SMALL TOWN BLUES MELT AWAY

“Get to know Bulgaria so that you grow to love Sofia” was a popular saying in the Communist era. Foreigners can only understand its meaning if they lived in the country before 1989. But the unspoken message was clear: “Choose the capital if you want to enjoy a decent life, while the rest of Bulgaria is losers' territory”.

That kind of thinking is now obsolete because – as the latest data confirms – the sharp divide between capital and countryside is narrowing. Last year, investors started to take a keen interest in towns and regional centres, a trend that has gathered momentum.

Homeowners first noted the shift. At the beginning of this year many withdrew their properties from the market only to offer them again a few months later at a 20 to 30 percent mark-up.

Even in smaller towns the sale of modern buildings is booming, a trend cited by speculators as proof of the upsurge. Deeper diversification of the market – an interest in a range of properties and amenities – is now apparent in cities with populations of between 100,000 and 150,000. Previously, this was only evident in larger cities.

Quality, location and parking facilities have now become important factors when buying in even the smallest towns.

In terms of investment opportunities, smaller cities and towns can be divided into three categories: regional centres, towns near large resorts and spa towns.

REGIONAL CENTRES

Stara Zagora: Proud Leader

Stara Zagora, located 230 km from Sofia, has a population of 165,000 – and until recently it was an unattractive destination for buyers. But now it's the hottest investment spot, boasting this year's fastest growing prices. The turnaround is remarkable. Last year supply of properties was almost double that of demand and by this July there was virtual parity. In two years' time it's expected that demand will outstrip supply. When it comes to residential properties this is already the case, so triggering the price rises. Last year the price for a square metre of good residential property averaged 500 euros. Now it's 630 euros.

Shortage of office space is now a fact in Stara Zagora. The price for offices varies between 500 euros per square metre in older premises and 800 euros in prime location, class A buildings. The process of relocating the administrative and trade areas from the centre to the outskirts of the town, as in Sofia and other larger cities, has still not started, and investors are looking for offices mainly in the heart of Stara Zagora. The same applies to trade premises, except that – on account of the shortage – prices are much higher: anything from 800 to 1500 euros.

Veliko Tarnovo: Third in Line

Veliko Tarnovo – a regional centre in northern Bulgaria – is attractive to investors not so much for real estate in the town itself but more for its environs and nearby villages. Foreigners and Bulgarians purchase old houses and renovate them with the idea of providing accommodation for rural tourists. Typically, prices for such properties rarely exceed 20,000 euros for a house with a 500 square metre yard. An emerging trend for the region is investing in modestly sized but luxurious villas near Veliko Tarnovo.

Blagoevgrad: Runner-Up

Blagoevgrad, in south western Bulgaria, is following Stara Zagora's example and now boasts the country's second fastest rise in property prices. Highway E-79, one of the main arterial roads of Bulgaria (which bypasses Blagoevgrad), has been targeted by investors since the beginning of the year. Land prices near the motorway have increased by 50 percent on last year.

The city's business life has also become much livelier and consequently, the demand for trade and office space has increased. Limited supply has led to steep rises of up to 1,200-1,300 euros per square metre. The closer the land is to functioning trade outlets – like Technomarket, Metro or Mr Bricolage – the higher the price climbs. The cost of residential properties has also increased: by 12 percent this year. Currently, one square metre in Blagoevgrad's city centre fetches 900 euros, while elsewhere in the city it seldom exceeds 650 euros.

Near Large Resorts

Another category is that of smaller towns near large resorts. An example of such investment is Razlog – a town near the popular ski resort of Bansko. A few years ago nobody could place it on the map. Now, due to its proximity to Bansko, investors have besieged the town, targeting fully-furnished apartments priced at anything between 800 and 2,000 euros per square metre, depending on quality and location. A new golf course, currently under development, has also boosted Razlog's appeal. Property near the proposed course is available from between 1,300 and 2,200 euros per square metre. Bigger investors, however, have already focused on purchasing plots of land in and around the nearest villages, with the aim of starting new developments there. Prices for land near these villages are substantially lower than in Razlog and Bansko – 15 to 40 euros per square metre. The situation and the prices are similar in Samokov (near the ski resort Borovets) and Smolyan (near Pamporovo).

Spas and Small Towns

Sandanski, a town with 42,000 citizens, in the sunny southwest, is probably the country's most famous spa resort but it's also an administrative and trade centre. Being close to the Greek border – just 30 km, or 19 miles, away – small scale Greek investors have contributed the most to the rapid price rise in the region (eight to 10 percent during the first half of this year). These investors usually purchase residential properties (850-1300 euros per square metre), while larger purchasers are interested in developing ambitious projects near the town. This, in turn, has triggered a sharp growth in the area's land prices – from 20 to 80 euros, depending on location.

Among the other popular Bulgarian spa towns, the cheapest so far is Varshets. Prices are still low, but the town provides excellent potential for investment return. Plots in and around Varshets can be purchased for 20 to 40 euros per square metre. In Velingrad – one of the most luxurious spa towns – prices are among the highest in this sector with a square metre of land costing between 50 and 150 euros. In Hissar, investors have to pay from 40 to 100 euros and in Devin, 50 to 150.

These new real estate trends indicate that the Bulgarian property boom is far from over – it has simply moved to smaller cities and towns. So investigate those run-down rustic properties: they could prove to be a lucrative investment!

1) Average prices for residential properties in administrative centres, in euros per sq m
2) Average prices for residential properties in small towns located near large resorts, in euros per sq m
3) Average prices for living properties in spa towns, in euros per sq m