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Last Updated: Apr 15, 2016




Bulgaria’s housing market continues to recover. Property demand is increasing. Investor confidence is up.  The recovery is particularly strong in Sofia.

In the third quarter of 2015, the nationwide house price index dropped 0.5% (-0.2% in real terms) from the previous quarter, according to the National Statistical Institute (NSI).
  • Prices of new dwellings increased 0.8% (1.1% in real terms) q-o-q in Q3 2015
  • Prices of existing dwellings fell by 1.4% (-1.1% in real terms) q-o-q in Q3 2015

Though this may not look like a recovery, two things must be noted. First, in Sofia, Bulgaria’s capital, apartment prices rose 6% to €790 per square meter (sq. m.) in 2015 from the previous year, according to the real estate firm Bulgarian Properties. In fact in Q4 2015, the average price of apartments exceeded €800 per sq. m. for the first time since 2011.

“2015 brought an upturn of the real estate market in Sofia. Not only the buyers have returned to the market, but also we have witnessed a growing trust in the real estate market and the properties as an investment asset,” says Polina Stoykova of Bulgarian Properties.

Second, while NSI house price figures (the official figures) remain subdued, unofficial figures suggest that the Bulgarian housing market was in an upswing in 2015.

From 2000 to 2008, Bulgaria had a house price boom, with residential property prices surging around 300%.  The bubble burst at the end of 2008:
  • In 2009, Bulgaria’s average dwelling price plummeted by 26.31% (-26.72% in real terms);
  • In 2010, the average dwelling price fell by 5.58% (-9.68% in real terms);
  • In 2011, the average dwelling price fell by 6.16% (-8.67% in real terms);
  • In 2012, the average dwelling price fell by 1.4% (-5.42% in real terms);
  • In 2013, the average dwelling price fell 1.21% (but increased 0.38% in real terms);
  • In 2014, the average dwelling price increased 1.15% (2.05% in real terms).

Bulgaria’s property market is expected to strengthen further this year. Demand for properties in the major cities will grow, and the supply will become increasingly limited due to the low levels of new construction, according to local property experts. Moreover, property prices are expected to increase by about 7% this year from a year earlier, according to Bulgarian Properties.

“An important element of the new market reality is the return of the confidence in the property market. More and more buyers are thinking of buying property because real estate is a safe real asset and good investment,” Stoykova stated. “It is clear and obvious that the buyers have permanently returned,” Stoykova added.

Bulgaria house pricesEuropean Union citizens can now purchase properties in Bulgaria, including land.  The 5-year moratorium on land purchases, set as a condition in the Accession Treaty between Republic of Bulgaria and The European Union, was lifted in January 1, 2012.

Previously, foreigners could purchase land only in the name of a legal entity and were not allowed to own a property. The lifting of the ban now gives European citizens the right to own property as individuals.

Analysis of Bulgaria Residential Property Market »


RENTAL YIELDS
Last Updated: Aug 28, 2015



Sofia has moderate gross rental yields - i.e., the rental return on a property if fully rented out, before all expenses. Yields in the centre are around 4.7% to 5.7%. Yields a little further out are a half a per cent higher.

Doctor’s Garden, Ivan Vazov, Iztok and Lozenets are among the most sought after addresses in the centre. Embassies, museums and universities are located here. These areas also have many parks and green spaces, making them popular with expats.

In the southern part of Sofia in Vitosha Mountain (or in the vicinity) are prestigious suburban neighborhoods like Boyana and Dragalevtsi. Though new developments being built here are increasing the stock of rental apartments, we find better yields here on the very smallest apartments, with yields stretching up to 6.4%. Last year we found that the very biggest apartments command exceptional yields at 8.4%. We weren't able to gather enough data this year, but that may be worth investigating.

We aren't able to provide yields in Bulgaria’s beach and ski areas, because rents in these areas are highly seasonal.

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Nov 03, 2014



Rental Income: Gross rent earned by nonresidents is taxed at a flat rate of 10%, withheld at source. Deductions are not allowed for nonresidents.

Capital Gains: The sale of real estate by nonresidents in Bulgaria is subject to 10% withholding tax on the net gains received.

Inheritance Inheritance of direct descendants is not taxed. For all other beneficiaries, the inheritance tax rates vary, depending on the relationship between the donor and the heir.

Residents: Residents' worldwide income is taxed at a flat rate of 10%.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: Nov 04, 2014



Total roundtrip transaction costs are around 5.30% to 10.30% of the property value. The buyer pays for transfer tax (0.10% to 3%), notary fee (0.10% to 1.50%) and 0.10% registration fee.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: Jan 01, 1970


The laws are pro-landlord

Bulgarian law is pro-landlord.

Rent: There are no rent controls, so rents and terms and conditions can be freely negotiated between the parties. Any method of rent increase can be agreed upon, including indexation, and periodic progressive increases.

Tenant Eviction: Bulgaria’s weakness is the inefficiency of the court system, which can, in practice, make it difficult to evict a tenant. Usually it is the landlord who initiates litigation. But the length of proceedings often dissuades them. It takes an average of 660 days to evict a tenant.

Read Buying Guide  »



ECONOMIC GROWTH
Last Updated: Apr 15, 2016


Modest economic growth

Bulgaria sofia residential apartmentsBulgaria is one of Europe’s poorest countries, with a GDP of around US$6,582 per capita in 2015, based on data from the International Monetary Fund (IMF). The country is also one of Europe’s most corrupt.  Bulgaria’s transition from communism was not easy. Things only really started to improve when Bulgaria’s last Tsar Simeon II became the democratically elected prime minister from 2001 to 2005. His government pushed market reforms intended to ease accession to the EU.

Bulgaria enjoyed an economic boom from 2000 to 2008, with the economy expanding by an average of 5.6% per year.  But in the June 2005 elections, the Bulgarian Socialist Party (BSP), successor to the Bulgarian Communist Party, led by Sergei Stanishev won most seats in parliament. After weeks of wrangling the main parties signed a coalition deal under which he became prime minister, but largely bound him to continue previous policies (partly constrained by EU membership conditions).

Bulgaria joined the European Union in January 2007. In the coalition's second term Bulgaria lost millions of euros of EU financial aid due to allegations of widespread political corruption. In the July 2009 elections, the center-right party, Citizens for European Development of Bulgaria (GERB) led by Boyko Borisov, soundly defeated the BSP.

In October 2011 presidential elections, Rosen Plevneliev of the GERB emerged victorious. Then in May 29, 2013, Prime Minister Plamen Oresharki of the BSP came to power after anti-austerity protests forced out former Premier Boyko Borissov’s GERB party and triggered a snap vote.

Oresharki faces strong opposition, the key issue being the appointment of controversial media mogul Delyan Peevski as head of the state security agency DANS. Then in July 2014, Oresharki stepped down from office, paving the way for a snap election in October 2014. Boyko Borissov returned to premiership as his GERB party forms coalition with fellow centre-right Reformist Bloc.

Bulgaria gdp inflationBulgaria’s economy expanded by 2.2% in 2015, after growing by 1.7% in 2014, 1.1% in 2013, 0.5% in 2012, and 2% in 2011, mainly due to higher net exports and public investment, according to European Commission.

The economy was projected to grow by 1.5% this year and by another 2% in 2016, based on the latest forecast released by the European Commission. The economic slowdown this year is mainly due to the expected decline in public investment caused by the slowdown of the implementation of projects co-funded by the European Union.

Bulgaria’s general government deficit is projected to decline to 2.3% this year and further to 2% in 2017, according to the European Commission. In 2015, the country’s consolidated budget deficit fell to 2.9% of GDP, down from 3.7% of GDP in 2014. On the other hand, public debt is expected to increase from 28.2 % last year to 29.7 % in 2016 and further to 30.7 % next year.

The country had negative inflation of -0.9% in November 2015, down from -1.6% in 2014, according to the NSI. Deflation is still expected throughout most of 2016.

In Q3 2015, unemployment rate was 8.3%, down from 9.9% the previous quarter and 10.8% during the same period last year, according to the NSI.

Unemployment is expected to stand at about 9.4% in 2016 and at 8.8% in 2017, according to the European Commission.







  • Pro-landlord rental market
  • Yields not great
  • High transaction costs
  • Moderate rental income tax
  • Corruption & crime woes
RESIDENTIAL PROPERTY FACTS
Price (sq.m): €1,222 For a 120 sq. m. property, usually an apartment.
Rental Yield: 4.64% For a 120 sq. m. property, usually an apartment.
Rent/month: €566 For a 120 sq. m. property.
Income Tax: 10.00% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 7.95% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: 10.00% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Landlord Rating is based on a detailed study of each country’s law and practice.

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