Property investments are considered one of the most valuable assets in any part of the world. The advantage is that real estate investment has appreciated in value over time. Those looking for opportunities in the property market in Bulgaria tend to be guided to off-plan purchases, due to the fact that the buyer is able to secure a property with a 10 to 30 per cent deposit and allocate the balance of the project through installment payments over 8 to 12 months until completion. This enables the buyer to gain capital growth on the full value of the property while only placing 10/30 per cent of the value invested (at the first stage). Thus, the investors put down a deposit on one or several apartments/villas, before or at the beginning of the construction, pay around 10/30 per cent of the price, generate the required balance of the investment over a year and then attempt to realize a quick return through re-selling them upon completion. There are several challenges arising from this:
1. Efficient allocation of the cash flows, as the total cost has not been placed at the beginning of the project, but allocated in a certain time-frame.
2. Opportunities to sell the finished unit at a profitable, and at the same time competitive price level, so long as the market value of the newly-built real estate is attractive and there are further increases up to the European levels.
3. Newly built real estates imply better infrastructure and services related to the new rules introduced recently. In the same context, the quality of construction in Bulgaria has improved considerably and the related authorization of property development is governed by a new level of control. Apart from this, construction technologies have advanced and the materials have been improved. According to the statistics, the volume of construction has doubled through the last year. In 2004, the foundation of some 5,780 housing and 440 administrative buildings were laid. This boom in green-field investment is seen as a result of the country’s economic stability over the past few years and also the forthcoming accession to the European Union.
4. Opportunity to adjust and re-arrange the key factors –like location, quality of design, quality of construction and facilities – to the desired preferences which will influence the value of the finished product, so the final scope of return will hopefully match your criteria.
5. The challenge of purchasing something you have seen on a blueprint rather than buying a building when construction has been completed.
In general, off-plan purchase attracts people tending to own multiple properties and as a green-field investment it is more affordable and flexible option of generating-allocating-return of investment, so long as when the time to sale comes the market place does not suffer an over-supply situation. Certainly, the strong economy and stability of the country is a major factor when looking to invest in the Bulgarian real estate market and currently levels of return are high.
