Hungary revises foreign investment visa options

Key Changes to the Program

Previously, the Hungarian government had set up a new residency program, which replaced the former residence bond program. Under the original plan, guest investors had three options to qualify for a ten-year residency:

1. Invest at least €250,000 in approved investment fund shares by a Hungary National Bank-registered fund manager.

2. Purchase a property in Hungary worth at least €500,000.

3. Donate at least €1,000,000 to an educational or research institution.

The second option, which allowed for real estate purchase, has been entirely eliminated from the legal framework. Reports indicate that there is currently little interest from foreign investors—primarily from China, Vietnam, India, the Arab world, and Sub-Saharan Africa—despite the remaining options.

Challenges and Market Reaction

The interest in the revised program has been minimal due to several factors. Most significantly, the only investment fund that meets the required criteria has only recently been formed and has no track record. Many other potential applicants have been rejected due to unspecified national security concerns.

Furthermore, the new requirements limit investor options significantly. Instead of acquiring properties, potential investors now have to consider making generous donations, which may not prove as appealing compared to similar programs abroad where one can invest in tangible real estate for a much lower amount.

The original intent of the program, to attract foreign capital for housing development, has now been hindered. Observers have noted that this shift reflects broader economic challenges in Hungary and the tightening of investor criteria might have reduced the program's effectiveness.

Future Prospects

As it stands, the Hungarian residency program for foreign investors remains a disappointment, with only one certified fund currently active. However, some stakeholders within the market express hope that interest may grow with time, as the landscape can change. They believe that investors will eventually come around if the program aligns better with their expectations and offers more concrete opportunities.

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