The decrease is mainly due to two factors – the rising prices of homes over the past several years, as well as the increasing rates of montly rents in the capital city.
Return on investment in vacation homes is also down, due to the sharp increase in their prices over the last couple of years. Such investments take 20 years to repay, and return on them is calculated at 5%.
Thus properties such as houses and apartments are getting less attractive for investors, compared with commercial real estate, where returns stand at between 12% and 14%. Commercial real estate, however, is too expensive for individual investors, which do not have that amount of capital at their disposal. An opportunity they prefer to use instead is investment in Real Estate Investment Trusts (REITs) listed on the stock exchange.
The priority of many REITs is investing in commercial real estate and logistics centers and, according to legislation, they have to distribute 90% of their annual profit as dividend. Dividend is subject to a 7% tax.
The stock of 41 REITs is currently traded on the Bulgarian Stock Exchange, and according to data from yesterday's session, the market value of these companies stands at 810.353 mln leva (414.327 mln euros).