13.11.06
Fancy a property on Black Sea coast! Look at East Europe
With the RBI announcing that resident individuals would be allowed to remit up to USD 50,000 per financial year (increased from USD 25,000) for any current or capital account transactions or a combination of both, a slew of overseas real estate destinations are playing on the investor's mind. Moneycontrol picks up Bulgaria, a quaint country, which is fast becoming a hotbed for real estate kind of acquisitions and the law of the land permits outsiders to buy property there albeit with some clauses.
Cities, particularly those in soon-to-be EU member states, are rapidly emerging as the safest bets. One such overseas real estate destination is Bulagaria. The country with a flourishing marketplace is being looked upon as a second-home destination by many.
Bulgaria's major draw is that it is slated to join the European Union in early 2007, following which property prices will zoom. As of today, the country is still offering low-cost real estate investment opportunities when compared to other European nation which joined the EU in 1994.
Located in South Eastern Europe, Bulgaria is bordered by Greece and Turkey to the South, Romania to the North and Macedonia and Serbia to the West. Its Eastern Border is formed by the Black Sea Coast. The Black Sea Coast is a major tourist destination and property prices are increasing rapidly with many overseas investors entering the market because of its high growth potential. Since the counrtry is not yet an EU member, it doesn't have the steep tax structure and production costs that make second homes cost prohibitive in EU countries.
Perhaps this explains the rise in demand for properties in Bulgaria. In June 2005, The Wall Street Journal reported that the prices of real estate in Bulgaria jumped 48% in 2004, a world record and the highest rise in prices registered in any country. In the same breadth, The International Herald Tribune said in March 2006 that residential prices in Sofia (Bulgarian capital city) still average only 600 euros per square metre, that is much less than the 750 euro average per square metre in Bratislava, Slovakia; 850 euros in Bucharest, Romania; and 1,500 euros in Prague.
According to an international real estate company, majority of demand for Bulgarian property currently originates from investors in overseas property from the UK and Ireland. When multinational companies look for cost-effective locations for headquarters or major distribution outlets, central and eastern European cities often catch their attention. For example, the Bulgarian capital city, Sofia, is the most popular among international companies, thus directly impacting the property market. Recent entrants include Microsoft, Deutsche Bank, and Google. Hewlett Packard too has recently outsourced its IT operations to Bulgaria. Other multinational companies investing include General Motors, Capital One and Ford, plus retail giants Marks and Spencer and Intersport.
As Bulgaria comes closer to European Union accession, financing a property purchase has become easier, and airlines are ramping up flights to Sofia and Varna. Acquiring property in Bulgaria, excluding land, is made easier by the new Foreign Investment Act (1997) which lifted the requirement to seek prior approval of the Ministry of Finance to conclude such purchases. Foreign judicial and physical persons can still acquire land via a Bulgarian registered company. The legislative intention is to provide this opportunity to foreign persons who intend to engage in commercial activity in Bulgaria. The currency (Lev) is pegged to the Euro, making it stable and less volatile. Most property can be bought and sold in Euros.
-By Jhini Sinha Phira
Labels: bulgaria real estate, bulgarian investment property, holiday homes
