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Hungary: Coming Along for the REIT?
Following the lead of most developed economies, Hungary has now introduced Real Estate Investment Trusts (REITs) in en effort to revitalize the local real estate market.
• Their equity must equal at least HUF 10 billion;
• Their business activity must be limited to the purchase, sale and rental of own properties and to real estate and property management;
• The percentage of their public float shall be at least 25 per cent;
• A part of the shares equalling the public float percentage shall be listed on the stock exchange;
• Credit institutions and insurance companies must not hold more than a 10 per cent share of the shares;
• 90 per cent of the entity’s dividends must be disbursed.
Although the tax exemption may make REITs an attractive form of investment, the question still arises why they were not admitted earlier and how they may contribute to the revitalization of the real estate market. In other countries, REITs face challenges from both the slowing economy and the global financial crisis. Therefore, how they will perform in Hungary remains to be seen.
Dr. Andrea Juhász LL.M. Eur., Attorney-at-law, Partner of ECOVIS in Budapest
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