In the Beginning...
The inauguration of Bulgaria's property rise neatly coincides with Bulgaria's courting of the European Union for eventual membership status in the new face of Europe. In large part, when subject to scrutiny, the reasons for the property boom is clearly a combination of potential EU membership driving an economy to grow exponentially with the aim to be on par with its EU neighbours, in conjunction with a tourism market that was established long before Bulgaria debuted on international property market maps. Bulgaria's property market is therefore dependent on the country's success in becoming and EU member in the short term and on the development of the tourism industry in the long term.

The Role of EU Membership in the Bulgaria Property Market
Having signed the EU accession treaty in 2005 and commencing and completing a number of reforms to comply with EU requirements, Bulgaria has successfully bolstered its property market. EU memberships is scheduled for 2007 or 2008, dependent on Bulgaria's ability to mitigate the amount of upper-level corruption by establishing and enforcing stronger laws and punitive measures for such crimes. With EU membership all but certain, in under 2 years, the next logical question is, 'what lies in the through the cloud beyond EU membership?' The answer: In all likelihood, the achievement of EU membership will propel the property market further in its current direction for a while afterwards while the market continues to adjust to new standards. While this is all speculative, consider the facts:

- While Bulgaria's prices have been steadily increasing in tandem with GDP and inflation, prices of securities, commodities and property are not yet up to the rest of Europe's popular tourist destinations
- Even with approximately four (4) million tourists visiting Bulgarian annually (2005) after a 50% increase since 2001, studies prove that the majority of Europeans avoid Bulgaria for the sole fact that it's not yet part of the EU and thus has not yet earned their trust and security.
- If a correction occurred shortly after EU membership it would be very short lived because the overwhelming majority of Bulgarians cannot afford the properties that many Europeans and Americans can buy in multiples. If a dip occurred the only people to sell to would be the large amount of foreigners that have not yet enjoyed the splendour of the market, benefiting from a new dip in prices and fuelling the next rise.

The Symbiosis of the Tourism Industry and Property Market
Bulgaria's tourism industry has existed even through the communist error. While it may initially seem like a strange fact to many propaganda enriched westerners, upon further consideration it's quite logical: even former soviet communists enjoy beaches, skiing and mountain vistas and Bulgaria's geographic location (same latitude as the French Riviera) featuring mountains, valleys and beaches in a area of 1/5 that of France lends itself perfectly to the holiday image.

When the property boom began, the already mature tourism industry began a second stride that has already overshadowed the first (1970s) by being the primary residual beneficiary of property craze success. Hotels in the three largest beach resorts, Sunny Beach, Golden Sands and Albena (in descending order) began to multiply like crocuses in an open meadow during early spring. Many of Bulgaria's largest companies at the time of this writing are hotel companies with properties in the beach resorts. With growing diversity in the consistently expanding tourist population, tourism in Bulgaria is feeding the property market directly through the purchase of land and property for ever more hotels and villas for rent combined with a substantial volume of impressionable middle class foreigners who are looking for a decent means of securing their ticket to the good life.

While the future of any type of market can only be based on speculation, the Bulgarian property market still shows many signs of increase and more importantly is building a price foundation for support. The support provided by the tourism industry and foreign investment in Bulgaria help to mitigate the chances of near immediate correction after EU membership is obtained. What remains to be seen is when these supporting pillars will be insufficient to abate the inevitable balancing correction that is surely on the distant horizon, and how those already invested will employ their resources to profit from the redistribution process.

Karim J A Brathwaite
Varna, Bulgaria
www.investmentsinbulgaria.com
email: brathwka@novaluxe.com