Most developing countries arrive at a stage when they are no longer developing and instead are accepted as part of the regular club of investment countries. For Bulgaria this will most likely be in 2007 and it joins the EU and becomes accepted as a quality investment location within Europe.
There has been a lot of focus recently on investing in property in Bulgaria and many people believe that a lot of the profit potential has already been exhausted in the country. Certainly over the last 2-3 years Bulgarian property has been at the forefront of property investment in developing countries. For sure prices have increased dramatically in the last few years but it should be realized that this was from a very low base and in addition many of the properties that were being purchased were old and of low quality.
For sure property in Bulgaria as an investment buy has increased hugely in just three or four years. It is no longer possible to find dirt cheap sea or ski properties in Bulgaria but also it is true that now you can easily find financing in Bulgaria which makes it much easier to purchase more expensive properties. The quality of construction has also improved dramatically and with this comes increased prices. When buyer who purchased cheap run down properties 3 years ago have realised that at the end of the day they were not so cheap when the full cost of renovation is included.
As the country joins the EU the quality of its modern buildings as increased significantly and this is reflected in the prices. The modern residential and commercial building in Sofia are equal to any in other cities across Europe however the prices are just and faction of what they would be in western Europe. This is attracting commercial and residential investment funds who are interested in taking a 10-15 year investment in Bulgaria. Unlike the recent private buyers of the last couple of years who mostly are interested in speculative capital gains these investment funds take a long term view and focus instead on rental yields and the income that can be generated from their Bulgarian properties. The available of these mature investors is seen as the next step in the development of the Bulgarian real estate market.
The changes to the Bulgarian law as a result of joining the EU are also encouraging investors. As well as the improvements in the law and the reduction in corruption investors can now be confident that they are investing in a country whose real estate laws are largely in-line with those in the rest of the European union. This is an important element for investment funds as they can frequently be investing several hundred million euros in Bulgarian properties and they need to feel confident in the legal system.