As the world’s strongest property market in 2007, investment in Bulgarian property recorded a huge 2.36 billion euro increase compared to 2006. All the signs were that this momentum would be maintained this year, according to global investment specialist Obelisk.

Bulgaria’s property investment proved to be the country’s economic motor last year with a record-breaking turnover of 11.36 billion euro. James Gonzalez, market analyst at Obelisk, said, “The huge property price rise was largely attributed to a good mortgage market, high annual property revenues and Bulgaria’s independence from the world financial crisis. The US sub-prime crisis hasn’t hurt the Bulgarian financial market as there was no cross-border banking and consumer borrowing was continuing to grow at a steady rate.”

UK property investors, who accounted for 40 per cent of all Bulgaria property investment in 2007, followed closely by Russian investors at 38 per cent, played a key role in maintaining favourable market conditions.

Nikolin Gavrailov, president of the Bulgarian Entrepreneurial Chamber in Building, reported the turnover for the construction industry was 5.6 million euro. “Investment growth in tourism, production and the need for modern infrastructure stimulated construction. Construction sector growth was expected to record between 12 and 16 per cent year-on-year gains until 2010,” said Gavrailov.

The Economist has forecast a consistent 6.4 per cent GDP increase year-on-year. Bulgaria’s emigrant workers are also pouring investment back into the country, particularly in the retail and housing sectors, so providing further boosts. According to preliminary figures from the World Bank, remittances from Bulgarians working abroad amounted to 1.26 billion euro in 2007. However, the Bulgarian National Bank cited a figure closer to two billion euro or seven per cent of GDP.

“In a bid to ensure a consistent flow of foreign direct investment, the Bulgarian Government has made bold changes to the Bulgarian tax system. The new system means that both income and corporate tax are charged at a highly competitive 10 per cent rate. This new flat rate applies to all workers, investors and companies regardless of income or profit values, making Bulgaria a tax efficient place in which to relocate or invest,” said Gonzalez.

The value of monthly instalments is a crucial factor for Bulgarian borrowers when selecting a mortgage product, according to local consultancy Credit Centre. This was the company’s conclusion after analysing the increase in the average maturity value of mortgages approved in January.

Mortgages with maturity of 20 to 25 years accounted for 31.9 per cent of those issued in January. Those with a maturity period of over 25 years formed 23.4 per cent of the market and mortgages with a maturity of less than 10 years, 10.63 per cent of the market.

In terms of size, mortgages in the range of 10 000 to 30 000 euro formed the biggest part of the market, 35.6 per cent, of those drawn down in January, while mortgages in excess of 50 000 euro accounted for 27.1 per cent of the total. Nationwide, the average size of a mortgage was 46 800 euro, a 20 per cent increase compared to December 2007. The figure for Sofia was 61 500 euro.

Around 78 per cent of mortgages withdrawn, nationwide, in January were in euro. The  corresponding rate for Sofia was 85 per cent. Nationwide, half of all mortgage borrowers were aged between 25 and 30 years.