Property Investment in Bulgaria

Bulgaria is a country full of ancient history and culture. One of the oldest European countries, it is now home to nine UNESCO World Heritage sites. It is located on the verge of the Black Sea, in Southeast Europe, surrounded by Greece, Serbia, Macedonia and Romania. A center of many ancient empires, the country turned Communist after the Second World War. While repressing the economy, this served to preserve the culture and heritage of this land of kings and tsars. More recently, since the 1970s, Bulgaria has sought to build relations with its neighbors, move towards a democratic system of government and liberalize the economy.

The topography of the country varies widely, from alpine mountains in the southwest to the warm Mediterranean beaches along the Black Sea. The famed Balkan mountain range slices through Bulgaria from West to East, and the legendary Danube river flows in the North. Sofia is the center of economic and political activity in its capacity as the capital of Bulgaria. The country supports a population of 7.7 million, over a land area of over 40,000 square miles.

The GDP growth rate of the country remains around 5% in the last couple of years and EU membership is expected in 2007. Both factors have been impacting the overall economy and contributing to the stability of property prices. Additionally, Bulgaria became a NATO member country in 2004. Proximity to Europe, Asia and Africa makes the country a crossroads in inter-region travel, with 5 of the 10 trans-European connections cutting through Bulgaria. Air and land transport is well developed, with ample international airports and plenty of public transport facilities in large and small towns. Bulgaria is one of the countries of East Europe to which companies are attracted due to highly qualified workforce and reduced overhead costs, particularly in the area of science and technology.

Bulgaria is experiencing strong growth at an early stage in its development, making it a promising destination for those seeking a substantial capital appreciation in overseas investment property. There has also been a huge surge in the number of tourists, over 50% in 4 years, with the majority of the increase from European countries. Great spas, modern infrastructure and a stable political environment all add up to a great holiday destination. Meanwhile, the prices for property remain low, giving opportunities for long term investment property pension.

All these indicators explain the rising property values in the country, as well as the hype surrounding overseas investment property in Bulgaria. However, there are some areas for concern in this emerging market. Corruption has been a major issue that effects the economic growth, and coupled with the recession of the 1990s, has caused the emigration of millions of Bulgarians from their country. Further, a major concern for those seeking buy to let properties is that the population of the country is actually declining, and Bulgaria holds the dubious distinction of being the country with the world’s slowest population growth rate. The market for rented property is fragmented and there is a lack of quality accommodation.

Overall, when investing in Bulgaria, the selection of the location and the property is critical. Despite the hype surrounding the coasts, the yields are low and the property is difficult to sell. Sofia is considered to be the center for growth, particularly the new off plan investment property. Yields on this real estate are good at around 5%. Select ski resorts are also regarded by analysts as possible candidates for capital appreciation, though the returns are seasonal and the property must be carefully chosen.