Bulgaria

Property Investment

Over the last few years there has been a large overall increase in property prices in Bulgaria, due to a large increase in the number of foreigners buying apartments and houses. However there are significant regional differences, the location is the most important factor when making a property investment.

The highest price increases have been in the cities of Sofia, Burgas, Varna; the towns and villages near to the Black Sea coast; and the skiing areas. In some areas which have been overdeveloped, such as Sunny Beach and Bansko, prices have stagnated. In other areas, prices are still increasing a lot.

The English were the pioneers, buying cheap property at low prices. They are now being overtaken by the Scandinavians and Russians, who spend more on better quality properties.

Some people see an old house for sale for €10,000, and think they are getting a bargain. Often these properties are only worth the cost of the land, minus the cost of demolishing the building.

Build quality

Most new construction in Bulgaria is in the solid German style: steel reinforced concrete structure and reinforced concrete floors, with supporting and non-supporting walls made from clay brick. The photo shows a villa near Lozenets Seagarden using such construction, before the non-supporting walls have been added.

The construction sector is highly regulated in Bulgaria. Buildings have to be constructed to survive earthquakes - foundations are on a solid concrete slab, which move with the building. Although in recent years the amount of damage caused by earth tremors has been very little (less than in the UK), the theoretical risk of an earthquake is higher.

The main problem is in the quality of the finishing work. If you employ a company to do a job, you should definitely see an example of the work they have done first. There are some very good workers, with experience of working in western Europe, but they are hard to find.

Buyer beware

The Bulgarian units of measurements tend to be flexible. Don't believe 'five minutes' from the beach - find out how far it is in metres.

Apartments are measured in square metres. Unfortunately this is a 'gross' value that is quoted, which includes balconies, walls, and the percentage share of common areas such as stairs, reception, pathways and even the garden area. The usable area of the apartment is typically 80% of the quoted area, but does vary depending on the property.

Construction materials are more or less the same price as anywhere else, but labour is cheaper compared to elsewhere in the EU. This increases the temptation to take shortcuts and use substandard materials, particularly at the low end of the market. Bulgaria offers very good value for money, but you still have to pay for quality.

Where not to buy

Be very careful about buying anything in the Strandzha park, Ropotamo Reserve or any other protected area. The environmental lobby is quite strong.

So far there are two high profile projects that have been stopped - one in the Strandzha park near Varvara, the other much further north in Irakli (between Sunny beach and Varna. Both of these project are regularly on TV, with environmental activists and famous celebrities protesting against their development.

The project near Varvara received building permission, and construction started. The document from the ministry of the environment, which allowed construction in that area of the Strandzha park, was found to be forged. This meant that the building permission was invalid. The case went to court, and the construction work was stopped.

As long as you avoid the national parks and nature reserves, you should be ok.

Be careful about buying land within 200 metres of the sea - a new law restricts construction within 200m of the sea.

Agents

Estate Agents are not as well regulated as in Western Europe. Certainly there are good ones, but there are also agents that will say anything to make a sale.

The commission an agent earns on a new development is hidden in the price of the property, so the purchaser has no idea how much the agent earns. For unattractive properties, or properties where the developer is desperate to sell quickly, the commission is 15%. This encourages the agents to promote these properties first.

Some disreputable agents advertise properties which they are unable to sell, because they do not have an agreement with the developer or owner. The reason they do this is to get more visitors to their website via the internet search engines. (The more information there is on a website, the more likely it is to be found).

When a customer contacts them about such a property, they then try to persuade the customer to buy a different property - one which they are able to sell.

Information

Opposites

Sunny Beach has the largest number of apartments for sale.

For high class villas by the sea, Lozenets is increasingly popular.

Stating the obvious

In general, the places where lots of people go to on live and work, and those places where lots of people like to go on holiday, are the locations which have the best investment prospects.

Strange exception

One exception was remote rural villages. For years there was a surplus of cheap houses, as people migrated to the cities.

Then foreigners, particularly the English, started buying remote rural properties.

Prices went up a lot. They have stabilised now, because it is difficult to resell such properties.

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