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Real estate and business climate |
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The real estate sector in Bulgaria in 2004 and 2005 and the Real Estate Market Index (REMI) are given here. The real estate sector in Bulgaria reached incredible heights in 2004 and 2005, influenced by the interest among foreigners in buying property in this country, and by increased purchasing power of Bulgarians due to the low interest rates of the mortgage loans offered by the banks. Bulgaria is a country with extremely low real estate and building plot prices compared with the EU states.The real estate prices rose more than 20 per cent in 2004 and more than 30 per cent in 2005, and are expected to increase by an annual average of 10 to 15 per cent for the next few years.The independent property newsletter Hot Property Alert:“ Bulgarian real estate has enormous potential. ”In 1994 The National Real Property Association (NRPA) was established. For the first time a Real Estate Market Index was published in October 2002, which in March 2003 reached 104.37. The next figure represents the Real Estate Market Index (REMI) indicating the increase in property sales in Bulgaria.Real estate deals reached a record high in 2004, according to the statistics. Most of the buyers are from the UK. According to the BBC, some of the UK-based banks even lent loans for acquiring immovable in Bulgaria.The greatest interest shown is in villas and land at the Northern Black seaside. UK buyers are focusing on properties in Dobrich area, in the coastal town Kavarna, in Albena and Balchik resorts, in Golden Sands, St. Vlas and Elenite. In the inner part of the country the foreign buyers prefer properties near Veliko Tyrnovo town.The stable economy as well as the drive for a fast and smooth process leading to EU membership brought about an upsurge in Bulgarian economy, as well as a better investment rating for the country. Macro-economical indexes are stable: § Five year average GDP growth of 4.9%; § Budget surplus, low inflation, currency peg to EUR; § 80% private economy; § EU accession in 2007, NATO member; § Investment grade rating BBB by S&P and Fitch; § Foreign direct investment at 11.7% of GDP (EUR 2.3 bn in 2004); § The stock market has tripled in the last two years; Bulgaria is now recognized as having a functioning market economy. But Bulgaria’s business environment still doesn’t meet all requirements of the private sector. Moreover, a currency board was introduced in 1998 to stabilize the currency as the mechanism ties the performance of the lev to that of the EUR.But economic development in Bulgaria has shown positive trends in various areas, including tourism, the capital market, and the banking system. The degree of lending in the market, including of small loans, appears to be rapidly on the rise. Infrastructure is also steadily being improved, mainly thanks to EU funding.Bulgaria had made great progress in creating a non-discriminatory regime of national treatment for foreigners performing economic activities in Bulgaria. In late 2003, Parliament approved changes to the Foreign Investment Act, which aimed at treating domestic and foreign investors on an equal footing and reducing the time spent on administrative issues.As a conclusion, Bulgaria is a country, which has a lot of potential and with determined effort could overcome obstacles to an improved business environment.
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