Bulgaria is split into several investment areas, the coast, ski resorts and residential/commercial, primarily in Sofia, Povdiv, Bourgas and Varna.
Sofia residential opportunities are good long term investments, prices rose by just under 30% last year and look continue to rise. However, to some extent the economic prospects of western companies investing in the region are reflected in the residential prices and if there is an economic slow down then returns could be lower.
Added to this Bulgaria has its currency tied into the Euro and therefore investment from the UK or America is relatively more expensive due to the drop in value of sterling and the dollar against the Euro.
However, there are still some residential units in Sofia that are unoccupied, with demand strongest for central locations. Long term prospects look good and investors should in our opinion concentrate on the best locations.
The best locations are concentrated near the centre of Sofia, near the business districts and the commercial and diplomatic areas. Also, residential and commercial opportunities near to the airport could be good prospective investments.
The prices of residential accommodation is underpinned by foreigners working in the cities, however, one should take into consideration money from the western countries being re invested into property by Bulgarians living abroad. In some cases Bulgarians living abroad such as in the UK can not afford property in London but can obtain mortgages in Bulgaria which can easily inflate residential Bulgarian property values significantly above normal Bulgarian salary ratios. Evidence currently suggests that average property prices are 30 times average Bulgarian salaries.
The prospects for Bulgarian residential investment look promising; however, there may be a slowdown over the next year.
Ian Hunt
www.bestbg.co.uk
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