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The Russians are Coming

Back in 1878, the Russian army crossed the border into Ottoman - controlled Bulgaria and defeated the Turkish army after 500 years under the Ottoman yoke. They were met with open arms and this single act strengthened the deep bond between the two countries. After the Second World War, Bulgaria threw its lot in with the Soviets and became part of the Eastern bloc. So close was the relationship, that Bulgaria asked to become the 14th state of the Soviet Union. Today the Russians are exerting another type of influence and support over Bulgaria; Russian buyers of Bulgaria property are now the largest group of foreign investors here, but what motivates them to buy?


Brits Retreat whilst Russians Advance

Developers have seen the steady stream of real estate investors from the UK and Ireland almost disappear in the ski and sea resorts and much has been written about their decline with some publications blaming Bulgaria’s infrastructure and lack of organization as key factors in this decline, but with the economic recession creating a stranglehold around everyone’s wallet is it any surprise that these property buyers can no longer afford to invest? However, it is not all doom and gloom for Bulgaria’s real estate market; over in Russia, new found wealth is being used to buoy the Bulgarian property market and a recent conference to promote tourism between the two countries drew the conclusion that Bulgaria will continue to be favourite destination with Russian real estate investors despite the global credit crunch.

Profile of Russian Buyers

In 2007, Russian buyers accounted for 39% of all foreign property investment in Bulgaria; their figures more than doubled last year. Another survey of buyers by Green Life Property Development found that Russians now made up 90% of their buyers and that the majority of them were coming from Moscow and St Petersburg and were looking for new, spacious apartments for their own personal use, particularly for family holidays. There are a proportion of Russian buyers who do not have extremely high disposable incomes who are looking for property in a lower price band to rent out.
Other data shows that the majority of Russian investors are aged 25 to 45. Unlike the British and Irish buyers before them, who purchased much renovation property at the low end of the price scale, Russian buyers are purchasing houses and apartments for 100,000 to 200,000 Euros. They favour off plan developments because of the attractive early entry prices along with stage payment schemes.

Preferred Locations

Bulgaria is indisputably the most popular foreign destination for Russian buyers; 23% of all Russians who bought property abroad invested in Bulgaria followed by 17% in Montenegro and 16% in Spain.
The big attraction for the Russians is the climate, close proximity of Bulgaria to their own country and culture as well as the low property prices compared to other EU destinations. Bulgaria’s Slav and Orthodox roots including its shared history, culture and language makes Russian visitors feel at home. Whilst Russia has its own stretch of Black Sea coastline, services in their resorts are poorer and prices much higher, thus their favoured destination is the Bulgarian Black Sea coast, with more than 80% of Russian buyers investing here. Some buyers are looking for rental opportunities in small and medium-sized Bulgarian towns, with the aim of developing businesses there, but largely Russian buyers show little interest in other parts of the country; despite a love of skiing, fewer than 10% of Russians invest in ski resorts mainly because they like to test out different resorts each year rather than being confined to the same area year in year out. Those buyers who did invest in ski resorts tended to do so for the potential rental yields. Golf resorts have yet to capture the Russians attention; it is not a popular sport there and again the only attraction is for rental potential.

Attracting more Russians

In March 2008, the Bulgarian government made it much easier for Russian visitors to enter the country, allowing them to apply swiftly for a visa online rather than undergoing the lengthy process of going to the Embassy. Foreign businessmen are also eligible for Bulgarian passports if they invest over $250,000 or run a business in the country and the best way for them to do this is to enter Bulgaria on a one year business visa and register their own Bulgarian company name. Once the year is up the visa is automatically extendable to a three-year business visa and many Russian investors are taking this option to develop new businesses here.