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 and mountain areas. With the average property price having risen by an incredible 31% during the 2004 alone, it is easy to see why investment in Bulgaria is becoming 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 thriving economy, property investors continue to see this Eastern European location as one of the world’s best 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.

Why Invest In Bulgaria?

• Bulgaria is an exciting emerging market and currently offers property at prices simply un-obtainable in other areas of the world. With prices steadily rising and set to continue to do so for some time, wise property investment Bulgaria promises excellent returns on investment. Purchasers are snapping up bargains now, with a view to enjoying some excellent returns on investment in the near future.

• With an increase in tourism of 50% between 2000 and 2004, Bulgaria has established itself with the fastest growing tourist trade in Europe and this, in turn, is steadily driving property prices upwards. Tourism concentrates mainly on the popular Black Sea resorts and increasingly popular ski locations and it is creating a very stable buy-to-let environment for investors. Bulgaria has invested heavily in Borovets ski resort in a strong bid for the 2014 Winter Olympics. This will have an inevitable knock-on effect on worldwide awareness of Bulgaria and property investment potential.

• Bulgaria is strongly backed by the UK in its bid for EU accession in 2007. Traditionally new EU countries experience steep increases in property values and tourism from other EU nations, whilst having brought their infrastructures and economic standards up to EU standards.

• Bulgaria has come a long way since its former Communist days and today has a government that is stable and committed to economic reform. It is now a modern, strong and rapidly growing country that has recently become recognized as for its promise on the international market. GDP growth expected to be highest in Eastern Europe (Institute of International Finance) at 6% for 2005/2006.

• With warm weather and stunning blue flag beaches as well as beautiful countryside and a rich cultural experience, Bulgaria has something to offer everyone.

• Close proximity to Europe and increased low cost airlines offering direct routes to Bulgaria from many UK and other European airports, make Bulgaria easily accessible and a viable property location for investors and property purchasers alike.

The Property Market In Bulgaria

The Bulgarian property market today continues to grow in accordance with expert forecasts. Property prices in some locations here have been rising by more than 30% per annum – one of the highest rates in the world. 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, market trends between each region of Bulgaria need to be understood, eg. supply far outweighs demand in the capital city of Sofia. Capital appreciation here in 2004 was just 5.9%. If you compare this with the town of Silistra on the banks of the River Danube which had capital growth of 36%, and the town of Vratsa with figures of 30%, Sofia offers a less profitable option. It is true that these figures reflect the comparatively low property prices in these towns originally, but supply and demand in these areas are also better balanced. Although these figures are impressive, investors with a buy-to-rent strategy should research their area very thoroughly before purchasing here in order to gain a realistic view on projected returns.

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.

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

• Strong possibility of inclusion in the European Union in 2007 backed by the UK

• 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 effect

• GDP growth expected to be highest in Eastern Europe (Institute of International Finance) at 6% for 2005/2006

Bulgaria Property Investment Forecasts

Despite excellent growth figures experienced over the past decade, Bulgaria continues offer comparatively 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. Bulgarian property remains up to 40% lower priced than in these example countries.

Property prices in Bulgaria are increasing and continue to grow at a higher rate in tourist areas than in the rest of the country. The property investment market in Bulgaria is 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.

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

As a conservative estimate, prices in Bulgaria will continue to increase at around 12% per annum until EU accession in 2007. Following this, experts maintain there will be an additional sharp rise in property values, followed by the leveling out of the market by approximately 2009.