Bulgaria, Market Update

Not long ago flights to Bulgaria were full of British and Irish property investors with money falling out of their pockets. The return flights were awash with people who had purchased what they considered a safe investment or a new home. Now the flights are full of Bulgarians returning from shopping trips to London. So what has happened to the investors and relocators?

By Mike Stock

If you had walked down the main street of the old capital of Veliko Turnovo a couple of years ago, you would have been sure to see Western Europeans who either lived in the area or were looking to invest. How things have changed, the few you meet will tell you how so and so has had enough and has returned home. True, in the summer, the holidaymakers still arrive here as well as the Black Sea Coast and the ski resorts, but in a country that began to rely on the income that property sales brought, you can only imagine the sigh of relief in the halls of government that the country got into the EU and a cushion of funding and investment is there to help keep the wolf from the door.

In 2007 I looked at a traditional Bulgarian property for sale. The price was €110,000 which I considered to be way too much for a property in a rundown village, even one as beautiful as this. As chance had it, towards the end of 2009, while checking on the market, I came across the same property now for sale for €50,000. To test the market, I emailed and offered a price of €30,000. The agent replied and said the price was too low. I insisted that this was my final offer and lo and behold the owners accepted.

So the question that begs to be asked is how can a seller drop the price from €110,000 to €30,000? The answer is plain and simple, Bulgarians came to believe that they could name any price and the crazy foreigners would fall over themselves to buy. Indeed this was true. I have been shown countless properties purchased by Western Europeans for what can quite frankly be described as insane prices. Properties that the only recourse would be to demolish and build anew. Many investors have been seriously caught out; they have purchased properties way above any sensible market value and now have no chance to resell in the foreseeable future.

So is the market dead? We as seasoned veterans of the ups and downs of western economy should have an idea. Yes prices became too high and for the foreseeable future Bulgaria will have to deal with a glut of empty properties. Most young people want to leave the country and the old want to live in the towns and cities so the villages will only become emptier but can we not use our own history as some sort of guide?

Some Bulgarians have bought and renovated properties in the villages whereas before they only looked on with utter disbelief at the foreigners as they had their crumbling dwellings brought into the 21st century. So maybe over the next few years as the cities become busier and more overcrowded we will see the villages start to revive. As for the Black sea coast, there is only so much beachfront that property can be built on so it is easy to see a return here.

And ten years down the line, if we were to paint a picture of a country that has reaped the benefit of EU membership, how would it look? To me Bulgaria can only go up, companies will arrive and set up factories and offices. Tourists will come and enjoy the delights of the Bulgarian countryside, coast and historical sights. The young generation will return from working abroad and bring with them a different approach to life and business, the population will demand a better standard of living, and you can safely bet that the investor and the relocator will return, but this time maybe a little wiser and a little more careful, or is that wishful thinking?