Prosperity in the Bulgarian Property Market: How Much Longer Can It Last?

Recently Bulgaria has become one of the most prominent places to join the European trend of middle class holiday investing largely fuelled by British, Irish and American investors. Property; very cheap and surprisingly profitable property is at the top of the shopping list for many lay families and individuals looking to enjoy “the good life” when schedules permit. Bulgaria has proven through its tourist and property industry to be worthy of its recent favour.

One of the frequent questions is: why Bulgaria? The answer to those who have invested before is all in the history of the numbers. While Bulgaria doesn’t have a long history in the property market, the budding market is spawning a lot of happy investors harvesting their rewards and forging a long term trend, the beginning of which yields the answer to the “why” in investigating the “when”. It was in 2001 and 2002 that Bulgaria made public their efforts to come up to par with western nations through substantial efforts to transform the nation from a defunct, all but nameless former soviet satellite to a contributing and valued member of the European and International communities. Bulgaria set off to accomplish this by working to qualify for involvement in international organizations such as joining NATO early in 2004 and signing the European Union Accession treaty during the Luxembourg Presidency of 2005. It was arguably these political steps that displayed to Europeans and the world that Bulgaria was open and on the road to stability, ready for investments in some of the cheapest and most profitable properties available in Europe with diverse areas from beach front apartments and villas to ski resort and mountain side chalets and bungalows lining the highest European peaks east of the Alps. With property prices incontestably lower than the competing western nations and a local service industry that makes the cost of living just as negligible, foreigners have a lot to gain when purchasing in Bulgaria, not the least of which is improving their quality of life without going above and beyond the credit limits. For example – it’s possible for a middle class British investor to purchase a property in Bulgaria and use home media development services to have a partially automated and fully media accessible home with LCD screens and audio in every room without spending more than £30-40k on the entire endeavour. Services like HomeMediaBg ([]) and scores more make these wonders into a possible standard for many.

Between the years 2001 and 2005 Bulgaria’s property market has maintained an average growth of 20-30% on property value appreciation annually. Furthermore, above average appreciation occurs annually in the tourist regions where the idea of owning a holiday apartments or villa on the Black Sea beaches or a chalet in the popular ski resorts has maintained substantial appeal to more than just a few working class property seekers. In that same period, many Bulgarians profited from the markets as well with a number of shrewd, business-minded people seeing an opportunity to capitalize in the spirit of new found capitalism, they quickly established themselves in the path of the deluge. Bulgaria’s property market went from accommodating 2 major agents in 2001 to spawning approximately 3,000 by the 2005.

In Bulgaria’s present market, future, former and current investors share a common curiosity: “What lays ahead for a property market that has been surpassing expectations for four (4) years?” It’s a question that even the thriving and bold Bulgarian property agents are hesitant to broach. No one can claim to know how far the market will rise before a doomsday-like market correction is required to normalize prices and remedy artificial inflation. To understand the hesitance to address the concern and ignorance that most buyers have about the future state of the Bulgarian property market, it’s necessary to understand the driving force behind the evolving market trend.

In the Beginning…

The inauguration of Bulgaria’s property rise neatly coincides with Bulgaria’s courting of the European Union for eventual membership status in the new face of Europe. In large part, when subject to scrutiny, the reasons for the property boom is clearly a combination of potential EU membership driving an economy to grow exponentially with the aim to be on par with its EU neighbours, in conjunction with a tourism market that was established long before Bulgaria debuted on international property market maps. Bulgaria’s property market is therefore dependent on the country’s success in becoming and EU member in the short term and on the development of the tourism industry in the long term.

The Role of EU Membership in Bulgaria Property Market

Having signed the EU accession treaty in 2005 and commencing and completing a number of reforms to comply with EU requirements, Bulgaria has successfully bolstered its property market. EU memberships is scheduled for 2007 or 2008, dependent on Bulgaria’s ability to mitigate the amount of upper-level corruption by establishing and enforcing stronger laws and punitive measures for such crimes. With EU membership all but certain, in under 2 years, the next logical question is, “what lies in the through the cloud beyond EU membership?” The answer: In all likelihood, the achievement of EU membership will propel the property market further in its current direction for a while afterwards while the market continues to adjust to new standards. While this is all speculative, consider the facts:

  • While Bulgaria’s prices have been steadily increasing in tandem with GDP and inflation, prices of securities, commodities and property are not yet up to the rest of Europe’s popular tourist destinations
  • Even with approximately four (4) million tourists visiting Bulgarian annually (2005) after a 50% increase since 2001, studies prove that the majority of Europeans avoid Bulgaria for the sole fact that it’s not yet part of the EU and thus has not yet earned their trust and security.
  • If a correction occurred shortly after EU membership it would be very short lived because the overwhelming majority of Bulgarians cannot afford the properties that many Europeans and Americans can buy in multiples. If a dip occurred the only people to sell to would be the large amount of foreigners that have not yet enjoyed the splendour of the market, benefiting from a new dip in prices and fuelling the next rise.

The Symbiosis of the Tourism Industry and Property Market

Bulgaria’s tourism industry has existed even through the communist error. While it may initially seem like a strange fact to many propaganda enriched westerners, upon further consideration it’s quite logical: even former soviet communists enjoy beaches, skiing and mountain vistas and Bulgaria’s geographic location (same latitude as the French Riviera) featuring mountains, valleys and beaches in a area of 1/5 that of France lends itself perfectly to the holiday image.

When the property boom began, the already mature tourism industry began a second stride that has already over shadowed the first (1970s) by being the primary residual beneficiary of property craze success. Hotels in the three larges beach resorts, Sunny Beach, Golden Sands and Albena (in descending order) began to multiply like crocuses in an open meadow during early spring. Many of Bulgaria’s largest companies at the time of this writing are hotel companies with properties in the beach resorts. With growing diversity in the consistently expanding tourist population, tourism in Bulgaria is feeding the property market directly through the purchase of land and property for ever more hotels and villas for rent combined with a substantial volume of impressionable middle class foreigners who are looking for a decent means of securing a their ticket to the good life.

While the future of any type of market can only be based on speculation, the Bulgarian property market still shows many signs of increase and more importantly is building a price foundation for support. The support provided by the tourism industry and foreign investment in Bulgaria help to mitigate the chances of near immediate correction after EU membership is obtained. What waits to be seen is when these supporting pillars will be insufficient to abate the inevitable balancing correction that is surely on the distant horizon and how those already invested will employ their resources to profit from the redistribution process.

Property Investment – Finding The Right Property Manager

Many property investors will choose to manage their own properties, especially if they live within a short distance. However, for many investors it just may not be feasible to take on the management of their properties if they are spread out between different states and countries. In these cases they may appoint a property manager to take care of the affairs concerning the rental and management of the properties in return for a monthly fee.

The benefits of appointing a property manager can easily outweigh the reasons not to do so. A good manager will always communicate effectively with the owner under all circumstances and the tasks they perform.

The tasks and duties of a property manager are wide ranging and will vary depending on the requirements of the property owner. Here is a list of the some of them:

Advertise for and screen (credit checks, contact referees) potential tenants

Collect initial bond/security payment

Collect monthly rents

Arrange any necessary repairs

Periodic property inspections and inventories

Pay workmen, gardeners, council rates and other bills out of incoming rent

Make regular rental payments to the landlord

Contact landlord upon tenants giving notice to vacate property

Liaise with landlord to arrange for repairs over a certain value

Issue relevant notices and letters to tenants

Provide rent and expense statements to landlord

This is just a sample of the duties carried out by a property manager. Ultimately a good property manager is not the one that charges the lowest fees. Most managers in the location where your property is situated will charge similar fees however their ability to manage the property according to your requirements will differ and so it’s necessary to carry out a strict screening process.

The best way to screen a number of property managers is to ask them a series of pre-defined questions. Some owners prefer to do this in a face to face interview; others are content with perhaps a phone call and emails.

So what questions would you need to ask? There are a few different aspects of property management that need to be looked at and so I’ve categorised some possible questions accordingly.

Fees and Service

What monthly fees do you charge?

How many properties do you manage?

Do you charge letting fees?

How often do you carry out inspections?


How often are payments to landlords made?

Under what circumstances do you contact a landlord?


How do you find and screen prospective tenants?

How often do you collect rent?

What is the typical notice period?

How do you deal with non-payment of rent?


What action is taken if a tenant was to damage the property?

How do you manage minor and major repairs?

How long have you been dealing with your preferred tradespeople?

These are only sample questions and will differ according to your situation however they do provide an outline of what you may need to ask.

At the end of the day, don’t settle for less than what you expect from a property manager. After all, this is your investment, purchased with your well-earned money, which you are putting in their hands. Do whatever you need to ensure it is in the hands of someone you consider capable and trustworthy.

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.