A Different B2B – British to Bulgaria – Property Market

Before 2009, it was estimated that more than 58,000 expats were living permanently in Bulgaria. The number was expected to increase dramatically in 2009, and virtually every village has a group of expats, mostly British. With a temperate climate, mountains and beaches, there is certainly ample reason to enjoy the relaxed lifestyle and all of the natural beauty. Beginning with the introduction of the currency board in 1997, Bulgaria began a course of improvement to become a politically stable country with an economy improving and developing quickly. British expats say that some prices are comparable or even higher than in Britain, but the cost of living is lower on average, as food, clothing, furniture and other staples are as much as 65% lower in cost than in Britain. Low property taxes are also a draw.

While there is a lifestyle for most everyone, from urban chic to rustic rural homes, virtually everyone in Bulgaria has access to telephone services, mobile phone coverage, high speed Internet and cable TV. There are train and bus services to transport people from the smaller villages to the more urban centers with more amenities like shopping centers, hospitals and schools. Investment in Bulgarian real estate is growing, as there are preferential conditions and guarantees offered to foreign investors. Bulgarian property prices are still lower than most other European tourism destinations as well. The Bulgarian Constitution and legislation guarantee that either foreign persons or companies can invest in Bulgarian real estate personally or as a local legal entity.

While a person can purchase a home, villa or flat, including limited ownership rights, they cannot own land. However, setting up a company based in Bulgaria to own the property allows the ownership of the land as well. Using a Bulgarian attorney, setting up a company is not expensive and quite easy to do. There are other ways, such as a joint venture with a local company, or acquiring an existing company.

The Bulgarian government has taken the stance that foreign investment is good for the future of the country. In trying to attract foreign investment in the economy, the rules for real estate investment have been made quite favorable. With more expat residents every year, it would seem to be worth an investigation into the merits of investment in the Bulgarian economy, and in Bulgarian real estate especially.

Sofia is Where the Smart Property Investment Money Is

Bulgaria was the brash newcomer of the world’s property market a few short years ago. Now, after experiencing the highs of a booming market followed by the lows of a price correction in some parts of the country the situation is more complicated.

If you do your research on the Bulgarian property market it is possible to find very contradictory information on the health of the market. One the one hand, newspaper reports about unscrupulous developers and agents, and stories about people unable to sell their unremarkable new-build flats in Black Sea coastal resorts make for sober reading. Meanwhile, international sales agency Knight Frank recently published a report looking at house price growth across the globe, calculating that Bulgaria has experienced the biggest capital growth of anywhere in its report. The report stated: “While the rate of growth in the price of flats was lower than in previous quarters, it was nonetheless maintained at over 30 per cent, again being driven by the performance of areas bordering Romania such as Ruse and Vidin, as well as the capital Sofia, where year-on-year price inflation exceeded 60 per cent.”

Assetz, the property investment and sales agency, is also enthusiastic about the market, but not wholly so. “Those purchasing homes overseas in the last five years will have found few destinations to rival Bulgaria for strong capital gains,” adds its managing director Stuart Law. “However, major oversupply in the country’s most popular tourist areas means that this is set to lower significantly in the near future. Assetz has always advised caution to property investors in these areas, and rental returns have now started to fall into the negative. It is very likely that average property price growth statistics have been misleading, with rural property price growth masking poor performance in the tourist hotspots for at least the last 12 months.”

Traditionally, Brits have mainly bought in the coastal areas in the east of the country – Sunny Beach, Bourgas and Golden Sands, for example, where the tourists are predominantly British and Germans on package holidays and you can still pick up a flat for £40,000 – and the ski areas, such as Bansko and Pamporovo. It is resorts such as Sunny Beach and Golden Sands where concerns about oversupply are most valid, easily confirmed by the rows of uniform new-build apartments on display when you visit.

If you’re thinking strictly property investment, then Sofia, the capital of Bulgaria, is – according to most property experts – where the smart money is. With an influx of international companies setting up offices here, an expanding middle class, and relatively recent access to mortgages, Bulgaria’s capital city is showing the best price growth in the former Soviet Bloc country.

“While many property investors have focused on the tourist areas such as Bansko, Golden Sands and Sunny Beach, the astute property investor has looked towards Sofia, which is benefitting from plenty of property investment and a year-round rental market,” says Kirsty Barry of Select Property, an agency selling in the area. “Sofia has seen a significant influx of multinational companies including Hewlett Packard, Sony and Cisco Systems. This has created jobs and therefore increased demand for a strong professional rental market, requiring new-build and commuter belt properties that are close to areas of work. While Sofia’s property prices have risen – they rose 25 per cent in 2007 – it still remains the second cheapest capital city to buy residential price in Europe.”

South Sofia commands the highest rent and is considered more desirable then north – and, according to developer Aston Lloyd, rents in south Sofia went up by 20 per cent in the last year, which is an enormous jump. “Rents rising 20 to 30 per cent in 12 months, along with good capital growth – 20 to 25 per cent per year – are unusual for any property investment market,” says Joe Upchurch, director at Aston Lloyd. “This sets Sofia apart from many emerging markets. This is a result, mainly, of local affordability. Incomes are still not high enough for many Bulgarians to get a mortgage – deposits of 20 per cent are required and interest rates are high, at seven per cent. All this means there are a large number of Bulgarians who can’t afford to buy and are forced to rent.”

For anyone interested in buying, loans of up to 70 per cent of the property’s value are available and solicitor’s fees are normally between £300 and £800. Property taxes are between four and five per cent, though this is different in the various regions. Estate agents fees are three per cent of the agent’s fees – both buyers and sellers pay estate agents three per cent.

While you need to be wary about the reputation of developers anywhere you buy in the world, you need to be particularly wary in Bulgaria. There are many Black Sea coast developments that are not achieving anywhere near the rental yields promised, and others have never been built. “Buyers are advised to check the credentials of any developer carefully and ensure that they have the capital to fund the entire development, and are not entirely reliant upon sales to finance the build,” says James Hickman of Caxton FX.

“Regular tales surface about dodgy agents in Bulgaria and unscrupulous practices,” adds James Barnes, managing director at Robson Barnes. “Examples include surveys still not being commonplace, agents charging overseas buyers more than the listed price and developers changing plans for new-builds without informing those who have already purchased. It is important to ensure that the infrastructure promised by agents and developers – such as new roads, golf courses and ski lifts – are actually planned and funded, and not just part of the sales pitch. While bargains can be had, buyers do need to have their wits about them when considering Bulgaria.”

Pomorie – A Town With A 100 – Year History – Becomes A Hot Spot With Bulgaria Property Buyers

Pomorie, a town with a 100 -year history, comprises of two parts. The old one is located on a peninsula, to which only one narrow road is leading. As it becomes for a reputable town with rich history, it is densely built, with narrow curvet streets, expressive and even electrical (usually the local guides proudly tell about few buildings designed in “Modern ” style).The new town is located on the continental part and according to tourist guides it does not step back to the old town with its places of sightseeing -its quarters are rectangular, filled with numerous small hotels offering luxurious rooms and the new developments fascinate with individuality of the projects.

Pomorie is a balanced and calm resort. It does not press its guests with the places of historic interest though one can find here some quite interesting architectural monuments.
All these facts can explain why during last years the population in Pomorie, recently counting 14 000 people, is increasing fast. The place is attractive also for foreigners buying their second home in Bulgaria.
The Irish become pioneers in Pomorie real estate market – enterprising and with eyes towards the future. Their presence has been so massive that locals call the first resort complex in Pomorie “Irish village”.

On the property market in Russia one can find also Pomorie estates such as vast apartments (for example 5 bedroom apartment with total area of 240 sq .m. offered at the price of 270 000 EUR), mini-hotel (comprising 14 rooms, three star category, situated in the old part of the town, 300 m. from the sand beaches offered at the price of 450 000 EUR) However most preferred are residences in the newly developed complexes and apartment houses. This has of course its logic explanation; such an estate in resort is not difficult to be rented. Despite this, prices rise with quick rates, so once investing you can expect very good profit.

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