BULGARIAN REAL ESTATE MARKET
Property prices in Bulgaria have seen significant capital appreciation. On average, prices are seeing increases of between 30-40% annually – a pattern that has continued for over the last 3 – 4 years. Some regions have shown between 50-100% capital return within 1 -2 years.
The most popular places for investors in 2007 are:
The Black Sea Coast offers a stretch of over 370km of sands – and focus is in and around the principal cities of Burgas and Varna – both benefiting from international airports – with clear growth in the routes being operated and the number of tourists visiting these sandy hotspots. From March 29th 2006 British Airways will be providing direct flights between London Gatwick and Varna, for an average price of £149 return.
Ski resorts have grown in popularity significantly throughout 2005, with many new developments in popular ski resorts such as Pamporovo and Bansko. Here, the most popular investments are the off-plan and new apartment complexes, with prices starting at an average of €45,000 for a studio apartment (for example).
Sofia , being the capital city, offers many new development opportunities – and is widely regarded as the best place to target rental returns for the expanding foreign community. Much less of a tourist destination, investing in Sofia requires a good understanding of the local areas and infrastructure in order to identify the prime rental locations. Property reports suggest that apartment prices (for example) in key locations in Sofia are expected to see annual appreciation of between 20 – 30% over the next few years. In some of the more prestigious locations of Sofia prices have seen increases of 80% within a period of 18 months.
In 2006/7 there has been growing interest amongst investors to look further inland in regions such as Elena, Veliko Turnovo, Tryavna – which offer great historical interest, growing tourism and very attractive property prices. As many reports would caution, property prices here are unlikely to see such large capital appreciation over the short term, but when looking for a 10 – 15 year period, the potential for a large capital appreciation is much greater. In the villages, it is still possible to obtain very low prices – even from 8000 euros.
The most popular investments in Bulgaria can be summarized as follows:
There are clearly pros and cons for each type of investment. Whilst land prices do continue to rise in Bulgaria and offer attractive capital appreciation, there is much more importance on the location of the land, than for property. One also has to consider the size of the plot more carefully and decide whether the eventual resale is going to target a property development company or a private individual who just intends to build their own house on the plot.
Rural properties tend to attract more individuals who intend to come to Bulgaria to live. It offers a cheap purchase option, and with a budget of between €15,000 to €60,000 (on average) a property can be renovated to a western standard. Those serious investors considering a portfolio of rural properties have to conduct a lot more research in the areas where the properties are located – and as such areas currently lack many services and amenities its certainly a higher risk investment in terms of estimating the capital return. Many would advise focusing on rural properties that are still within 10 – 30km of the nearest major city – so that driving times from these villages to the major town/city are kept to no more than 40 – 45 minutes.
Off-plan apartments still attract the most interest from serious investors. Particularly those who are seeking attractive rental returns in addition to a good capital return. When comparing apartment/villa prices in euros per square metre, to other central European neighbours – prices are still extremely attractive. For example, prices start from approximately 800-1000 euros a square metre on average in Sofia and Varna; whilst in Veliko Turnovo prices for off-plan apartments average 300 - 400 euros per square metre.
Apart from the potential for both good short and long term capital appreciation, there is the added benefit of targeting short and long term rental in some regions – boosting the overall profitability. Since off-plan apartments are paid in stages, there is also the advantage of smaller staged payments – therefore spreading the capital outlay over a period of months (typically over a period of 9 – 12 months).
New build apartments are those apartments that were offered off-plan that have been recently completed. Here, the advantage is that you can see the finished product and once furnished, you can start renting out the property in a shorter period. Finished apartments would typically be between 10 -20% higher in price than the off-plan apartments – but this varies by region and by developer.