Is Hungary the New Hollywood of Europe?

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Laszlo Balogh / Reuters

A woman cools herself in a fountain, as temperatures reach 35 degrees Celsius (95 degrees Fahrenheit) in central Budapest

On the outskirts of the Hungarian village of Etyek, 29 km (18 miles) west of Budapest, there is a sprawling open area surrounded by vineyards. During the Cold War, this was a military base with missiles trained on Western Europe. Today, the missiles are gone, replaced by another type of technology focused on the west — film cameras. The spot is now home to the Korda Film Studios, a massive high-tech moviemaking facility, one of several studios and production companies transforming Budapest into a cinematic hub thanks to its cheap talent, seductive tax breaks and could-be-anywhere architecture.

"The [film] business in Budapest is thriving," says Amy Horkay-Szabados, production executive of the Stern Film Studio & Media Center outside Budapest, adding that there have been a dozen movies shot in and around the city over the past year. "Right now Budapest is hot."

So hot that in April, Hollywood-based Raleigh Studios, in partnership with Hungary's Origo Film Group, opened the doors of a $76 million superstudio complex rivaling Korda in size and sophistication. Soon after, Raleigh's soundstages became host to the 20th Century Fox romantic comedy Monte Carlo, while Korda has just announced a deal to service the Showtime network production of The Borgias, the latest historical miniseries from The Tudors creator Michael Hirst. The horror thriller The Rite, with Anthony Hopkins, is currently being filmed in Budapest, using select streets as a backdrop for Rome, and local teenagers still chatter about glimpses caught of Twilight star Robert Pattinson, who was recently in the city shooting the historical love story Bel Ami.

Hungary has seen this kind of action before: parts of the 1988 Arnold Schwarzenegger thriller Red Heat were shot in Budapest, as well as some scenes in Alan Parker's Evita (1996) and Steven Spielberg's Munich (2005). But for years, Budapest was overshadowed by Prague as the location of choice in Eastern Europe. The Czech Republic's capital launched itself as a virtual Hollywood back lot in the 1990s, becoming home to big-budget productions like the first Mission: Impossible and 2002's The Bourne Identity, as well as the James Bond movie Casino Royale.

Budapest's fortunes changed after 2004 with the passage of a progressive new film-tax law, and renewed interest in Hungary as a location was visible in the trajectory of sequels — fantasy-action film Hellboy (2004) was shot in the Czech Republic; Hellboy II: The Golden Army (2008) was done at Korda Studios in Hungary. According to the Hungarian National Film Office, foreign film production in the country is on the rise, even through the financial crisis, with 47 foreign films made in the country in 2008 and 52 in 2009.

In the Czech Republic, meanwhile, foreign film production has fallen more than 50% from 2002 to 2010, according to the Czech Film Commission, pushing it to implement its own tax-incentive program to increase its competitiveness.

Why does Hollywood suddenly find Hungary so attractive? Gabor Varga, CEO of the Origo Film Group, says the reasons range from low labor costs to the capital's chameleon-like architecture, which allows it to pass for cities such as Paris, London, Rome, Berlin and occasionally even New York City. And a 2.4% drop in the value of Hungary's currency, the forint, in early June, following a 3% drop in March 2009, has given foreign producers more bang for their buck.

But the main reason filmmakers from all over are shooting in Hungary, Varga says, is the new tax-incentive program that allows producers to save as much as 20% on local costs. According to Korda Studios CEO and president Tamas Csapo, the tax break is a "strong and effective" means of drawing productions to the country, and with every movie successfully made in the Carpathian basin, word gets around. "Hungary's reputation is growing and spreading within the industry," says Csapo.

Not everyone in Hungary's film industry is prospering from the influx of foreign productions, however. Hungarian-born director Gabor Dettre, now living in Brussels, points out that state support of domestic filmmaking is falling — funding was cut by $1.36 million from 2009 to 2010, with further cuts of as much as $3.4 million now being considered. "Our business is shrinking," says Dettre, and as a result, local films are no longer as important as they once were in "strengthening national identity and addressing social problems." Also, only a few select local productions have big enough budgets to use expensive facilities like Raleigh and Korda, which in Dettre's eyes divides the film industry between the haves and have-nots.

But even Dettre has to acknowledge that some of the Hollywood prosperity is trickling down. He admits that the superstudios are providing work for Hungarian film crews and that the tax break bringing foreign movies to town "works for Hungarian filmmakers too."

At the top of the country's film industry, the mood is both bullish and ebullient. Budapest's studio chiefs are not just setting their sights on outdoing Prague; they — like the missile masters of the Cold War — have dreams of continental domination. "The next step for Budapest is to truly become one of Europe's main filmmaking centers," says Csapo.

Can Budapest, long a filmmaking frontier, really become a European Hollywood? Varga, the Origo Film Group CEO, replies without a moment's hesitation: "I think we have a great chance of that."