Hungary Officially Eliminates the Real Estate Investment Option in the GIP Residency Program

The Hungarian government has officially announced the removal of the €500,000 real estate investment option from the GIP residency program, as stated in the Hungarian Gazette on December 20. This decision comes less than six months after the program’s launch in July 2024 and just days before the option was set to take effect on January 1, 2025.

Current Pathways in the GIP

The GIP residency program now offers only two pathways to obtain residency in Hungary:

1. An investment of €250,000 in approved real estate funds, or
2. A €1 million contribution to public education and cultural initiatives.

According to Laszlo Kiss, CEO of Discus Holdings, this decision reflects the evolving conditions of Hungary’s real estate market.

“At the time, this might have been a reasonable decision, but currently, Hungary’s housing market is under significant pressure,” Kiss remarked. He also pointed out that rental prices are rising, and the government likely wants to avoid exacerbating the situation by introducing additional competition from foreign investors.

Concerns About Market Impact

Armand Arton, President and CEO of Arton Capital, highlighted that the elimination of the real estate investment option is aimed at ensuring market stability. He stated:

“Experiences in other European countries have shown that allowing uncontrolled real estate purchases often led to cases of client fraud. The fund investment structure is a safer solution, enabling the government to closely monitor and manage investments, whether they are in residential or commercial properties.”

Arton also noted that similar residency programs in Portugal, Greece, and Spain have faced challenges, as real estate speculation allegedly contributed to housing crises for local residents.

Kiss added that if the real estate option were to remain, properties valued at €350,000 could suddenly be priced at €500,000, placing additional strain on the market. He deemed the decision to remove the option as logical, protecting the GIP program from potential abuse, negative public reaction, and unfavorable media coverage.

Anastasia Barna, CEO of One World Migration, emphasized that this decision consolidates the fund investment pathway, a focus that has been part of the program’s vision since its inception. She pointed out that the initial minimum investment for real estate was set at double the amount for funds, indicating that the government prioritized funds from the beginning.

“The Hungarian government seems to have decided to fully focus on investment funds, as they align better with the country’s long-term economic goals,” Barna stated.

Key Benefits for Investors

The GIP residency program continues to offer its original benefits, including:

• A renewable 10-year residence permit.
• The opportunity to transition to permanent residency after 3 years.
  Applicants must submit their residency applications within 30 days of their first legal entry into Hungary.

Russian Nationals No Longer Eligible

Barna also confirmed that the program no longer accepts applications from Russian nationals, including those holding dual citizenship. This is seen as a temporary measure to “protect the program” while the government makes further decisions on the matter.

The Hungarian government has yet to issue an official public statement regarding these changes. However, experts believe that these adjustments demonstrate the government’s commitment to refining the GIP residency program to better meet its economic and social objectives.