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Land Banking

Investors who have bought land in Bulgaria, or indeed have properties here with large tracts of land attached, may be wondering exactly what they should build on them to yield maximum profits. The answer, believe it or not, is nothing!

Land banking is the practice of buying land with the aim of keeping it until its original price has increased and generated a profit on the original purchase price. Land is now an attractive investment option particularly as it is a physical asset unlike shares and bonds. In Bulgaria, land purchase is one of the best investments you can make. It is cheap to buy and once you have endured the headache of the bureaucratic paper trail, it is hassle free. You do not need to burden yourself with architectural plans, finding builders, connecting utilities or, the bane of my own build, sorting out the mess of a garden afterwards.

Once you own your land, you may choose to rent it out for grazing, pitch your tent there in summer, turn it into a vegetable plot, mini farm, stray dog home or leave it as a place for your own personal picnics, there’s nothing as satisfying as sitting back and thinking “I own this.”

Large-scale construction in Bulgaria today is often the result of land banking. Large investors bought huge parcels of land when prices were extremely low and the average man in the village didn’t give a thought to increases in tourism, the British invasion, EU funding or foreign labour investment. These professional land bankers sat back for years until they felt the time was right to either sell on or develop. That is why professional investors have built golf courses in remote areas along the Black Sea coast. The price of land 20 km outside of Balchik was far lower than prime land 20 km out of Varna. Shopping malls, office blocks and retail parks are all being built on out-of-town sites, because the land was purchased cheaply before the real estate boom had taken off.

Another money-spinner in the land banking game is the purchase of agricultural land. This strategy is much riskier than purchasing regulated plots because you are reliant on the municipal allowing you to change the status of the land to regulated, which fetches a higher premium. Many investors bought agricultural land for as little as one euro a m2, spent a further two euros per m2 changing it into regulated land and then sold it for much higher levels. When purchasing agricultural land do check whether it is reasonably close to a road and utilities, like water and electricity. Putting a road in and connecting up to utilities can be extremely costly for future developers.

Buying land is no different to buying stocks and shares or antiques, funds can go up or down and land purchase should be seen as a mid to long term investment. Another key factor in buying land is location. Bulgaria has many huge plots available at low prices in the middle of nowhere, but their low cost and enormous size does not mean they will yield high returns. Shrewd investors need to research carefully the area they are buying. Are any future developments planned here? Is it close to a major attraction, city or resort? Is the land regulated or is it likely to become regulated? How could the land be used in the future? Many people who invested in Kavarna a few years ago bought there because of its close proximity to the sea. The town, which consisted of many shabby, concrete apartment blocks; remnants of the communist era, was not particularly attractive. It was one and a half hours drive from Varna airport but was close to historical attractions like Kaliakra and Balchik. Yet who would have thought that Kavarna would become the target of several large-scale property developers? Today, Kavarna has shaken off its run-down image with the development of a yacht port and several gated communities of luxury villas and apartments.

Sometimes the size of the plot is an issue. It’s no good buying a small plot next to an industrial estate and hoping someone will come and buy it, when the view of the office building in front and noise from the motorway provide few desirable features. Small parcels of land are usually only useful for residential development and to gain maximum profit, they need to have an attractive location. Passing off a parcel of residential land as an ideal place for a rural retreat may not generate good results if the land is far from amenities or attractions and in Bulgaria there are lots of potential parcels sold as ideal “rural retreats”, when in reality they are in the back of beyond.


Many companies have set up as specialist land bankers, who purchase land worldwide on a client’s behalf, in the same way that a stockbroker would buy shares for a client’s portfolio. There are many reputable companies in the market, but potential investors should be aware of companies promising massive gains for very little outlay. A BBC Radio 4 documentary called “You and Yours,” which aired on 14th December 2006, focused on companies offering large gain from the purchase of land both in the UK and abroad. It warned investors to beware of companies offering high profits from land banking, on the basis that they sell non-regulated land at over inflated prices. The land they sell is unlikely to receive planning permission. 

Bulgaria still has a lot of mileage to offer the small investor. The property market is still in its infancy and you can still find cheap land in potential development hot spots. The key to success is doing your homework!

Researching your chosen location

Is the land regulated or is regulation possible?
How far are the utility services from the land?
How high have prices risen in the last two years?
How much land is being sold in the area?
What are the attractions here?
How far are the nearest airport or town?
Is there a view and could someone obscure this by developing in front of you?
Can the land be used for commercial purposes?
Is there any large scale developments planned?
Can you afford to lose this money?