As the world's strongest property market in 2007, Bulgarian property investment has made a huge 2.36 billion euro increase on 2006 figures and is maintaining momentum for 2008, according to global investment specialist Obelisk.
Bulgaria’s property investment has proven to be the country's economic driver with a record-breaking turnover of 11.36 billion euro in 2007. Many local and international property experts predicted the year's increase to reach up to 30 per cent but, by September the market had actually risen by 32 per cent and many major cities, such as Sofia, are already recording impressive growth this year.
James Gonzalez, market analyst at Obelisk, comments: "The huge property price rise has been largely attributed to a good mortgage market, high annual property revenues and Bulgaria’s independence from the world financial crisis. The US sub-prime crisis hasn’t hurt the Bulgarian financial market as there’s no cross-border banking and consumer borrowing is continuing to grow at a steady rate."
UK property investors, who accounted for 40 per cent of all Bulgaria property investment in 2007, followed closely by Russian investors at 38 per cent, have played a primary role in maintaining favourable market conditions. They have further strengthened the country's financial stability and added to the robust appeal of Bulgarian property investment.
Nikolin Gavrailov, President of the Bulgarian Entrepreneurial Chamber in Building, reports the turnover for the construction industry as 5.6 million euro and adds: "Investment growth in tourism, production and the need for modern infrastructure stimulated construction. Construction sector growth is expected to be between 12 per cent and 16 per cent year-on-year until 2010."
The Economist forecasts a consistent 6.4 per cent GDP (gross domestic product) increase year-on-year. Bulgarian emigrant workers are also investing back into the country, particularly in the retail and housing sectors, which provides a further boost. According to preliminary figures from the World Bank, remittances from Bulgarians working abroad will have amounted to 1.26 billion euro in 2007. However, the Bulgarian National Bank has stated the actual figure to be closer to 2 billion euro or 7 per cent of GDP.
James Gonzalez continues: "In a bid to ensure a consistent flow of foreign direct investment (FDI), the Bulgarian government has made bold changes to the Bulgarian tax system. The new system will mean that both income and corporate tax will be charged at a highly competitive 10 per cent. This new flat rate applies to all workers, investors and companies regardless of income or profit values, making Bulgaria a tax efficient place in which to relocate or invest."
