Sofia braced for ‘big boom’?

An expert explains why Sofia is currently an excellent investment destination…

According to Neil Lewis, CEO of Property Secrets, Sofia is currently at the beginning of a long-term growth curve and a ‘big boom’ is still ahead of the city. He also believes that now is an ideal time to invest in Sofia: “Excellent capital growth is probably Sofia's strongest attraction at the moment, especially when we consider that several of those markets that experienced ultra growth are now slowing to more sustainable rates.

”Plus, Sofia's market is healthy where the share of foreign investors doesn't exceed 25% and some developers set a limit on apartments that can be bought by non-owner occupiers.

”The rental market in the city is relatively undeveloped, but it is likely it will pick up after the initial burst of capital growth slows down and decreasing affordability forces many potential buyers to rent instead of buying. But that isn't going to happen just yet. There are, of course, always exceptions, but this is a market investors should target primarily for capital growth.

Favourable tax situation

Mr Lewis continued: “Rising interest rates are an indirect result of the credit crunch, but we believe this is a temporary trend and shows the government's willingness to target inflation. Interest rates in Bulgaria are set to keep the country's currency tightly pegged to the euro.

”The mortgage market is fairly developed for investors, especially when put in the context of an emerging market. LTVs of 70-80% are available and choice of products is good. Along with standard repayment mortgages, self-certification and re-mortgaging is also possible.

”An encouraging fact for investors is the favourable tax situation in Bulgaria. Capital gains tax is taxed at 15% while rental income is taxed as personal income at a rate of 10% .