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Why Invest in Bulgaria Property?

Last updated January 2018

Bulgaria is one of the most risk adverse countries in the world today. Ranks on the 7th position in The Global Risk Briefing, by Bloomberg (3rd best European country after Switzerland and Czech Republic), and confirms Bulgaria’s strong position compared to other EU target countries for immigrants. Bulgaria with about 28% the third lowest Debt-to-GDP ratio in the EU;

  • Only Estonia and Luxembourg have a lower ratio;
  • Cyprus has a Debt-to-GDP ratio of about 105%, Malta has a Debt-to-GDP ratio of about 56%, and the UK as the target country of most Asian EU immigrants has a Debt-to-GDP ratio of about 88%.

Why Invest In Bulgaria property?

  • Bulgaria is an exciting emerging market and currently offers property at prices simply un-obtainable in other areas of the world. With prices steadily rising and set to continue to do so for some time, wise property investment in Bulgaria promises excellent returns on investment. Purchasers are snapping up bargains now, with a view to enjoying excellent returns on investment in the near future.

  • With an increase in tourism of 50% between 2000 and 2004, Bulgaria has established itself with the fastest growing tourist trade in Europe and this, in turn, is steadily driving property prices upwards. Tourism concentrates mainly on black sea coast resorts and increasingly popular ski locations and it is creating a very stable buy to let environment for investors.

  • Bulgaria is a new member of the EU. Traditionally new EU countries experience steep increases in property values and tourism from other EU nations, and have upgraded their infrastructures and economic structures to EU standards.

  • Bulgaria has come a long way since its former Communist days and today has a stable government committed to economic reform. Now a modern, strong and rapidly growing country, Bulgaria is recognized for its promise on the international market with GDP growth reaching the highest in Eastern Europe (Institute of International Finance) at 6% for 2005/2006.

  • With warm weather and stunning blue flag beaches as well as beautiful countryside, and modern, vibrant cities Bulgaria has something to offer everyone.

  • Close proximity to Europe and increased low cost airlines offering direct routes to Bulgaria from many UK and other European airports, make Bulgaria easily accessible and a viable property location for investors and property purchasers alike.

After almost five years of stagnation, Bulgaria’s house prices are now rising rapidly, thanks to falling interest rates and stable economy. The recovery is led by the country’s capital, Sofia, with double-digit house price rises.

The nationwide house price index rose by 8.82% (9.79% inflation-adjusted) during the year to Q3 2016, a sharp improvement from a rise of just 2.04%y-o-y a year earlier and the highest annual increase since Q4 2008, according to the National Statistical Institute (NSI). During the latest quarter, house prices increased 1.59% (1.29% inflation-adjusted) in Q3 2016.

  • Prices of new dwellings rose7.9% (8.6% inflation-adjusted) y-o-y in Q3 2016, after annual rises of 4.9% in Q2 2016, 5.8% in Q1 2016, 4.5% in Q4 2015, and 3.8% in Q3 2015. During the latest quarter, prices of new dwellings increased 3.8% (3.3% inflation-adjusted) in Q3 2016.

  • Prices of existing dwellings surged 9.3% (10% inflation-adjusted) y-o-y in Q3 2016, a sharp improvement from a meager growth of 0.9% in Q3 2015.

The almost zero interest rates on bank deposits have encouraged people to invest in real estate, and also encouraged purchases of pre-construction residential property.

“2016 has been a very dynamic year for Bulgarian real estate market and for the first time in many years the trend has been entirely positive.

From 2000 to 2008, Bulgaria had a house price boom, with residential property prices surging around 300%. The bubble burst at the end of 2008:

  • In 2009, Bulgaria’s average dwelling price plummeted by 25.72% (-25.64% inflation-adjusted);

  • In 2010, the average dwelling price fell by 4.96% (-8.05% inflation-adjusted);

  • In 2011, the average dwelling price fell by 5.8% (-8.75% inflation-adjusted);

  • In 2012, the average dwelling price fell by 1.32% (-6.16% inflation-adjusted);

  • In 2013, the average dwelling price fell 1.19% (unchanged when adjusted for inflation);

  • In 2014, the average dwelling price increased 2.78% (3.65% inflation-adjusted);

  • In 2015, the average dwelling price increased 4% (4.23% inflation-adjusted).

Bulgaria’s property market is expected to remain strong in 2017. Demand for properties in the major cities continues to grow, and supply is increasingly limited by low levels of new construction.

Bulgaria’s economy expanded by 3% in 2015, an improvement from annual growth rates of 1.5% in 2014, 1.3% in 2013, and 0.2% in 2012, and the highest expansion since 2008, mainly due to higher net exports and public investment, according to the (IMF). The economy is expected to expand by another 2.8% in 2017, according to the IMF.

European Union citizens can now purchase properties in Bulgaria, including land.  The 5-year moratorium on land purchases, set as a condition in the Accession Treaty between Republic of Bulgaria and The European Union, was lifted in January 1, 2012.

Investment Conclusion

Bulgaria offers two types of investment opportunities, Sofia the capital for professional investors where rental returns and capital growth are currently exceptional and the beautiful Black Sea Resort properties for the lifestyle investor who plans to actually use the asset for their own holiday time and get holiday rental income when they are not using it.

Whether you’re a professional investor or a lifestyle property investor prices are very low for an EU country especially one that is starting from such a low base and has one of the best debt to GDP ratios in the world let alone the EU. We would strongly recommend Bulgaria as a property investment Hot Spot.

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