 Investment
Advice
Investment
Opportunity in Bulgaria – A personal view
Bulgaria is turning into the hottest property market in Europe. It
has been interesting to see the development and recognition of the
market over the past eighteen months. Nobody asks me anymore ‘’
I hear Bulgaria is a great place to invest, but, tell me, where is
it!’’ – I swear this happened to me. However, the
number of agents and developments has also increased dramatically.
The choice of client is now wider than ever, both from development
and the choice of agents. I cannot advise you the agent to choose
but, be careful out there. The most important questions are –
do they know the market and are they direct agents for large, well
established developers.
Let me try and answer here the most repeated questions I am asked
on a daily basis.
- Why should I invest in BG? Simple one to answer - currently
for capital appreciation and low cost of entry. Also, secondary
consideration has to be, the people and the country. We have seen
gains for our clients of 30-40% in the past 9 months without exception.
Current average cost per square meter of 800-1000 Euro for key
developments in Sunny Beach and Sofia will also result in good
gains over the next 12-24 months.
- Where should I invest? Hmm, more difficult to answer. My standard
response to that question is another question –what do you
want it for –investment only or a mix of holiday/investment?
I would look at Fort Noks developments in Sunny Beach and Sofia,
in general, for investment and Bankso/Sunny Beach for mix holiday/investment.
- Why pick out Fort Noks for investment? Easy –only developer
currently in BG with 10% deposit and balance at end of development.
Allows the client the maximum potential for appreciation for the
minimum investment. Sofia obviously offers year round rental potential.
- Stage payments – yes, it is normal practice. Expect normal
payment of 30% down with 3 X 20% stage payments and 10% at title
deed stage. Some developers ask for more up front. We only deal
with developers who accept wire transfers and refuse to deal with
cash payments.
- Why Stage payments? – My answer comes down to the banks
in Bulgaria. Bank loans are not available to developers so, they
use the stage payments to fund the complex. Obviously, the larger
developers are not totally dependent on selling all the apartments
prior to commencement of development.
- Why so much emphasis on Sunny Beach? – Easy one –
it is the best beach resort in Bulgaria. 7 Km of the best bay
and sand you will see. Very well developed infrastructure. Close
to Burgas and Varna airports. In general, sympathetic developments
and best opportunity for renting your apartment.
- What about Sofia? With 1.2m people and less than 3% unemployment,
the capital of Bulgaria is developing very quickly. I have seen
amazing changes in the city over the past three years. Of, course,
not perfect by any means with parking and general roads/pavements
the main problems. As capital and with the number of office/business
parks currently in construction we can only expect the rental
market to expand rapidly.
- Where in Sofia? Lozenets and area around Hotel Kempinski is
the main area on offer from most agents. Frankly, although central,
it is becoming a very boring landscape with apartment block after
apartment block under construction. I don’t personally like
it. Some general rules, for apartment purchase, would be to keep
within the ring road around Sofia (beltway) - keep away from anything
close to airport and also, anything in North or east Sofia. Area
down Bulgaria Blvd is developing into good area with great views
down to Vitosha Mountain. Area close to new American Embassy,
Lozenets (as mentioned above), Doctors Garden area (mostly older
apartments). Remember, this is just my personal opinion but, based
on many years experience walking round the city and talking to
people on the ground.
- What about ski resorts? Bansko is the only one of the ski resorts
not purpose built. It is a lovely old town that attracts tourists
in winter and summer. Sure, not the best developed of the 3 resorts
but, the one where most money will be invested over the next 3
years. Only 2 hours from Sofia and a great jazz festival during
August every year –ok, I like jazz!
- Buying apartment –Do I need to setup company? No, is
the short answer. However, buying houses or land and you will
need to Set-up Company. Cost for company setup is approx. 600
Euro with annual return every year not to exceed 200 Euro.
- Property Tax? – Yes there is property tax and is paid
annually based on 0.15% of the property value.
- VAT – I have heard horror stories –please explain?
Normally developers will declare the build price to be 30% or
less, of the purchase price. Entirely up to buyer to ‘’come
clean’’ and pay the extra VAT on the full amount.
99.99% of clients never do this. Some developers will say that
VAT is included in the price. I often wonder what that means!
- What about country areas? Bulgaria is a very large country with
lowest level of new births in Europe and mass exodus to the main
cities. Probably the most beautiful countryside in Europe with
breathtaking landscapes. Buy in country areas if you never want
to rent. Houses can be very cheap but, please oh please, check
the area first. We specialise in area between VelikoTarnovo and
Sliven in the Balkan Mountains and are fortunate to be in position
to offer clients rental income for select houses. We never advertise
these on the website so, please contact us for details.
- Should I wait until 2006/2007 to invest? Absolutely not ! The
market will show gains in 2007-2009 for sure. However, the large
gains are to be made up to 2007. Remember, we sell developments
today off plans that will not be ready until July 2006.
- With incomes of 200 Euro/mth how can locals buy apartments?
Don’t believe all you read about salaries. The largest purchasers
in Sofia and Black Sea are locals.
- Why should I purchase from buyinbulgaria? – another question
we are always asked. We try to be as impartial as possible. We
match the client to location and apartment complex. We constantly
follow up with clients and remain main point of focus throughout
the process. We are a total provider with furniture/ letting and
resales. Finally, knowledge of Bulgaria remains one of our key
strengths.
- Why not villas –why all apartments? We are starting to
see villa developments for release by end of 2004. Watch the website.
- What are your charges?- as a total provider we charge a flat
fee of 3% for new apartment developments. Old houses/land/villas
we charge 4.5%-5% excluding any local charges. Searches for specific
property or development/investor opportunities are negotitated
on case by case basis.
I hope I have answered some of the basic questions in the above.
At least it should give you a better appreciation for the Bulgarian
market.
Tom Fingleton
CEO buyinbulgaria.com
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