Buy & Sell Bulgaria Insight Newsletter

By Christopher Violaris, BSc, MSc, PhD ( Econ)
Chairman of Eurolink Investment Group

You may ask, what is the best way and where should somebody invest. We are listing below some facts that will allow you to draw your own conclusions:

THE APARTMENT MARKET-RENTALS AND RE-SALES:

In recent years tourism has seen a spectacular increase and development in Bulgaria, something that has come about because of the huge Tour Operators’ advertising and the construction of exceptionally modern and luxury hotels on the Black Sea coast and the winter resorts of Bulgaria. Only in 2006 we had an increase of 28% of tourists spending their holidays in Bulgaria and the predictions for 2007 is even greater, 35% increase!

The role of the tour operator in the tourist industry is not just dominant but it is also absolute! Over 98% of tourists come into the country on packages bought through the tour operators, while over 85% of the flights landing at Bulgarian airports during the holiday season (summer and winter) are controlled or organized by tour operators.

With regards to hotel beds, the last 5 years have seen a huge increase both in numbers as well as quality, while in the meantime a huge number of new hotels are under construction, thus offering more and more beds. Considering all the above, we can not see how a holiday maker who can get a package all inclusive from a tour operator for a week in a luxury hotel, next to the beach or on the ski slope for €350, will be prepared to pay the same just for accommodation in a flat, somewhere in or near the resort, neither can we see how a tour operator will rent an apartment for his clients and offer a reasonable rent for the season, when he can get all the hotel rooms he needs at very low prices!

We honestly believe that investors buying apartments for rental purposes should think again! There are thousands of empty apartments in the resorts every year and they will carry on being empty for a lot of years to come! The non-existence of a rental market, therefore rental income, has naturally affected demand which has been declining year after year. Not to talk about the re-sale market which is either too small or non-existent!

The situation with purely residential apartments in the main towns and especially in Sofia and Varna is exactly the opposite! Demand has been steadily grown during the past 7 years with an average of 10% per annum, while the rental market is thriving with the average rent up to between €5-8 per square meter per month, while shops and offices can get as much as €15 per square meter per month.

So, if you are going to invest in an apartment, office or shop and wish to have rental income and a good investment return in the future, stay away from the holiday resorts and put your money on a nice residential property, shop or office in one of the main towns.

HOMES - VILLAS - COTTAGES - COUNTRY HOMES:

Most of the buyers, especially the British with their sense of adventure, go for old, in some cases derelict, houses and cottages mainly in villages and small towns, always having in mind that the “little work needed” they can do it themselves! The reality in these cases is that the “little work needed” can turn out to cost more than the price of a brand new house, but in any case it is never as easy as it may sound, while the chance of getting somebody to rent or buy the renovated property is next to none! Our advice is to get your facts and numbers right, before you make such a move! You may put yourself into a lot of problems.

The majority of buyers, though, invest in brand new villas, homes and cottages that are built near or very near to big towns, with easy access to services, hospitals, shops, etc. Besides been a fantastic value for money, these properties have excellent rental potentials and are in great demand for all the year round. It goes without saying that once a property can generate income, its value will also grow by the years. So, if you are considering buying a house, villa or a cottage, go for a brand new one, it will surely give a lot of enjoyment and a good return on your investment.

AGRICULTURAL LAND - BUILDING PLOTS:

Land has always been the big money maker all over the word and at all times!
Bulgaria couldn’t be an exception to that rule! Demand for land has been steadily growing in Bulgaria, while prices in some cases picked up by as much as 100% per annum. We have hundreds of cases where land that was bought only a year ago for €25 per square meter, was sold a few weeks ago for €50 per square meter!

Once again we will stress that land can be very valuable and a great money maker, provided it meets certain criteria, this is why when you are buying land or building plots, you should use the services of professional consultants who know the market and have a proven background! A nice spot can be attractive to you, but it may have such restrictions that may make the land totally useless! You may buy a plot right next to building site and find out later that this is a “green area” allocated for the construction of a garden or a park! Simply ask a professional and then part with your money! Don’t just take the sweet words of a corrupted “estate agent” as a fact! Remember if you are cheated, there is nothing you can do to recover your money!