Environment
Everyone’s into Bulgarian real estate these days. The market reached incredible heights in 2004, boosted by foreigner interest and by the increased purchasing power of Bulgarians due to the increased availability of mortgage loans.
Hundreds of agencies have sprung up, not just in the big cities but in the resorts too. Others just have a website and appeal straight to the foreigners – mostly Brits and Irish – who are keen to invest in cheap Bulgarian property, frequently with the aim of using it themselves as a holiday home but also fairly safe in the knowledge that the money invested will appreciate faster than if it were sitting in a bank at home. The expectation that Bulgarian real estate will continue to rise up to the country’s EU entry in January 2007 keeps the market buoyant.

Despite an average rise of 25% last year (this figures changes depending which survey you read!), prices are still relatively low by EU standards, though Sofia is looking less of an investment these days, with so much new construction going on and rental demand fairly low. Its not just foreign interest that has bumped up real estate prices – as the Bulgarian economy becomes stronger so people have the disposable income to buy property and the mortgage boom over last couple of years has meant that even those without savings can buy a first or second home.
Other boom areas are the Black Sea, especially the southern stretch, which has begun to resemble the Costa Del Sol with its concrete developments, and the ski town of Bansko.
There are of course many opportunities outside of this – there are other large ski resorts for instance and quite a potential for the development of new ski resorts in those places where there are currently only one or two pistes.
Bulgaria is lucky in that almost everywhere here is beautiful and it is difficult to say that one place in the mountains is better than another, though of course location and proximity to cities, airports, etc. is of importance if you are looking to rent the property out. Some of the old houses in mountain villages can still be bought for 3 or 4000 euro!
Agencies
The market is thus far not regulated, in fact you don’t even need a licence to operate as an estate agency, so the ground is ripe for various rip-off merchants to practice their trade. We have heard various horror stories, including one Brit who was alerted to the fact that he was about to pay a ridiculously high price for a property by a conscientious notary and ended up fleeing in fear from his agent. Though he lost his deposit he felt his physical safety was more important. We have also heard complaints about poor service even from some of the expat-owned agencies, who are perhaps unable to cope with the demand and just leave their clients hanging.
If you are buying from abroad do some thorough research on the many sites available – take a look at the photos of houses, get a good idea of price ranges and check out where is a good place to buy. You can also ‘chat’ with the many foreigners who have already been through this experience both on our ‘Forum’ and on others.
Peculiarities
Foreign individuals cannot own land in Bulgaria and despite the country’s mooted EU membership in 2007, will not be able to do so until 2014. A legal loophole currently allows foreigners to set up a Bulgarian company (see Doing Business in Bulgaria), which can then buy the land. This little bit of bureaucracy means that you need to use a local lawyer to set up the company, do the deal for you and you will have to retain their services on a permanent basis to maintain the company for you. You will also need to use an accountancy company to submit annual tax returns, since the land is considered an investment. The good news is that although you have to pay the initial capital (5,000 levs or 75% thereof) into a bank account, you can subsequently withdraw it once the registration process is over. If you are buying an apartment and there is no land included in the deal then you can buy it outright as an individual.
The legal fees are usually quoted as a total for the court fees and the lawyer’s fee for handling you. They can range from 400 – 1000 euro.
Residence
Another thing that may be an issue for you is getting permission to stay in Bulgaria. Cases are decided individually at present but citizens of EU countries have the right to stay in Bulgaria for 3 months out of every 6, while those of Great Britain and Ireland can only stay for one month out of six. This is a tit-for-tat regulation and will anyway fall by the wayside when Bulgaria joins the EU on January 1^st 2007. In the meantime here is some advice: if you are retiring to your property in Bulgaria you will probably get residence as long as you can provide the documents to prove you are retired, that you receive an income outside the country, etc; if you are a freelancer of any kind you will probably not get residence because although the law allows for it in practice permits are not issued to freelancers. In many cases, however, depending on the value of your investment (in property) you may be granted residence so you should choose a lawyer with a proven track record.
Mortgages
Interest rates are still high here – around 10%, though some banks advertise lower rates. If you are eligible for a mortgage in your own country then you would be advised to do it there. Rates here will eventually drop but the IMF has been pressuring the Bulgarian National Bank to put the brakes on lending in Bulgaria so banks will be cautious about lowering rates.