TANGRA CASAS

Bulgaria

Located in the Balkans, Bulgaria is a diverse and picturesque country, with snow-capped mountains creating a backdrop to exhilarating ski runs and winter sports, while the Black Sea coastal resorts offer some of Europe’s best beaches. Bulgaria is almost half made up of mountains. Rila and Pirin are the largest and are perfect for winter activities. The mountain resort of Bansko located at the foothills of the Pirin mountains recently began a metamorphosis from strictly a winter mountain resort into a year-round destination offering golf courses, climbing, cycling, horse riding and hiking, and appealing to modern eco-tourists. The original Black Sea coast resorts such as the major ports of Varna, Bourgas and Sunny Beach have recently come into their own. New development is under way, catering for the increased number of international tourists. Comparisons to the Spanish resorts in their infancy are justified with activities such as windsurfing, paragliding and waterskiing offered and a varied choice of accommodation, restaurants and entertainment. Not only a land of great beauty, contrasts and surprises, Bulgaria has proved to be resilient and adaptable. Having survived Ottoman rule and Communism, it is now a democratic constitutional republic with its finger on the pulse.

The Bulgarian economy is growing with fast rates since the beginning of 2000, and up to now the property prices have increased 2 to 3 times, while usually, a property value can double within the timeframe of 9-10 years. In September 2002 a sales index for real estates on the Bulgarian market (REMI) was introduced, making Bulgaria the first country in the Central and Eastern Europe to introduce such national index for real estate sector. This index is considered to be a solid indicator of property investment activity and development in the country. There are several main factors that contribute to the advance of the Bulgarian real estate market, which include the stable political situation, the improvement of the infrastructure, the increasing popularity of the sea and ski resorts, the low cost of living and the influx of foreign investment. Also, the real estate related services and bank services, including mortgages conditions, are constantly improving in order to meet the high criteria of the EU countries. Generally, the demand for properties in Bulgaria is high and stimulates the construction of new residential complexes and commercial buildings. Thanks to the stable economy as well to the drive for a fast and smooth process leading to EU membership brought about an upsurge in Bulgarian economy as well as a better investment rating for the country, making the macro-economical indexes very stable, which are as follows:

- Five year average GDP growth of 4,9%

- Budget surplus, low inflation, currency peg to EUR

- 80% private economy

- The stock market has tripled in the last two years

Also during the last years, Bulgaria had made great progress in creating a non-discriminatory regime of national treatment for foreigners performing economic activities. In the fall of 2003, the Parliament has approved changes to the Foreign Investment Act, which aimed at treating domestic and foreign investors on an equal footing and reducing the time spent on administrative issues, so as you see Bulgaria is a country, which has a lot of potential and with determined effort could overcome obstacles to an improved business environment. In Bulgaria the rent reimbursement from properties is exceptionally attractive, since it is close to 12%, making the annual reimbursement from real estate investment almost 5 times higher than in the United Kingdom. The increased demand for properties is the biggest reason for the rise of the rents, and according to the last official statistics, Bulgarian properties, both residential and commercial, bring 10-13% annual reimbursement from rent, depending on the characteristics and the location of the immovable. These numbers place Bulgaria in the lead in the whole of Central and Eastern Europe with regard to reimbursement coming from rent, so some new developed real estates in Bulgaria as the apartments in Sunny Beach resort offer very promising perspective to long term returns on investment. The prices of the properties in Bulgaria are among the lowest in Europe, so even the cost of a good quality property in a popular destination as the Black sea or mountain resorts is affordable for most of the property buyers. For example, and an old house in the countryside may cost less than 10,000 euro. The deals with off-plan properties are also preferred by the buyers for being very profitable, so just in the last two years the estates prices have increased with more than 50%. The trend for the next years is that the prices will continue to rise with around 10-15% per year - a moderate, but systematic increase of Bulgarian property prices after the EU membership and maybe some time afterwards.