in Hungary
According to hvg.hu Raiffeisen announced on Wednesday, 29. April 2015 that it would reduce the number of its branches from 112 to 67, introduce a 20 per cent (over HUF 10 billion p.a.) cost-saving campaign and cut back its staff by 15 per cent by the end of 2016.
According to the press release in the future the focus will shift from mass retail service to the corporate, premium and private banking businesses where both the number of staff and the assets managed will be increased by 15-20 per cent. Raiffeisen still intends to retain 80 per cent of its retail customers by placing greater emphasis on new electronic banking channels.
Raiffeisen closed its previous business year with a loss of HUF 114.7 billion, mainly due to the effects of the compulsory settlement of foreign-currency loans.
Construction industry on the increase again
16 March 2015 – Source: MTI
After a decline in December, the Hungarian construction industry’s output grew again in January as a result of road constructions, railroad reconstructions and public utility development projects. Construction volume of buildings and civil engineering works grew by 6.7 and 10.1 per cent, respectively, which resulted in an overall output growth of 8.2 per cent compared to previous year’s results, the Hungarian Central Statistical Office reported on Monday, 16 March 2015.
After a period of constant growth lasting 21 months construction industry output declined by 2.2 per cent in December 2014 as a result of a drop of 4.9 per cent in the volume of building constructions and an increase of a mere 1.2 per cent in the volume of other construction works – the smallest since February 2013.
Invalidation of the Act on Bank Accountability?
According to HVG, a Hungarian weekly on economics, judges attempted to invalidate the Act on Bank Accountability – they said it infringed several provisions of the Constitution
The Constitutional Court of Hungary repelled initiatives to invalidate key elements of the Act on Bank Accountability.
This was the act that removed the exchange rate gap clause from the foreign currency loan contracts concluded by various banks and that declared that all unilateral contract amendments enabling banks to raise their interests, expenses and fees are unfair. It followed from this act that banks were compelled to repay the exchange rate gap and all amounts paid by clients on account of raised interests, expenses and fees.
The only way out the government left for the banks was that they were free to prove the fairness of their unilateral contract amendments in court processes initiated against the State. According to judges behind the initiative the Act infringes the Constitution on account of the fact alone that the State makes the banks sue the State itself, whereas the State is the holder of all legislative, executory and judicial powers. The judges also asserted that the act infringes the principle of legal certainty because it interferes with already existing contracts.
However, the Constitutional Court ruled that the initiatives were unfounded. In the opinion of the Constitutional Court this was not a case where the State abused its power to create a situation where the financial institutions suing the State found themselves in a less favourable position than the State.
According to the Constitutional Court the fact that the State took over the task of claims enforcement in relation to a specific contractual provision from consumers and from parties who are entitled to put forward an appeal of common interest is in line with the constitutional requirement of consumer protection.
The Constitutional Court ruled that considering the fact that the unfair provisions were null and void at the conclusion of the loan contracts, they could not have had any legal effect at all. This is why it was necessary for the State to interfere with these contracts. The real reason of debtors’ trust in legal certainty faltering would have been if an unfair practice had remained without consequences – even if on account of its legal effect.