Bulgaria Looms as the Next Real-Estate Hotspot
European Demand
Black Sea Property, for example, is serving the growing trend for Europeans to buy real estate in other countries. “Last year, 146,000 British people bought properties outside the U.K.,’’ said Roger Hornett, London-based manager of the fund’s property holdings, in a telephone interview.
“You can buy a two-bedroom luxury flat by the sea in Bulgaria for 40,000 pounds, which is less than the average British house has gone up in value by during the past two years. So we think there is going to be big demand from foreigners for holiday properties in the country.’’
Still, just because something is cheap doesn’t make it a sure bet. The issue is whether the Russian and Eastern European property markets can keep expanding.
Reliable figures on trends in property prices are hard to compile, the U.K.’s Royal Institution of Chartered Surveyors said in its latest review of the market. There is little historical data and not enough information comparing properties over time.
Communist Buildings
Moreover, much of the housing built under Communist central planning was of such poor quality that it is practically worthless. Most of it will have to be rebuilt.
“Despite little change in rents, investor demand in emerging Europe is surging across the board,’’ the institution said. “The primary driver is expectations for convergence in incomes over the medium to longer term to Western European levels, which will facilitate growth in rents.’’
What kind of returns you might expect will vary. Hornett says the Bulgarian market has risen about 40 percent in the past two years. He predicts gains of at least 10 percent annually for the next three years.
That may be too optimistic. Still, equity markets across Eastern Europe remain strong. The Bulgarian stock market, for example, is up 32 percent this year. Asset prices are rising fast, and property is unlikely to be left out.
