INVESTMENT POTENTIAL IN BULGARIA

Fancy a holiday home on the coast with surf, sand and beauty, and for a fraction of the price such luxury would usually cost? Make it a reality and buy property in bulgaria.

Bulgaria’s pristine nature and affordable real estate prices attract a growing number of foreign investors looking to invest or spend their holidays in a prime property along the Black Sea coast or up in the mountains at one of the up-and-coming ski resorts.

With a population of 7.5 million, it is known for its exquisite ski resorts in Bansko, Borovets, and Pamporovo. The climate and economic conditions of the country make Bulgaria property investment attractive to Europeans and others from around the globe. Bulgaria has become an exciting emerging market and currently offers property at prices simply unobtainable in other areas of the world. With prices steadily rising and set to continue to do so for some time, purchasers are snapping up bargains now, with a view to enjoying some excellent returns on investment in the near future.

Tzvetanka McFadden, a native Bulgarian and director of Imoti Bulgarian Properties, says there’s every reason to buy in Bulgaria. “It’s obvious why people pick Bulgaria to buy property because it’s cheaper to invest there and offers good value for money. There’s no comparison between the value offered in Bulgaria and in Ireland. Also it has a perfect location. We are there on a crossroads between many countries.”

EU Membership

Bulgaria became a full-fledged European Union member on January 1st 2007 as the flags of Bulgaria and the EU were officially hoisted in front of the Monument of the Unknown Soldiers in Bulgaria’s capital Sofia. Tom Fingleton, CEO of Buy in Bulgaria, believes EU membership will contribute to the already rising prices of Bulgarian property. He says there are several reasons why the prices are going up.

“First of all, there’s VAT on land in Bulgaria which there wasn’t before. That’s going to add an average of 6% to the price of apartments. Secondly, construction costs went up 28% last year. The developments are becoming of higher quality and a lot more facilities are going on sites such as swimming pools therefore the average price per square meter is rising.”

Fingleton continued by explaining that, “land costs three years ago would have been substantially cheaper than they are today. There is an EU factor built in now and it’s hard to estimate but there could be up to €80 or €90 a square meter built into the price because of the EU entry. We’re seeing things now we’ve never seen before. In the past we saw maybe one price increase in the lifetime of a build.

Now we’re seeing monthly price increases in apartment. However, this isn’t putting people off. It’s a doublewhammy. Although prices are rising, it’s still cheap in comparison to other EU countries.”

Experience Matters

There are three approaches that one can potentially take when buying property in Bulgaria. You can buy off plan property, buy a resale or renovation property, or buy land and build a house yourself. So what is the majority of Irish investors buying their properties for?

“There’s a mix of people buying property in Bulgaria and the majority of what they’re buying are in beach and ski resorts and in cities. There are people buying for pure investment, capital appreciation, and potential rental return. There are people purchasing who want to rent it for some of the year but also live there for a few months. Then there’s a lot of people who are buying it for themselves and family for holidays,” reveals Fingleton.

It is essential that anyone buying off plan goes to a reputable developer who has completed projects under his belt and whose previous developments can be inspected for build quality and standard of finish. Agents in Ireland can help you with this and it is important you look around and choose one that has experience and a good reputation.

“Good agents do all the groundwork and pick all the developments carefully. They know where the best developments and locations are. They are experienced in the field and will have offices out there, have people on the ground and know the market very well. They carefully select a development and developer for the client. It’s good to have a local voice here to keep you informed as the process moves along,” said Fingleton.

Hiring A Solicitor

Without a decent solicitor a buyer could face many hurdles. Therefore it’s imperative that one is employed to give legal guidance. A good solicitor will make your purchase quicker, less stressful and much less likely to fall through.

McFadden recommends using an Irish solicitor instead of a Bulgarian solicitor. “You cannot use your Irish solicitor because they don’t have local Bulgarian knowledge and don’t speak Bulgarian. An Irish solicitor wouldn’t be able to close the deal in Bulgaria, so it has to be either a Bulgarian solicitor or if you are closing the deal yourself you will need a translator there on the day,” she explained.

Finding a reputable, English speaking lawyer to oversee your purchase and ensure you avoid any potential pitfalls is crucial according to Fingleton. “A good solicitor is absolutely crucial. An Irish solicitor can’t work in Bulgaria because they’re not registered. Agencies that do a lot of overseas work would have a Bulgarian associate to do all the work. We have solicitors who are independent of us but we recommend them to our clients. Everything has to go through a solicitor. From a legal perspective you should always use one. It gives you some comeback if anything goes wrong,” advices Fingleton.

Affecting The Landscape

However, recent articles in Bulgarian newspaper, The Sofia Echo, would suggest that the Bulgarian landscape is suffering due to mushrooming developments. Hotels and holiday homes are springing up along parts of Bulgaria’s Black Sea coast, many within the territories of other existing protected areas. Bansko ski resort is located in Pirin National Park, a UNESCO world heritage site in the country’s south-west. Two-thirds of the existing ski facilities built in the ski zone above the town of Bansko have already been constructed within the area of the national park without approval from the Bulgarian Ministry of Environment and Waters.

An ongoing campaign organised by environmental groups in Bulgaria has already collected more than 30,000 signatures for a petition that calls on government authorities to improve the legislative, administrative and judicial conditions needed to stop the destruction of the country’s natural heritage. Bulgaria’s accession to the European Union should also contribute to improved nature protection in the country as more stringent EU laws on nature conservation, planning and environmental assessments will apply.

Dramatic Jump In Prices

“It’s my view that the next six months will be crucial in Bulgaria and people who are seriously interested in buying should really look at the market over the six months because prices will jump dramatically. For people who are looking to maximise their investment, now is the time to buy in Bulgaria,” concluded Fingleton.

Atrium Beach complex, Elenite resort, Bulgaria	Skiing in the Bulgarian mountains	Fishing boats moored in Sozopol Harbour, Southern Bulgaria

GET RICH FAST

Have a structured plan in place and write it down. You need to decide how rich you want to be before you can figure out how you are going to get there. Different people have different interpretations of the word ‘rich’. What you need to do is work out how much money you would need on a monthly basis to ensure your every material desire is satisfied. Work this back to a yearly income figure and then capitalize that figure at, say, 10% (an average asset yield) to arrive at your target net worth. Leverage your equity into quality property that offers maximum capital growth, not maximum rental yield. Your aim is to strike a balance between maximum return on your investment and a level of holding costs (negative equity) that you are comfortable with. Primarily your target net worth will dictate this and how long you are prepared to work to achieve it. For instance, if you decide you want to be worth €100 million in 20 years then you must figure out what level of annual return on your capital will give you this result. Ignore the supposed experts who say ‘diversify your portfolio’. Instead, just buy property as it is the only investment vehicle that allows you to effectively leverage your money at minimum risk. Look to buy good property in a good location at a good price. Avoid the stockmarket, it is not called ‘The Worlds Biggest Casino’ for nothing. Also avoid any mediahyped investments such as SSIAs as your money is not leveraged and therefore the return on investment is, in reality, extremely poor. In summary, it is very easy to double your money every year with just a small amount of knowledge, and if you can do this then you would be surprised how easy it is to end up with €100 million or more over an extended period of time, like twenty years. Failing to plan means you are planning to fail, so start planning now! Adapted from Get Real, Get Rich- How to Make Your Fortune Fast in The Real World, by Paul O’ Connor, Professional Negotiator and Managing Director of Agents for Property Buyers (APB) Contact: Paul O’Connor, Agents for Property Buyers (APB) T: +353 (0) 1 2750684 W: www.apbproperty.ie