The two newest members of the EU are the eastern European, former communist nations of Romania and Bulgaria; they joined the European Union on the 1st of January this year and prior to their entry there was huge speculation, especially among the British and Irish, about whether an investment made into the real estate property markets of either country was a good investment.
Now that both countries have joined the EU, and many have already made a commitment to invest in property in Bulgaria and Romania, it’s time to review their decisions and look at the future projections for new investors examining the prospects of the property markets in both countries.
Leading up to EU entry many investors sought to target property in Romania and Bulgaria because they had already witnessed the positive returns that other investors had derived in the property markets of previous entrants such as Hungary and Poland for example. As a result, Bulgaria in particular developed an active property market almost overnight. In fact it was completely due to EU accession that Romania and Bulgaria developed a property market at all, because if it was left to local demand to fuel the real estate sector neither country would have taken off.
This strong international demand for property stock in Bulgaria and Romania spiked the media’s interest and once the media became interested and began promoting the perceived financial benefits of investing in either nation, property investor interest surged even more. Meeting this demand for investment property stock was keen property developer activity, and because few restrictions were in place at that time (we’re talking 3 – 4 years ago), few regulations and restrictions were in place to prevent over development.
As a result certain areas such as Sunny Beach in Bulgaria are now over developed and many say spoiled, and property prices in these locations are now stagnant. Luckily the rest of Bulgaria and Romania has been protected from this over development with the benefit of hindsight, and so looking to the medium to longer term there is certainly room for property price expansion still.
Now that both Bulgaria and Romania are in the EU each will benefit from a period of investment which will help to improve some of the creaking infrastructure in both countries. The money will go towards such projects as road development and airport expansion meaning it will be easier to access and explore both countries which will boost tourism appeal. Additionally money is likely to be spent on renovating historic sites of interest as well as promoting the delights of both countries.
All this investment will hopefully boost the travel and tourism economy in Bulgaria and Romania and mean that investors have a growing market to let their real estate investments out to suggesting that not only is long term capital appreciation likely in both countries, but short to medium term rental yield is also possible making a return on investment quickly achievable.