Is Sofia the next overseas property hotspot?

Tuesday, 03 July 2007 12:00

After several years of investors focussing on Bulgarian beach and ski resorts, the real growth could now be in the cities.

That is according to overseas property analysts Property Secrets - which argues coastal resorts could prove a mistake.

"There is no secondary market [on the coast], developments have been hyped and sold by agents on high commissions and price rises and anticipated rental yields are, for the most part, unrealisable," Property Secrets explained.

"So our advice at Property Secrets - stay well clear of the Bulgarian coast as an investment opportunity. It's been over hyped and oversupplied and offers poor resale and rental opportunities."

However, with Bulgaria still relatively cheap and with economic growth and EU membership set to boost property prices, there are still good investment property deals to be had.

"The real opportunity in Bulgaria lies, as it does in other markets in central and eastern Europe, in the cities, and in particular Sofia," the company said.

In the cities emerging middle classes, increasing affluence and easier mortgage lending boost house prices even before foreign investors are considered. And nowhere sees stronger demand than Sofia.

Additionally, Sofia's population is set to grow, with higher wages paid in the Bulgarian capital than elsewhere in the country. Unemployment in Sofia has also fallen from 15 per cent in 1993 to two per cent currently.

And with high salaries and a growing population, the property research firm also points out 27 per cent of Sofia's population is within the household formation age range of 20 to 34-years-old.

"This is also a clear indicator of future, or current, pent-up demand for housing," Property Secrets concluded.

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