Bulgarian Property :: Real Estate in Bulgaria Blog

Property prices in Bulgaria increased by 36.6 per cent in 2005, compared to the previous year, according to National Statistical Institute data. In 2004 the average apartment price remained below 540 leva a sq m, rising to 738 leva a sq m in 2005. Prices vary according to region. In Sofia and Varna the increases were between 20 and 25 per cent. In smaller cities, prices rose by more than 70 per cent.
Apartments in the capital city continue being most expensive, at an average 1222 leva a sq m. The cheapest property is in Vidin, 356 leva a sq m. Bourgas property became significantly more expensive, by 46 per cent. Property in the Black Sea city costs almost as much as apartments in Sofia. Experts said that the boom that Sofia experienced a few years ago is now spreading to other cities, Dnevnik newspaper reported.Data also shows that construction is continuing at full pace throughout the country. Construction permits issued in 2005 numbered 55 per cent more than those in 2004. Smaller apartments are now more preferred than larger ones, while larger buildings are being constructed. The process is tied to the popularity of housing loans. More users are buying property with loans, experts said.


Source: Sofia Echo

Assetz Bulgaria - Legal Guide to Buying Property in Bulgaria

The buying process in Bulgaria is as follows :

• Once the reservation monies have been paid, which will secure your interest in the property and go towards the asking price, there is usually a period of 4 weeks in which to carry out checks before the investor signs the 'preliminary' contract. The preliminary contract is signed by all parties in which they effectively promise to enter into a final contract to buy and sell the property. After all the necessary details are provided, the contract will be drawn up by the developer’s solicitors and will set out timescales, payment terms, prices and the terms and conditions agreed.
• A deposit is required upon the signature of the contract. Usually this is at 40% of the asking price; however it is subject to the particular developer’s requirements.
• The remaining deposit is then due prior to build completion and payable in stage payments. The developer is usually flexible when these payments are made so long as the required deposit is paid in full before build completion. Your solicitor should be able to advise you whether this is actually the case.
• Transfer the required remainder of the funds on completion. Once the build is completed, you are able fund the remaining amount due via a Bulgarian mortgage. However, you cannot obtain a mortgage before the property is completed. (Please see section on financing options for further details.)
• In most countries, except the UK and other common law jurisdictions, the Notary plays a major part in the process of buying and selling real estate. The notary is a public official who is simply there to ensure that the transaction goes through in a proper legal manner, but it not duty bound to act on behalf of the investor. In the case of off-plan developments, the final Notary Act is not signed until the building is completed, at which point it can be put on the public record which will show the official transfer of title to the investor.
• Once this has occurred, the investor will transfer the remainder of the funds and obtain the title deeds in their name. At this point the property is legally completed and the investor becomes the owner!

Bulgaria's Financial Supervision Commission (FSC) licensed Balkan Capital Management last week, bringing to 15 the number of management companies operating here.
Balkan Capital Management is co-owned by Financial Brokerage House Logos TM (51%) and investment intermediary Sofia International Securities (49%).
Balkan Capital Management intends to launch 5 contractual funds, Dnevnik learned from the company's executive director Iliyan Skarlatov.
One of the funds will invest on the European markets while another one will buy shares in property investment vehicles. The group will be completed by an aggressive, a balanced and a conservative investment funds.
The FSC also licensed Capital Management and CCB Real Estate Fund to operate as Special Purpose Vehicles. Both are co-owned by CCB Group Asset Management (70%) and insurer Armeec (30%) and have capital of 500,000 levs.
Capital Management will securitise receivables while CCB Real Estate Fund will securitise real estate properties.

Source: Dnevnik

With the increased availability of cheap flights and the current popularity of relocation television programmes, property investors from the UK are becoming increasingly adventurous as they look for the perfect property.

In an assessment of the current European property market, the Independent has suggested that Bulgaria has now become a genuine alternative to France and Spain as an estimated 80,000 Britons make the decision to purchase a second home in the coming months.

Peter Esders, a partner at law firm John Howell & Co, states that because some people are solely interested in a holiday home while others will want either capital growth or income, it is impossible to isolate an individual area as the "best" choice for property investment.

Nonetheless, he indicated that the rapid rise to prominence of a number of Eastern European markets had led to a shift in the usual emphasis.

"Spain and France are still popular - but probably not as much as they used to be because of these new countries," said Mr Esders.

"More and more people are thinking about buying in places such as Croatia and Bulgaria," he added.

The Independent has rated a number of countries in terms of access, property market and general pros and cons. Bulgaria is rated good for access because it is well served by airlines, but the assessment does not take into account the fact that the situation is likely to improve again with Sofia Airport expecting to open a new terminal in 2007.

Mr Esders has advised people to be choosy when looking to invest in property in Bulgaria because of variable growth rates. Borovets, Pamporovo and Bansko have all been highlighted in recent months as lucrative possibilities for property investors.

"I think both Sofia and the skiing areas are going to be good investments for a while. However, lots of people have been buying on the coast so the level of value increases there are unlikely to be sustainable," he suggested.

While Bulgaria will clearly dominate the investment projects of many Britons, France and Spain will also remain extremely popular. The French National Association of Estate Agents (FNAIM) recently revealed that property prices increased by 10.3 per cent across the nation in 2005, while figures from Sociedad de Tasacion showed that Spain's property boom is continuing with a 10.1 per cent increase in the country's provincial capitals during the same period.

As one of the chief advantages of buying a property in France, the Independent suggests that if you get bored of it "there are always people interested in buying in France so selling on your property shouldn't be too much of a problem, as long as it's in an attractive area".

Paris is an obvious example, with house prices continuing to escalate in the capital city. Assetz managing director Stuart Law has picked out the region of Languedoc as another sensible option, with house prices considerably lower than they are in the surrounding area and access becoming more realistic because of cheap flight routes.

Of Spain, the Independent remarks that houses in Valencia have doubled in value since the beginning of 2003. It also refers to the advice from Neil Lewis from propertysecrets.net that the best policy is to look for houses that are in need of restoration.

In a stark message to prospective investors, the Independent stresses that irrespective of the location, it is absolutely crucial to seek professional advice.

"Don't be tempted to skimp on this area. Seeking help is essential to avoid making costly mistakes."

Source: Assetz

About 1.2 M British tourists will probably choose Bulgaria as their Holiday destination in 2008, James Knight, Managing Director of leading property specialist Knight International said at Bulgaria's key annual tourism event, Bulgaria Dream Area ( http://www.bulgariantourism.com ).

The number of Brits visiting Bulgaria has been steadily rising since 2002, when they numbered 100,000 to their current count of 400,000 for 2005, Knight said, adding that he expected an even greater rise in the upcoming years.

Bulgaria has finally entered the Brits' "comfort zone", Knight explained, and along with countries like Spain, Portugal and Italy, it is a country they now know a lot of good things about.

The British nation is one of holidaymakers, and Bulgaria is yet to see a huge wave of tourists, Knight predicted. In his words what limited the number of tourists now was the lack of cheap means of transportation.

As soon as more low-cost airlines start flying from the UK to Bulgaria, the latter will see a wave of independent travelers, he added. They are the ones who prove more lucrative, because all of their holiday money enter the country, instead of going to foreign tour operators.

To that effect, Knight urged all Bulgarian companies in the sphere of tourism to do their best to help the low-cost air carriers establish good business relations with Bulgaria.

Source: Sofia News Agency

New rules allowing British investors to include commercial property funds in their tax-efficient savings schemes are expected to provide the funds with an estimated 4 to 12 billion-pound boost this year, a gusher that could well spill over into new real estate developments on markets like Bulgaria's.
The rule change, announced by Chancellor Gordon Brown in his pre-Budget Report and introduced on 27 December, allows property funds to be included in Individual Savings Accounts (ISAs), Personal Equity Plans (PEPs) and Child Trust Funds (CTFs) for the first time.
Some 82 bln pounds are currently invested in ISAs and PEPs, news agency Reuters quoted experts as saying Thursday. Independent financial advisers were recommending that between 5 and 15% of typical investors' total holdings, excluding their own property, should be in property, said Reuters.
The new legislation is an incentive to diversify savings portfolios with investment in funds developing retail, office, warehousing, industrial and other income-yielding properties.
The move will spike the interest of British funds in the Bulgarian property market for as long as they connect with the necessary incentives, said Roger Hornett from Development Capital Management. The company manages Black Sea Property Fund which is investing in Bulgaria. If Bulgaria's 2007 EU accession is rubber-stamped this spring, that would give a further impetus to incoming investment while making it less risky, he said.

Source: Dnevnik

The investments in real estate in 2005 in Central and Eastern Europe exceed EUR 5 B, the online edition investor.bg announced.

The investment is EUR 1 B greater than the prognoses of the US consulting company CB Richard Ellis Research's (CBRE).

The real estate investments for the period January-September 2005 equal the investments for the whole of 2004, which amounted to about EUR 4 B. EUR 1.6 B were invested in the third quarter of 2005.

The greatest portion of investments goes to office premises - 53% and retail premises - 38%. 9% of the investment capital was poured into industrial buildings.

9/10 of the investment was directed to the new EU member states: Poland (36%), the Czech Republic (30%) and Hungary (25%). The interest towards Russia, Romania and Bulgaria has increased.

A drop in the profitability of the real estate investments in the third quarter of 2005 in Poland and the Czech Republic has been reported.

Source: Investor.bg

Bulgaria went down 12 positions in a ranking of economic freedom for 2006. The statistics were created by Heritage foundation and the Wall Street Journal. Bulgaria occupies the 62nd position. In 2005 the country was ranked 52nd and climbed 26 positions. Countries like Peru Saudi Arabia, Mongolia, Mexico and Macedonia come before Bulgaria in 2006. The index features 157 countries ranked according to criteria such as economic openness to foreign investors, trade policies, government interference and regulations.
The decrease of Bulgaria’s rank came as a result of the poor evaluation of regulations and private property rights criteria. The analysis points out that corruption among high-level officials has increased. Problems with the judicial system pose a risk to investors who might be unable to defend their rights, Sega newspaper reported.

Source: Sofia Echo

Sofia residents will have to pay between 20 and 60 leva higher property taxes this year. Starting from January, the new tax evaluations will produce taxes that are 20 to 30 per cent higher. In Sofia and other major cities, the increase will be 30 per cent. Residents of the capital will also pay higher refuse collection taxes. Combined with the higher property evaluation, refuse collection fees will increase on average between 10 and 40 leva, depending on the neighbourhood, type of building and size of the apartment, Standart newspaper reported.
Taxes in some Bulgarian resorts will increase by nearly 45 per cent. The increase is higher than that in cities because of the sharp increase in the price of resort property. The owners of real estate worth up to 1400 leva will not pay taxes. Tax collection this year will begin in March. City councils have until then to calculate refuse collection fees.

Source: Sofia Echo