Property Development in Bulgaria

The latest findings of the National Statistics Institute regarding the Bulgarian property market make for very interesting reading…for example did you know that now average property prices in the coastal resort of Varna are higher than in the capital of Sofia and that residential property prices have increased across the entire country this summer by about 4.6%?

These positive factors and many more are revealing that all in all interest in property development in Bulgaria is not waning and this is what’s causing property prices to creep up…we examine the short term prospects for the Bulgarian property market.

According to the currency specialists at HIFX in the UK, the number of enquiries they have received from buyers interested in investing in property in Bulgaria increased by a staggering 40% following the announcement and confirmation that yes, Bulgaria will join the EU in 2007 which bodes very well for property developers in Bulgaria at the moment.

Furthermore Bulgarian property developers are aware that the price of land and building materials as well as labour in Bulgaria remain relatively cheap and that fact coupled with intense and currently lasting demand for property for sale in Bulgaria means that it makes sense to keep building desirable and affordable apartments, villas and chalets for investors and holiday home buyers at least for the time being.

While demand for property in Bulgaria remains high and investment continues to be made into the improvement of major resorts and locations such as Varna and Bansko, Pamporovo and Sunny Beach for example, and as long as supply is kept in check – i.e., planning controls are enforced – there will be a natural rise in the price of property. 

EU entry will also likely have a positive knock on effect first to the economy and then to the property market in Bulgaria as investment is expected to be freer flowing into the country following 2007 entry resulting in greater economic prosperity for many as well as allowing local people access to more sophisticated finance facilities to enable them to buy their own homes should they so wish which creates another tier of market demand for developers.

The problems in terms of property price increase sustainability only come about when housing supply outstrips demand – as has happened in certain coastal resorts, or where affordability becomes an issue.  At the moment the majority of properties are being marketed to the individual investor interested in single or small multiples of property unit – if this investor base finds it hard to afford property in Bulgaria because prices go up too high or domestic interest rates rise or there is a sudden slow down or drop off in the price of the investor’s principal residence with which many are re-mortgaging and financing their property investment plans in Bulgaria, then there could be a drop off in the Bulgarian property market’s success.

While all of these factors are actually currently positive, demand is increasing and property development in Bulgaria is not abating.