Why Bulgaria

The Bulgarian real estate market reached new heights in 2004, boosted by interest among foreigners in buying property in this country, and by increased purchasing power of Bulgarians due to the increased availability of mortgage loans. Bulgaria has become a favored destination for foreign holiday home investors—particularly those put off by high prices and overdevelopment in much of the Mediterranean. Bulgaria's Black Sea coast and unspoiled inland lakes and mountains offer an attractive alternative. Bulgarian real estate prices rose more than 20 percent in 2004 and are expected to increase by an annual average of 10 to 15 percent for the next years. In addition to second home buyers, Bulgaria is attracting other investors who are buying a range of property from new beach and ski developments to dilapidated farmhouses. Developments vary from apartment blocks and hotels to modern luxury complexes with swimming pools, solariums, restaurants and a host of other facilities. Real estate prices are expected to go up by 40 percent year-on-year in cities and towns, where real estate prices are currently lower in Bulgaria. The mortgage credit expansion of local banks and the rise in number of signed mortgage contracts will influence the development of the domestic real estate market in 2005. The past year saw a continuation of the upward trend in housing prices in the capital Sofia and most of the big cities in Bulgaria. The average selling price of flats in Sofia exceeded 500 Euro per sq m. In the second half of 2004, prices of flats in Sofia went up achieving an average market price of more than 600 Euro per sq m, while in the beginning of the year it was 450 Euro. Other large cities also saw an increase, with Varna and Bourgas leading the list where the prices surged by more than 50 percent, due to the Black Sea coast resort location of the two cities. The 2004 growth is a continuation of a trend during which, over the last two years, the prices of housing in big cities has gone up by 20 to 100 percent, and of flats in housing and resort areas by 100 to 200 percent. Agricultural land is the current exception to the market growth. Farm land sells cheap since it is greatly fragmented and because it can't be sold to foreigners. This will change at when Bulgaria joins the EU, however, and landowners are looking to the government to speed up the process of land consolidation and re-allotment, which will result in larger parcels of land that are of sufficient size for efficient agricultural production, and which will attract foreign investors once Bulgaria joins the EU. Bulgaria has joined EU.