Property In Bulgaria

ABOUT BULGARIA

Bulgaria is a small, yet stunning Balkan country located in the South East of Europe and bordered by Greece, Turkey, Romania, Serbia, Macedonia and the Black Sea. It has a rich and varied history, influenced by the Romans, Greeks, Bulgars and the Ottoman and Byzantine Empires.

It is a former communist country with 28 provinces, and entered the United Nations in 2004 and will shortly be a member of the European Union. There is a commitment to economic reform by the Bulgarian Government (a democratic republic).

In Bulgaria, you will find ski resorts (in the Winter months), sunny beaches, Ancient Thracian burial mounds, spas and stunning landscapes (including caves) and architecture. Bulgaria has a temperate climate - dry in Summer and cold in Winter.

Bulgaria dates back to the 1st millennium B.C. and is one of Europe's oldest nations. The Thracians were the earliest people to inhabit the country , but it was invaded by the Romans in 188 B.C. and after many wars, became a Roman Province in 45 A.D. Many Thracian artefacts from those times have been found, and Roman influences are seen, for example, the Roman theatre at Plovdiv.

After being allied with the Byzantine Emperor, Heraclius in the 6th Century, Great Bulgaria formed two states - Volgar Bulgaria and Danubian Bulgaria (based on the rivers). Later, another state was formed which is now known as Macedonia.

The two main states had different characteristics and influences. In the 10th Century, Volga Bulgaria became one of the greatest Muslim civilisations in Eastern Europe. However, it was conquered firstly by the Mongolians and later by the Russian Tsar Ivan Grozni in the middle 16th Century. Christianity was adopted by Danubian Bulgaria.

After the vast expansion of Bulgaria under King Simeon I in the 9th Century (which was the "Golden Age" for Bulgaria), the Byzantines finally captured Bulgaria after numerous attempts and it later fell under control of the Turkish Ottoman Empire. It wasn't until 1878 that Bulgaria became free of Ottoman rule and a principality was formed.

In 1944, Bulgaria became a republic under the control of the Bulgarian Communist Party, but democratic changes started to take place in 1989 and a new constitution was later endorsed.

Property Market

There is no doubt that Bulgaria is benefiting from their forth coming entry into the European Union (EU) expected in 2007, which has both increased the profile of the country, increased visitor numbers and opened up access to large development grants from the EU.

Recently, property has been far and away the best performing asset in Bulgaria, with overseas investors looking to take advantage of the value for money, in comparison to some of the more mature member countries of the EU. While the average price rise in property in 2003 was an impressive 25%, areas such as the Black Sea resorts, the capital - Sofia and the Ski resorts of Borovets and Bansko have experienced rises of between 50% and 100%. As the membership date for entry to the EU approaches, many market analysts expect a further increase in activity.

While foreign investors are allowed to own buildings in Bulgaria, they are not allowed to own land. Therefore the last couple of years have seen a number of umbrella companies set-up under the Bulgarian system as a way to bypass the land restriction.

Currently there is a big rush on holiday homes and retirement properties in Bulgaria, with foreign investment leading the way. Property values are set to rise still further, with signs that price rises are starting to filter through to the more rural areas, in an inevitable catch up period.

Bulgaria now has a firm foothold in the holiday market, with many of Europe's larger travel companies keen to highlight the attractions of this relatively fresh and unknown country. This can only help inward investment, and the external image of the country.

Why Invest in Bulgaria?

After being blighted by social unrest, corruption, and law and order problems, the country has made great strides over the last few years. Corruption has been a major problem at political level, but pre-set conditions of entry to the European Union have forced change upon this former soviet controlled country. One of the main successes has been the proposed integration with the rest of Europe.

In a country where mortgages only make up 5% of total credit, against 15% in the developed countries, the infancy of the property market is further highlighted. A potential three fold increase in mortgage activity would substantially increase the activity in the property, and should keep the market buoyant for some time to come.

At present the percentage of owner occupied properties is in the region of 90%, which would indicate a buy-to-let market in its infancy. Running and maintenance costs are still only a fraction of those in developed EU membership countries, further adding to the potential for capital growth.

As the recently embraced free market economy continues to touch all areas of the economy, and the standard of living and basic wages increase, so there will be more inward investment. The country has great transportation links, being surrounded by fellow EU members, Greece and Turkey, but also having access to the major Black Sea shipping routes.

The Bulgarian authorities have made great strides in simplifying the trade system in the country, with particular emphasis on the property sector. They appreciate that foreign investment needs to be encouraged, if their free market ideals are to be met. A growing economy and a property market in its infancy bode well for future growth.

Outlook

While the Bulgarian property sector continues to move ahead, there are a few characteristics which are unique to the countries trading system. As the authorities continue to embrace a free market culture, with no regulation, the property sector can encounter short term bouts of volatility due to seasonal swings in buyers and sellers.

While the country has taken on the free market ideals of the west, it is taking time for the reporting systems to catch up. There is often a time lag between property transactions and the effect on the market, but this is slowly starting to filter through.

Not surprisingly, the natural population trend of Bulgaria has been falling for a few years, as workers leave for better paid employment in other countries of the world. This has however forced workers to move into the larger cities in search of employment, thereby creating potential "hotspots" in the property market.

Contrary to popular belief, the remaining population of the country are taking on a more confident outlook to work, life and prosperity, which has seen the start of a feel good factor. This factor is expected to be the fuel which fires the economy in the short to medium term, with many expatriates expected to return "home" in due course. An interesting and mostly untapped property market continues to grow.