LM Legal Services Blog

The prices of large properties in Sofia have dropped sharply. Only in the area of Oborishte where the most expensive properties in the capital are located, prices have increased by 4% and start at 923 Euros/sq.m. , reaching 4331 Euros/sq.m. At the same time in the affluent area of Lozenets the property prices have dropped by more than 1/5 in the last two years. The lowest price there is of 816 Euros/sq.m. The most serious price drop – of 23% – in the expensive areas of Sofia is in Beli Brezi. More than 700 apartments located in affluent central areas of the city have been put on the market.

After its accession into the EU in 2007 Bulgaria had the right to keep in force its existing laws concerning the purchase of a second property by citizens of EU member states and citizens of states signatories to the European Economic Area Agreement (EEAA) for five years.

This term has practically expired on 1 January 2012.

Those citizens of EU member states and citizens of states signatories to the European Economic Area Agreement (EEAA) who legally reside in Bulgaria are in theory excluded from the above rule.

Concerning the purchase of agricultural land, forests and forestry land by citizens of EU member states and citizens of states signatories to the European Economic Area Agreement (EEAA) Bulgarian laws preceding the accession into the E.U. should be in force for seven years after the accession of the country into the E.U., i.e. until 1 January 2014.
The above restriction does not hypothetically apply to self-employed farmers and agricultural producers, who are citizens of EU member states and who would like to settle in Bulgaria. They should be treated like Bulgarian citizens concerning purchasing all types of property in the country.
For your reference please look at the text The Treaty of Accession 2005:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2005:157:0104:0128:EN:PDF

The Daily Telegraph has published the ranking of The Global Property Guide Europe’s Top Places to Invest in Property. The Bulgarian capital Sofia took 17-th place overtaking Prague (18), Paris (20), Lisbon (22) and London (26). According to The Global Property Guide, the positive feature of Sofia is the pro-landlord rental market. The negative feature is that the rental yields are poor – 4,19% – the transaction costs are high, the rental income tax is moderate and the corruption is strife. The capitals of many other Balkan countries feature better than Sofia. Ljubliana, Slovenia’s capital is in place 14, Bucharest, the capital of Romania, is in place 12, Zagreb, the capital of Croatia is in place 5, Istanbul is in place 4 and Skopje, the capital of Macedonia is in place 2.

The differences in the standard of living among the regions in Bulgaria continue to grow despite the European funding. The poorest regions – the North-Western and the Northern Central ones – continue to lag behind the rest of the country. At the same time Sofia receives the largest share of the European funding per capita according to the National Strategy for Regional Development 2011 -1015 of the Bulgarian government. The North-Western Region which includes Vidin, Montana, Vratsa, Pleven and Lovetch is getting poorer. According to the National Statistics Institute the GDP in this region was 5576 levs (apprx. 2250 Euros) per capita in 2009 or 62% of the average for the country. At the same time the richest region in Bulgaria – the South-Western Region which includes Sofia – had GDP of 15 610 levs (apprx. 7800 Euros) in 2009. In comparison the GDP per capita in the North-Western Region in 2000 was 90% of the average GDP for the country. The situation in the Northern Central Region that includes Veliko Turnovo, Gabrovo, Russe, Razgrad and Silistra is similar. The GDP per capita there in 2009 was 5942 levs (apprx. 2450 Euros).
In the North-Western Region only 59.3% of the people from the age of 20 to the age of 64 are employed. In the North-Central Region this proportion is 60.5% while in the South-Western Region it is 71.6%.
Instead of attracting Euro-funding, the poorest regions in Bulgaria receive much less European money in comparison with the capital Sofia. The North-Western Region has attracted only 512 levs (250 Euros) per capita, the North-Central Region has featured a little bit better, attracting 691 levs (345 Euros) per capita, while Sofia has attracted 2164 levs (1800 Euros) per capita.

Analysts expect that 2012 will be again the year of the buyers. Most buyers will be first-timers. The hope is that those who have savings or free money will be bold enough to spend them on properties because of the attractive prices.

The property prices in Bulgaria will continue to fall in 2012, however the analysts do not dare to give forecasts about the amount to which the prices will drop. The expectations are that the buyers and the tenants will dictate the property prices. Most of the buyers of holiday apartments and houses will be Russian, while the buyers of all other types of property will be mostly Bulgarians.  The expectations are that in 2012 cheap properties not exceeding 55 000 Euros will be in demand.  Although the number of the property sales in 2011 has increased by 30% in comparison with 2010 unlike a year ago, now the buyers are spending mostly on cheap properties.

Concerning the survival of the construction companies, the European money will be of prime importance for many of them.  In just one year the income of the construction industry has shrunk from 11.7 billion levs to 9.9 billion levs in 2011. Big companies will focus on the construction of apartment buildings and private investors will commission them for the construction of individual buildings. The construction of big shopping centres will continue.

The money from the European programmes will be spent for the reconstruction of hospitals, schools and cultural monuments.  The greatest amount of the European money will go for the development of infrastructure.  Some of these projects have to be completed in 2012.