Over the past year, Bulgarian real estate has more than doubled in price. However, even after that, it remains the cheapest in Europe: the cost of a square meter of decent housing ranges from 150 to 500 euros depending on location.
For business, Sofia is recommended; for recreation, a village
In principle, there are two areas in Bulgaria where real estate truly enjoys steady demand and appreciates in price. These are Sofia and the cities in the Black Sea zone. Today, in the Bulgarian capital, the lower threshold for the cost of a square meter is 350 euros, while the upper threshold hovers around 1,000. However, it is too early to speak of any serious boom in housing construction: according to Bulgarian realtors, in Sofia demand is fully balanced by supply on the secondary market and modest new construction, so for the time being no major price jumps are expected here.
Everything could change by 2007, when the country officially joins the EU. By then, a significant number of new office centers are planned to be brought into operation, along with a serious influx of foreigners. Today, Bulgarian realtors consider far more interesting work with the so-called 'small residential real estate,' which they classify as good village houses with an area of 150 to 250 square meters on land plots from 15 ares, located no further than 30 km from the sea and costing no more than 30,000 euros. The most active demand for these properties comes from elderly Brits, Swedes, and Finns, who plan to move permanently to this cheap European country with a mild climate in their old age.
Zone of German occupation
However, the most sought-after and fastest-appreciating real estate is on Bulgaria's Black Sea coast. This is, of course, Varna and the most famous resort areas - Albena, Golden Sands, Sunny Beach, etc. Although Varna still stands somewhat apart: life there does not come to a halt but bustles year-round, whereas at the resorts in winter one might experience a certain lack of social interaction. That is why the resorts are of primary interest to investors putting money into the development of tourist infrastructure. The lead here is held by Albena, which was privatized almost completely back in the early 1990s under an intricate scheme: the Bulgarian government created a holding company that included all of the resort's infrastructure facilities. Since then, investors buy shares of this holding and manage individual infrastructure facilities. In this way, more than 80% of Albena's shares have been sold, and the remaining state stake could well be auctioned among the largest German tour operators - TUI, ITS, Neckermann.
The reason for such a stir is quite banal: there is practically no free land left in Albena for new construction, and therefore it is only a matter of various opportunities for reconstructing old, mostly still panel hotels. This is a difficult and troublesome business, but according to the German tour operators association, a hotel in Albena reconstructed to four-star level with the creation of appropriate infrastructure (pool, bars, and restaurant) recovers the invested funds within three to four years.
The other two most famous resorts - Golden Sands and Sunny Beach - were privatized under a different scheme. All tourist infrastructure (hotels, restaurants, etc.) was sold off separately and also very successfully - today all hotels and restaurants (about 130 in total) on Golden Sands have been sold. However, the 'German occupation' here is somewhat diluted by the Spanish tour company Iberostar and private investors from Italy. Our compatriots have not yet been noticed among investors in Bulgaria's tourism industry.
However, their arrival is still possible. The aforementioned old resort areas are quite confined in terms of free land for construction, being bounded by the sea and the mountains. That is why today at the government level in Bulgaria the issue of creating new resort zones is being discussed quite seriously, in particular between Varna and Burgas - that is about 90 km of coastline with beautiful sandy beaches near the towns of Byala and Obzor, which in no way yield in natural attributes to the old golden-sunny shores and sands. The only question is that an influx of foreign investors into this area can be expected only after state guarantees of assistance in developing this territory - providing utilities, building proper access roads, etc. But, judging by the steadily growing (over the past four years - by 20-25%) influx of tourists to Bulgarian resorts, this time is not far off.
Had I known, I would have lived in Varna
No less interesting in investment terms, in addition to all the delights of personal use, is the purchase of an apartment or house in Varna, where annual price growth is projected at 20-25% per year. And here our compatriots are already among the first: according to Bulgarian agencies, out of 10 foreign buyers purchasing real estate in Varna, four are from Germany and three from Russia. In total, taking into account villas in the coastal strip, more than 22,000 citizens of the former Soviet Union live in this resort town, of which approximately half are in Bulgaria permanently, while the rest use their properties as summer dachas. Undoubtedly, most of them were attracted by the cheapness of the offered properties. On the secondary market in the center of Varna, a good three-room apartment or cottage can be bought for 100,000 euros. Meanwhile, a similar apartment on a less prestigious street and without a sea view may be offered for 20,000-25,000.
The Bulgarians themselves believe that this panorama in the form of a “blue spot of the sea” is absolutely not worth that money - it is pleasant to admire it for the first three summer months, but the rest of the year, especially in winter, the sea wind brings much less pleasure. However, prices for similar apartments and cottages in areas remote from the center will be approximately 20-30% lower. But the same properties, but located either in Burgas (130 km south) or in the resort town of Kavarna (60 km north), will cost half as much.
However, Bulgarian realtors note that last year our compatriots gave main preference to purchasing apartments in prestigious complexes under construction in Varna in neighborhoods close to the sea (proximity means a distance of 50-2,000 m). The fact is that the Bulgarian concepts of “ideal center”, “wide center” fit into the concept of one neighborhood for us. But the density of development of this “wide” center in Varna simply amazes the imagination and evokes memories of the narrow streets of Italy and laundry drying on ropes stretched between houses. Therefore, the cost of a parking space or garage should not be surprising either - 5,000-12,000 euros.
In coastal areas, there is undoubtedly more space, and prices are lower - in new buildings a square meter is offered at a price from 350 to 600 euros. All apartments for sale are made according to the so-called BDS (Bulgarian State Standard) - without floors, plumbing, only plastered walls and installed windows. However, bringing an apartment to perfection costs, by our standards, mere pennies - the contractor performs the remaining necessary finishing works (flooring, wall painting, plumbing and water heater installation, kitchen equipment installation, electrical work) at no more than 100 euros per square meter. As a result, the final price of a turnkey new building in Varna today ranges from 375 to 700 euros per square meter. In 2004-2005, according to forecasts of the Bulgarian Association of Entrepreneurs, such apartments will grow in price by 20-25% per year, making these investments among the most profitable on the Bulgarian real estate market. Moreover, renting them out at current prices of 300-500 euros per month can recoup the investment within six to eight years. And these forecasts can be quite trusted - like all coastal Bulgarian cities, Varna, being constrained on two sides by the sea and mountains, is experiencing serious problems with allocating new land plots for residential development. Therefore, no significant increase in supply on the residential real estate market is expected, while demand is constantly growing (primarily due to Germans) and today exceeds supply for new buildings by approximately 30%.