Innovative property investments
Investment Property in Bulgaria
Mountain Areas
Overview
Visitor draw
Bulgaria’s ski industry is booming and the government and the major private players seem to be succeeding in attracting a wide spectrum of tourists to the mountains.
Nevertheless, the market is still in its infancy relative to Alpine resorts and while visitor numbers are high and growing there is certainly no guarantee that the market can absorb the huge number of units under development.
Quality matters
In rental terms, therefore, once again it is the properties that stand out from the crowd, and those with tour-operator tie-ins, which should be first on the list for potential investors.
Short-term ski tenants tend to be less demanding in terms of accommodation than summer tourists as in general they spend less time actually in the property, so units are normally smaller and less well equipped than their coastal counterparts.
Nonetheless it is folly to buy ‘any old thing’ and expect it to perform well; buy superior-quality apartments a short ski away from a gondola or lift in an apartment block offering added extras like a spa or pool.
This also holds true for those looking to make money via capital appreciation.
Rental returns
One issue which is of great importance is the proportion of a mortgage which can be paid back through rental returns.
Unfortunately during the first phase of the ski zones’ emergence it was fairly easy to convince unwitting buyers that enough could be generated through rentals to pay for a property, including finance - even including a couple of weeks’ personal use.
This is palpably not true in all but the rarest of cases.
A handful of companies are offering mortgages for non-Bulgarian citizens, at rates of between 60 and 80%.
The ski rental season only lasts two to three months and as the ski resorts are marketed as a budget alternative to the Alps returns are correspondingly low - yields of between 5 and 10% are normally touted but the lower end of that scale is the norm and unless investors are willing to market their properties themselves it’s necessary to make further deductions for management and marketing costs.
Buyers also need to consider that over the next two years the number of completed units in Bansko, in particular, but at other resorts as well, is liable to increase much faster than the number of potential paying guests so it is sensible to budget for a much-reduced occupancy rate - perhaps as low as 50% over the season.
Investment purchases
Again, though, it’s important to emphasise that it’s still possible for individual investors to make money from the Bulgarian ski property market.
Buy a distinctive, well-located property with plenty of extras and your purchase should at least wash its face over time.
Bansko is the most hyped, and currently most developed, of the four major resorts and therefore the one with the most competition from a vendor’s point of view, but good locations are still available in the less advanced markets of Borovets and Pamporovo, while it’s possible to buy what could be classed as an urban ski property at the bottom of Vitosha.
Lifestyle purchases
For lifestyle buyers, again, such issues are less problematic, and Bulgaria is an excellent place in which to find an affordable ski home. Year-round facilities along Alpine lines shouldn’t be expected and it’s most probable that the majority of homes would only see use during the core winter season; lifestyle buyers should then weigh up whether it’s worth buying an entire property for a few weeks’ use each year. But at a tenth of the cost of its Alpine equivalent those few weeks each year in a Bulgarian ski property could actually work out as a great saving for regular skiers, and there’s always the capital growth to tip the balance.
Downloadable Reports and Documents
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