The adjoining sea is black in name, but the investment potential and leisure escape that Bulgaria represents is pure gold – Lance Nelson tells us more
With yields on bonds still at an incredibly low level, investors are increasingly looking elsewhere for a home for their money. Yet the obvious alternative, property, has its disadvantages. Even the most optimistic reports on the UK housing market are predicting lacklustre movements in price over the next few years. The good news is that Capital Gains tax on recent property investments will probably be lower for the next few years; the bad news, thatâ€™s because capital gains are likely to be miniscule.
Given the high value of properties in the UK, what does the would-be property investor do? Many would argue the answer lies in investing in property abroad.
Not in the traditional locations; many fear Spain too is sitting on a property price bubble; the obvious alternative locations are the burgeoning economies of Eastern Europe. And for a whole host of reasons, Bulgaria is currently seen by many as top of the pile.
First thereâ€™s value for money. Then thereâ€™s the natural beauty of the country. Combining winter skiing with summer sun, Bulgaria really does seem to offer the best of both worlds – or is that the best of three worlds: value for money, sun and snow?
A candidate for the 2014 Winter Olympics, and set to join the EU next year, the country is joining the rest of the world with aplomb.
The savvy investor has already spotted the trend. 2004 saw typical property prices rising by 47.6%, and last year they were up by a more sedate, but still mouth watering 21.6%.
Experts say 2006 wonâ€™t see quite such a big jump in prices, but even in this year, the calm as it were before the EU membership growth engendering storm, property specialists in International Property Investment have judged Bulgaria as the best overseas investment market.
Bulgaria is often seen as challanging Cyprus to occupy its lofty position. But then with the average new two-bedroom apartment in Bulgaria now costing about Â£60,000 and with yields of around 12% per annum, perhaps thatâ€™s not surprising.
Did we say Bulgaria offers the best of all three worlds? Actually thereâ€™s a fourth benefit.
Many investors like the idea of having a second home in the country. Their investment property is also their holiday retreat.
According to foreign currency specialist, HIFX, France and Spain are still number one for buying property abroad – taking up 43% of the overall market between them. Australia was in third place with 11%, and then sits good old Bulgaria with 10%.
According to Svetla Kostadinova, a senior Bulgarian economist at the Institute for Market Economics: “ The economic environment in the country improved significantly in the past five years – we have one of the lowest corporate rates in Europe, inflation is lower, incomes are rising constantly, predictability has improved, economic freedom increased and overall peopleâ€™s expectations are positive.”
But, of course, investing overseas carries risks. In some regions money has poured in, but planning has not been so good. But the Bulgarian government is learning. With help from a specialist, there are bargains to be had, both in the capital, Sofia, and in the unspoilt mountain and coastal areas for your investment and leisure time.
Lance Nelson is the Director of Bulgarian property experts, Jet2Let Ltd. Tel: 0870 428 3567 or www.jet2letproperty.com for more info jet2let
© Investment & Business News 2013