Búlgaría: Construction and Property in Bulgaria are Booming

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Both the construction industry and the property market in Bulgaria are continuing to boom as we move in to 2008, with 2007 having been bumper years for both economic sectors according to a series of independent reports. This is excellent news for the nation and for all those who had committed to the market prior to the country’s 2007 EU entry...but what does the market have in store for the short to medium term for those who have yet to buy?

Well, there is an opinion widely shared that the construction industry will continue to expand well in to 2010 simply because of a general dearth in supply of quality residential, retail and some industrial commercial stock across the nation...so this will bring with it undoubted opportunity. But what about basic buy to let strategies or buying now and reselling a few years down the line for realization of equity expansion? Well, neither investment strategy will bring much success in the short term in our opinion…

How can it? There is already a strong investor base that has bought in to the buy to let tourism market - and the World Travel and Tourism Council’s predictions of an increase in real travel and tourism activity growth per annum is less impressive in 2008 than it was in 2007. In addition to this, those who want to live and work in the likes of Sofia are now more likely to be buying than renting – with those who continue to rent also having a strong investor base in place with assets that they can let.

In terms of buying low and off plan today or buying a renovation and tidying it up all for resale within the next few years, there is likely to be a hold on financing, a tightening of belts globally speaking when it comes to property, and a continuation of supply anyway in Bulgaria which will make this particular property investment strategy a tricky one to pull off in the short to medium term.

All this negativity to one side for a moment though – and back to the facts from last year – yes Bulgaria’s was one of the best performing property markets in the world in terms of price appreciation with figures for year on year growth ranging from 30 – 35% depending on which sources you favor. The turnover in the construction industry was a whopping 11 billion leva – up 15% from 2007 – and the property market turned over in excess of 11 billion euros. So Bulgaria is certainly not down and out, it is certainly not a market to dismiss, as mentioned there are solid expectations the construction industry will continue to boom until at least 2010 because very real demand still exists for commercial and residential stock – but for investors to get the very most out of property in Bulgaria they need to target their locations carefully and they need to hold for the medium to long term.

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