Will European investors now flock to the Bulgarian property market?
When Bulgaria joined the European Union, part of the arrangement was a five-year moratorium on land purchases which dictated that European investors could only acquire land through a legal entity, i.e. a company. This five-year arrangement is now up and since the beginning of 2012 we have seen renewed interest from European buyers. So, what does the future hold for the Bulgarian real estate market? How is the country positioned to take advantage of the eventual European upturn?
Even though Bulgaria is situated on the outskirts of the politically volatile Ukraine/Russian area of the world many people believe that the country is very well positioned for the future.
Property market recovery
While it would be wrong to suggest that the Bulgarian real estate market has recovered, is set for significant growth in the short-term and is over the worst, the situation has certainly improved over the last 12 months. The 1.21% decline in flat prices across Bulgaria was the slowest since 2009 and many believe the country is positioned for good growth in the medium term.
Quote from PropertyForum.com : “What are your expectations for the Bulgarian real estate market?”
Indeed if you dig a little deeper the figures show that only three provinces of Bulgaria saw an increase in their property prices during 2013, with 25 provinces showing a slowing decline. It is also worth noting now that the average house price in Bulgaria is now 39% below the 2008 peak, just prior to the US mortgage crisis, suggesting there is significant room for growth in the longer term.
Bulgaria’s economic position
Interestingly, despite the fact that Bulgaria is often associated with the Russian way of life, this is a country which has one of the lowest European budget deficits and overall debt figures. This leaves the government significant scope to invest in real estate, infrastructure and the overall economy as and when the time is right. This fact is often overlooked although serious investors are keeping a very close eye on the situation.
It is also worth noting that the economy is expected to grow by 1.8% during 2014, making it one of Europe’s stronger economies, and something which could breathe new life into the real estate market. When you also take into account the fact that property transaction volume in Sofia alone increased by 10% during 2013, predominantly because of the lifting of the moratorium, it looks as though this particular market is well-positioned for future growth.
Dipping your toe in the water
On the whole it is still a very difficult situation for the European real estate market with austerity measures kicking in, economies still struggling and many European governments drowning in a sea of debt. If you dig a little deeper, the situation in Bulgaria is very different with a relatively small budget deficit, low debt and the opportunity to breathe new life into the real estate market and the overall economy in the short to medium term.
Is it time to take a look at the Bulgarian real estate market? It may not make you a fortune overnight but there are certainly reasons to look a little deeper for the long-term.