Market analysis on real estate in Bulgaria
● For a number of years, the economic development with a minimum of 4% growth, is on the rise. The salaries grow correspondingly, whereby people on the average level, have significantly more to spend than 5 years ago. They enter the real estate market in a higher segment.
● There is now a shortage of highly educated people and in the field of technology, particularly industry and construction. This inflates the growth of salaries. As a result, there is an increased demand for real estate in the higher segment.
● This shortage of highly educated people is partly caused by the departure of about 2 million people to Western Europe. These people have, in the last ten years, been able to save for their retirement. Their savings currently earn no interest at the banks. A good alternative is to invest their money in real estate in Bulgaria, where prices are still relatively low. This results in a higher demand.
● Currently borrowing money has never been so inexpensive. For a 20-30 year mortgage rate fixation, a percentage of 4% is attainable.
● Within two years Bulgaria will join the euro zone, which is also going to be a huge accelerator of economic growth and appreciation of real estate on A-locations or higher. Investors can get a good return in the next ten years, in particular those who currently dare to step in.
Consider above when purchasing Holiday House in Varna
Holiday House Varna consists of two independent single family homes with all the amenities available for permanent inhabitance.
The apartments are situated on a AA-location with regard to:
1. Location in an economic hotspot within Bulgaria
2. Distance to the sea and beach i.e. 800 mtr, distance from public transport - 400 mtr and distance to the City Center which is approx. 7 km (10 minutes by car)
3. Panoramic view of the garden, coastline and the Black Sea
4. Sense of security and privacy
5. Quiet location but not isolated
6. Beautiful garden with many leisure facilities
8. Located in an expansion area for detached houses in the higher segment
9. House is easily accessible even though the road over the last 200 meters, is unpaved
On the basis of the above analysis but also on the basis of historical experience in Western Europe, we can to draw the conclusion that the value of real estate in the coming 20-30 years minimum, is going to triple.
Current investors can now, with a relatively small risk, get a good return on the real estate market.
It is insignificant for an investor whether the House is purchased for €230,000 or €270,000. The value of the property will rise in a period of 20-30 years to approximately €800,000.--. (see above conclusion)
Financing by means of mortgage
Important aspect is whether the investor obtains a loan or uses own resources.
A mortgage can usually be obtained from commercial banks if two conditions are met:
1. There is about 20% equity
2. Can the borrower meet the medium-term payment obligation?
With an investment of €270,000 to meet condition 1,
an equity contribution of 20% of €270,000 = € 54,000.-
The loan amount is then €270,000 – €54,000 = €216,000.-
Mortgage amount: €216,000
Mortgage term 30 years
30 year rate fixation
Interest rate 4%
Above incurs a monthly interest rate payment of: €372,-
Monthly payment on loan is (no cost): €600,-
Gross monthly payment: €972,-
The House is purchased for private occupation. (1) property purchased by, for instance, the parents of the buyer and the buyer. We refer to this as a "Kangaroo" situation. The younger generation takes care of the older, without loss of privacy.
The above calculation shows that a buyer and resident of one of the two houses with a monthly payment of €922,- after 30 years, become 100% owners of two homes on a plot of 996 m2 on a AA-location.
The equity (investment) will then be higher than €800,000.-.
Of course, 1 or 2 cottages can be rented out at a current market-based price of € 5.50/m2.
Rental property 1 is: 100 m2 x € 5.50/m2 = € 550/month (rental income)
Rental property 2 is: 110 m2 x € 5.50/m2 = € 605/month (rental income)
The above calculation also shows that an investor, renting two houses and a monthly yield of €183,- after 30 years, is 100% owner of two homes on a plot of 996 m2 on a AA-location.
The equity (investment) will then be higher than €800,000.-
Are you interested in this property?
To introduce you to the house? Spend a holiday period in one of the apartments.
Do you have questions? Send your inquiry through the contact page.