What for the Bulgarian market in 2009?

In 2007 Bulgaria was the place to invest in land and property. The country was being touted as the new and exciting market, from being the new summer and winter holiday location, to the centre for Eastern European commerce. Property prices were cheap and the tourists were arriving in droves. With the onset of the economic downturn, the country has seen a withdrawl of overseas interest and as such, prices have fallen. Developers and estate agents alike are struggling to keep heads above water.

By Mike Stock

The property market can be divided into three distinct sections: 

1. Coastal & mountain properties for the tourist market:

Both the Sea and Ski markets have seen an explosion of development, in some cases without much thought given to infrastructure or even planning permission. Front line development space has been filled at a rapid pace and Sunny beach is now a sprawling mass of Apartments and hotels.  

2. City properties to be rented out to employees of newly arriving international corporations:

Sofia has been the centre of this boom although other cities such as Varna, Plovdiv and Veliko Turnovo have seen an influx of foreign companies.

Only Sofia is really seeing a return on rental properties, as with any capital city, it attracts large numbers of nationals looking for work or education as well as foreigners.  

3. Inland properties that were purchased for either relocation purposes or as holiday homes:

Many British purchasers bought with a view to relocate to their rural property, attracted by the cheap cost of living and the slower pace of life. Other bought with a view to sell on later at a profit.

Each of these categories are now being affected by a lack of buyers. Investors who bought with a view to selling their properties within a short timeframe, now have to either look more long term or sell and make a loss. Add to this the fact that the banks are no longer keen to give mortgages and you have a market in difficulties.

Near term outlook

As with any other location, Bulgaria is affected by what is happening elsewhere. This is a market that was very dependant on British people with cash and they have virtually stopped coming. For a while the Russians filled the gap, especially with the purchase of coastal properties, but even this has waned with the financial difficulties that Russia is now facing.

As the world economy recovers, there will be a resurgence of buyers, but this is still some way off.
Property prices in Bulgaria increased as sellers started to believe all the hype about the country being the new Spain or France and in some cases the prices were higher than these more established markets. This was already causing a dip in sales. A correction in prices was always on the cards for Bulgaria and now it has happened, the hope is that once prices rise again, there will be a more realistic outlook. 

For the astute investor who has access to cash, this market as with many others, has the potential to provide good medium to long term investments. Developers need to offload properties and distressed sellers need to realise cash, so bargains are to be had. The question is, when is the right time to jump in?

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