Investment Growth In Bulgaria

There are many reasons why Bulgaria offers a promising investment future. Outlined below are some of the factors that make Bulgaria ideal for property investment today.

Bulgaria - The Country

Bulgaria is considered to be one of the most rapidly advancing nations in Europe today and is renowned for foreign property investment in its coastal, mountain and more recently city lccations. With the average property price having risen by an incredible 31% per annum over the past three years, it is easy to see why investment property in Bulgaria is so popular. With excellent property prices and high capital growth projections, combined with Bulgaria’s natural advantages such as sun, sand, sea, skiing, beautiful landscapes and booming economy, purchasers of investment property in Bulgaria continues to see this Eastern European location as one of the world’s top emerging markets.

Although roughly the same size as England, Bulgaria is at present, a very sparsely populated state, with a population of approx just 7.45 million people. Located in the extreme east of south east Europe, Bulgaria borders Greece, Macedonia, Romania, Serbia, Montenegro and Turkey.

Investors are now focusing on the merits of investment property in Sofia where property prices are currently at their highest in Bulgaria, but growth rates are also at their highest, while a huge demand for housing and commercial property is fuelling a new investment market in the capital. Meanwhile other features for investors are its eleven “Blue Flag” beaches along its 354km of Black Sea coast, 37,500km of hiking paths, mountain trails and Roman, Greek and Thracian historical attractions, including nine UNESCO (United Nations Educational, Scientific & Cultural Organisation) world heritage sites which continue to draw seasonal tourism to Bulgaria.

The Property Market In Bulgaria

The Bulgarian property market today continues to grow in accordance with expert forecasts. Property prices in some locations have risen to more than 30% per annum – one of the highest rates in the world and while this rate is now not so high, it still far exceeds many other European markets. In 2006, property prices in Bulgaria range from around £10,000 to £175,000 depending on property type and location, while you can still purchase a comfortable, well renovated property in a good area for approximately £50,000.

In order to take maximum advantage of the Bulgarian market property purchasers are looking to the capital city of Sofia for the best returns on investment, Due to a huge influx of new foreign investment into the city and an increased supply of a young, educated workforce seeking modern, quality accommodation, demand currently exceeds supply, creating an excellent opportunity for many foreign property investors purchasing apartments here. As the economy of Sofia continues to grow, property prices in the city are rising faster than anywhere else in Bulgaria, making Sofia one of the most active Bulgarian property markets today.

Now that Bulgaria is establishing itself on the foreign property market, it is shifting construction emphasis towards higher quality, exclusive developments. Only projects of the highest quality in terms of design, specification, construction and location are being considered. Permission for construction will be granted only if the developer can highlight a minimal effect to the environment and, indeed, protection of areas of natural beauty is paramount while protection orders have already been placed on National Parks.

Tourism In Bulgaria

The World Tourism Organisation describes Bulgaria as one of the most appealing “new faces” in the tourism industry today, and it is true that this industry in particular has gone from rags to riches over recent years. Bulgaria has benefited from a great increase in international exposure as a desirable holiday destination and this has created an increasingly exclusive market. As with most major tourist destinations, visitor numbers vary seasonally. The summer months see the arrival of over 50% of Bulgaria’s annual tourists, compared with only 14% between January and March. Peak time is considered to be between April and October for the coastal areas, while rentals in the ski resorts peak between December and March.

A forecast by the World Trade Organisation indicates that by the year 2010, the number of tourists visiting the country will annually exceed 20 million, making Bulgaria one of the world’s greatest emerging tourism markets. This has obvious positive repercussions for property investors. The success of Sofia as a property destination is reflected in its close proximity to one of Bulgaria’s popular ski resorts at Vitosha, allowing for a dual market to fuel property investment. City property is high in demand for those living and working in Sofia, while cultural tourists and skiers also seek quality accommodation in the capital, creating a prime opportunity for year-round investment returns that are not reliant entirely upon a tourist season.

Bulgaria - European Union Membership

Bulgaria joined the EU in 2007. As an EU member state, Bulgaria takes full advantage of its geographical position in the far east of the European Union, offering greater employment opportunities to its already highly educated workforce. Bulgaria now utilizes the considerable infrastructure and general expertise available within the EU to enhance its own economic development at all levels. Having already benefited from high levels of EU aid prior to its accession, being a full member now ensures the continuing flow of aid, to bring the country’s infrastructure to the same level as other member states. Between 2007 and 2009 Bulgaria will receive 4.6 billion euros from the EU, the highest figure per capita ever given to any EU accession country. This fact only adds to the already positive prospects for the development of Bulgaria. The huge strides that are being made with EU aid are already plain to see with, amongst other measures, the construction of a major new highway linking Bulgaria with other member states to the west, north and south.

Most importantly, being an EU member has brought considerable stability to Bulgaria, ensuring it will never again return to the economic mire which it found itself in post-Communism. Any remaining weaknesses in its economy are being finally eradicated and property prices will continue to respond accordingly. Examples of the same trend can be found if you study figures immediately after accession to the EU by countries such as Hungary, Poland, Czech Republic, Cyprus and Malta.

Bulgaria Property Investment Forecasts

Despite excellent growth figures experienced over the past decade, Bulgaria continues to offer comparatively very low property prices. Other nations in Eastern Europe who are seen as competitors are becoming increasingly expensive, ensuring Bulgaria an ongoing competitive advantage despite rises in property values. It is interesting to note that upon joining the European Union, the cities of Warsaw (Poland), Prague (Czech Republic) and Bratislava (Slovakia) all climbed more than 10 places in the “Mercer Cost of Living” survey. The property investment market in Bulgaria has been heavily reliant on tourism for creating strong capital growth and high rental yield possibilities in the skiing and coastal resorts. This reliance is reciprocated however, with tourism being reliant on a thriving property industry to cater for demand. These industries are firmly set to continue to grow hand-in-hand. Meanwhile city investment in Sofia is currently in vogue, overtaking tourist resort investment in terms of reliability and yields, due to a year-round requirement for property and rentals to house a boom in the city’s working population. Thousands of new apartment blocks are currently under construction to meet the growing demand for top quality city housing. Approximate growth forecasts for Sofia now stand at 15% per annum and rental yields on buy-to-let properties are averaging 8% per annum, comparing very well to elsewhere in Bulgaria.

The most recently identified demand in Bulgaria is for secure, luxury developments and the end of 2006 brought a great increase in purchases from reputable developers for higher quality build constructions.

Reasons Why Bulgaria is an Intelligent Property Investment Location

  • Early stage of development in Bulgaria, ideal time to invest
  • Huge tourism growth potential. Increase of 50% between 2000 and 2004 (90% increase from EU visitors)
  • Tourists expected to exceed 20 million by 2010, making it one of the world’s greatest emerging tourism markets
  • Stable government committed to economic reform
  • Large amounts of foreign direct investment and establishment of large multinational corporations in the city of Sofia, creating a fresh demand for property to accommodate a new workforce
  • Recent membership of the EU and continued, strong EU funding
  • Excellent property prices that are very low compared to most other European locations
  • Considered one of the most rapidly advancing countries in Europe
  • Property construction emphasis on high quality design and build with minimal environmental impact
  • GDP growth expected the highest in Eastern Europe (Institute of International Finance) at 6% for 2005/2006

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