European Union membership has increased the confidence of foreign investors in Bulgaria’s real estate sector across the board and a wider range of nationalities are expected to invest in the country in coming years.
Currently, 29 per cent of real estate sales in the country are made to foreigners, mainly British (67 per cent) and Irish (12 per cent). Other EU members have been less enthusiastic about entering the market, with Germans accounting for four per cent of sales and Italians three per cent. In 2007, it is expected that the British will account for most foreign purchases.
Pamporovo and Borovets. Black Sea resorts such as Albena, Golden Sands and Sunny Beach are expected to draw less demand as properties in these locations are considered to be profitable only in the summer. Negative press coverage of the perceived “overdevelopment” of the coast may be another factor, though many resorts are still investing heavily in holiday complexes, and many foreign firms are putting money into high-end developments such as luxury hotels and golf courses.
Katya Tsenova, the executive director of Address real estate agency, told local press that another area of growth would be spa resorts such as Velingrad, Hisarya and Sandanski. Spa tourism also is the focus of the State Agency for Tourism’s current development campaign.
Last year, British real estate firm Assetz caused a stir in Bulgaria by saying that the Balkan country was a less favourable investment location than the UK and that the time for fast profits in the country was over. Assetz recently issued a report, listing Bulgaria as the third best country in Europe in which to purchase buy-to-let property. While the UK was listed above Bulgaria, with Poland taking top spot, Bulgaria came above Turkey and France, traditionally strong buy-to-let locations. Estate Agent Knight Frank lists Bulgaria in fifth place in Europe in house price growth for 2007.
Besides, Colliers International announced in April 2007 that the industrial real estate sector had received considerable attention in 2006, driven by logistics operators, manufacturers and traders. Bulgaria’s location on five of the Pan-European transport corridors highlighted for development by the European Commission is one of the factors driving demand. Other factors include the rapidly improving economy, the boom in retailing and production and finally, Bulgaria’s lower costs in comparison to the rest of the EU.
At present, 700 000 sq m of modern industrial space are available in Sofia, while Plovdiv has about 250 000 sq m and the coastal city of Varna about 200 000 sq m. Rents for prime modern industrial sites, which Colliers said had climbed to “unrealistically high levels”, range from $5.10 to $7.40 a sq m, according to location and accessibility to transport links.
Atanas Garov, Colliers International Bulgaria’s executive director, said that he expected an increase of 220 000 sq m of logistics space in Bulgaria this year, due to improvements in the transport infrastructure, particularly in Sofia and the southern city of Plovdiv.
Andrew MacDowall is editorial manager of the Oxford Business Group in Bulgaria.
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