Should you Invest in Bulgarian Property?
Property for sale in Bulgaria – useful information about buying a Bulgarian home, price increases and estimates, where to buy and much more.
According to the ranking of HIFX, Bulgaria moved into the top five most popular destinations for British citizens to purchase investment properties. Only Spain, France, and Australia placed higher. France and Spain snapped up 43% of all purchases, while Bulgaria claimed an impressive 10%
These facts, supported by that remarkable survey, show that many Europeans, especially the British, intend to buy overseas properties as rental properties or vacation homes. Europeans are looking to purchase property in areas that offer plenty of sun and inexpensive flights.
Due to strong demand, property for sale in Bulagria have increased by nearly 40% in just one year. That National Statistical Institute does show that some area’s property values are climbing much faster than others. Cities like Sofia and Varna are experiencing slower growth, while towns around the Black Sea are climbing rapidly. Rental units in Sofia and in the Black Sea city are quite expensive – the average rental rate is 1222 leva per square meter. The least expensive properties are found in Vidin, costing a mere 356 leva per square meter. In Bourgas, property prices increased by a staggering 46%. Small apartments are preferred to large units, and bigger buildings are under construction at present.
Experts reported in Dnevick newspapers that the housing boom in the larger city of Sofia is now winding down, while other areas are now starting to experience a similar trend. Throughout Bulgaria, construction is occurring at alarming rates. Dozens of construction permits are issued every day. This is creating a ripple effect with banking industries as loans are obtained.
An expert from the Newspaper “Sofiaecho” reports that property values in the year 2007 will climb drastically. Despite this, the country has a long way to go before it can catch up to the growth in tourism and housing that France and Germany have experienced.
However, there is a remarkable drawback – Sofia experiences problems with providing terrains for new constructions, and 34 villages in the Sofia region house 6.5 percent of the 1.2 million citizens of the capital. According to predictions, a third of Sofia residents would move to the suburbs to escape from the traffic, the noise and lack of clean air.
For that reason, most new construction takes place near Vitosha Mountains, which used to house only villas, but is now turning into a residential suburb. Over some years, these suburbs will eventually merge with the ones in eastern and southern areas of Sofia, due to the natural growth and tendencies of these cities.
In the same source of information, experts report that consumers are still hesitant about buying properties in the suburbs, but they expect sales to increase in these areas as well, by means of extensive advertising campaigns. The emerging middle class may prefer calmer surroundings and that may be the reason why the interest toward property in the Vitosha region is growing.
Property for sale in Bulgaria
The Bulgarian economy is rapidly expanding thanks to tremendous growth in industry and production companies. Because of this growing trend, loans are helping the banking industry to thrive.
Regardless, even if Bulgaria’s economy has grown in leaps and bounds and housing values are skyrocketing, overall housing prices are still much lower than in other countries. Typical housing prices are 1,000€ per square meter. Homes in Greece sell for 8,000€ per square meter. Property in Croatia costs 2,200€ per square meter. Finally, housing in Serbia costs 2,000€ per square meter.
Since property for sale in Bulgaria is significantly less expensive than in neighbouring countries, it is simple to gain high rental profits on the property in the range of over 10% of the purchase price and on commercial/industrial property gains upwards of 20% may be possible.
One of the most important problems that properties in Bulgaria must face is the fact that many residential buildings within Bulgaria are in horrible condition. Before many of these buildings or homes can be leased, they require significant repairs and upgrades.
Property for sale in Bulgaria has no regulations with this regard, unless apartment owners agree to do some repairing, nothing can be done, because individual leaseholders cannot be forced to contribute towards the cost of repairs to common areas and the building exterior unless their leases specifically state it. This explains why even the most attractive residential areas in Sofia remain difficult to lease.
Although the Bulgarian market is not sophisticated – some estate agents do not even announce their properties, and if they display them, prices are not clearly stated – they usually charge commissions to both buyers and sellers, which increases costs and reduces the possibilities of the market. Apart from that, the development of modern industrial or commercial property is little, particularly of distribution centers, cold storage, and warehouses.
Since Bulgarian property regulations are poor and not very clear, valuations fluctuate from market to market. Every area has a different tax base. Foreign investors will discover that their tax rate is not based on the property they purchase, but instead on their business profit and the actual bank account used to purchase the investment property.
Under current Bulgarian law, foreigners may own a building but not the land. For a foreigner to own the land their building it sitting on, they must either form a Bulgarian business or hire a Bulgarian business to oversee their land.