I want your opinion on Bulgaria

[Tania]

Hi everyone,
I own Estate Agency in Bulgaria and I am an investor as well. I have my thoughts on the market here but will really appreciate if you share your opinion with me.

Best Regards,
Tania

 

[The Soup Dragon]

The obvious observation is the plethora of units available by the sea and in some of the ski resorts. Supply seems to be outstripping demand in these places for all but the best accommodation. I imagine people will have to look harder in Bulgaria to find a property that will appreciate in the short to medium term and offer good rental. (Perhaps the cities or countryside away from tourist developments are best for that.)

I'm not a fan of tourist accommodation in locations with short seasons. If season is 2 months long and you have problem in your property during that spell then you could lose a significant chunk of your rental and perhaps have to re-imburse those that had booked accommodation with you (assuming you can't find comparable accommodation they are happy to take.)

Global warming isn't good for skiing regions, though could be some time before it has a noticeable effect on the season there.

 

[Investy]

The issue for me is 'integrity' or the lack of it in Bulgarian officials.

This lack of integrity and robust rules means investors are out in the cold if things go wrong and that developers can get away with things they wouldnt in better run states, for example ppor build quality, little state oversight in terms of building standards etc.

If the state itself is afairly corrupt this will feed into the attitude of its people, which again then deters thinking investors.

As a result Bulgaria seems to attract buyers who are'nt savvy.

Compare to Morocco for example: Ok its a poor country but the Government has planned tourism expansion in great detail. This means for example nothing over 3 stories is allowed, a good percentage of a development has to remain green (ie not built),planning permission seems very thorough.

This crucial Government oversight gives investors confidence.

Another emmerging market with very tight Government oversight is Estonia. Every property should be registered on a central data base that anyone can access. This is just one example.



Bulgaria seems to allow pretty much a free for all when it comes to planning so what you end up with is over saturation which means investors cant attract buyers or tenants in sufficient numbers.

Another major factor that detered me ( I was invited to an event at the Bulgarian embassy nearly 5 years ago so would have been a very early investor) was the fact you have set up a company and submit annual Bulgarian accounts - this seemed just too cumbersome and open to abuse by greedy local Accountants.


I also bought in Germany, the worlds biggest exporter. Prices in Germany are often less than those in Bulgaria and you get 12 months rent. Surely any thinking investor would put Germany way ahead of Bulgaria?

 

[Greenoak]

My own view

I have been looking at most of the eastern block countries for letting to locals in mainly the capital cities.

I have to say Bulgaria was way down on my list of candidates.

Most of the deals for off plan developments required stage payments rather than deposit and balance on completion. This was also a major issue with Polish new builds. There seems to be planty of choice in Sofia so supply / demand looks the wrong way round. I would rather have higher demand as lower supply to ease my exit route.

The 3 baltic states seemed to have the deposit - finish and pay as the standard arrangement with LTV going from 70% upwards.

I want to put as little into the deal as possible and watch the price go upand with my gearing getting maximum ROI.

 

[Tania]

Reply to Investy

Hi everyone!

Thank you for your response to my post!

I really appreciate your opinion! Here is mine as well:


“Compare to Morocco for example: Ok it’s a poor country but the Government has planned tourism expansion in great detail. This means for example nothing over 3 stories is allowed, a good percentage of a development has to remain green (ie not built),planning permission seems very thorough.”

Investy, I can see that you are big Morocco fan but there is no need to keep your eyes shut to any other opportunity. Bulgaria is not rich country as well but our Government has its plans for developing tourism as well. Yes, the main tourist destinations are overdeveloped but Bulgaria doesn’t end with Sunny Beach and Bansko.
There are many other great places in Bulgaria where is not so easy to get a building permission, where a big percentage has to remain “not built”.

“If the state itself is afairly corrupt this will feed into the attitude of its people, which again then deters thinking investors.”

Unfortunately you are right, but do not assume that Bulgaria is place where everything is to be done “under the table”. I have been to many European Countries and I think there is always some corruption. I am not arguing with you and do not try to convince you that Bulgaria is not a corrupt place but is really not as bad as you may think. I am really happy that we join EU for one reason mainly – our laws are changing for better, more criminals are being convicted and the corruption is something they can put you in prison for /before it was different/.


“Another major factor that detered me ( I was invited to an event at the Bulgarian embassy nearly 5 years ago so would have been a very early investor) was the fact you have set up a company and submit annual Bulgarian accounts - this seemed just too cumbersome and open to abuse by greedy local Accountants.”

Setting up a company only takes about two weeks. The money you need to pay with all taxes and solicitor’s fees is between 300 – 600 EUR /depends on the region/. To set up a company is only needed when buying property with land. If you wish to purchase an apartment the procedure is very, very simple.
I am sorry if you find it inconvenient but there is nothing to be done. This is the law in Bulgaria. If I come to your country /or to Morocco/ to invest I will have to follow the rules there! No one is going to ask me if I like it or not.

About the “greedy” Bulgarian accountants – let’s give the chance to others to judge.
So, a greedy Bulgarian accountant will charge you as follows:
50 BGL /25 EUR/ per year if you only buy a house with land /for example/ and you do not do any business /do not resale your property/
And
100 BGL /50 EUR/ per month if this is your business – buying and reselling properties here. And this is not every month but only when you have a deal.

“Another emmerging market with very tight Government oversight is Estonia. Every property should be registered on a central data base that anyone can access. This is just one example.”

Here is my example – in Bulgaria there is a place /every court in the country/ where you may go and check EVERY property!


I hope I did not sound rude /if so, I apologize!!!!/, I just wanted to show you another point of view!


Have a good day!

PS: I am open to any comments you may have!