BULGARIA BATTLES BACK

by Jonathan White

Don’t be put off by negative publicity. Bulgaria still has a great deal to offer the canny buyer

Too many recent articles on the Bulgarian real estate market have focused on over-development and lack of infrastructure, even to the point of trying to dissuade investors from buying here. But such tales have to be put into perspective.

When the media shine their spotlight on the likes of Bansko and Sunny Beach, it is often to show up the shadows. It's certainly true that development has been rife in both these tourist hotspots over recent years. But is this all bad? Should Bulgarians lay down their spades and wither away into the background while the rest of Europe seeks to improve its global appeal?

With any developing country courting foreign investment and wanting to make its mark on the global playing field, the construction industry is often the most active. The industry itself provides jobs. It also improves the supply of housing for both the domestic and foreign market and helps to boost the aesthetic appeal of some regions - moving them away from their Communist-grey past and into the 21st Century. Bulgaria is also developing new communities thanks to such construction, whether for tourists or for hard-working Bulgarians seeking to improve their quality of life.

So when do developers go too far? Could it be, perhaps, when they emulate the British example by building housing estates on top of each other? Bulgaria has seen growing demand for its real estate, particularly over the last five years. Apartments allow a much lower level of entry for the average buyer and, in recent years, Europeans have been hooked on buying their place in the sun. In many cases West Europeans are re-mortgaging their own homes to release equity for an overseas purchase.

But with this growth in the real estate market and construction, has the government been idle? Has it really done nothing to improve the infrastructure of the country, as the British media would have you believe? Not at all! In fact, those who really know Bulgaria are well aware of the improvements. The motorways have been a major focus, all the way from Sofia to Varna. Over the last few months, the section in and around the Veliko Tarnovo region has seen its highway enjoy major works and road quality now on a par with Western Europe.

Modern buses, which show English DVD movies during their journeys, provide low cost, reliable transport between major cities and even further afield. Companies like Biomet, for example, have established themselves as major players in the Bulgarian transportation market. Yes, there is still much to be done and yes, there are still many pot holes in the roads. But now, even inner city areas are seeing renovations. In Varna for example, Maria Luisa Boulevard has seen many improvements just in the last six months.

The telephone company BTC is actively improving the reach of its broadband Internet service, making it available to more towns and villages throughout Bulgaria. Internet speeds have increased over recent years with BTC now offering up to 4Mbps. Such development represents a significant improvement in the country's technological infrastructure.

While it hasn't quite managed to communicate what Natura 2000 is all about, the fact that Bulgaria is now part of the EU means that it has taken on additional responsibilities. Natura 2000 is essentially a European network of protected sites helping to support rare or vulnerable natural habitats. Such a responsibility will prevent Bulgaria from developing property in every conceivable beauty spot in the country. It should be stressed that new development projects are not necessarily prohibited from Natura 2000 sites but such a conservation policy will certainly help to prevent over-building in some regions.

So, what about all those people who are suffering poor rental returns? Certainly, with so many people investing in Bulgarian property - particularly between 2003 and 2005 - the result is an inevitable increase in competition for rental income. Good advertising and location are important in maximising rental income. Clearly, when it comes to property investment, there will always be winners and losers. If you think that all you have to do is buy the first cheap apartment an agent shows you, and sit back and wait for rental income to come pouring in, then you are seriously mistaken.

If you are one of the unlucky ones, and aren't getting a good rental income, there's no way to change the location of your property. But if at least the location is good, try to be less reliant on local agents and take a more personal pro-active role to seek out tenants. Advertise on property rental sites and in magazines. Consider lowering the rent to attract people or offer promotional prices for certain weeks. On the whole, Bulgaria has yet to reach an acceptable level of professionalism amongst the property rental companies. Quite often, agents say not a word as they take potential tenants around properties!

Why the media only want to focus on those who fail to make a success of their rental properties is something of a mystery. Instead, why not balance the report with those who are achieving rental returns well in excess of 12 or even 20 percent? In fact, you can hardly watch the news on TV or read a paper without feeling that with such a negative focus on pretty much everything, the end of the world must be imminent!

So, next time you hear someone telling you how awful Bulgaria is, consider the following points: Bulgaria still has an abundance of natural, unspoilt beauty, great traditions, beautiful and varied mountain ranges, many (clean) beaches and also facilities for winter sports like skiing. The cost of living is significantly lower than the rest of Europe and there are countless opportunities. It's the kind of country where you have greater freedom to explore all of your interests. There aren't (yet) any speed cameras strategically located to extract as much money from you as possible nor are there any anally retentive congestion charges, or come to think of it, an over-supply of speed bumps in suburbia!

From a working perspective, it also has one of the lowest corporate taxes in Europe - at only 10 percent! It offers attractive opportunities for foreign businesses wanting to set up shop here. Perhaps that's why Bulgaria has seen real growth in the supply of large hypermarkets, like Praktiker. Yet another infrastructure improvement, this time for the retail market.

We can only hope that the powers that be will actively prevent a true over-supply of properties in the tourist hotspots and continue improving the infrastructure of roads, towns and cities to make Bulgaria a truly great place to live.

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