THE  BULGARIAN  REAL  ESTATE  MARKET

  Taking the Next Step… Investing in Real Estate

Bulgaria’s popularity as a prime investment destination has been the result of its overall low costs and degree of affordability coupled with word of mouth dissemination and a solid record of good practices. Investment has been the incentive for most buyers in Bulgaria. However, a new trend is emerging where a large number of people opt to use their real estate for seasonal vacationing, relocating, establishing a small business or as in many instances for retirement. As well, investing in real estate is motivated by the desire to secure an additional source of income and/or profit. A lot of elderly people have chosen Bulgaria as the optimal retirement destination based on the fact that they can make their pensions stretch much further. Investing in real estate can also open the door to a lot of business opportunities for both young and elderly people. Options like opening up a quaint Bed & Breakfast could maximize any investment.

The sunny and warm climate, characteristic of locations in and within a close proximity to Sunny Beach Resort on the Black Sea coast have so far been most attractive to buyers. Nevertheless, a few kilometres inland, you will be able to find a totally different environment – where property prices are still extremely low. According to Bulgarian law, foreigners could not officially buy land and could only do so after establishing a company – this is expected to change under the auspices of Bulgaria’s accession to the European Union which occurred earlier this year (January 2007). Already, it is estimated that with EU entry, the number of foreigners living in Bulgaria is expected to greatly increase in the coming years as well as the amount of private sector investment. Many people who live in big cities and have stressful lives opt for more quiet and remote villages/towns in the countryside. As well, people that dream of owning country properties but have not been able to afford it, have shown tremendous interest in remote rural settings where the cost of living is remarkably low. In addition, in rural areas, residential complexes of the closed type are extremely popular. As well, most investors prefer to reside in two-bedroom lodgings. It has been observed that worldwide, property has become 8,5 per cent more expensive.

The stock market is also a great investors’ option but it can be quite a risky option. The stock market can yield high returns but it is a very unpredictable, unsafe and risky venue. Property investment is now considered the surest way of achieving long-term financial security. It is a believed fact that most people with six digit earning capacity have reached this stage on account of the property market and not any other investment option. In general, one cannot go wrong investing in property, since property prices are generally rise in value with the passage of time. This makes this type of investment really low-risk and safe. It has been observed that globally, property prices have increased by more than 100% each decade in the last 100 years especially in emerging property markets – as is the case with Bulgaria.

Likewise, investing in real estate does not obligate the investor to mobilize and commit this entire savings and/or the total overall investment amount. This is facilitated by the option of attaining a mortgage or an alternative bank loan modality. In this regard, in 2006, the mortgage rates fell from 7% to 5.95%, making borrowing affordable. Similarly, by mid-2006, the return on cash investment had jumped from 116% - 137%. Today, foreign investors have focused their attention on the most optimal value-for-money deals still available. These are strategic properties in the right locations which promise to yield a high capital returns. Early investments will flourish since the country’s EU membership will cause steeply rising prices in the years to come.