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Invest in Bulgaria – What’s your strategy?

Over the last few years the press have reported  on the virtues of the Bulgarian property market, but the question on everyone’s lips is whether this is still a viable market for investment and what opportunities are left for the savvy buyer.

Quest Bulgaria takes an independent look at the state of the market today and investigates investment strategies, which have the potential to generate profit and income in this diverse market.

 

 Market Overview

The real estate market has in the past witnessed unprecedented growth and received millions of euros in foreign investment, which has dramatically improved the infrastructure and the aesthetics of major cities and the tourist resorts. Thousands of British expats have made Bulgaria their permanent home, along with Russian buyers flooding the market especially on the Black sea coast. Added to this, investment from the EU is continuing to improve the infrastructure and, through policies like Natura 2000, preserve the natural environment from the detrimental effects of over-development.

Property prices, particularly in the capital city Sofia, and the cost of living in Bulgaria are still amongst the lowest in Europe. International banking conglomerates, particularly from the German speaking countries now dominate Bulgaria’s banking system and have created favourable mortgage and credit facilities for both the indigenous population and those foreign buyers who wish to finance their investment portfolio in Bulgaria.

 

Investing in the future

The continuing growth in the routes provided by low cost airlines means that Bulgaria has become easily accessible for short and long breaks thus increasing the influx of visitors.

Indeed, tourism continues to play a dominant role in the country’s fortune and most specialists predict that by 2018 Bulgaria will receive around 18 million tourists annually. The country is gearing up for this predicted tourist influx by constructing golf courses, spa resorts and holiday complexes.

Obviously, increases in tourism bring much needed revenue into the country, as well as creating more work, which makes the local population wealthier enabling them to upgrade their own living quarters. For foreign investors this also has a positive effect on the rental market.

 

Short Term Investment Strategies

Off-plan purchases have yielded as much as 50% profit upon completion in the past, but the increase in development has seen a reduction in the fast turn-around of such profits.

Buying off-plan to cash-in quickly is a risky strategy now and the key to successful investment in this area is thorough research and good location. Off-plan properties are still shooting up but at a less rapid rate, with developers offering a tempting range of incentives to encourage buyers. Front-line beach properties can still be bought off-plan in resorts and these are likely to yield excellent results, but only when the development of front-line property recedes – at the moment, many front-line hotel owners are choosing to develop their sites into apartment complexes, giving buyers plenty of choice.

Another key to successful off-plan profit is to buy right at the very start of the project. Developers often offer studio apartments at exceptionally low prices so that their advertising can claim that prices are unbelievably low. The reality of this situation is that there are usually a limited number of properties in this price range and the real start price is usually double the one advertised. Alternatively choose the best possible apartment in the build like the penthouse, a ground floor apartment offering a garden or a corner unit with stunning views. All of these properties will sell faster than a standard first floor unit. Applying each of these principles to purchasing real estate in the capital is also another lucrative short-term investment strategy providing its location is central particularly for the expanding business community.

 

Medium to Long Term Investment Strategy

As an emerging market opportunities exist for those interested in securing an additional income from the buy-to let market. This strategy also has the added advantage of significant capital appreciation over time.

Opportunities for rentals exist not only in the short-term tourist sector but also in the long-term rentals market particularly in the cities.

More jobs are being created, foreign companies are relocating or setting up in Bulgaria bringing many key personnel with them, all of who need somewhere to rent. Again research and location are the keys to success.

 

If buying for long-term rental ensure your property is within easy access of the city centre. Check out which companies plan to set up business in the city before you commit to the area and choose somewhere with an aesthetically pleasing location, employees like to get away from their workplace and properties located next to parks rent well. You don’t have to live in Bulgaria to choose this strategy of investment. There are numerous reliable property agents who will manage and let the property for you. As an investment strategy, buy-to-let is far less risky than a short-term plan. The main thing to consider is can you finance the property if no income is coming in?

Another low risk strategy is to buy for retirement. Many investors are purchasing property for personal use with a view to retiring there in the long-term. This is a particularly good strategy enabling investors to take advantage of low property prices and savings on the cost of annual holidays. Success in this field lies in choosing a property that you truly want to live in. Much time should be spent in researching the type of area you want to live in as though it were a permanent move. When you reach retirement age you may decide not to move to Bulgaria, but your property will have appreciated in cost and your savings on the annual family holiday will have been phenomenal and you will be able to sell your Bulgarian property for a profit.