Should You Invest?
After emerging from Communism in 1989, Bulgaria existed under a
series of weak coalition governments, a situation which persisted
until the election of a government devoted to free-market
principles in 1997. This year was a key turning point for Bulgaria,
seeing the creation of a currency board which tied the Bulgarian
Lev first to the German Mark and then to the Euro, a move which has
contributed greatly to economic stability.
- The recent strength of Bulgaria's economic indicators means
that the international community now sees the country in a very
positive light for several reasons:
- Privatisation programmes are moving quickly.
- In three years Bulgaria rose from being the banks' lowest-rated
country in the region to the highest.
- Increased economic prosperity in the country has created strong
local demand for property.
- New corporation tax is at an all time low of 10% which is
helping to attract increased international investment.
- A lot of recent interest has focused on the mountains, as
investors realise Bulgaria's potential as a holiday hotspot of the
future.
- Bulgaria's history of communism, combined with the slow start
to the market economy in the 1990s meant that property prices in
Bulgaria were significantly below realistic values. It was partly
these extremely low prices combined with Bulgaria's EU entrant that
has stimulated the demand for investment property in Bulgaria
Rental Yields
Properties in central Sofia have higher yields than comparable
properties in the suburbs. In central Sofia you can expect to find
yields of 5.6%-6.9% with property prices ranging from 83,000
euro to 216,000 euro.
Rental yields tend to be better for ski properties than for
those on the coast because of the longer winter season. Rental
yields on ski properties can amount to 12% whereas properties on
the coast generally achieve only half these levels.
Price History
The property market in Bulgaria remained strong in 2006, with
growth of an impressive 20.5% - second only to Latvia (45.3%) in
the Knight Frank Global House Price Index. Those entering the
market three years earlier however, would have seen an average
increase of a staggering 47.5% (2003-2004). Whether these
price growths are sustainable remains to be seen and whilst some
can be put down to economic growth and market catch-up, a lot are
considered to be a result of speculation.
Despite significant price increases in the mountains, prices
remain higher on the coast with apartment prices averaging 1,232
leva per square metre (£424).
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