Opportunities for real estate property sales and purchases in the situation of the current Bulgarian real estate market and prognosis (2013 – 2014)

Having in mind that most foreign real estate buyers wish to invest, or have invested in real estate properties in Bulgaria with the intention of re-sell on a later stage and others have bought off-plan properties just to save funds from the purchase of their holiday home, we would like to inform you of some important facts, which are usually being brought to the buyer’s attention in misguiding manner outside Bulgaria: 

1. The Bulgarian property market, related to completed and habitable properties, has not been affected as badly as presumed by many (and stated in some media) by the financial crisis. Indeed, part of the market called “sales on green” (off-plan projects), was heavily hit and almost destroyed; there presumably won’t be any serious project in holidays home developing in Bulgaria in the next 5 years, which on the other hand means there won’t be competiting newer apartments. The reasons for this are complex: one of them is the rapid and catastrophic drop of the British Pound against the Euro leading to higher prices of the properties (the prices are determined on the base of the expenses of the builder which are in Euros) and actually the cost of life in Bulgaria ; another reason is the lack of fresh finance reachable by the Bulgarian developers of off-plan projects (direct consequence from the total withdrawal of the foreign investors from the of-plan market due to their financial problems in their home countries, as well the lost of trust in the chances of completion). Thus, there is some kind of hysteria arising among foreign developers/investors that the local market has almost ‘closed down’ compared to other attractive property markets. In fact, all the rumors about the bad real estate market in Bulgaria are related only to non-started or/and non-completed developments ,because many people ,including Bulgarian investors did not receive their apartments or became owners of unfinished holiday complexes .This lead to total lack of trust in such developments leaving only the biggest companies who are apparently trustworthy . This has not happened only in Bulgaria; the real estate markets in other countries, like Greece and Cyprus, have been much more affected by the financial crisis. 

On the other hand, another group of buyers has filled the gap and pointed their attention to the already completed projects – Bulgarians, Greeks, Scandinavians and mostly – Russians. The new wave of buyers appeared ,because of two major reasons –a) there are plenty fully completed and habitable holiday apartments which means less risk and not having to wait the property to be completed and b) the prices of Bulgarian real estates (as well the related Stamp duty taxes and commission fees) have expressly collapsed to the levels before 2007 which makes the properties more affordable for some and more tempting for others ( primarily for the people with more money to spend) . Now the ones who have been persuaded to invest in off plan project by agents ,developers or simply friends with promises of huge profits from resell or rent are substituted by people who wish to acquire the property for more personal needs – for vacation homes or for living long term purposes. This is actually something that can play a positive role by stabilizing the market, because no one relies on quick resale. 

2. The outcome of the worldwide financial crisis whispers that there won’t be any new serious constructions of holiday complexes in Bulgaria in the next 5 years at least. This fact means that there won’t be many competition apartments, newer ones that would cause further drop of prices. I.e. prices can not drop further suddenly – they are stable at the moment and waiting to go up in the future. 

3. The fully completed and habitable (properties with Act 16 situated in operational sites); houses (whether new or old houses) and small regulated plots all over Bulgaria still take serious part of the Bulgarian real estate market. If you want to buy nice ,small holiday villa or vacation apartment on the seaside for reasonable price, you can still take the right choice. Trusted local agents are selling these quite well, although not for the exorbitant prices in the period 2005-2008. Thus, the newcomers look for bargains in completed sites, renovated holiday and retirement homes and basically they are the ones who keep the Bulgarian property market running in the sphere of fully completed new properties. Another group of local Bulgarian speculating merchants also entered the market in order to buy on discounted prices whole parts of sites, groups of apartments, houses, plots of land with intention of future re-sale; the same scenario is used by big Russian investment companies. 

4. Prices of completed and habitable real estates have dropped significantly – to the rates before 2008. Also the related Stamp duty and property transfer taxes, being 4-5% of the price, are reduced as an amount. Many real estate agencies have gone bust and these who remained, reduced their commission fees at the rates of 2-3% of the sale price. Some agencies finally adopted the practice of not asking commission from the buyer or the seller on before the signing of the title deed; other companies are now running well known internet property catalogues and third have good relations with the Eastern Balkans and the Russian property market, that helps them to attract buyers from these countries to invest in Bulgaria. All these facts lead to the conclusion that if in 2010 you could buy a holiday apartment for 65 000 Euro with another 6-7 000 Euro spent on stamp duty and agency commission fees, nowadays it is possible to purchase a similar-sized apartment in the region of 40 000 Euro only, with less than 3-4 Euro for the related taxes & expenses. 

5. The evaluation of the real estate properies, stipulated in the official tax evaluation document (demanded by the notaries in Bulgaria when you to resell a real estate property) were raised several times for the past five years. This means that the government determines a certain evaluation for the next year, which is higher than the one determined for the previous year. This, together with the lack of any new projects for the next 5 years, indicates that the prices of the real estate properties are not going to become cheaper than that, on contrary. If the properties were really becoming cheaper, then the Tax Authorities would not evaluate them as more and more expensive every year. 

6. The Sterling may indeed have lost positions against the Euro, but there is a large group of owners (primarily from the UK) who have paid the price in Sterling are more than willing to sell even with 30 % loss ,because it will be compensated by the price he will receive in Euros according to the higher exchange rates . This way he can still make reasonable profit or at least cover his initial investment; and at the end of the day this is what the overseas real estate investments are for – to make profit and if it is not possible – to protect your savings from inflation and fluctuating exchange rates. 

As property professionals, we are familiar with the local property issues and we are capable to perform negotiations on behalf of buyers regarding the actual price of the property – namely to determine and achieve a property price, which will suit best your financial interests. On the base of our nationwide professional experience and knowledge of the real estate property market in all areas ,we can comment and compare prices of properties, so you will be sure that you have not sold your property for less than the others in this region, or if you are the buyer to be calm that the sellers have not retired with the money received from your property purchase. As already mentioned ,because we have represented the current owners of the properties included in this web site and most importantly ,because of the fact that we have dealt with the real estate paperwork as part of our services we have the full history of the previous transfer including copies of documents, drafts and copies of title deeds, registration certificates and assisting a seller or a buyer of such property will definitely be quicker and more efficient. This will lead to significant discount from our standard fees for performing the re-sale. 

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E-mail: property@dynsolgb.com 
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