Foreigners occupy Bulgarian villages
Among the owners of "square meters" in Bulgaria, foreigners are, on the whole, not numerous. Possibly because the current Bulgarian legislation does not permit foreigners to acquire land as private property. As for buildings that stand or will stand on this land, ordinary foreign citizens need only obtain permission from the relevant authorities to become property owners. Companies, as well as individual businessmen, have a harder time - they need to "form a legal entity" in Bulgaria, that is, to register a company or enterprise in the country. Whether the newly formed company will be 100% foreign or will operate with the involvement of Bulgarian capital is irrelevant.
However, one should not think that the legal impossibility of private land ownership dampens foreigners' interest in Bulgarian real estate. Those who want to invest in Bulgaria invest regardless. Recently, small private projects have become one of the priority areas of foreign investment. This applies first and foremost to business investments, for example, in small plants and factories.
Despite all the drawbacks of the socialist economy, one important thing was done back then: small enterprises were built in nearly every Bulgarian village, providing employment for the local population and bringing in a small but steady flow of money to the treasury. In this sense, Bulgaria greatly resembles, for example, Italy: the Italian shoes worn by half the world are mostly produced in modest factories located not at all in the center of Rome or Milan, but in small towns and villages. Unlike our country, where most small factories and plants were ruined, post-perestroika Bulgaria preserved small-scale production. It was then developed, with efforts to make it attractive to foreign investment. And they succeeded: Western investors willingly and to mutual benefit deal with small Bulgarian enterprises.
In addition, since last year Bulgaria has seen a real boom in "small" residential real estate, costing no more than 30.000 euros and located no more than 30-40 km from the sea. Among buyers are mainly British, Germans, Swedes, Finns, that is, representatives of countries with rather harsh climates. For them, a house in Bulgaria is a dacha by the sea (which, let us not forget, will soon be located on EU territory). Moreover, foreigners, unlike us, are people without pretensions: they buy the most simple houses, in villages, that is, for very moderate money. Sensing which way the wind blows, some Bulgarian real estate companies have completely reoriented to working with the "village": today it is one of the liveliest "foreign" segments of the Bulgarian real estate market.
As for houses located directly on the seashore, interest in them has always existed. And here the Russian-speaking community is represented much more vividly. This is understandable: until now, the most active category of buyers of Bulgarian real estate were very wealthy citizens of Russia and other CIS countries, and they were interested only in luxurious mansions in prestigious resort areas (some of our compatriots own villas estimated at half a million euros, which for Bulgaria is not just a huge sum, but an unimaginable one). Only recently has our middle class, having recovered and risen after the 1998 default, appeared on the Bulgarian market. Therefore, in addition to exorbitantly expensive exclusive mansions, so-called "luxury apartments" - with a large kitchen and loggia, located in townhouses or low-rise apartment buildings, if not right by the sea, then in close proximity to it - began to be in demand.
On the shore, it is so lively and crowded
For the whole world, Bulgaria is a country for beach holidays. Therefore, the Bulgarian tourism industry as a whole, and the real estate belonging to this industry in particular, is a tasty morsel for any entrepreneur who has an idea of working in tourism.
Companies ready to invest money in this area of the economy have several paths open to them. The most common, which many solid Western tour operators follow in particular, is granting loans to owners of hotels and entire hotel chains. The vast majority of such investments are directed to the reconstruction of hotels at the three largest and most famous resorts in Bulgaria - Albena, Golden Sands, and Sunny Beach.
At one time, Albena was privatized as a joint-stock company. Accordingly, shares of this resort were sold to those who wished. Now over 80% of all Albena infrastructure is in private ownership, and there are already many buyers for the "percentage" remaining with the state. In Albena, almost no new hotels are being built - there is no free land. So we are talking only about reconstruction, which, it must be said, is proceeding with great difficulty. The complex was built very quickly, using the panel technologies of that time, and every specialist knows: panel buildings actively resist redevelopment and modernization. However, builders still find ways to fight the stubborn panel, and their work is financed by large foreign tour operators. With the loans obtained, hotels are being reconstructed, a pool is being built, infrastructure is being improved - and then the loans are repaid with services over two to three years. The Bulgarians themselves note that thanks to such cooperation with the West, Albena has been transformed beyond recognition in a few years.
Golden Sands and Sunny Beach were privatized under a different scheme: hotels, restaurants, clubs and other components of the tourist infrastructure were sold off individually. As of today, for example, all hotels and restaurants in Golden Sands have been sold, and there are about 120-130 of them. Among the new owners there are quite a few foreigners - both large companies like the Spanish "Iberostar" and ordinary citizens who decided to try their hand in the tourism business.
Large funds were invested in the development of the resorts, which soon yielded results. Almost all hotels that previously had 2 or 3 stars have moved into the 3+ or 4 star category. The new owners even built a couple of five-star hotels, which is actually a rarity in Bulgaria. The main burden of financing here too was taken by TUI, Nekerman, ITS and other leading German tour operators, investing according to the same scheme described above: money in exchange for services. The Scandinavians also had their say, although in percentage terms their contribution to the development of Golden Sands and Sunny Beach is much smaller than the German one.
In 1995-96, there was a serious downturn in Bulgaria's tourism business. But gradually everything began to return to normal, and the tourism market started to gain momentum. Tourists coming to vacation on Bulgaria's Black Sea coast typically use one of two airports - Varna or Burgas. So, Varna airport in 2000 received about 530,000 passengers, in 2001 - 750,000, in 2002 - over 1 million. The more modest Burgas served 350,000 people in 2000, 520,000 in 2001, and 770,000 in 2002. Thus, the growth of tourist interest in Bulgaria is evident. And, as experts believe, this growth is mainly a consequence of the active position of Western tour operators who recognized the necessity and prospects of cash injections into Bulgarian resorts. It's time for our tourism companies to think about whether they should start using similar practices in their work, so as not to be completely pushed to the sidelines of the global tourism market.
The second highly promising business path is the development of new resort areas on still free or relatively free lands. First of all, these are the lands between Varna and Burgas - approximately 85-90 km of coastline. There are beautiful sandy beaches there (for example, near the towns of Byala and Obzor), which in their natural characteristics are in no way inferior to either Sunny Beach or Golden Sands. But there is practically no tourist infrastructure in these areas, so development of the territories will have to start, so to speak, from scratch - with bringing in utilities, creating access roads and transport interchanges, and similar things that in previous times were taken care of by the state.
There is another problem hindering the development of the resort area between Varna and Burgas. Bulgaria adopted a restitution law, according to which all previously nationalized lands, enterprises and real estate properties were returned to their former owners. As a result, quite a number of landowners have appeared on the Black Sea coast. Now imagine that you lease a piece of coastline, build a hotel on it, and everything would be fine, but on the adjacent piece of coastline they raise chickens or pigs. It is unlikely that your guests will like such a neighborhood.
In short, an investor who decides to take coastal territories under their control will have to convince all owners to sell the land, persuade them to reorient to the tourism business, or in some other way settle this delicate issue. Many in Bulgaria believe that the state can and even must help solve the problem. After all, today's income from inbound tourism in Bulgaria amounts to $1 billion 300 million (which is 30% more than in 2000). So the state, more than anyone, is interested in the development of the tourism industry.
How to make money out of snow
Besides sea resorts, Bulgaria also has ski resorts - quite popular, by the way, in the world due to a favorable price-quality ratio. So investments in snow may turn out to be even more profitable than in land.
Bulgaria has three main ski resorts. The first is Pamporovo, located in the Rhodopes (some consider this resort one of the best in Europe). The resort is fully privatized and already about 50% reconstructed. But actually, Pamporovo is difficult to call strictly a ski resort, because guests are received here practically year-round: in July-August there are no fewer European people in Pamporovo than in January-February, and free rooms can only be found in hotels located outside the complex.
True, there is one problem: the international airport of Plovdiv, the closest large city to the resort, has a small capacity. So guests of Pamporovo have to fly to Sofia and then drive about 230 km. It is far, and some do not like it.
The second ski resort in Bulgaria is Borovets, which is located only 60-70 km from Sofia, which is much more convenient. But here there is another problem - little snow falls, and they try to solve the problem with special equipment. Borovets is also fully privatized, but it is not spoiled by foreign investments and therefore does not have very rapid development.
The third ski resort is Bansko. It is located about 200 km from Sofia, 60 km from the borders with Greece and Macedonia, on the slopes of three mountain ranges - Rila, Pirin and Rhodopes. Perhaps this particular resort is the most attractive for business investments.
Bansko, located in a very beautiful place, has recently seen rapid development thanks to private investment. Several hotels have already been built there, which at the moment can accommodate about 2,500 guests. And large investors are now building a cable car designed to connect the town with ski slopes that can serve about 6,500 people. Comparing these figures is enough to understand: hotels in Bansko are desperately lacking - the construction reserve is enormous. And if we consider that Bulgaria intends to create in Bansko the best ski resort in the Balkan region, then the attractiveness of this place for entrepreneurs becomes doubly obvious. And the snow in Bansko is fine: this year people skied until the end of April.
A country of low taxes and high professionals
Entrepreneurs who study in detail the possibility of investing in Bulgarian real estate will not, so to speak, be disappointed by the country's tax system. Nor will cost calculations be surprising - prices in Bulgaria are, of course, rising, but they still lag far behind Western European ones, and from the point of view of an Englishman or an Austrian, they are almost dumping prices.
Let's start with the fact that Bulgaria has a rather low average salary - in other words, relatively cheap labor. The second pleasant point: the profit tax this year is 25% (one of the lowest rates in Europe), and next year it will drop further to 20%. Land tax is 1.5 per mille. To make it clear how to calculate: you divide the value of the land by 1,000 and multiply the resulting sum by 1.5. The tax on the building itself is calculated in the same way.
Another important thing: Bulgaria is one of the recognized leaders in the construction industry. After the country joins the EU, "big Europe," seeking to define each state's "specialization," will certainly leave construction to Bulgaria. It is no coincidence that Western companies, which often win large construction tenders in Bulgaria, use exclusively Bulgarian materials and the services of Bulgarian specialists.
As for prices, location is decisive here. You can find land for $1 per square meter, or you can find it for $200 for the same meter. But on average, the price of land in a "dacha" zone, that is, within 15-20 km of the sea, is $25-30 per "square." In principle, you can buy land together with a house that is quite suitable for living for $15,000-20,000.
The closer to the sea, the more expensive everything naturally becomes. In a good coastal location, land prices can reach up to $1,000 per hundred square meters. The price per square meter of living space in Varna and Burgas ranges from $250 to $550, depending on the type of housing.
Well, and all the most expensive things, of course, are in the capital. Even according to statistics, a square meter of residential space in Sofia costs on average no less than $380, which means in reality - significantly more. However, our compatriots rarely buy apartments in Sofia. Much more often they are interested in such a type of capital real estate acceptable for investment as office buildings. If we use the terminology we are accustomed to and divide office buildings into classes A, B, and C, then the construction of each square meter will cost $1,000, $700, and $400, respectively. As for leasing, the prices will be as follows: a square meter of a class A building can be rented out for $20-25, class B - for $10-15, and class C - for $5-6 per month.
So do the math on how quickly you will recoup your costs once the finished building starts generating profit, and accordingly, what is more profitable to build - an office in the capital, a hotel on the coast, or a restaurant in the mountains.