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Bulgaria: Coming out of the cold
Article by Graham Norwood * with excerpts, The Independent, 23rd March 2005


Now could be the time to buy in Bulgaria, but buyers should study all the potential risks, advises Graham Norwood

If one country typifies the explosion of interest in eastern Europe it must be Bulgaria - but is it surrounded by hype or covered in genuine opportunity? Prices are startlingly cheap, especially for new homes, even if some of the architecture is reminiscent of 1970s Britain.
A two-bedroom new house 21 kilometres from Varna on the northern Bulgarian coast of the Black Sea costs around £70,000; a three-bedroom maisonette only 300 metres from the sea in the same region is yours for £95,000. Even cheaper properties can be found in high-density resorts being built close to the coast.
Sunset Apartments near Sunny Beach
Relatively low prices such as these, along with estate agents' talk of 40 per cent rises per year, have triggered worries of a price bubble. But analysts suggest most buyers just want a low-cost holiday home or a long-term investment and that, so far at least, the high volume of ongoing building has not undermined price gains made by early buyers.

In proportion to new sales there are relatively few re-sales, suggesting the majority of buyers keep them for a length of time. There's evidence of over-construction in certain areas but to date there's been little impact on prices or demand.

Grand Montana in Bansko ski resort

Antim Residential Building in Sofia
For investors, there is a clear appeal in the Bulgarian capital, Sofia. When the nation accedes to the European Union in 2007 there is much confidence that the capital will vie with the likes of Prague and Berlin as a base for the central European offices of many multi-nationals. The result would almost certainly be price rises in apartments and a booming corporate rental market. Meanwhile, the city is also surprisingly close to many long-standing and now newly refurbished and increasingly popular ski resorts.

But although market prospects remain strong, experts advise buyers to remember that this is still an emerging market. There are many eccentricities.
Buying a home can be complex because it involves setting up a Bulgarian company to meet the country's stringent rules on foreign property ownership: "The final price you end up paying is not even certain, as tax is estimated on the purchase deeds."
Independent property lawyers say buying in Bulgaria - or elsewhere in eastern Europe - is clearly a good investment but needs to be done with a level head. Yet despite the uncertainties, Bulgaria increases in popularity. The country's economics ministry says 248,792 Britons visited in 2004; its London embassy says the number of visas issued to Britons in 2004 was double that of 2003; just one estate agency, BulgarianProperties.com, claims to have sold an average of 120 homes to Britons every month since late 2003.
Bulgaria's star is rising. But if you're going to buy, be quick - before the prices rise too.


Aheloy Apartments near Sunny Beach

Nothern Black Sea Coast, the town of Kavarna
FACT FILE: BULGARIAN HOTSPOTS

Burgas
The largest port on the southern coast of the Black Sea has 9,500 hectares of protected wetlands and a maritime park - but unexciting beaches. One of the cheapest parts of the country.

Varna
On the Black Sea coast with modern resorts nearby and an international airport. Enjoyed 23 per cent house price inflation in 2003/4.

Sofia
Unlike the coastal resorts there are year-round flights from UK to the capital, which is likely to benefit most from EU accession.
How to buy

* Foreigners can buy buildings as an individual but not land, so most purchases involve the creation of a company

* Expect to pay for legal fees plus a municipal tax on property sales of about 2 per cent of purchase price

* Bizarrely, the actual price paid for a property may not be the price appearing on the title deeds - the deeds will carry a "tax estimation" price well below the purchase price to lessen the amount of purchase tax paid. This is a custom known even to the Bulgarian inland revenue

Southern Black Sea Coast, the town of Nessebar

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