Where is it possible to buy a property on
your credit card? Bulgaria, of course! With thousands of potential property
buyers seduced by Bulgaria's bargain property prices, the temptation
is to think that making a solid return is a no-brainer! Searching the
Internet, dozens of articles and property websites boast about the 100%
capital growth that can be achieved on Bulgarian property investments
in the space of 12 months.
For first-time investors with small budgets looking for a step onto the property
ladder, this seems like an opportunity almost too good to be true! The result
is that thousands of novice speculators and second homebuyers are flocking to
Bulgaria to cash in on the investment opportunities it offers. But as the saying
goes, if it's too good to be true...
Property prices are rising significantly but largely in the more established and more desirable tourist hotspots. Investing along the Black Sea coastline and areas within 10km of the two major ski resorts, Borovets and Pamporovo, is likely to yield a healthy 60-80% capital growth in one year. Buying a new apartment in these areas can cost as little as €30,000 and is likely to be a solid investment since they can be easily let to the increasing number of tourists coming to experience the delights of Bulgaria.
A quick trawl through the Bulgarian real estate portals and you're likely to find hundreds of properties under €15,000. With prices like this, the temptation is to rush in and buy, sometimes without even seeing the property. It is wise not to be carried away by the prospect of a property at this price doubling its value in one year. The problem with many of these properties is that they tend to be located in Bulgaria's most isolated and rural areas. These areas are often weak on infrastructure and services and may lag behind the rest of Bulgaria for many years to come.
| Investing in Bulgaria's more established locations, such as Varna,
Sofia or Borovets, may seem more expensive for the budget investor.
But when you consider the headaches and additional expenses that
come with renovating an old property in rural Bulgaria, as well as
the language difficulties, your budget buy could prove not to have
been such a bargain after all! Also, these properties could very
well be difficult to rent. Although Bulgaria is growing in popularity
with eco-tourists, this tourist sector has not taken off to the same
extent as the more traditional ski or sun holiday destinations.
Consequently, the likelihood of property prices rising as dramatically in isolated areas is very slim. Even if property prices take a huge leap upon Bulgaria's entry to the EU in 2007, the chances are that they will increase in rural areas by 20-30% at most. |
The situation is similar in Spain and provides a good example. Though Spain saw property prices increase by over 100% on joining to the EU, it is still possible even now to find properties in the most isolated, inland areas for as little as €35,000. These areas are only now gaining the interest of property buyers priced out of Spain's more desirable locations.
The situation will be similar in Bulgaria. Tourists will flock to the ski resorts, the Black Sea coast and the more popular mountainous regions. Consequently, developers will continue to invest in these areas. New developments will attract more buyers and more tourists and the areas will see continued capital appreciation on investments. Isolated areas, lacking amenities and services, will be overlooked and property prices in these areas will remain significantly lower than the rest of Bulgaria.
For intrepid investors willing to take a long-term view on their investment and wait 15 to 20 years to see significant returns, then cheap, isolated properties may be worth considering. But the certainty of a return and the ability to approximate what that return will be is far more likely with properties in the more established Bulgarian destinations.
Information courtesy of Tracey Meagher, of PropertyAuthors,
a website offering freely downloadable property investment ebooks and
articles.
Full details about the ‘Super Borovets’ project, price madness
in Bansko, golf developments in Bulgaria, and new apartments in Bansko and
Borovets can be seen at the Bulgaria Properties Ltd web site www.BulgariaProperties.net.
You can e-mail questions to advice@BulgariaProperties.net,
or, if you have no Internet connection, call the company (in UK) at 0871 226
2296 to order a free 30-page hand-out, or just for a chat, if you prefer. They
always have time for you.
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