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Property Investment in Bulgaria |
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 The Bulgarian property market is made up of three distinct
opportunities. Firstly, the ski resorts and chalets around Bansko and
Borovets, secondly, Sofia the capital and thirdly, the Black Sea Coast.
Here are some very good reasons for investment
1. Bulgaria is a small and a politically stable country
It is not reliant on old fashioned heavy industry and therefore does
not have many of the economic and structural problems of other former
Eastern Block countries. It has a well educated low cost labour force
with significant cost advantages.
2. It is well situated geographically
It straddles the main overland route between Western Europe and the
Middle East, and it provides access to the Black Sea through its ports.
The combination of its geographical location and its labour force makes
it an attractive location for multi national companies to set up
operations.
3. The Bulgarian economy is growing steadily
Strong growth in industrial production, employment and credit has
resulted in high GDP growth over the last few years. The economy has
grown at an average rate of 4.8 per cent over the last five years yet
despite this, inflation has been reduced to 4 per
cent. Foreign Direct investment has increased year on year from 32
million USD in 1992 to 5.2 billion in 2004. The growth in the Bulgarian
economy should underpin a strong property market and is expected to
lead to increased property prices.
4. Property Prices are low
Prime residential property in Sofia sells in the region of €
1.000 - € 1.200 per square meter or approximately Pound Sterling 67 to
80 per square foot.
To give regional comparisons, the best residential property in Zagreb, Croatia sells for
€ 2.300 - € 2.600 per square meter, in Belgrade, Serbia € 2.200 -
€2.400 per square meter, in Romania for over € 1.600 per square meter
and in Athens for € 7.800 - € 9.000 per square meter.
It is clear, property in Bulgaria is cheaper than in any other
countries in the immediate area. By way of comparison, in London,
property in a number of residential areas ( such as Knightsbridge,
Chelsea and Kensington ) can sell for approximately € 16,000 per square
meter ( Pound Sterling 1000 per square foot ) !
5. Multinationals are starting to establish themselves in Bulgaria
As Bulgarian integration into the mainstream European economic life
continues, multinationals are starting to set up operations in
Bulgaria. For example, Unilever, Proctor and Gamble and the Metro
Group, just to name a few have recently invested in Bulgaria.
6. 10 Year Transition to a Free Economy from Communism
EU accession in 2007 is well on track. Property prices are predicted to
outperform the Eastern European 8 which have recently joined. Inward
investment should continue to stimulate the Bulgarian economy and the
Bulgarian property market.
7. Currency Board Arrangement ( Cba )
Bulgaria has aligned its currency ( the Lev ) to the Euro. The choice
of the Euro as a peg currency is designed to reinforce accession to the
EU. ( 1€ = 1.9558 Levs )
8. The mortgage lending market
Mortgage rates are currently around 7%. When Bulgaria introduces the
Euro, interest rates are expected to decline in line with the rest of
the EU.
9. Interest Rates are currently high for domestic Borrowers for a Bulgarian Mortgage
Supply is currently limited however, more suppliers are expected as
demand increases and some of the larger international mortgage lenders
enter the market.
10. Foreign indirect investment
General tourism is up by over 25% last year and is predicted to explode
over the next few years due to the lowest cost of living in Europe and
the increase in flights, particularly from budget airlines.
11. Key Macroeconomic Indicators
These are positive and stable with future policy set to continue this trend.
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