ARTICLES

Bulgaria tops property investment hotspots

Assetz News, 27th March 2006

The latest Property Investment Tracker from Assetz has found that Bulgaria is leading the way as an overseas hotspot.

While experts have been predicting for a number of years that Bulgaria will emerge as a leading choice for investors, Stuart Law, managing director of Assetz, has indicated that the new research firmly positions the country at the top of the chart.

With yields rising to 12 per cent and capital gains remaining impressive at 36 per cent, it is thought the total return on cash invested was 116 per cent last year.

This phenomenal statistic has pushed Bulgaria above Cyprus in the chart for total returns on cash invested, backing up the popular claim that Bulgaria is now comparable to Spain in the 1980s. For those looking for capital gains and those entering into the buy-to-let market, there is clearly huge potential.

Furthermore, while deposit levels are in the region of 30 per cent, they are largely accessible to investors because property prices in the country remain low, despite the speed of the growth. A typical two-bedroom apartment, for instance, will set you back only £80,000, which is partly why there has been such a staggering influx of foreign investors in recent years.

The Assetz research suggests that the steep incline in house price increases will level off to some extent before the year's end, but market growth is expected to remain high. The ski resorts of Bansko and Borovets continue to draw a huge amount of interest from property seekers, with significant construction projects now underway to accommodate the demand.

While Cyprus has dropped down into second place, it remains popular with property investors because of deposit levels as low as 15 per cent. Swiss and Franc mortgages are also available at a rate of just 3.25 per cent, which also aids the borrowing process.

According to the new research, capital growth will remain steady at 15 per cent, in addition to solid rental yields of eight per cent. While someway behind Bulgaria, an 84 per cent return on cash invested in Cyprus is certainly not a figure that can be ignored.

"Overseas markets are still offering excellent opportunities for investors, with Bulgaria and Cyprus now overtaking some of the more established destinations in terms of total return on cash invested," said Mr Law.

"However, investors should remember that high return is often associated with higher risk. Established locations such as France are still holding up extremely well against the competition, offering a total 68 per cent return on cash invested with an excellent holiday rentals market. With the low deposits requirement of just 15 per cent in France, the total return on cash is still exceptional at 68 per cent," he added.

This backs up a recent article for 999 Today by property developer Trisha Mason, who stressed that the stability and predictability of the French market makes it an ideal choice for investors looking for a safe bet.

Certainly not a safe bet at the moment, according to the latest Property Investment Tracker, is South Africa, where growth has slowed from 24.6 per cent to 15.8 per cent. With rising mortgage rates, Assetz remains concerned that the market is approaching a period of instability.

For future reference, Turkey may well be a sensible option, with legislation at the end of the year likely to allow mortgages for foreign investors. It is a move which is expected to boost house prices across the country and investors are advised to keep an eye on developments.

It is clearly Bulgaria that has stolen pole position, however, and Mr Law has said it is particularly wise to invest around the ski resorts.

"Cheap Bulgarian ski destinations are certainly in as much demand as quality resorts in the France Alps. However, for sunny destinations combined with quality investment returns I prefer the South of France and Southern Cyprus to the coastal resorts in Bulgaria," he observed.