Bulgarian property investment is the fastest growing asset in Bulgaria – but for those who want to buy property in Bulgaria, is it actually a good investment – or is it all hype?
Should you be putting money into the Bulgarian property investment market?
Well, as always with property that depends on a few factors and on your personal investment strategy. Yet, it is true that Bulgaria has been attracting a huge amount of interest over the last few years and that interest only increased once it joined the EU in January of 2007.
It is also very promising from an investment stand point that Bulgaria and the Bulgarian currency has seen steady and sustained economic growth for a few years now and with the extra investment due to come into it because of joining the EU, one can speculate that this growth will only increase at a more rapid pace.
Even though Bulgaria history is full of it’s ups and downs, investment in Bulgaria has been getting stronger for a while, many investors think that Bulgaria and the Bulgarian people are still currently only touching the surface of their property development potential and that even though there are huge gains to be had now that the real gains still lay ahead.
Some investors make a very strong argument that Bulgaria is now where Spain was 15-20 years ago and that if you followed what happened with the boom in Spain you will then get excited with the prospects that still lay in wait in Bulgaria. These investors state that as regards to tourism, property development and a few other factors, Bulgaria is today where Spain was in the 80’s.
Another thing that helps is that Bulgaria currently has one of lowest tax regimes in Central and Easter Europe. This helps to invite extensive Bulgarian property investment opportunities.
Even though Bulgaria, like any hot spot, has the potential to become very over congested with investors very quickly, there are still great opportunities for sustainable long term growth especially if you are looking at investing in key cities such as the capital Sofia.
What areas should you be considering when thinking about Bulgarian property investment?
When looking at the potential of Bulgarian property investment, one has to realise that the Bulgarian market isn’t just one market as a whole, instead it can be segmented into various different markets, the three main ones being.
- The Coast such as Golden Sands, Albena and Sunny beach
- Ski Resorts such as: Bankso, Pamporovo and Borovets
- Key Cities such as the capital Sophia
Many investors are looking at the beach resorts along the Black Sea coastal line. Places such as Golden Sands, Albena and Sunny beach are being hotly hunted by investor from the UK and else where in the World.
However, a sensible amount of caution needs to be displayed when looking at any coastal investments. The simple reason is that there is a tendency for an oversupply and inflated prices that only overseas buyers can afford.
These conditions spell trouble in any property market. Investors that are going for these properties have to be careful that at some stage in the not to distant future that they don’t get hit with a big price correction that sees either the price of their properties decrease or stay stagnant for a significant amount of time.
If you where to drive the coast of the Black sea looking for Bulgarian property investment you would undoubtedly see hundreds if not thousands of newly built or under construction properties just ready for the projected influx of tourist and foreign investors.
This should signal alarm bells for any experienced investor. Anyone who has invested in UK property for a while will probably have seen similar things happen in the UK market, places like Leeds and Liverpool saw many new build properties built that where then sold mainly to investors (many of them members of property clubs).
Then when the properties came to fruition they had the typical problems that many off plan developments have. Building properties in this way and investors buying them in this way, has led to the creation of virtual ghost towns and apartment blocks where whole developments have been bought mainly by investors, but there is not enough supply of tenants or new live in buyers to fill them.
Whenever there is an over influx of investors and inflated property prices you could find yourself in a situation where locals are being priced out of both the rental market as well as the property buying market. No matter where in the World you are investing, once you have price locals out of the equation, you are potentially on a very slippery slope to losing huge amounts of money. Unless you can guarantee a supply of non locals, which can sometimes be difficult to predict.
The ski resorts of Bulgaria currently have several problems which can make them a poor Bulgarian property investment strategy.
One of the interesting facts on Bulgaria is that it really fancied itself as a strong contender for hosting the 2014 Winter Olympics but the fact that it was eliminated from the list of bidders – speaks volumes for some of the issues that they face with their ski resorts in general.
Below I have listed just couple:
- At the time of writing it takes at least a couple of hours to get from the airport to the resorts. This is simply to long for the skier who is only on a short skiing trip and has just traveled on a plane for a number of hours.
- Skiers typically want a weekend ski trip or a 3 or 4 day trip, hence time scales are crucial. The last thing they want to do is then take some sort of road transport for another two to three hours before they get to their resort, especially when there are other skiing destinations in the World where the traveling time is minimal.
That said, when comparing skiing in Bulgaria to other ski resorts around the World, even though it falls short in a few key areas, overall it can be a fantastic experience and very competitively priced.
But until the key areas where it falls down are addressed then Bulgaria may struggle to attract the ski enthusiast it desires.
However, it is for this very reason that ski resorts are attracting attention from the risk taking, long term minded property investor.
They are investing there in the belief that they can buy cheaply now (because no one else wants to buy there) and that in years to come they will make a killing once Bulgaria has ironed out the problems previously mentioned.
Key Cities like Sofia
Sofia is the capital and is the place where investment really started several years ago. Since then, the investment has been steady, although the coastal locations have perhaps overtaken it in terms of the speed of investment.
And lets not forget that many people are buying second homes in Bulgaria so Bulgarian property investment isn’t all about experienced property investors buying large amounts of apartments all in one go, there is also a growing market for the foreign property purchaser who is just looking for a second home.
The problem with cities like Sofia is a problem that tends to blight most city hot spots. There can very quickly be a over supply of new build apartments. This tends to be the thing that developers tend to want to build since the profit per square meter can be significantly higher, because you are building upwards.
A different investment opportunity in the medium to long term might be to be looking at the out skirts and surrounding areas of cities like Sophia, and to perhaps be considering 3-4 bedroom houses. There are attractive newly built houses in the suburbs of Sofia that meet these criteria. Many of these developments are gated; adding a sense of security and making them feel that much more exclusive. However, you obviously won’t be getting the smaller traveling groups of one two or three people.**Nothing on this website should be confused with financial or legal advice. If you need this, or any other type of advice, please seek the help of a competent professional. In addition, because real estate laws change all the time and differ from state to state, and even city to city in the same state, everything in these pages should be considered general marketing advice and ideas. Please see link to full Disclaimer at the bottom of this page.