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The Bulgarian property market has been on an increase over the last few years. The prices are expected to continue to rise in 2008, although is will be less than the 30% of 2007. The potential is great in this region, particularly with the commercial and industrial property. The city of Sofia is rapidly growing and shows some of the better potential.
Many people are looking at Bulgaria for vacation investments. The region offers amazing natural amenities, including hiking and bike trails, coastline along the Black Sea, beaches,historical attractions, and skiing. The weather is also temperate.
The economy has also been playing a large roll in the increase of the property market. Tourism continues to rise, and the local, regional and national governments are all working hard to improve conditions to take advantage of the tourism dollar.
Since 2002, the annual growth of property values has been around 50%.
In Bulgaria, the property buyer pays most of the costs associated with the purchase. The transaction fees can run up to 25% of the total purchase price (and sometimes a bit more).
The property rental market tends to be stronger in the ski regions than along the coast, mainly due to the longer skiing season.
Rental incomes tend to run around 6% to 12%, with the higher rates being generated by mountain properties.
Properties away from the tourist areas tend to be more rustic and need much more work. They offer little rental income (if any) and are better investments for individuals who want a second home away from the rest of the world. Typically these properties can be found for a very good bargain.

Some other wise investments would be property near one of the many mineral spas or even in some of the nicer, historic cities (like Veliko Tarnovo).

Tax pointers:

VAT - Value Added Tax is 20% of the value, after discounting fees paid for the transfer.

Municipal Tax - paid to the municipality where the property is located.

General pointers:

Only the purchase of structures is open to non-residents at this present time. The Bulgarian cabinet has ruled that beginning in 2014, foreigners will also be able to buy (and inherit) land.

If you desire to purchase land before 2014, you can do so by setting up a Bulgarian limited company. It will take approximately one to six weeks and can be done by an independent lawyer. It is also important that you hire a qualified accountant to look after company affairs.

Increasing numbers of Britons are eyeing up property investment opportunities abroad as they look to indulge in some cheaper, sunnier, stress-free living.

Research conducted by Foreign Currency Direct shows that ten million UK people are looking to buy a property in another country, such as Spain, Bulgaria or Cyprus in the next year and four million of these would like to live in their overseas home permanently.

Some 14 per cent of those looking to purchase abroad were first-time buyers, suggesting that high prices in the UK are encouraging them to look elsewhere.

In addition, 33 per cent of respondents said crime levels at home would prompt them to move abroad for good and 31 per cent said they would do so to escape the gloomy British weather.

"Buying property overseas is still an excellent investment and a great opportunity for a better quality of life," said Peter Ellis, chief executive of Foreign Currency Direct.

Meanwhile currency company Caxton FX says it has seen unprecedented demand from British clients looking to begin a new life.

It was announced that Bulgaria's real estate and tourism sectors attracted the greatest share of foreign direct investments of all sectors in 2007.

According to a preliminary report, the foreign direct investments in January-November 2007 reached about EUR 5,05 billion which is a 20% increase from the same period in 2006. This figure is 17,7% of the country's GDP.

It was stated that the improvements of the business climate in the country were related primarily to the reduction of the earnings tax, which is now down to 10%, and of the social security tax.

The largest foreign investors in Bulgaria in 2007 are reported to be the UK, Austria, Greece, Belgium, Spain, Cyprus, and Luxembourg.

The report also says, however, that the fact that about 60% of the foreign investments had been directed to real estate and tourism business was an expression of an upsetting imbalance. It stressed that the government needed to step up its efforts to attract more investors in the manufacturing sector in contrast to the popular commerce and services sectors, which provide fastest returns.

Property investments are attracting the attention of Hollywood celebrities and pop icons, prompting the emergence of a new luxury market.

Cheap holidays, cheap skiing, cheap flights, cheap food and drink, and of course cheap property – ‘Cheap’ has been the main attraction for British investors buying into Bulgaria.
However, big changes are in the air with an increasing number of foreign investors and Hollywood A-listers buying up the more exclusive high-end property.
Antonio Banderas, who already owns property in Spain, is amongst “Hollywood royalty” spending many months in the capital filming The Code, due for release this year, along with Morgan Freeman who has revealed his interest in purchasing a block of executive apartments in Sofia.

The newly renovated film studio in Sofia has created a house-hunting frenzy from top filmmakers and celebrities. Nu Image has strategically snapped up the previously state-run film studio in Sofia for US$9.2 million in a bid to cut massive production costs that the company faces in the US.

Rock legend Lenny Kravitz has also put Sofia firmly on the superstar map. The “Get on the Bus with the Love Revolution” tour will descend on Sofia’s Akademik Stadium on 27th July 2008. Huge interest for the £15 tickets has been created, with international fans taking advantage of a cut-price city break. Pink is also due to hit the city in July along with Marilyn Manson, Michael Bolton, and Vanessa Mae.

The need for larger, more luxurious properties in prime city, beach and ski locations dictates the market evolution. Additionally, rising demand is originating from foreigners working for the big multinationals in Sofia and from Bulgaria’s emerging middle to high classes, for properties within commuting distance of the capital.

Luxury properties are still within an affordable range for many overseas buyers, compared with more traditional markets (such as Spain or Portugal). A luxury apartment in Sofia’s commuter belt averages around £100,000 – you would be hard pressed to find a good apartment in the Costa del Sol for that price.

The growing demand for top-end properties is prompting developers to raise the quality levels of new properties, with a number of developments now offering well-executed design and superior build qualities. Generally, property prices have remained very competitive.

Sofia is an excellent commuter base with budget airlines, such as Wizz air, servicing routes all across Europe. The airline will also be offering internal flights to the town of Kavarna - known as the ‘Rock Capital of the Balkans’, with headline acts such as Motorhead, Led Zeppelin’s front man Robert Plant and musicians from Black Sabbath, all kicking off the Kaliakra Rock Fest in July.

The country is also upgrading ski facilities including a £345 million Super Borovets project - a major development in the country’s most popular ski resort. Spa tourism is also on the up and steering the market further towards the more upmarket investors and holidaymakers.

With the rising demand and the low supply of quality new builds, British overseas property investors need to look at why the rest of Europe views Bulgaria, and in particular Sofia property investment, so differently.

Since Bulgaria's EU accession foreign buyers' confidence in the country has grown immensely. British buyers, who still believe Bulgaria to be a destination for low end investment rather than a second home or luxury rental investment, need to revisit the market.

Bulgarian property investment has grown by €2.36bn on 2006 figures and looks set to continue this growth trend in 2008, has been revealed.
James Gonzalez, market analyst at Obelisk, said property has been the country’s main economic driver, recording a turnover of £11.36bn in 2007. UK property investors accounted for 40% of all property investment in 2007, with Russian investors accounting for 38%.

The market also contributed growth to a strong mortgage market, high annual property revenues and Bulgaria’s independence from the current global financial crisis. The US sub-prime crisis hasn’t hurt the Bulgarian financial market as there’s no cross-border banking, and consumer borrowing is continuing to grow at a steady rate.

In a bid to ensure a consistent flow of foreign direct investment, the Bulgarian government has made bold changes to the tax system. This will mean that both income and corporate tax will be charged at a highly competitive 10%. This new flat rate applies to all workers, investors and companies regardless of income or profit values, making Bulgaria an extremely tax efficient place to relocate or invest in.

Bulgaria was the world's strongest property market in 2007 with an estimated turnover of 11.36 billion euro, an increase of 2.36 billion euro over the previous year, British property investment company Obelisk said on February 1.
The previous lack of modern apartments, retail, and administrative buildings, as well as growing investment in tourism, production, and the need for modern infrastructure caused the construction boom.
Construction sector growth is expected to be between 12% and 16% year on year until 2010, Obelisk said in a statement.
The huge property price rise has been largely attributed to a good mortgage market, high annual revenue of properties and the weak impact of the global credit crunch on Bulgaria, since there is virtually no cross-border banking in the country.
Britons accounted for 40% of all Bulgaria property investment in 2007, followed closely by Russians with 38%, and "played a primary role in maintaining excellent market conditions (...) and adding to the robust appeal for Bulgaria property investment," Obelisk said.
Bulgaria's decision to slash taxes to a flat 10% starting from this year makes the country a very tax efficient place to relocate or invest in, according to Obelisk, while budget airlines' plans to increase the frequency of their flights would make traveling to and inside the country easier.
"Despite such rapid price growth, Bulgarian property investment remains very competitive and highly profitable in comparison with other European markets, giving the country a long-term profitable investment edge," the British firm said.

Bulgaria is fast becoming Europe's "value destination" of choice. Whether to purchase a property or just enjoying a short break, Bulgaria is a "lot less expensive" than other European destinations and this has made it a popular choice.
"It's a lot less expensive - not just to buy property, but to enjoy your holiday or enjoy your retirement or whatever.
The cost of living is substantially lower than the UK and the rest of Europe.
Another reason for its success, according to some commentators, is its rising reputation as a boutique destination attested to by a selection of designer shops retailing at reasonable prices.
Similarly, its coastal location ensures that summer leaves no shortage of unique sea opportunities and cheap diving breaks to see some of the Black Sea's sunken ships.

Bulgaria's National Statistics Institute (NSI) said that real estate prices in Bulgaria had, on average, risen by 28.9 per cent in 2007, compared to the year before.
Price increases in 2007 ranged between 44.3 per cent in Turgovishte to 15.6 per cent in Yambol, the NSI said.
Ranked by price increase, Sofia was fifth with 35.1 per cent, with Vidin (36.5 per cent), Silistra (38.7 per cent), Pernik (40 per cent), Rousse (140.9 per cent) and Turgovishte ranking ahead of the capital city.
Sofia was still the most expensive place to buy real estate, with an average price of 1813.17 leva a sq m, according to the NSI data.
Though the Bourgas was a close second with 1762.63 leva a sq m.
Other Bulgarian cities where real estate prices were in the above-1000-leva range included Varna, Bourgas, Rousse, Stara Zagora, Plovdiv, Blagoevgrad and Pleven.
The cheapest real estate was available in the Sofia region outside the capital, where the average price was only 488.14 leva a sq m.

Bulgaria, once a place that attracted bargain-hunting tourists is becoming ‘boutique Bulgaria’.
Words associated with Bulgaria such as cheap, bargain and low-cost, are slowly being replaced with boutique, luxury and designer. The country is ditching its cut-price image in favour of one associated with style, culture and opulence.
With developers chasing a wealthier clientele and Bulgarians become richer, a different type of tourist is exploring the treasures of the country. The evidence for this is overwhelming. Everywhere you look there are boutiques, designer shops and even the wine industry is taking on a new look. The evidence of Bulgaria’s re-branding is all around. Golden Sands, once the darling of discos and “kiss-me-quick” tourists, has undergone a dramatic change – and it’s good to see. One driving factor is the construction of professionally designed golf courses from the Black Sea to the capital, with associated properties built to a lavish standard.
The cost of properties on these complexes is much higher than equivalent properties in neighbouring towns and villages.The Gary Player designed Black Sea Rama golf complex provides a luxurious gated community with apartments and villas surrounding the 18-hole course. There are numerous on-site facilities and access to a wide range of elitist sports including tennis and horse riding.
Even the wine industry has taken on the mantle of boutique wines. In the last two years it has won numerous prestigious awards including medals at the world-renowned Vinalies Internationales Wine Tasting Show in Paris.Last year Thomson Holidays and First Choice announced they would no longer feature Bulgaria’s Northern coast resorts in their brochures. And the reason? The resorts have become too expensive for their budget travellers.
Change for the better is happening at a rapid pace in Bulgaria, now better placed to take its fair share of the luxury market. But those who still want traditional rural Bulgaria will not have to travel far to find it - although, says Quest Bulgaria, luxury tourism is about to reach there too.

House prices in Bulgaria registered the highest increase in the world in 2007, while those in the US were at a standstill and price growth in Europe slowed down, according to the Global Property Guide list.
According to figures until the end of September 2007, Bulgarian house prices had risen by 30.6 per cent, BBC said.
Second in the ranking was the Chinese city of Shanghai with house price increases of 27.9 per cent in the first 10 months of 2007.
Singapore, Estonia’s Tallinn and Lithuania followed in the ranking, with price increases of respectively 27.6, 23.4 and 13.6 per cent.
The figures were taken in local currency without adjusting for inflation, BBC said.