Latest Developments for Property in Bulgaria

2004 was a bumper year for property investment in Bulgaria with around 10,000 British people alone buying second homes in the country over the twelve month period.  But what’s the general consensus of opinion for 2005, what are the prospects for the Bulgarian property market this year?

Changes in key constitutional legislation, increased foreign interest in the country and a steadily improving tourist market all point to the fact that 2005 will be another good year for Bulgaria...in fact the latest developments for property in Bulgaria are, on the whole very positive, but let’s examine the market a little closer to test commonly held theories.

Bulgaria Versus Spain

Firstly, those responsible for the promotion of tourism in Bulgaria and those keen to profit from the increased numbers of foreign property hunters have started to boast that the Black Sea coastal resorts are turning into the next Costa del Sol.  Okay, but is this a) true and b) a good thing?

Well, Bulgaria has some of the finest beaches on the Black Sea with over 380km of fine sandy coast...many of their beaches have achieved the coveted and hard won EU Blue Flag and apart from the likes of the Golden Sands resort, they seldom suffer overcrowding.  Average coastal summer temperatures range from 24 to 28 degrees, but winters are nothing if not cold!  The Costa del Sol on the other hand works hard to keep its 24 heavily used beaches clean and up to scratch...in some cases they have been more successful than others as some beaches also hold the EU Blue Flag.  Average summer temperatures are similar to those experienced on Bulgaria’s Black Sea but winter temperatures are far more temperate.

From this we can conclude that Bulgaria’s Black Sea coast is an excellent summer holiday destination, while the Costa del Sol is a year round favourite, and generally speaking those promoting tourism in Bulgaria have made a fair comparison! 

Tasteful Development or Concrete Carbuncle

Now let’s consider the property development that the Black Sea coastal resorts are seeing compared to the developments along the Costa del Sol.  It’s commonly accepted that certain areas of the Costa del Sol have suffered bad, ugly overdevelopment...while the Spanish authorities are keen to prevent further environmental and visual degradation and in some cases are promoting re-development, surely Bulgaria would be keen to learn from Spain’s mistakes and stop any such overdevelopment before it even started.  Unfortunately this is not true.  Where developers have been quick to start building it seems the authorities have been too slow to spot potential eyesores and property black spots. 

Of course much of the Costa del Sol has been saved from overdevelopment and concrete and is beautiful and desirable, and a fair amount of the development that is going on in Bulgaria is tasteful and well built...but because it is a young market there will be mistakes made and some developments will be regretted!  If you’re interested in purchasing any property in Bulgaria, especially off-plan properties, then it’s essential you visit not only the country but also the proposed development site.  You have to be sure you’re purchasing what you expect, that the development is well positioned, well built, well finished and ultimately well designed.

Land Ownership Ban Lifted

The next significant development for the property market in Bulgaria is the fact that in February of 2005 MPs from all political parties agreed to amendments being made to Bulgaria’s constitution to allow foreign non-residents to purchase and own land in the country.  This of course brings the legislation in line with that of the rest of the EU and positions Bulgaria well for its proposed EU accession in 2007.  One point to note is that this legislation will take seven years to come into full effect.

To some this news adds weight to their conviction that Bulgaria and the Bulgarian real estate market is stable and secure and that their property investments will likely return consistent and significant profits.  For others it’s fairly irrelevant!  After all, it’s already possible for a foreign non-resident to purchase land through a correctly established company structure.  But this news is truly good as it further proves that the Bulgarian government are committed to aligning themselves perfectly for a smooth EU transition in 2007.  Although nothing is set in stone, it seems Bulgaria is best positioned for acceptance to the EU club in 2007, but remember accession is not guaranteed.  There is a chance, albeit an outside chance, that the country will not meet all critical criteria for acceptance and be rejected - if this were to happen the consequences for those banking on property investment could be catastrophic.  For the average investor with one or two properties the decision would simply hold back gains, for the serious speculator this could cause profit melt-down.

Oversupply or Under-demand?

Finally, while to the outside world the increased levels of interest in Bulgaria’s property market seem significant and one could be forgiven for thinking we’re missing out if we’re not over there buying up holiday apartments or ski chalets or rural retreats ourselves, there is actually an over supply situation building.  Particularly in Sofia where apartment building is going on at an almost furious rate there are simply more developments than there are buyers. 

The potential consequences of this are two fold...firstly there may be a small implosion in the market with developers wondering if the property boom was actually a myth after all, and secondly it could result in a correction or stabilization of the market.  While property investors and those looking for a second home abroad will continue to come and buy, prices are less likely to spiral upwards out of control, rather they should hopefully steadily and realistically rise.  For Bulgaria this would be a good thing, it would retain foreign interest but it would prevent speculators from making a quick profit from the market and destabilizing it and the country’s economy.

Conclusion

So, the majority of the latest developments for property in Bulgaria are positive...but beware those developers and speculators looking to make a killing from the market.  The country is beautiful, a gem, and it doesn’t deserve anyone visually spoiling it or destabilising it.

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