First popularised in the early 19th century by the Austro- Hungarian nobility drawn to its thermal springs, Lake Balaton was a favourite with Hungarians and their neighbours during the communist era (not least because the Iron Curtain meant alternative travel options were limited). Despite the charms of Italy and Croatia, now within an easy drive, it has remained popular with local people and also attracts Germans and Austrians (who, for reasons best known to themselves, call it the Plattensee).
Little by little, however, British towels are beginning to appear alongside their German counterparts around hotel pools, helped by the introduction this year of low-cost flights from London Stansted to Balaton airport, a former military airfield northwest of the lake. And in the tourists’ wake, the first wave of property investors is already following.
That, at least, is the hope of Alan Lewis, director of Central European Properties, a Dublin- based company that is part of the development team behind Zala Springs, an ambitious golf and leisure resort being built near both the airport and Heviz, site of Europe’s largest outdoor thermal springs.
Lewis, 24, spends much of his time buying and selling supermarkets in Transylvania, but on a boiling hot summer’s day he is driving a 4x4 down what will be one of the course’s fairways. On either side, the baked earth is already being formed by shapers into greens and bunkers, and Lewis can barely contain his enthusiasm.
“This is going to be the best golf resort in central Europe,” he says. “It’s what we call a lifestyle investment: there’s a possibility to use it as pure investment, but also as a full-on holiday home.”
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The complex, the first phase of which is due to be finished late next year, will eventually have a total of 399 units, from two-bed 56sq m flats at £76,000 to four 265sq m penthouses at £460,000. The development has a 1,860sq m hot spring spa and will boast its own vineyard.
Some 54 of the flats come fully furnished, with a rental guarantee of at least 5% a year for three years, but also allowing some usage. The developers will also help buyers set up a Hungarian company, which allows them to avoid the 25% Vat levied on new buildings.
Much of the interest so far has been from Irish investors, but some British buyers are coming on board, too. Among them is Peter Mullin, 47, a management consultant from Oxford, who has bought a four-bedroom villa overlooking the golf course for just over £200,000. Mullin, whose girlfriend, Edina Gyurovszki, 24, is Hungarian, wanted a base in the country and also sees it as a good investment.
“I plan to use it only a few weeks a year myself, but the attraction is they have the rental structure in place,” he says. “I think there’s a good chance of capital appreciation.”
Zala Springs is far from the only development near Balaton. In Siofok, a bustling resort on the opposite, southeastern, side of the lake, whose clubs have earned it the label of “Hungary’s Ibiza”, a number of smart new blocks are going up alongside grey communist-era towers.
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Just 65 miles down the motorway from Budapest, Siofok is a popular weekend and holiday destination for the city’s young, well-heeled crowd — as evinced by the traffic jams to get out of the place on summer Sunday evenings. Prices for flats with lake views start at about £750 per sq m and should be easy to let, although probably to locals.
Things are much quieter on the northern shore of Balaton, which lies within a national park. There are no high-rises here; instead, the shore is lined with well-kept villas that would not look out of place in a German village. Keszthely, the largest town, and the equally unpronounceable Gyenesdias are popular spots.
Prices in this area start from as little as £30,000-£40,000 for a basic house with a garden, although a luxurious villa with panoramic views could set you back more than £150,000. There are no rental guarantees here, of course, and so if you want to rent it out, you will have to do so yourself.
With the likely returns only just about enough to cover your mortgage (loans for foreigners have finally started to become available), the real attraction, as in much of central and eastern Europe’s emerging markets, is the potential for capital gains.
The picture in Hungary is a mixed one. With growth last year of about 4%, the economy is certainly not stagnating, even if it is lagging behind many of its other former communist neighbours. The budget deficit, though, is expected to hit 8% of GDP this year — the highest in the EU — forcing some government belt-tightening and making it unlikely that Hungary will achieve its goal of joining the euro in 2010. The forint, meanwhile, has suffered badly in the recent turmoil in global markets.
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All of which, for the agents, of course, adds up to a buying opportunity. “Because of the recent fall in the forint, property is cheaper now for foreigners than it was five years ago,” says Daniel Jovan, a broker with Otthon Centrum, one of Hungary’s largest estate agencies. “It is a very good place for investment at the moment.” Lewis and the other parties behind Zala Springs must hope that is a message British investors take to heart.
On the market
This four-bed villa, one of 80 at the Zala Springs golf resort, costs £236,000, is a 15-minute drive from Balaton airport, and is due to complete by late 2007. Cushman and Wakefield, 020 7491 9791, www.zalasprings.com
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In Zalakaros, 10 miles from the airport, a five-room house that could be converted into a two- or three-bedroom home. It has two garages and is for sale for £73,000. Otthon Centrum, 00 36 704 540 489, www.oc.hu