Unless you’ve been living under a rock for the last year, you’ll have heard plenty of good things about Bulgaria. In recent years this ex-Soviet state has seen huge development in its mountain and seaside resorts. And with EU accession planned for January 2007, the demand for property here shows no signs of abating.
“Demand has remained strong over the last year, with prices increasing by up to 20 per cent,” says Steve Worboys of ExperienceBG. “Bulgaria is one of Europe’s fastest growing economies, has a stable political environment and has joined the EU in 2007, so now is the perfect time to invest.” Tourism is also growing quickly, so it’s hardly surprising that investors are keen to buy into off-plan developments in ski and beach resorts. But properties in Sofia are also attracting attention.
“The capital Sofia, which is growing geographically faster than any other former eastern European capital, is becoming more and more popular,” says Worboys. “While the traditional coastal and ski regions are restricted to seasonal rental opportunities, year-round rental yields of up to ten per cent can be expected in the capital.” And it seems that Bulgaria’s image too is being transformed from cheap and cheerful to charming and beautiful. “Obviously low property prices are a major attraction, however people’s perception of Bulgaria is now changing,” says Worboys. “It is no longer seen as a cheap alternative to the more mature markets of Spain etc. Purchasers come to Bulgaria because they actually like it and enjoy the spectacular scenery, sandy beaches, fantastic skiing and unspoilt countryside.”
All of which means there’ll be plenty more properties cropping up to tempt the discerning investor. “We’re seeing new areas developed such as Balchik, one hour north of Varna,” says Worboys. “The Black Sea coast will see two marinas and three international golf courses being created. Another promising sign is that British Airways now fly direct to Bulgaria all year round, and budget airlines are expected to follow.”
There are many fundamental economic, political and geographic reasons why property investment in Bulgaria represents a good medium to long term opportunity and this article offers an overview of the main driving forces behind the growth in the real estate sector.
Firstly one has to consider the natural appeal of Bulgaria. It is a country that has suffered little from the ravages of concrete over-construction, industrialisation and even globalisation and as a result the natural landscape of the country remains intact. Inland, Bulgaria has retained a unique rural charm which is embedded in traditional farming methods and the Bulgarian people’s natural respect for the countryside. Growing numbers of visitors are attracted by the fact that Bulgaria offers them a glimpse of old, unspoilt Europe.
Even in the country’s capital city of Sofia, where major domestic and international investment is being ploughed into the regeneration of the city which suffered a spate of ugly construction during Communist rule, there are stunning monuments and beautiful buildings to behold. The money is pouring in from Europe and beyond to improve the infrastructure and create sustained horizontal foreign direct investment based upon the creation or relocation of companies and the creation of employment opportunities to buoy up the local economy.
Beyond the rural interior and capital city of Sofia, Bulgaria has the stunning Black Sea coastline that is of attraction to tourists, retirees and those looking for a second home in the sun and it has a wealth of fantastic ski resorts which are growing in sophistication and popularity.
Therefore property investors have a series of local areas to target depending on whether they want to focus on attracting income from the tourist trade, expatriate professionals or from commercial property or capital growth by reselling to holiday home seekers or retirees. Property buyers in Bulgaria also have access to mortgage facilities which opens the market up to far more people.
Although property prices in Bulgaria have increased quite substantially in the last 24 months they remain artificially low and restricted by the rules of the Constitution that restrict foreign ownership of land and property in Bulgaria. This is one of the fundamental reasons why investors believe there is room for substantial growth in the real estate sector over the medium to long term. Changes to these rules in the Constitution had to have been made for Bulgaria to join the EU in January 2007 but currently a foreign buyer still has to purchase via a local Bulgarian company if he wants to own the land on which his investment property sits! Realistically it will take until 2014 for the changes to the Constitution of Bulgaria to be passed and for it to be 100% legal and straightforward for a foreign investor or purchaser to own direct freehold title to land and property in Bulgaria.
It is believed that real estate investment in Bulgaria will therefore remain an exceptional opportunity until the country joins the EU in Jamuary 2007 and a good long term capital growth appreciation prospect at least until the necessary changes to the constitution are made at which point the numbers of those seeking property for sale in Bulgaria when all the risk from the process has been removed will likely surge.
