Luxury demands have hardly changed

Article in "TOP 100 Hungarians" Magazine

NOWADAYS,  IT IS BY NO MEANS EASY MEET THE DEMANDS WHEN IT COMES TO  LUXURY REAL ESTATES, BECAUSE NOT ENOUGH HIGH QUALITY REAL ESTATES ARE BEING BUILT. THIS MARKET SEGMENT KNOWS NO COMPROMISE, FOR IF THE DISCERNING BUYER DOES NOT FIND WHAT HE IS LOOKING FOR, HE WILL RATHER POSTPONE THE PURCHASE - CLAIM THE LUXURY MARKET SPECIALISTS, ENGEL&VÖLKERS EXPERTS.

(Click on the illustrations in the article to get more information on the property for sale.)

In fact, in Hungary only the classical, pre-war architectural value, high-quality refurbished and high-tech homes, and houses built after 2010 are marketable. The properties in-between can only be sold out with great effort and struggle, no matter how expensive the property was originally or if it was built on a valuable plot - so experts describe the current state of the market. The real estate supply has huge gaps: Budapest lacks in luxury flats exceeding 200 m2  as well as residential blocks in an over-all good condition are missing, and in Buda there are too few newly-built luxury homes.

Due to this, the limited supply is overpriced, the glass ceiling effect is present, ie  the state where property prices break through the limit that customers are willing to pay. Today, this barrier ranges from 1.8 to 2 million HUF / square metre - therefore, new, exceptional and luxury quality has to be offered.

The aspects are changing

Very few real estates exceeding 100 million HUF will change owners, and much more enter the market for sale year after year - as there is a huge difference between the expected and the vendible supply. Some speculate on the luck factor and ask for two or three times the realistic price, others say they will only sell the property if they receive a certain price for it. Therefore, it could take longer than expected to successfully sell one property, but there was an instance of a real estate on the market since the mid-90s, and eventually, the area slowly deteriorated, so the value dropped and fell out of the luxury category.

The experts share their experience when they say; it is hard to make the owner understand the pitfalls of pricing based on emotional aspects, or to explain why one neighbouring property costs one-and-a-half times more even if that is a smaller house.

In the segment of luxury real estates, there were no major changes in trends, although some changes in mode and tone is observed. There are more and more foreign buyers, energetic aspects have come to the fore, and passive rating is a great advantage. Today it is not unusual for a luxury apartment in a downtown area that has not had a window opened for a year to still maintain fresh air - nowadays full automatic features are an expectation.
Home-wellness has lost its charm, sweating in a sauna, swimming, body building have become more and more a social experience instead of using own, home gyms and swimming pools, however a remotely controlled smart home is expected.

The location is still the most important

The elements of the luxury market have not eroded: the location is still the most important factor. The old classics are still Buda in the 12th District, the Gellért Hill and partially, Rózsadomb, the area neighbouring the Chain Bridge, Pest and Andrássy Avenue, the Parliament's surroundings, along the Danube, Szabadság tér and Szent István Park, the Danube embankments, the world heritage sites and the panoramic locations. This club expands but little, more recently District 11, Madárhegy is trying to get into this elite club.

There are strict limits on the luxury market in terms of size: an apartment smaller than 150 m2 is not considered luxury. In case of houses and mansions 250-300 m2 is the bottom limit, this is essential to comfortably accommodate three to four bedrooms, gradually each with its own bathroom and wardrobe, and of course the place for the separate and complete guest suite. The storage room, the 3-4 car garage is also an indispensable part of the luxury villa, just like the door-, or cleaning service, the gardener and the caretaker.
The other side of the river, ‘Pest’ mainly attracts foreigners. Anyone who is looking for an apartment in the city for the first time favors the downtown area, especially those who are occasionally staying here to enjoy the buzz. Anyone who wishes to reside for a longer time, prefers Buda similarly to the locals.

Serious customers preferred.

There is no shortage of window-shoppers, real estate tourists are on the rise - the luxury market is also of interest to those who do not have the necessary financial background for purchasing. Consultants, of course, try to curb this phenomenon and do everything they can to identify the buyer candidates as much as possible. In this segment, it is a basic expectation to reveal purchasing motivations before presenting the property: it is necessary to assess the customer's needs and intentions for which, the customer's trust must be obtained. Occasionally, it can be requested that the potential buyer provides a bank statement to substantiate the seriousness of his/her intent - explain the staff of the Engel&Völkers office. International contacts come in handy when identifying foreign visitors - often customers are directed to us from an Engel&Völkers office of another country. 

Western European buyers are obviously familiar with the 'getting-to-know-each-other' phase, and they do not mind handing in a coverage certificate, they understand that, when it comes to amounts exceeding millions and billions, working with a property expert requires this initial process. At such values, an ID card or a passport is simply not enough to establish trust.
Trust and good relations are an indispensable duo, for, in this market there is a long lasting cooperation between the client and the consultant. The sale of such a property can be even a longer period of time, however the real challenge is the sale of real estate that cannot be advertised at the owner's request or in response to the buyer's need to convince the owner of the apartment that he or she otherwise does not intend to sell. All these are the characteristics of this segment, the luxury market is extremely complex, it is difficult to perform well, but its beauty lies exactly in this, "claim the staff of the office.

Szepesi Anita