Bulgaria Country Guide

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The Bulgarian Economy is growing steadily - there is a strong growth in industrial production, employment and credit has resulted in high GDP growth over the last few years. The growth in the Bulgarian economy should underpin a strong property market and lead to increased Bulgaria property prices.

Bulgaria Property prices are relatively low. Property in the better residential areas of Sofia sells for around €1,000 – 1,200 per square metre (roughly £67 – £82 per square foot). It is clear that Bulgaria property is significantly cheaper than many other countries in the immediate area. By way of comparison, in London, property in a number of residential areas (such as Knightsbridge, Kensington and Chelsea) can sell for approximately €16,000 per square metre (£1,000 per square foot).

Low Currency risk - The Lev has been attached to the Euro since its introduction at a fixed rate equivalent to €1 to Lev 1.9558. From 1997 the Lev was attached to the DM at a rate of 1 Lev to 1 DM.

The current cost of domestic borrowing is relatively high. The rate that ordinary Bulgarians pay for a floating rate mortgage is in the range of 10 – 12% pa. We believe that once Bulgaria joins the EU, interest rates should fall in order to harmonise with rates in the Euro zone. Lower interest rates should help stimulate the Bulgaria property market.

It is currently possible to achieve high rental yields on property. Rental yields on residential property are currently in the range of 10 – 12% of the purchase cost.

Much residential property available is unsuitable for letting. There is currently no mechanism whereby individual leaseholders can be compelled to contribute towards the cost of repairs to common parts and exterior of buildings unless their leases specifically contain provisions to this effect. Whilst suitable provision is sometimes made in the leases of recently constructed blocks, blocks constructed in the communist era, or earlier, rarely have such clauses in leases. The result is that unless all the owners in a block agree to repair, nothing may be done. Even in the best residential areas of Sofia the common parts of older blocks are frequently unattractive and are, therefore, difficult to let. Good quality modern blocks of flats therefore command a premium in the letting market.

The Bulgaria property market is relatively unsophisticated. Whilst there are estate agents in Sofia, they generally do not have shop fronts displaying Bulgarian properties that are for sale with prices clearly stated. It is common practice that estate agents charge fees to both buyer and seller. This increases costs and hence reduces the liquidity of the market. With accession to the EU, it is probable that this situation will change, with a consequent beneficial impact on the Bulgaria property market. Premier apartments generally receive fees from the vendor.

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