Bulgaria: See the light

As the cost of UK homes rises, Robert Nurden looks at investments further afield
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The Independent Online

The booming property market in Bulgaria has given first-time buyers struggling to get on to the housing ladder in Britain a slice of hope. A growing number of young professionals are investing in new-build apartments in the capital Sofia in the hope that appreciating values will eventually give them a platform for purchasing a property in this country.

With property prices growing at up to 30 per cent a year in Sofia, these nest-egg investments stand a good chance of hatching the necessary deposit in five years' time. "This is a totally new phenomenon," says Helen Disburry, sales manager at estate agents Barrasford and Bird. "These are pure investments by these young hopefuls. They see the rental income as just the icing on the cake."

Work has already started on its Monastery development in the foothills of Mount Vitosha, which overlooks the city. Two- bedroom apartments are going for £75,000 in the complex, which will have a gym, shops, pool, sauna and bar. According to Disburry, this upmarket scheme represents the start of a move away from "shoeboxes" and towards more stylish developments. And the complex's proximity to ski slopes - Bulgaria is bidding for the 2014 Winter Olympics - only adds to the investment potential.

Disburry adds that older British people are buying to boost their pensions, while others are "buying 10 apartments at a time, just like penny-chews", she said.

But for Robert Jenkin of Bulgarian Dreams, the centre of Sofia is where the real value lies. Prices in the suburbs are the same as in the centre, but worsening traffic jams are making the suburbs a less attractive prospect than they were two years ago. He says the country's "raging" economy is growing at 8 per cent a year. This is on a par with China, and the hub of this boom is Sofia itself. Add to that an unemployment rate of less than 3 per cent for the city, plus a rise of 20 per cent in incomes in the past two years, and you have a potent cocktail for pure investment.

"Because Sofia is not exposed to international tourism in the way that the coastal resorts of the Black Sea are, it is a stable market," says Jenkin. "It is now behaving like Warsaw and Bratislava, whose city centres experienced soaring property values a few years ago."

Unlike most parts of Europe, British investors are keen to buy new-build rather than crumbling homes for redevelopment. This is because old properties do not have efficient management structures in place, and there can be hassles over lifts, for example. Buyers prefer to start with a clean slate, with a built-in management agreement. Bulgarian Dreams' top-end Museum House development is £820 a square metre, with one-bedroom apartments at £57,000 and two-bedrooms at £79,000. They have gym, sauna and basement parking.

There are different reasons for investing in Varna, on the Black Sea. Because it is a tourist area, it is attracting buyers who are using their property both as a holiday home and as an investment. It is an attractive area, with beaches, parks, good shopping, extensive pedestrianisation, and several golf courses on the way. The port is expanding rapidly, and in March British Airways saw fit to start a direct service from London.

The top end boasts luxury that far exceeds that of Sofia, but there is a better range of properties, with a larger cheap end than the capital has. "There is a huge variety on offer," says Iliana Yordanova of Home Cottage Bulgaria, "and British people frequently come here to look at property for investment and end up living here for several months of the year or even moving here."

In the fashionable district of Trakata, a new two-storey, four-bedroom villa, with great sea views from the roof balcony and a plot of 400 square metres, is selling for £117,000.

There's one big city left: Plovdiv, the second largest in the country. Its property market remains Bulgaria's biggest secret, its charming cobbled old town completely untouched. But deep mutterings among agents suggest that it's there that Bulgaria's biggest bargains are now to be had.