London, 15 July 2006, Telegraph.co.uk, By Max Davidson
For decades Bulgaria has been the object of fear and loathing in the West. Now this former Soviet satellite is not only coming in from the cold, it`s turning into a capitalist`s dream. Max Davidson reports
Bulgaria sexy? That would have given most of us a good laugh during the Cold War when, of all the Soviet satellites in Eastern Europe, Bulgaria was the most reviled. The country`s weightlifters took drugs, its wine was gut-rot and its secret agents carried cyanide-tipped umbrellas. It was the dregs of the Balkans.
But Bulgaria is finally on the move, revealing hidden depths and unexpected charms. The fact that it is due to join the European Union next year is like an amber light turning green for the property hounds who scour emerging markets for bargains. Investors have made a killing in Prague; their punt on Tallinn is starting to pay off. Next stop, Sofia.
The logic of investing in Bulgaria is so compelling, on the face of it, that Bulgarian property exhibitions have become commonplace in London. Television is also getting in on the act.
"If you are going to take the plunge," say the siren voices of the developers, "now is the time."
Parc Investments Group of Guildford typifies the new wave of interest in Bulgaria. Parc started out by investing in residential property in London, before extending its portfolio to Portugal in 2002.
"In simple terms," says Robert Lucy, the joint MD, "we see Portugal as a medium-risk, medium-return market, Bulgaria as a high-risk, high-return one."
The risks being?
"Well, for one thing, Bulgaria is not yet a fully paid-up member of the EU. One of the conditions of entry is that it gets its organised crime under control. That should not be an insuperable problem. The Bulgarian government is actively addressing the issue. It could hardly have a worse crime problem than Estonia, could it? But it is a factor."
Other potential snags were highlighted by a recent television documentary shown on Channel Five. A British woman set about buying property in a Bulgarian ski resort and, having exchanged contracts, discovered that the apartment did not yet have plumbing or electricity, and that 21 per cent VAT had been added to the purchase price.
Such cautionary tales are inevitable in an emerging market where little English is spoken. But the scare stories need to be taken in context - and that context is the exceptionally low cost of property in Bulgaria, with plenty of scope for rapid growth. Even if you make an ill-judged investment, you will not lose your shirt. Whereas if you make a shrewd one… "In 2002, I was offered four apartments in a Bulgarian ski resort for a total of $US30,000," says a rueful Rod Allen, an IT consultant who worked in Sofia for 10 years. "They would be worth more than $100,000 today. Bulgarians tend to pad prices for foreigners - you need to watch that. But there are some great bargains."
A traditional Bulgarian village house could set you back as little as £10,000; a stylish modern apartment in Sofia just £40,000. On the Black Sea coast - Albena, Golden Sands, St Konstantin - there is a plethora of new developments. Not all of them are easy on the eye, but all are easy on the wallet. Think £20,000 for a one-bedroom beach apartment, or £100,000 for a top-of-the-range three-bedroom villa.
Most tempting of all locations is Bansko, an up-and-coming ski resort in the foothills of the Pirin mountains. It is 105 miles (170km) south of Sofia and a three-hour drive from an international airport, but those drawbacks are temporary. A motorway is being built and a new airport, to take both charter and low-cost flights, is also planned.
Few in the know doubt that medieval Bansko, on the edge of a Unesco-listed national park, is going places. It attracted 30 per cent more visitors in 2006 than in 2005, making it the country`s premier mountain resort; and, with Bulgaria bidding for the 2014 Winter Olympics, is aiming even higher.
In summer, the town is one large building site, with developers cashing in and estate agents proliferating like rabbits. A shepherd herds his flock past a billboard advertising a new apartment block; yellow cranes point skywards with dark mountains beyond. Not every building, inevitably, is a work of art. But there is real excitement in the air. A Bulgarian ski resort has set its heart on becoming a European ski resort. Even the red wine in the restaurants is fabulous.
You can certainly see why Parc has made Bansko the focus of its Bulgarian operations. "There is nowhere else in the country with the same long-term potential," says Robert Lucy. "At the older European ski resorts, new development is mainly at the margins. Here, the whole town feels like a work in progress. They are doubling the number of slopes and putting in all the necessary infrastructure."
Location matters as much in Bansko as anywhere else, and Parc has collared one of the prime sites, between the old town and the mountains. There are fine views in every direction and, just as importantly for skiers, the site is close to the gondola.
There is some low-grade development in Bansko," says Peter Lowe of Parc. "But we are interested in the top end of the market, where there is enormous scope. Rooms at the best hotel in town cost €270 in high season, and there is 90 per cent occupancy even now."
St George`s Lodge, Parc`s flagship Bansko development, is due to be completed in early 2008. It is a five-star ski and leisure complex consisting of 148 residential units with a swimming pool, gym, sauna, shops and restaurants. Studios will cost about £52,000, one-bedroom apartments £69,000, two-bedroom apartments £105,000, and most of the units are likely to be bought off-plan.
With top-end property prices in Bulgaria rising by about 20 per cent a year, capital growth potential is considerable. Rental returns should be equally attractive, with one-bed apartments letting for around €500 a week in season. Even off-season, investors should do pretty well: there is an international jazz festival every August, two golf courses are being built and there is some terrific mountain walking to be had in the vicinity.
The investment arithmetic is enticing, but there is much more to Bansko than bean-counting. The old town, with its cobbled streets and weatherbeaten buildings, has a warm, welcoming ambience. A stork nests in the bell-tower of the old Orthodox church; children play under gnarled trees; the smell of grilled pork wafts from the door of a tavern. There is the sound of laughter and popping corks. It is not hard to imagine having fun here.
Unloved and unnoticed for so long, Bulgaria is on the threshold of exciting times.
Buying in Bulgaria
Currently, Bulgarian law forbids non-nationals from buying land, although they can own buildings. The standard way around this is to use a local lawyer to set up a company that owns the land, which costs less than £750; but the law is due to be changed before Bulgaria joins the EU in 2007.
Check whether the property is being sold with land, in which case you`ll need to form a company (see above).
Agree a final price with the owners and draw up an initial contract, allowing the property to be removed from the market.
Complete searches similar to those in the UK (title documents, licences, debts on the title and so on).
Sign a Notary Act (a purchase contract) in front of a Bulgarian notary public, and then the final legal contract.
Costs
Local tax of about two per cent of the purchase price. This is equivalent to UK stamp duty.
Notary`s fee, plus a few small fees for documents, totalling less than one per cent of the purchase price.
The total of these costs is invariably less than three per cent of the purchase price.
Ski`s the limit in Bansko
Simon Barbato and his wife Pamela have just bought a two-bedroom apartment off-plan in a new development in the ski resort of Bansko, at a cost of €98,000, through Manchester-based firm Bulgaria Revealed.
Keen skiers, Simon and Pamela at first thought of the French Alps when they decided to buy an investment property. But, says Simon: "France was so expensive that it was out of our reach - and apartments in the Alps are extra-small."
When a visit to Bulgaria was suggested by a holiday firm for which Simon was doing marketing work, he discovered the country`s potential. "I really appreciated how good the skiing was," he says, "and how good a ground-floor investment opportunity it was." Such a good opportunity, indeed, that he and Pamela have bought a place on the coast as well as the ski apartment in Bansko.
Just one visit was enough to decide what he wanted; after that, his house-hunting was mostly by internet and telephone. Once he`d found the right place and put down a reservation deposit, the purchase was painless. Bulgaria Revealed referred him to a Londonbased lawyer with an office in Sofia, and to a currency exchange firm that handled the money. "The whole process was extremely straightforward," he says.
He now has exactly what he was looking for: a spacious place close to the skiing, with potential for income from holiday lets. The development, Pirin Lodge, due to be completed in December, is just 300m from the ski-lifts. "The key things are being close to the gondola and having a relatively large apartment," he says. "We`ll be booking it ourselves, and for friends and family, for a proportion of the year, then renting it out. I think there is some summer resort potential in Bansko too."
Land of low costs and high hopes-online edition
