How does a mountain area investment compare with coastal properties?
“Significant differences yet again. Until recently, most of the investment was flooding into the northern Black Sea coast resorts, from Varna down to Sunny Beach. The area became very popular as a result of the Bulgarian government’s ‘Bulgaria the Beautiful’ TV campaign back in the ‘80s, and the subsequent interest of package tour operators. Now that the north is saturated with developments, the interest has begun to creep down the coast. This is causing a steep rise in property values. They are still lower than those in the north, but the gap is closing. An investment in the south should therefore offer a better ROI.
‘Don’t expect, though, the ambience of the south to become like that of the north. When I discussed the subject with the Chairman of the Bulgarian Foreign Investment Agency last year – an extremely intelligent and able young man, I must add – he told me in no uncertain terms that he did not want the south to become like the north. His very words were: “We don’t want another Benidorm.” So, prospective property purchasers need to bear this in mind, and balance their desire for more capital growth, or their willingness to accept less, with the different rental market appeal of the two regions, along with their own taste in holidays.
‘There is one highly significant factor, however, which very often goes unnoticed until it is too late; and it applies to the whole coast. Most people don’t know that it freezes on the coast in winter. When they see the coastal resorts basking in the hot summer sunshine, it’s difficult to imagine snow on the ground. The entire coast simply shuts down in the winter, and nothing happens. It’s as dead as a doornail. Therefore, rental income can be fairly assured for 15 weeks, possibly 20, plus some odd bits in the shoulder seasons of April and October. The coast has a five-month season from May to September, compared to nine months in the ski areas. Those people buying only for rental income, therefore, would find the mountains far more lucrative.
‘ ‘The Times’ recently published an article, saying: “Rental yields tend to be better for ski properties than those on the coast because of the longer ski season. You could expect about 12 per cent gross yield for a good ski apartment and about half that on the coast.”
‘Rents vary greatly, and depend on many factors, most of which should be obvious: location, size, view, amenities. The standard of finish and the condition of the property can also determine your market quite radically. To appeal to west Europeans, and to command the highest rents, your property must be well finished and appointed, and be in tip-top condition. If it is not, you still have a market for east Europeans, who tolerate less salubrious surroundings because they pay much less, usually about half of the west European rates.
‘Generally, summer rental rates on the coast equate to winter rates in the ski resorts, both seasons being about five months. Remember that you also have about four months’ additional rent, though at lower rates, during the summer in the mountains. These rates should increase gradually, as the Government programmes to make the ski towns more popular for summer holidays make their mark.
‘There are several Bulgarian agencies willing to manage your rental properties for you. Expect to pay about 20% of the rent as a fee.”
What about properties in the countryside?
“Not a serious contender in the ROI stakes, I think. Not if you consider the effort involved. You can pick up property very cheaply indeed in the inland areas, away from the resorts. Almost always it’ll need some kind of work; anything from a face-lift to demolition. There’s often no inner staircase to the bedrooms, no bathroom, and the toilet is in a shed in the garden. This kind of property is great for buyers who want to get away from their homeland, and disappear in the beauty of nature permanently. As a business, it could appeal to self-builders or DIY enthusiasts, prepared to do it for fun, and accept a low return on their financial and physical investment. As for rental income, forget it!”
And the cities?
“Again, there are differences, even between cities. The prime city is, of course, Sofia, the capital. Buy the right apartment here, in the right area, and you can expect a guaranteed rental return of about 12% per annum. The flavour of the month is gated communities, particularly in the south of the city. The diplomatic residential district of Vitosha is one of the best bets. There is a ready demand for luxury accommodation from diplomatic staff and executives seconded by foreign companies, usually on a long-term basis, and this demand should increase as 2007, the year of Bulgaria’s accession to the European Union, approaches. Although you should expect to pay high for such properties by Bulgarian standards, it’s still only the price of a tarted-up Victorian terraced flat in a UK provincial town.
‘There’s virtually no market for tourist rentals in Sofia, as it’s probably the least interesting European capital city. It’s also very polluted, although they are trying to clean up their act, ready for EU entry in 2007.
Plovdiv, the country’s second city, is much more pleasant. It has a quaint old town, as well as modern business districts. It therefore bridges the gap between business and tourism, as far as rentals are concerned. Plovdiv is connected to Sofia by an excellent motorway, on which you can keep the pedal to the metal, if you’re prepared to risk an on-the-spot fine of 50 Leva (about £18).
‘Veliko Tarnovo is probably Bulgaria’s most touristic city, with its citadel and mediaeval ramparts. Most people who buy property here do so to make it their main home. The city itself is beautiful, and it has everything a townie needs. Drive a short distance, and you’re in some wonderful countryside. You couldn’t really make a good living from rentals, but it’s the perfect place to retire to.
‘There’s one more thing which is important enough to mention: Mineral baths. These exist all over Bulgaria, the most significant being at Narechen, south of Plovdiv, and Momin Prohod, near Kostenets. Scientific studies rank Bulgaria among the foremost in Europe for hydrothermal, bioclimatic and mud treatments, sea cures and other health resources. Bulgaria is a world leader with its exceptional diversity of medicinal herbs and the excellent curative properties of its apian products. Any property near a spa should attract a premium to its sales or rental value.”
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Mountain And Coast 
