Budapest is Hungary for more

Budapest has long played second fiddle to Prague as a Central European tourist hotspot. But in terms of business, Budapest is giving the Czech capital, and much of Western Europe, a real run for its money as it grows economically into something of a regional powerhouse.

As Hungary emerged from behind the iron curtain in 1989, foreign investment poured into the country, attracted by the country’s highly educated, skilled workforce and, it has to be said, extremely low wages. In particular, Hungary proved very attractive to the automotive and electronics industries, with companies like Audi, Flextronics and mobile phone giants Nokia and Samsung placing manufacturing bases throughout the country.

In recent years, costs and wages have been rising in line with European Union expectations. However, the mobile telecoms sector in particular has remained fiercely loyal to Hungary and companies are actively increasing their investment in their Hungarian manufacturing plants as well as research and development facilities. Despite intense competition from neighbouring countries and the low-cost economies of the Far East, barely a week goes by without news of a new multi-million dollar investment in manufacturing somewhere in the country.

Thanks to the city’s attractive surroundings, stable political environment and ever improving infrastructure, Budapest is also proving itself a strong regional administrative base for companies targeting business in Central and Eastern Europe, the Balkans and the Near East.

And it’s not just the multinationals that are finding opportunities in the Hungarian market. Since Hungary joined the European Union in May 2004, small foreign investors have been flocking to the city hoping to make a killing in the Hungarian property market. The Irish, having seen their home market prosper within the EU and seeking similar returns abroad, are particularly fond of investing in the city. With the rental market being extremely buoyant, Irish investors are reportedly purchasing between 40 and 60 apartments in Budapest every week.

As investment pours in, so do the visitors. Budapest Ferihegy Airport recently expanded by reopening its Terminal 1 building to passenger aircraft to cater for the increasing demand, in particular from the new breed of budget airline. And it’s not just Budapest that’s reaping the rewards—massive investments are being made in regional airports across the county, including Gyor and the popular Lake Balaton tourist resorts.

As passenger figures rise, Budapest may not be playing second fiddle to Prague for much longer.