A part of the EU since 2007, Bulgaria balances old and new in an environment where ornate medieval churches, beautiful mosques and villages that have changed little over the centuries co-exist with the contemporary infrastructure of its cities and impressive sea and mountain resorts.
From the snowy peaks of the Balkans and popular hiking trails to the inviting white sands on the Black Sea coast, this small country has a lot to offer. Health conscious and ecologically aware visitors are drawn to the country’s well known therapeutic resorts, mineral springs and organic farms.
From rural farmhouses and cottages in picturesque hills and valleys to modern apartments in historically resonant Sofia and condos and villas in the Black Sea beach resorts, there’s an interesting variety of residential real estate to be found across Bulgaria.
The good thing is that modern properties in Sofia and other cities, in the glitzy Black Sea resorts and the popular ski resorts of Pomporova, Bansko and Borovets in the Balkans as well as charming, old houses in the countryside are generally significantly cheaper than in other countries in the EU.
Attracted by Bulgaria’s unique mix of natural splendor, historical richness and rustic charm as well as the potential for high returns on real estate investments consequent to Bulgaria’s induction into the EU, foreign buyers, particularly from Russia and Britain, flocked to buy properties in the ski resorts and on the coast. Robust economic growth and the easy availability of credit led to an increase in the number of domestic buyers as well. From 2003 to the third quarter of 2008, Bulgaria experienced a real estate boom with prices rising steadily in response to increasing demand. The average price of residential property in Q3 2008 was 1418 euros per sq. m.
Then came the recession and with it a change in market dynamics and sentiment. Demand, both domestic and foreign, dried up and property prices began to fall in the last quarter of 2008 and have been falling ever since. Within the country today, unemployment is high, credit is harder to come by, investment is low as is consumption and government spending has been reduced. With less money to spend and unsure of the future, Bulgarians are reluctant to invest in property. The poor performance of property markets in other countries, the credit crunch and uncertain economic prospects in general have led to a sharp reduction in the number of foreign buyers as well.
On an average, property prices have fallen by a third from their highs; in some locations prices are down by as much as 50%. According to market sources, prices declined by roughly 10% in 2010. The number of transactions, however, was higher in 2010 than in 2009. Analysts expect prices to fall further in 2011, though prices in Sofia and other big cities are likely to stabilise and for the country as a whole, the price regression is expected to slow down. The luxury home segment has not suffered as much and is more impervious to short-term trends.
Sofia is faring better than other parts of the country because unemployment is relatively low and demand for apartments, especially in the south and east of the city, is picking up. In Sofia, the average prices range from 35,000 to 90,000 euros for apartments that measure 50 – 100 sq. m. Domestic buyer interest in other cities has also increased to some extent. In the countryside, demand has not revived and prices continue to fall.
Demand is beginning to improve in some coastal areas and more beach property deals were concluded in 2010 than in 2009. In 2010, the vacation home segment performed better than in 2009 with more foreign buyers, particularly Russians, buying properties along the coast. The number of beach property deals increased by roughly 20% in 2010 as compared with 2009. Buyers are showing interest in buying holiday homes at bargain prices along the northern and southern coasts of the Black Sea.
Revival of the real estate market hinges on positive economic performance. A reduction in unemployment, wage increases and improved credit supply can revitalize demand for real estate. According to analysts, real estate is still a sound long-term investment in Bulgaria. However, potential buyers should survey the market for properties of their choice and consider buying when prices reach a fairly stable level. Many properties in the cities as well as elsewhere are currently available at discounted prices.
What you need to know about property transactions in Bulgaria:
• In Bulgaria, foreign non-residents can buy an apartment, condo or any structure, but not freehold land directly.
• In 2006, the law was amended to permit foreigners to buy and inherit landed property, but the law will come into effect only in 2014.
• EU residents, however, can currently buy land if they have been residing permanently in Bulgaria for several years or if they are self-employed with a permanent residence in Bulgaria and are engaged in some sort of agricultural activity.
• It is possible to acquire land by registering a company in Bulgaria with the potential buyer as sole owner and director.
• Once buyer and seller decide on the price and other particulars, a preliminary agreement is signed and buyer deposits 10% of the property price.
• A title search is conducted.
• Formalities pertaining to company registration are initiated.
• After the property is found to have a clear title and the company has been registered, a “contract of purchase” is signed by the vendor and buyer.
• Buyer pays the balance and receives the keys to the house.