Net foreign direct investment inflows surged 53 per cent year-on-year to 3.2 billion euro in January-October while the annualised current account (CA) gap expanded to 14.7 per cent of GDP as of October 2006.

The net inflow of FDI more than offset the negative trade balance, rising 53 per cent to 3.2 billion euro over January-October, or 19 per cent above the CA deficit for the same period, according to Bulgarian National Bank preliminary data. About 53 per cent of all FDI inflow in January-October was reported as equity participation, seven per cent as reinvested profits and the remaining 40 per cent was assigned to other forms of capital transfers, including internal financing from foreign parent companies to local subsidiaries.

FDI breakdown by industry shows that nearly 50 per cent of this year’s non-debt inflows were directed to purchases of real estate or construction projects.

The consumer price index (CPI) grew by 6.1 per cent y/y in November, accelerating from 5.7 per cent y/y in October and 5.6 per cent y/y in September, according to National Statistical Institute (NSI) data. The CPI, however, remained below the period average of 7.3 per cent y/y in January-October and was still much lower overall than 2006’s inflation peak of 8.8 per cent y/y in February.

The speed-up in November was caused by the groups of food and non-food products and restaurant prices, while the group of services has a disinflation effect. On an annual basis, about 50 per cent of the inflation has been generated by excise tax hikes for tobacco and alcohol products that came into effect in the beginning of 2006.

The price index of just 2.6 per cent y/y in the service group for November was quite encouraging for the potential of Bulgaria to meet the price criterion for adoption of the euro, which is based on the harmonised index of European Union and has a much bigger exposure to services than the local consumption weights. Inflation, however, continues to pose risks on the ambition of the central bank and the Government to adopt the euro by 2010, while all other criteria look easily achievable.

The CA deficit widened by 50 per cent y/y in October to 525 million and 69 per cent y/y to 2.67 billion euro in January-October, according to NSI preliminary data. The 12-month CA gap for the period ending in October increased to 14.7 per cent of GDP estimates for the same period, relative to 14.3 per cent a month earlier. Worse performance was recorded in all major groups of the CA balance, as the merchandise trade deficit continued to increase while the positive net inflows for service, income and current transfers narrowed.

Nevertheless, the overall balance of payments remained on a big surplus in the period January-October due to strong inflows of FDIs, which significantly exceeded the CA deficit. Debt-related inflows as well as unidentified transfers booked in errors and omissions also contributed to the large surplus in the balance of payments in January-October and October alone.

SofiaEcho

In Soviet times, Bulgaria was a cheap, if not always cheerful, option for Russian tourists looking for a seaside vacation. Decades later, the country’s improved infrastructure and potential European Union membership, all amid a familiar Slavic setting, is tempting Russians to invest in Bulgarian property.

One of the newest destinations on the international real estate market, Bulgaria is appealing to Russians not just for its pleasant climate and cultural affinity, but also because of low prices. For example, a small resort apartment sells for as little as $35,000, a price tag that is inconceivable in Western Europe.

The market in Bulgaria was especially lively last year, said Darya Pushkaryova, a representative of Best Active, a company specializing in real estate in Bulgaria and other European countries.

Last year, prices grew by 30 to 40 percent, but they have leveled out since then after an explosion in development swamped the market with a supply of new properties.

Though no longer the hottest destination in terms of investment, Bulgaria’s prices are still low among other resorts with developed infrastructure.

Russians with relatively modest means are increasingly seeing property in Bulgaria as potential summer homes, said Kim Waddup, the director of the International Property Show, which took place in Moscow last month.

“The market of international real estate is finally moving because affordable options are drawing in more Russians. … Not only the wealthiest businessmen looking for luxury property,” Waddup said.

“I spoke with two retired university professors recently, who were looking at an apartment in Bulgaria,” he said.

“These days, going to Bulgaria takes as long as driving to your dacha that is four hours away.”

This year, there were 14 Bulgarian real estate firms at the International Property Show. This is a marked change on the 2004 show, when none of the 34 firms present were from Eastern Europe, but from more traditional investment choices like England and Spain.

“Right now, more people are buying property in Bulgaria to keep for themselves, rather than to invest, since Bulgarian prices are not growing as rapidly as those of Montenegro, for example,” Pushkaryova said.

Another destination that is extremely popular, Montenegro has a less-developed infrastructure, and attracts people who enjoy Balkan rural landscapes more than the condos that spring up across ex-Soviet Bulgaria.

Bulgaria’s current bid to host the 2014 Winter Olympics, however, is creating interesting opportunities in the country’s ski resort properties, where developing infrastructure is driving up the price, Pushkaryova said, and Bulgaria’s imminent EU membership will continue to push up prices.

What is more, owning property in Bulgaria also entitles the proprietor to residency rights. Russians, who usually need to go through the bureaucratic hassle of visa applications to visit Europe, will certainly bear this mind when considering real estate investments abroad.

The St Petersburg Times

Bulgaria has been named as one of the best countries in which to invest this year, in a recent report by FC Exchange. Its findings were based on a number of indicators including its economy, the strength of its currency and the supply and demand already present in its market. The report shows Bulgaria as a strong contender in the overseas real estate market, catching up the present market leaders.

Bulgaria has been named as one of the best countries in which to invest this year, according to a report by UK-based commercial currency brokerage FC Exchange. In its report, the company employed several indicators to choose the best destinations for investment, including the countries’ individual economies, the strength of their currencies, and the levels of supply and demand already in each market, which in turn affects prices and availability.

Bulgaria’s investment potential for the coming year is attributed to several factors: the low prices compared to other European markets which are attracting buyers; and extensive World Bank funding which has gone into significant improvements to the country’s infrastructure and investment in its tourism industry.

Potential investors are advised to look out for tell-tale signs of an up-and-coming investment area; promising indicators include the presence of small, independent businesses such as restaurants, cafes, shops and estate agents, that typically signify the arrival of well-off locals to the area.

SofiaEcho

The lack of industrial, retail and storage area properties in Bulgaria’s coastal city of Varna would make the area near Varna airport a property market hit, Real Estate Association of Varna said as quoted by Dnevnik daily. Areas there featured unoccupied agriculture plots, close to the city and to the roads, Dnevnik said. Several investors that would create working places were interested in the area.

The region could become a huge industrial complex in the forthcoming years, Dnevnik said. The region was the best one in Bulgaria regarding transport connections. An airport, a port, a railway station, a ferry complex and two highways were located nearby.

Nearly 50 per cent of the properties near Varna airport were for sale. Most of the sites were located on both sides of Hemus highway an were rather big, from 6000 to 25 000 sq m. The highest price was 52 euro per sq m. The average price in October 2006 varied from 30 to 45 euro per sq m.

Dnevnik Daily 

Office property prices in Bulgaria’s coastal city of Varna reached more than 2300 euro a sq m, Dnevnik daily reported.

Offices in Varna were the most expensive in Bulgaria, imoti.bg data showed.

Price of property in the city centre raised by 20 per cent if compared to the prices for 2005. The cheapest offices in Varna’s most prestigious part costed 20 500 euro, or 661 euro a sq m, Dnevnik said.

A number of houses near the city centre were destroyed in the past several years and office and residential buildings were constructed.

Offices in construction in the centre of Varna costed from 850 to 1000 euro a sq m. Such property suffered from the lack of parking places.

Experts said that the office property demand would be focused on the big trade complexes in 2007.

Dnevnik Newspaper 

The Parliament was considering a move from forbidding foreigners to own property in the country to some special regulations.

Changes feature in ownership regulations, discussed on first reading on December 7. Voting on the new laws would take place on December 8, Bulgarian National Radio reported.

Such changes were needed because of Bulgaria’s upcoming EU entry. The country accepted EU requirements for the free movement of capital.

Foreigners will be allowed to purchase property in Bulgaria, following international contracts. This would guarantee the opening of Bulgaria’s property market upon the country’s EU entry, the national radio said.

Bulgaria is going to introduce a new term ‘citizen of EU member state’ to replace the term ‘foreigner’ used until present in ownership regulations, the report said.

The same regulations would apply to citizens of countries that are members of the European Economic Community and of Lichtenstein, Norway and Iceland.

Current regulations for the acquisition of a second home would remain valid for citizens of EU member countries, who reside permanently in Bulgaria, the report said.

Current regulations for the purchase of property by international organisations will remain unchanged.