Bulgarian Property Investment The Facts

Submitted by: K Damian Qualter BA MBA

Benefits and Cons on Bulgarian Property Investment

With residential property in the UK having reached a peak for the current future, investors have been desperately looking around for alternative locations with investment potential, and Bulgaria is tops on everyone s list. Many investors have already noticed that Bulgaria offers very good value for any money that is spent and it also has letting potential as a holiday destination.

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The best investment opportunities in Bulgaria right now include the ski resort of Bansko and the Black Sea resorts of Varna and Bourgas. The capital Sofia is developing rapidly as a commercial Mecca as well, signalling that capital appreciation and rental yields should be very strong in the foreseeable future. Bulgaria saw property price increases of 35% in 2004 however the average yields on rental properties are still 8% to 12% thanks to the fact that most investors are buying in the Black Sea coastal resorts and 15% in ski areas. Some of them are investing in new developments instead.

For example, studio apartments in the Black Sea resort of Sunny Beach can cost the investor as little as 16,850. There are good opportunities out there for both city-centre buy-to-let properties and vacation homes that are also offering letting potential. Let it be known though, that despite promising returns, investors have to be wise to the risks that are potentially involved in buying in an emerging economy like this one.

Low prices attract the buyers who are looking for a quick-fix solution to pension problems, but as many agents as you can find will admit there is no guaranteed resale market in Bulgaria (or anywhere else for that matter) and little existing benchmark for measuring price increases other than more and more investors paying higher prices on a monthly basis. That is why long-term investment is recommended over instant returns.

There is, however a genuine demand for quality rental properties but written contracts with holiday companies are absolutely needed as a means of ensuring the buyer a guaranteed yield. Travel agents and tour agents who are no longer enjoying big mark-ups in Spain are looking for higher profit margins in Bulgaria and this does cause problems in the long-term future. High street travel agents and tour operators do have an amazing number of sun and ski holidays available in Bulgaria today and they are selling well, which goes well for future returns for quality locations and developments.

If you are really wondering what the benefits are to investing in Bulgarian Property; it is definitely the cost. The cons of course is that nothing in property investment is completely fail safe and therefore you need a regent in Bulgaria to act on your behalf and help you find a piece of property that will do exactly what you need it to.

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