Investment Property in Bulgaria

Published on Friday, August 12th, 2005
Property Abroad » Property in Bulgaria

Summary: As Bulgaria continues to attract more foreign investors and increase its average GDP annually so it becomes clearer that investment property in Bulgaria makes sound medium to long term economic sense.

Bulgaria is a country that has successfully embraced political and economic change. Over the last seven years it has enjoyed sustained economic growth and as it aligns itself for EU accession in 2007 and stabilizes its currency to work directly with the Euro, so foreign direct investment is surging; in 2004 it topped in excess of USD2bn and the inward flow of investment has not abated.

Therefore as the country continues to attract more foreign investors and increase its average GDP annually so it becomes clearer that investment property in Bulgaria makes sound medium to long term economic sense.

In the past year alone many property developments in Bulgaria have increased in initial asking price by as much as 30% and as the larger holiday companies continue to make further inroads into Bulgaria so the rental yield potential from investment properties grows. As off plan properties are reaching completion some short term investors are offering their units up for resale and making up to 50% out of their speculation as the market has moved so much between them securing an off plan price and the property being completed.

There has never been a better time to enter the Bulgarian investment property market because the Bulgarian government are working on the legislation relating to foreign direct freehold ownership of property and land and it is being simplified and the choice and quality of the new properties being constructed is improving all the time. Those who were seen as pioneers just a year or so ago for venturing forth and shelling out cash for apartments, chalets, town houses and villas have been seen to be shrewd speculators and many are now following in their footsteps.

A report issued by Invest in Bulgaria in January 2005 about average property prices in the country is now inaccurate by up to 30% in some areas of the country showing just how quickly property prices are moving. This may lead to panic among some readers, but please be aware that property in Bulgaria was incredibly cheap and only now that the demand for property is increasing so the prices can rise.

Without the demand for property pushing prices up they could remain low because labour costs, land costs, corporate taxes, building and utility costs are all far lower in Bulgaria than in other European countries which enables construction companies to develop properties far more cheaply. But fortunately or unfortunately - depending on your perspective - more property investor interest means less supply which means greater price gains.

As mentioned the rental yield achievable from suitable properties in Bulgaria is also on the increase. As more Western companies like Phillip Morris, Nestle, Kraft, SAP and American Standard establish bases in Sofia so the employment prospects in the city increase, in turn this has resulted in an increase in demand for rental apartments and townhouses in Sofia for executives and international employees - and as already mentioned high demand = higher potential yield!

The number of summer tourists frequenting the Black Sea resorts is growing annually and apartments and villas in Varna and surrounding areas are now being rented out from May to September for healthy weekly returns. And those with ski chalets and apartments in Bulgaria’s popular ski resorts can profit from healthy weekly rents throughout the winter season.

Investment Property in Bulgaria

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