The fundamental attraction of property in Bulgaria for investors and why real estate investment in this Eastern European country may make very sound financial sense.

Bulgaria has overtaken Dubai in terms of the attraction of its property sector for the smaller real estate investor with less than three properties in their portfolio.  But is this simply because the Dubai property market is no longer the affordable oasis that it once was, or is there something else attracting more investor interest to Bulgaria?

Well, the affordability of the Bulgarian property market cannot be overlooked.  While property prices have increased substantially on the Black Sea coast and in Sofia, they still remain artificially deflated across the whole of Bulgaria mainly because of the fact that foreigners cannot legally directly own the land on which their property sits; they have to purchase via a company and the necessary changes to the Bulgarian Constitution that will remove this requirement may take until 2014 to come through.

So, yes, the affordability of property in Bulgaria means it is of attraction to a far broader investor market.  Furthermore mortgages for property in Bulgaria are readily available (email us if you want to know more) therefore the country is attracting people who may not have been able to commit the necessary funds to an investment property in a more expensive country like Dubai.

But just because properties are more affordable in Bulgaria this doesn’t necessarily make them a good underlying investment.  So the question to answer really is ‘why does property in Bulgaria represent a good investment opportunity?’

Firstly Bulgaria has a strengthening tourist market which is built on three solid layers.  There are the summer sunshine seekers who head for the Black Sea Coast, then there are the winter sports fanatics who head for the Bulgarian ski resorts and finally there are the culture vultures who head to Sofia all year round. 

The tourism market brings money directly into Bulgaria and helps the local economy strengthen.  And tourists demand accommodation, entertainment and amenities.  For a property investor there is the chance to target any one of these tourist markets by purchasing residential property to let out in Sofia, on the coast or in the mountains; or alternatively an investor could seek to diversify by entering the commercial property sector and buying into hotels, retail units or tourism facilities.

As the tourism market continues to grow as it is predicted to, so rental prices for holiday homes will increase and the underlying value of any commercial property will also likely increase.  Furthermore the country will become better known, more desirable for more people and as a result the numbers of those seeking second homes, holiday homes and retirement properties in Bulgaria will increase creating a broader international market for a property investor who would one day like to resell his properties and realise the gains he has made from his investment.

The second reason why Bulgaria represents a good investment opportunity comes down to the local political and economic situation in the country.  As Bulgaria aligns itself for EU accession in 2007 and fights the corruption that the EU have criticised Bulgaria for so investment begins to creep into the business sector which creates a flow of foreign direct investment which in turn buoys up the Bulgarian economy.

Politically the country is stable, economically the country is improving in leaps and bounds particularly since Bulgaria joined the Central European Free Trade Association and significantly increased its export potential.  More international businesses are establishing a presence in Bulgaria creating more employment opportunities locally which in turn pushes up the wealth of the local people.  As purchasing power slowly increases among the Bulgarian people so these people become the next market a property investor can target.  An investor can purchase properties to let out to professional Bulgarians and expatriate employees in Bulgaria now, and as the country’s wealth increases so more local people will be able to afford to own their own homes thus creating the second resale market opportunity for an investor who will one day want to release the equity that has built up in his property.

So, as you can see the attraction of property in Bulgaria from a real estate investor’s point of view is built on far more than just media hype about Bulgaria being ‘the next big thing’, and those entering the market now have the longest projected period over which to enjoy the most substantial gains.

www.shelteroffshore.com