Over the summer, I had the opportunity to explore the real estate scene in Budapest. To be frank, I was quite surprised at how cheap it was (now don’t drop reading and rush off to Budapest just yet…or at least not without calling me first!!!). It really got me thinking. I was looking at quality, un-renovated historical properties in reasonably good locations that were going for under 1000 euro per sqm. I have been in a lot of European capitals over the years, yet I have not found prices like that anywhere, even in raunchy Bucharest or relative backwater places such as Sofia.
The prices are less than half that of equivalent properties in Istanbul, which is not even part of Europe, a.k.a ‘the bubble belt’.
I reflected on this at length and I came up with a few pseudo-theories that I think stack up.
Apart from the obvious economic facts which any economist could rap off in their sleep… such as Istanbul’s being one of the fastest growing dynamic mega-cities or its geopolitical importance in the 21st century, bridging Europe and Asia, etc…are the other, less tangible reasons why I feel real estate prices are higher in Istanbul and will likely surge higher. Much like Moscow, New York, and the undisputed king, London.
In Istanbul, you can buy anything and at ANY TIME. It defines the insomniac modern city. And everybody is selling something. It is deeply immersed in the culture, so much so that I am appalled at how concerned I have become about the price of trivial items, of one kind or another, I have been indoctrinated. When my friend buys a new pair of socks, I cant resist…’how much?’ In Istanbul, dinner parties often deteriorate into a game of monopoly, where people call out street names and prices of property. In Budapest, I suspect doing so at a dinner party would be met with, ‘go directly to jail. Do not pass go.’ a major social faux pas.
By contrast, In Budapest, nothing is open on Sundays and it felt perpetually as if it were a Sunday afternoon, even on Friday night. It lacked bustle, not to mention hustle. Lovely for relaxing, not so great if you want to make real estate skyrocket (not that I do).
Estate agents looked at me with suspicion, whereas in Istanbul they salivate; often sleeping, drinking and chatting in their offices until all hours. In Europe, the baseline for all commercial activity seems to peak at about 35 hours a week. That would be a good weekend for our unshaven, slightly dishevelled Istanbul hack property agent.
On a more technical note, the big difference in city center prices between the two capitals is the transportation reality.
In Budapest, an area that takes 15 minutes to get to by public transportation is considered a bit out of the way, and by no means central.
15 minutes in Istanbul can be chewed up just walking to the nearest metro stop, or getting through a set or two of lights while on the bus.
Obviously, if you work downtown in Istanbul, you lose an enormous amount of time if you live outside the city center. Throw in high gas prices and it becomes a bit more apparent the factors that drive up prices in central areas. It can be a false economy to rent or buy on the outskirts of the city.
Population is a big factor, though so obvious as hardly worth mentioning. Istanbul belongs with Asian giants at an estimated 20 million.
On a psychological level, our Magyar (Hungarian) brothers, seem to have a bit of a grudge, as if history had been unkind to them, which it often, indeed, was.
Contrast that with the Turks, who are walking with more of a swagger these days and harking back to their Imperial past and Ottoman glory. How does this reflect real estate prices, you ask? Perhaps the sense of belonging at the top of the heap gives a bit of confidence, dare I say arrogance, to its possessors.
One of the final points I would like to make concerns the demand and supply side.
Istanbul, though a large and sprawling city, has an undersupply of well-established and beautiful neighborhoods, so the ones that fit this bill, command very high prices. Most of the neighborhoods and building stock are pretty drab and unattractive. Therefore, areas like Bebek, Nisantisi, and parts of Beyoglu are in demand due to their attracive old buildings or sea views.
In Budapest, lovely old historical buildings are a dime a dozen. The architecture is cohesive and the neighborhoods often blend imperceptibly into one another. People will pay more to live in the popular second district than they will to live in the grittier eighth district, but the divide is not as great as that between Nisantisi (4000 euro per sqm)and some barrio on the Asian Side of Istanbul (400 euro).
And comparing the Bosphorous with the Danube? Like comparing Pele and Ronaldhino, my friend…
In my entry next week, I would like to continue with some future predictions on real estate prices for both cities. I hope you will be interested in what I have to say on this. By the way, it hit 30 degrees today, the middle of October. Add that to your reasons to come to Istanbul!!!