1. Post-pandemic situation
The pandemic has had serious consequences in many economic sectors, but the rental property market saw a 41 % increase from May 2020 to April 2023. In the first quarter of 2023, the increase was 9 % and the trend continues. Investing in real estate therefore continues to offer exceptionally attractive investment return opportunities.
Average purchase price for a 2-room apartment in Sofia
A slight increase, around 0.2 %, in interest rates has occurred over the past year, but this increase comes after a long period of reduction in mortgage interest rates. Despite this increase, the solvency of households should generally be well maintained because in Bulgaria the debt ratio is much lower than in Western countries. Whether the client desires to buy a home to live in or to make a rental investment, the project currently offers several financial and tax advantages.
Trends 2023
While bankruptcies strike many businesses, which suffer the consequences of the pandemic, and inflation depreciates currencies, real estate investment offers all the more security in terms of financial investments. Rental yields should continue to be held up by the low cost of mortgages in 2023 and the search for fund shelters, the latter being gradually devalued by inflation.
2. Advantage of rental property investment
Average rental price for a 3-room apartment in Sofia
a. Stability, profitability and capital gain:
- Unlike stock market investments, real estate investments are less subject to changes in unstable economic situations. In addition, it is rare to see a property depreciate in the medium or long term, contrary to other investments. Rather, capital gains are anticipated. From May 2020 to April 2023, an average increase of 56 % in real estate prices in Sofia has been observed.
- In addition, with a rental property investment the client can benefit from a return of up to 7 %.
b. Increasing the client’s assets
- Rental investment is one of the most attractive ways to accumulate a durable portfolio of lasting assets, even for investors who do not have very high incomes. The leverage effect of credit and the Bulgaria’s low tax rates of 10 %, enable the development of a lucrative and long-lasting real estate portfolio.
- Real estate offers a much higher return on investment than that offered by the various monetary or financial products.
c. Safe investment
- Investing in real estate is much safer in times of economic instability.
- The investor’s funds are protected from inflation.
- In addition to the rental income, the investor benefits from capital gain.