Bulgaria's Real Estate Sector Boosted By The Development of Tourism and Economic Growth

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Bulgaria's Real Estate Sector Boosted By The Development of Tourism and Economic Growth

Low real estate prices and a good level of economic development are the main factors making Bulgaria one of the most attractive countries for investment in real estate, a research by British Obelisk states.

Prices are not the only thing that attracts foreign investors, according to the research. The development of tourism and the potential of the sector are the other very influential factors.

The world tourist organization (UNWTO) describes Bulgaria as the new “new face” of tourism in the 21st century. At the same time CTO makes a daring forecast - that by 2010, some 20 mln tourists will be visiting the new EU member country each year. If that forecast turns true Bulgaria will be one of the fastest developing tourist destinations in the world.

By comparison, the country was visited by just 4.6 mln foreign tourists in the first three quarters of the year.

According to official national statistics, the number of foreign visitors rose 70% between 2000 and 2004, of which 90% are EU citizens.

The tourism sector, which contributes 16% of GDP, is expected to continue receiving the strong support of the government, which guarantees its future development.

Economic growth is also stable – 6.25% in 2005, and 6.1% in 2006. This year it is projected at more than 6%. H1 economic growth came to 6.4%.

Bulgaria attracted a significant amount of foreign investment between 2003 and 2006. Last year DFI stood at the record 4.36 mln euros, or 16% of GDP.

The economic development, the rising income of the population and the increasing foreign interest in the country after its EU accession lead to the fast growth of the real estate market in the past several years.

According to official data presented by the National Statistics Institute (NSI) real estate prices have risen 15% in H1, but according to market analysts, the actual figures are much higher.

In Q2 Bulgarian real estate prices were rising at the second highest pace in the world. Home prices rose 27.1% y/y, and Q2 alone registered a 12.2% hike versus Q2 2006.

Last year Bulgarian real estate prices were the fastest rising in Central and Eastern Europe, after Poland.

In the past several years, property prices have been rising at an annual average of 30%.

The 10 countries, which joined the EU in 2004 rapidly moved forward more than 10 spots in the “cost of life” chart right after their accession.

Prices in the Bulgarian capital are still nearly 40% lower than in Prague, Warsaw and Bratislava, but are expected to catch up with them in the following years, together with the increasing income of the population.

The development of the banking system and easier access to crediting has also helped the real estate market significantly .

Some of the problems still remaining before foreign investors, who wish to buy property here are the fact that the law does not allow foreign residents to own land in the country, as well as the relatively high transaction fees on property deals.

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