HUNGARY Law and Practice Contributed by: Attila Ungár and Júlia Várkonyi, Lakatos, Köves & Partners
1. General 1.1 Main Sources of Law
(3-star/apartment hotels), due to gradual increase of tourism, mainly in Budapest. The office market stabilised to some extent due to a new pipeline; office vacancy rates have been increas - ing but the general expectation is that the home office trend has reached a steady level and will not drasti - cally further alter office occupation ratios going for - ward. ESG requirements are becoming more impor - tant for institutional investors, financers and tenants. New developments obtain the appropriate green cer - tificates, and existing office stock is subject to repur - posing trends. The logistics market saw substantial growth up until 2023, but since then speculative land acquisitions and developments have only been taking place if there are committed new tenants. The home ownership ratio in Hungary is one of the highest (approximately 95%). Housing property prices have been increasing intensely in the past years, but the buying power of locals has not kept pace. Gov - ernment incentives are boosting residential develop - ments. The wider spread of rentals has not yet taken place, and institutional residential assets are lacking. Interest rates stared to decrease and bank financing is less expensive, though banks are more cautious when selecting their projects. To mitigate risks, banks are turning towards alternative projects, such as mixed- use developments (office, retail, hotel and residential within the same building complex) and renewable energy projects (primarily solar parks). 1.3 Proposals for Reform The most significant reform for real estate is the ongo - ing renewal of the land registry system. The frame - work of legislation has become effective; however, the introduction of the IT background is still in progress. The introduction of the new “E-Land Registry System” is expected to create a safer, more transparent and faster system, which will allow automatic decision- making processes in certain cases. A new construction act (Act C of 2023) became effec - tive in October 2024.
The foundations of the general protection of real estate rights are provided by the Fundamental Law of Hungary, according to which every person has the right to property. The main source of Hungarian real estate law is Act V of 2013 on the Civil Code. Real properties are registered in the centrally organ - ised land registry, which is regulated by Act C of 2021 on Real Estate Registration and by Government Decree 179/2023 (V 15) on the Implementation of Act C of 2021 on Real Estate Registration. Additionally, Act CXLVI of 2021 regulates certain issues related to the preparation for the electronic land registry pro - cedure, the implementation of which is currently in progress. Other legislation relating to real properties includes laws on agricultural land, leases of residen - tial properties, construction of buildings, monument The commercial transactional real estate market slowed substantially after the start of the war in Ukraine in 2022; activity is only slowly returning since then, and Hungarian investor participation in trans - actions is constantly increasing. There are multiple reasons for this (country risk, limited exit possibilities from assets, rent levels stagnating, high construction costs and interest rates, etc), but the most important is the lack of price adjustment compared to Western European markets. It is difficult to determine yields due to the limited number of transparent transactions. Construction activity reduced after the start of the war in Ukraine due to high prices for raw material and energy, the lack of new state projects in the absence of EU sources and the uncertainties of the commercial transactional real estate market. Greenfield investments in industrial properties/new developments remain active due to the entrance of Chinese, Korean and Japanese manufacturers in relation to the electric vehicle (EV) manufacturing/ related battery industry. Substantial state subsidies have been available to attract such investments. The other growing asset class is the mid-scale hotel sector protection, condominiums and taxation. 1.2 Main Market Trends and Deals
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