Bulgarian Property Boom Tops €11 Billion in 2007

Booming property sales drove the Bulgarian economy in 2007 as the country achieved a record-breaking property turnover of €11.36 billion, which according to local industry experts amounts to the total value of all land and property deals in the country over the past twelve months. Furthermore, figures collected by the Novinite news agency from real estate agencies across the country, calculated that the average price of a Bulgarian residential property rose by 18.6 per cent last year.
The market for Bulgaria property in 2006 saw a turnover of around €9 billion and an anticipated 35% increase in the values of residential properties; by September 2007, property prices had increased by 32%, a rate of growth twice that of 2006, thanks largely to a strong mortgage market and Bulgaria’s resistance to an otherwise global credit crisis. High levels of international property investment interest had stimulated action in the construction industry; the sector now ranks among the fastest developing in Bulgaria, with anticipated growth of 15% over the coming year.

However, research indicates that demand for holiday homes in Bulgaria from UK buyers has declined by 30% due to concern about over-development, over-supply and the ongoing UK mortgage crisis. UK clients accounted for 40% of 2007 sales of holiday homes, compared to 70% the year before. Russians now account for 38%, according to Green Life, with Scandinavians making up 3.64% of the market and Greeks 1.84%. Leading a trend that is catching on worldwide, Russian investors are more interested in buying for investment than personal use. The percentage of holiday homes bought as buy to let investments in the main ski resorts has doubled since 2006 because Russians are more interested in capital growth than personal use. Additionally, savvy Russian investors, who are noted for their high expectations, are driving the development of higher end, luxury projects. However, the research was keen to point out that poor domestic infrastructure, particularly the quality of roads and new airports, is still holding the Bulgarian real estate market back.

Nonetheless, strong potential, especially in the area of easily accessible ski properties, is still bringing international investors to Bulgaria, including those from the UK and Ireland. Knight Frank’s Global Price Index in December placed Bulgaria at number one for investment, displacing Latvia for the first time in ten quarters. Topping off the accolades piling up for the Bulgarian property investment, after a period of strong growth, the seaside city of Varna is rated the most expensive place in which to buy a Bulgarian residential property where property values were found to 19 per cent higher than in 2006, well above the national average.