Why Invest in Bulgaria?

Rental and Investment Opportunity

Now has never been a better time to invest in Bulgaria, with recent times having seen record property sales registered. Holiday apartments in Bulgaria's Black Sea and Mountain Ski Resorts have increased by up to 40% in the 12 months to Dec 2004. Forecasters expect prices will continue to increase 20%-30% annually until 2007 at least (the year of EU accession for Bulgaria).

Bulgaria’s tourism sector is well established and has recently become one of the fastest growing tourist destinations in Europe. The number of tourists visiting Bulgaria is expected to reach 4.4m in 2005 and as tourism continues to grow exponentially, rental opportunities for the right property are high.

The country has a number of unique features in its favour

Macroeconomic stability:

• Political and economic stability
• Sustained GDP growth of 4.7-4.9 % per year
• The currency is stable and linked to the Euro
• NATO membership achieved in 2004
• Rapid economic growth ahead of EU membership
• EU membership set for 1 January 2007
• Very competitive labour cost compared to the rest of Europe
• Very competitive tax regime - 15% corporate profit tax as of 1 January 2005
• Well educated, highly trained English speaking workforce
• Strategic geographic location
• Full national treatment of foreign investment

Top tourist destination:

• Established and fast growing tourist industry
• Bulgaria voted No. 4 tourist destination worldwide by The Washington Post
• Budget airlines expected to start servicing the Black Sea coast from mid-2007 or 2008
• Bulgaria is a 2.5 hour flight from the UK direct and once Low Cost airlines start to operate there watch the country open up and demand soar
• 22% average annual growth of tourist arrivals for 2002 – 2004
• 43% year-on-year increase in British tourists for 2003
• Well developed and constantly improving summer resorts
• Excellent skiing opportunities with guaranteed winter snowfall
• Unbeatable prices guaranteeing best value for money holidays
• 1600 thermal mineral water springs
• Rich historical and cultural heritage
• Easy access from Europe

Booming real estate sector:

• Bulgaria on the agenda of top European real estate investment funds
• All properties we sell have a 10 year building guarantee
• All properties we sell are freehold
• Rapidly emerging property market
• Bulgarian property prices are rising but are still below other comparable countries, the major boom is yet to happen there
• Bulgaria has yet to see the spiralling property prices that have typified areas such as Spain, France and Greece
• 25% price growth in the last 12 months
• Still lowest real estate prices in Europe
• Dramatic increase in demand for quality accommodation at Bulgarian resorts
• Strong drive for property purchase from Bulgarians living abroad

Buying Off Plan

Buying an ‘off plan’ apartment in Bulgaria is essentially the same as buying in the UK and means reserving a property on a new development before the property is completed, often before construction has started. Buying ‘off-plan’ can prove a fantastic investment and prices are extremely competitive at this early stage as potential investors only have floor plans and artist impressions of the finished development to view and developers are keen to sell to minimize risk and to provide the project with some forward momentum.

You then have the option of selling straight away upon completion for a profit, or you can hold on to your property for further rental/ capital growth whilst having a great holiday destination to visit. Holding on to the property for a longer-term means you can benefit from Bulgaria’s expected accession to the EU in 2007 where considerable appreciation is expected throughout the Bulgarian real estate market, with holiday apartments expected to lead the way and appreciate the most in value.

'Off Plan' purchases have provided spectacular returns for hundreds of people over the last couple of years. The real key to why buying 'Off Plan' can prove such a good investment lies in the fact that in many cases you only have to pay initially a deposit as low as between 10% - 25% of the purchase price and then nothing until various stages of the project are completed.

Why should I invest in Bulgaria?

For capital appreciation and low cost of entry. Also, secondary consideration has to be, the people and the country. We have seen gains for our clients of 30-40% in the past 9 months without exception. Current average cost per square meter of 800-1000 Euro for key developments in Sunny Beach and Sofia will also result in good gains over the next 12-24 months.

Where should I invest?

What are your reasons for wanting to buy? –Investment only or a mix of holiday/investment? Sunny Beach remains the best beach holiday resort in Bulgaria. In terms of skiing, look to Bansko, Borovets and the upmarket Pamporovo. Remember, it will be possible by end of 2005 to reach the beach resorts in Northern Greece from Pamporovo. Sofia, as the capital, is worth it from the investment point of view for buy to let.

Stage payments

It is normal practice. Expect normal payment of 15 to 30% down with 3 X 20% stage payments and 10% to 25% at title deed stage. Some developers ask for more up front.

Why Stage payments?

Bank loans are not available to developers so, they use the stage payments to fund the complex. Obviously, the larger developers are not totally dependent on selling all the apartments prior to commencement of development.

Why so much emphasis on Sunny Beach & Varna Golden Sands?

The best beach resorts in Bulgaria located are here. There is a very well developed infrastructure. Close to Bourgas and Varna airports. In general, developments are sympathetic and are the best opportunity for renting your apartment.

What about ski resorts?

Bansko is the only one of the ski resorts not purpose built. It is a lovely old town that attracts tourists in winter and summer. Although not the best developed of the 3 resorts, it will be the one where most money will be invested over the next 3 years. Only 2 hours from Sofia and a great jazz festival during August every year .Borovets is starting to get the first apartment developments and Pamporovo is the most exclusive of all the ski resorts and very beautiful.

Buying apartment

Do I need to setup company? No, is the short answer. However, buying houses or land and you will need to Set-up Company. Cost for company setup is approx. 600 Euro with annual return every year not to exceed 200 Euro.

Property Tax

Property tax is paid annually based on 0.15% of the property value.

What about country areas?

Bulgaria is a very large country with lowest level of new births in Europe and mass exodus to the main cities. It has probably the most beautiful countryside in Europe with breathtaking landscapes. Buy in country areas if you never want to rent. Houses can be very cheap but, please check the area first.

Should I wait until 2006/2007 to invest?

Absolutely not! The market will show gains in 2007-2009 for sure. However, the large gains are to be made up to 2007. Remember, we sell developments today off plans that will not be ready until July 2006.

With incomes of 200 Euro/month how can locals buy apartments?

Don’t believe all you read about salaries. The largest purchasers in Sofia and Black Sea are locals.

Why should I purchase from you?

We try to be as impartial as possible. We match the client to location and apartment complex. We constantly follow up with clients and remain main point of focus throughout the process. We are a total provider with furniture/ letting and resale’s. Finally, knowledge of Bulgaria remains one of our key strengths.

Why not villas, why all apartments?

We are starting to see villa developments for release. Check our website for latest offerings

Why Arrow Property International?

As a team of professionals, our Bulgarian Property Consultants will do everything possible to satisfy our client’s needs and to provide the best possible service. Our most important goal is to supply complete and comprehensive service. In the process of doing so we present to you our services:

• Property investment consulting
• Property management
• Research of the property you intend to purchase
• Registering a limited company for you
• Interior and exterior solutions
• Help in the process of choosing and purchasing furniture and equipment
• Advertise and sell your property

We will assist you all the way; If you need advice regarding your stay in Bulgaria, how to get medical assistance, buy a car, arrange a holiday or go out to a bar or restaurant - we will be there for you!

Viewing /Inspection Tours

We offer accompanied and unaccompanied tours, whichever suits your needs. If it is your intention to travel to Bulgaria under your own arrangements we can assist with hotel bookings, car hire etc. and arrange to meet you are show you our properties

We also offer a tour package that includes airfare, accommodation and transportation to view the properties to all areas, with the help of our staff. Just contact us for our up to date schedule. Please note that these trips book up very quickly so try and give us as much notice as you can

Varna International Airport and Bourgas International Airport

The importance of these seaside airports sharply increases during the summer months. They handle significant traffic of incoming tourists from Western Europe and Russia going for their summer vacation. They cover the main markets of the UK, Germany, Scandinavia and Russia. Out of season demand sharply drops and arranging a direct flight to the seaside becomes more difficult, but still possible, especially to Varna.

Shuttles and regular bus services are readily available between Bourgas and Varna (2 hours) and the resorts in between. Such services are also at your disposal should you want to visit the resorts south of Bourgas or north of Varna. Again, transportation is reliable.

Bulgaria is about two and a half hour flight from the UK direct. A number of Bulgarian and foreign airlines fly to Bulgarian airports from most capitals of Europe, Africa, Middle East and North America. Two scheduled airlines currently fly direct to Sofia once a day; most other major European carriers fly indirectly.

Bulgarian International airports are at Sofia and on the Black Sea Coast at Bourgas and Varna. Some chartered flights also land at Plovdiv and Gorna Oryahovitsa. Direct international flights are available to the capital, Sofia, all year round. Direct charter flights to the Black Sea (Varna/Bourgas) are available during the spring/summer months and can be booked through local UK travel agents.

Varna Airport (VAR) is 9km (5.5 miles) from the city of Varna. Bus service to Varna city centre departs every 20 minutes. Bourgas Airport (BOJ) is 13km (8 miles) from the city. Bus service departs every 20 minutes to the city centre.

There are also several international Bus stations where all international busses arrive and you can use a rail transport too. Although there are no direct rail services between Bulgaria and Western Europe there are frequent services between Sofia and Belgrade, Bucharest, Thessalonica and Istanbul.

Reaching Bulgaria by car is also convenient. Travelling by car you must enter at an official border point (those with Romania, e.g. Vidin, Oryahovo, Rousse probably being the most convenient). When entering you have to present a document of ownership over your car, if such ownership is not explicitly shown on the documents of its registration. You must also declare your exit crossing and pay the corresponding tax. Speed limits in Bulgaria apply on all public roads - 50 km/h in populated areas, 90 km/h outside towns and villages, 120 km/h on motorways.

There are also sea and river connections through the Black Sea and the Danube River however most of these are cruises rather than regular services. The official crossing point into Romania by ferry is from Vidin to Calafat. The two main international ports are Varna and Bourgas.

Payment Structure

PAYMENT TERMS (typical)

2000 Euro Reservation Deposit
40 % upon signing a Preliminary Contract of Sale
40 % in two or three payments until the completion of Complex
20 % upon completion/signing Title Deeds

RESERVATION DEPOSIT

This needs to be paid as soon as you find the property to take the property off the market and the fix the price as property is selling very quickly.

Deposit is payable by travellers cheques, cash or bank transfer. Developers, lawyers and agents do not accept take credit cards.

When you pay the reservation fee our lawyer will open a bank account for you in Bulgarian bank.

PRICES

he prices quoted for Bulgaria include VAT

All properties are freehold

No need to incorporate a Bulgarian company unless buying a villa with its own land

10 YEAR BUILDING GUARANTEE

All new build properties in Bulgaria come with ten years building guarantee. The Bulgarian national standards require this. This is written in all Preliminary Contracts.

PAYMENT PROTECTION

Most of the developers work with banks that finance the building works of the development. However some companies have other financial sources but now the construction business in Bulgaria is very lucrative and all developers are abiding the contracts they sign in order to keep a good reputation because they plan to launch many new projects.

I can assure you that nevertheless our lawyers check all their companies' documents very strictly and we make every effort to protect the buyers.

In Bulgaria there are not such bank and insurance policy guarantees but as we are joining EU in 2007 this practice should be introduced soon.

LEGAL FEES & TAXES

Local taxes and notary fees total approximately 5% of the Notary price (property tax value) As in many countries in the Balkan region the Notary price is based on a local tax evaluation conducted by the municipality, which is usually four times lower than the price paid.

Some of the developments share the cost 50/50 with the purchaser. As such clients should budget a maximum of 3% in addition to their purchase price. In cases where the municipality places lower Notary prices, these taxes are obviously much less.