What’s Actually Happening in Bulgaria’s Dead Property Market?

Have you been wondering whatever happened to the property market in Bulgaria?  It was the most hyped market back in the day with properties being marketed for sale on the coast, in the mountains, in the capital city and even rurally for those who wanted to escape the rat race and live the dream in an affordable country abroad.

Properties in the nation were highly affordable – they were pushed up in value as Bulgaria joined the EU and then pushed even higher by mass marketing hype that was not built on any sustainable or realistic fundamentals.  At the same time as people began to question the ever rising value of homes in Bulgaria, so too did people begin questioning the likes of build quality, supply and demand ratios in holiday resorts where the property sold was to investors, and even the attraction of Bulgaria as a place to live, work, retire or visit…

As the world’s economic markets began to melt and real estate became one of the biggest bubbles to pop at home and abroad, so Bulgaria’s property market was further undermined and it pretty much seemed to ‘die’ overnight.  So what’s actually happening in Bulgaria’s so-called ‘dead property market’ because there are still people living in the nation, there are still flights in and out of the country and there are still those who have ‘investment assets’ in Bulgaria.  Is it really dead/dying – or is there still some life left in the nation’s real estate economy after all?

The fact of the matter is, Bulgaria was possibly the biggest victim of over-hyped overselling of property at a time when we Brits and we Irish couldn’t get enough of the stuff abroad!  We believed that we were rich because we were convinced that the value of our own homes were rising and that the cheap credit and loans that we could get our hands on easily would never be hard to pay back.  At the same time we were told about an almost mythical land poised on the brink of EU entry where money was being thrown at the country to make it rise in value across the board.

It made sense to buy an investment property in Bulgaria if you couldn’t buy one somewhere like Dubai!  In fact, it was almost madness not to consider the market.  However, beneath all the truth about Bulgaria being poised on the brink of EU entry and all the benefits that can bring were some less palatable truths that were ignored.  They were ignored by the marketers, the estate agents, the developers and the buyers.  Such truths were that EU entry doesn’t mean a country will benefit from any fiscal stimulus overnight, that Bulgaria’s charms are limited, that the nation has extreme legacy issues from its communist past that will restrict its growth for many years and that it is not going to be an ‘easy’ country to move to for a new life for many, many years – if ever!

Whilst expats moving to Spain will find a buoyant tourism market even during a recession, international schools, those who speak English, some employment prospects and a fair degree of indifference to their presence, expats moving to Bulgaria will find that the tourism market is small – limited by the appeal on offer.  They will not find international schools in multiple locations nor will they find English speakers, jobs or easy acceptance if they step off the beaten track that’s really only found in Sofia. 

All of these truths are further compounded for the real estate investor by the fact that Bulgaria’s economic fortunes have been hammered for the near future by the fallout from the rest of the world’s fiscal downturn.  So, to answer the question posed by this article – namely: ‘what’s actually happening in Bulgaria’s dead property market,’ the answer is, ‘not a lot!’

According to Colliers International, prices across Bulgaria have fallen 20% on average over the last year – and that’s following similar falls in the years preceding this one.  In some of the previously popular property ‘hotspots’ on the coast and in the mountains there is no demand and plenty of supply, with many projects lying empty and unfinished as builders have gone bankrupt or just given up on a development.  Elsewhere – Sofia continues to have some activity in the real estate marketplace, driven by ongoing demand that’s attributed to the natural flow in a capital city.  However, if you look at a cross section of districts you can clearly see how prices have fallen in some of the less popular parts of the city, and how the most popular property being bought up is modern, completed real estate under the EUR 1,000 per square meter mark.

For those who hold assets in Bulgaria and who are looking for a market exit strategy, none of this is particularly good news – for others wondering whether to make an entry now that prices are deflated and one can benefit from the fact that Bulgaria is not in the eurozone for its currency, the writing is clearly on the wall!  If you want to buy in, do so carefully and do it in an area where there is demand for rental accommodation – i.e., demand based on business flow in Bulgaria’s main towns and cities.  The tourism market is probably not worth touching at the moment, and whilst the nation is not down and out in terms of its property prospects, you do need to proceed with caution.