Is It Worth Investing in Bulgarian Real Estate in 2020?Investors from all across the globe have shown great interest in the Bulgarian market in the past decade. Immediately after the 2007/2008 global financial crisis’ aftermath started to fade away, the exotic Balkan country was already on the rise.
The reasons for investors’ appetite for Bulgaria are one too many, and having a look at the real estate market would be a great way to show why the country will become an even more popular destination for investments.
Of course, investing is beneficial in more ways than one: apart from the investors’ gains, each new endeavor in any sector of the economy is bound to improve the overall financial situation in the country. This is why the Bulgarian government welcomes investors and tries to encourage them in various ways.
When it comes to the real estate market, there are quite a few advantages in comparison with the rest of the European countries, and the opportunities are countless.
The BackgroundBulgaria is one of the oldest nations in the world, but due to several reasons, the country’s economic state started to improve in the last few decades, particularly when it joined the EU. That was a great step forward, and Bulgarians are likely to benefit from it for a long time. NATO membership is another reason for the country’s stability. The economic environment is as stable as it has ever been, as the economy of the country has been on the rise ever since the 2008 financial crisis.
Many updates have been introduced to the country’s legislation to make investing in the country a straightforward process. It is not exactly a walk in the park, though, but this is where our experienced professionals come into the picture.
At Harmony Suites, we know every little detail about the processes of starting something new in Bulgaria, especially when it comes to finding the right piece of real estate, buying it, and maintaining it until it brings profit your way.
The country has been targeted by numerous real estate investors and trends in investing have already been shaped, which is a natural process. This is no surprise, as there are factors that no investor would overlook.
The LocationThe geographical location is definitely one of these factors: Bulgaria is the link between the Western countries and the East, meaning that important transportation routes pass through it.
Location is key: Bulgarians are close to most of the European countries, as well as to Russia and the Middle East.
The small country has four major airports, two commercial seaports, and three highways connecting the biggest cities. The infrastructure is constantly being improved, as transportation and tourism are among the main contributors to the country’s GDP. The government knows that foreigners willing to invest in real estate would also choose to invest in places where the infrastructure is new and well-maintained, which is another reason for its development.
Since we mentioned tourism, we should give that sector all the credit it deserves. There is no surprise in the fact that the sector is among the major contributors to the real estate market development.
The significantly improved Black Sea Coast resorts are still preferred by foreign investors. The ski resorts are not far behind, as some of them have become popular destinations for vacation homes that people rent throughout most of the year. Real estate brokers expect growth in foreigners’ interest in property there throughout 2020, especially in the second half of the year.
The BenefitsSince 2012, all EU and EEA (European Economic Area) residents can buy real estate property in Bulgaria, including the land included in it. Foreigners from the rest of the world need to register a legal entity first and acquire all property they need using it.
Non-EU and non-EEA citizens could buy the real estate, but not the land beneath the property.
There are several things to look out for during this process, and we can provide more detailed information or even guide you through it.
Buying real estate gives you a chance to receive a visa or to apply for citizenship. If you are not an EU resident, this would allow you to have easier access to EU countries.
Several trends will surely be continued in 2020. We already mentioned the growth of the country’s economy, and it is expected to keep up with the pace this year.
The number of construction projects due to be finished within months is similar to the new dwellings built in 2019 but, what’s more important, the demand is on the rise. In fact, the market is so demanding that more than 60% of all new dwellings in the biggest cities of Bulgaria were bought off-plan.
Bulgaria still has some of the lowest real estate prices in all of the European Union. While prices are currently rising, the time for investing is now. Regardless of whether you intend to keep the property as a vacation home, rent it, or sell it for a profit within a couple of years, you are going to make money from your investment. The only thing you need to do is to think through every step of the process, and we can help you with that.
Most investors either set their eyes on buying commercial property meant for development, or they buy homes and benefit from the rental yields. Both scenarios are good if you play your cards right. The country has great ski and sea resorts, which are extremely popular destinations for people from every corner of Europe, and the world, for that matter. Renting out real estate in these locations is guaranteed to bring a hefty profit.
The capital city, Sofia, and some of the other big cities, such as Varna, Plovdiv, Ruse, and Burgas, are among the other preferred investment locations. The annual return on investment varies between 3% and 6% on average, but it strongly depends on the type of property, the exact location, and other factors.
The Banking System and TaxesThe trend of low interest rates and competitive mortgage lending rates will continue in 2020. With interest rates that are close to zero in most cases, it is only natural for people to put their money in real estate, which is another of the factors boosting the property market in recent years. This is also the main reason why the majority of new real estate units are sold off-plan.
Most banks are currently offering mortgage rates of around and even below 3%.
Taxes are also among the lowest in all of Europe. Bulgaria has a low income tax (10%), and the property taxes in the bigger cities hardly pass the 2.5% mark, which is great news for all future investors in real estate.
The transaction costs need to be considered an important factor as well. In Bulgaria, they are below average, and they are divided between sellers and buyers in most cases.
Costs vary between roughly 5% and 10% of the property value. The buyer is obliged to pay a notary fee no greater than 1.5%, as well as a 0.1% registration fee, and a transfer tax that can vary between 0.1% and 3%.
The ExpectationsWhile there are no signs of the real estate market growth slowing, apart from the coronavirus outbreak, some experts’ analysis suggests that the increase in prices of new and used dwellings is likely to be smaller in 2020.
The Bulgarian real estate market was the strongest between 2000 and 2008, but the global financial crisis put an end to that. After the market recovered in 2014 and took off, developers chose to play it safe.
As a result, demand has been surpassing supply in the last three or four years. This is probably going to happen again in 2020, which means that it would be a good time to invest.
Is It Worth Investing in Bulgarian Real Estate in 2020 – The VerdictWhen it comes to investing in real estate, you should start by choosing your route to becoming an investor. Bulgaria has a lot to offer, and you need to know what you are after.
Whether it is a vacation home, a commercial property, or apartments to rent out, you have plenty to choose from, and we are here to help you make the right choice and purchase your new property.
The economic and political stability in the country, the developed infrastructure, the awesome climate, the coastline, the mountains, the historical sites are all reasons why you should consider making an investment in Bulgaria.
From a strictly financial point of view, you would find yourself entering a growing market with competitive prices that is bound to bring profit your way. The 2020 market forecasts look promising and, despite the current situation and the limitations due to the coronavirus, the Bulgarian real estate market is likely to remain a great place for investments.