The latest real estate news after Bulgaria’s first month as part of the EU is that typically conservative investors like pension and insurance companies are starting to take interest in the Bulgarian property market. This new type of investor is interested Bulgaria real estate investments because the political and economic profile for the coutry has improve. There is less perceived risk now that Bulgaria is in the EU and also there is a plentiful supply of cheap credit.
During 2006 we saw several large scale Bulgarian real estate takeovers most notably the purchases of the Mall of Sofia and Business Park Sofia. According to Forton real estate brokers, the main interest for these investors will be prime commercial real estate and office developments in the major cities.
Local real estate brokers point out that commercial real estate in Bulgaria currently offers yields up to 10% versus only 5% in other EU areas. As a result of these new pension fund type investors it is expected that they wil drive up prices slightly and that Bulgarian real estate yields will drop to around 8% over the next 2 years.
Bulgarian property investment has on of the main economic drivers for Bulgaria in 2007. Almost 12 billion euros of real estate deals were completed. In what was one of the strongest years ever for Bulgaria property returns. Prices have risen between 25-30% in many parts of the country with Sofia property being particular strong.
The strong rises are many driven by increased availability of mortgage financing as well as the fact that Bulgaria seems to have avoided the most of the global financial crisis. UK buyers made up over 40% of the foreign purchases of Bulgaria property in 2007, while Russian investors were not far behind at 35% of the overall investment market.
The growth in the Bulgarian property market has been driven largely by big improvements in the local infrastructure and economy. Helped by EU funding the country has rapidly modernized it’s infrastructure boosting its appeal to global companies. An innovative new tax regime with personal and corporate taxes of just 10% is attracting many high tech and manufacturing companies to relocate to Bulgaria. This in turn makes the country’s real estate market very profitable for the long term.