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Anyone who has a vested interest in Bulgarian real estate will be keeping a keen eye on the developments with the euro over the next few months. The whole uncertainty over the future of the eurozone will inevitably result in a weaker euro so the question is how much longer can we expect the pound to be weak against the euro? Of course, it is difficult to expect this situation to last much longer especially with many analysts expecting a 2nd default in Greece and the Bank of England expected to increase interest rates by early 2012 at the latest. What this means is that this will make the pound more attractive to investors increasing its value and ultimately making it stronger than the euro again. This is important to know if you want to buy property in Bulgaria.
 
What does this mean for you?
 
A strong pound is not good news for anyone who want to sell property in Bulgaria which will be in euros. Let me illustrate with a simple example
 
Couple X bought a 1 bed apartment in Sunny Beach in 2005 for 50,000(EUR) when the rate was 1.45 euros to the pound. This meant that the couple actually paid 34,000(GBP). Today, that 1 bed would have an approximate resale valuation of 30,000(EUR) which would translate to 27,000(GBP). Not only has the market value of the property dropped but the pound has dropped in value also.
 
So let’s consider then what would happen if the pound recovered against the euro to say 1.3 to the Euro. The same apartment above would still sell for 30,000(EUR) (because that is its current market value) but would return only 23,000(GBP) to Couple X when converted to pounds. That’s a further 4,000(GBP) hole in their pocket. Or, again using this example, this couple could potentially be 17% worse off if they decided to hold onto their Bulgarian property if and tried to sell in 2012.
 
Conclusion
 
Worries over the Euro and the demand for bargain properties from Russians are just two major reasons which has led many foreign investors putting their properties on the market in Bulgaria in 2011. Here at Worldwide Group we can certainly testify to the very real nature of this Russian demand having concluded in excess of 100 deals to Russian buyers so far this year. This strong demand still exists, even post summer-season, although no agent would be naпve enough to believe that it can continue for years to come. Some experts even believe that 2011 has seen the plateau of Russian interest and predict a decline in demand will occur in 2012. Of course, it is difficult to predict anything with any degree of certainty but certainly we at Worldwide Group would advise anyone thinking of selling to carefully consider their options. If you are serious about selling ask yourself is it worth risking the wait until next year when Russian demand may be in decline and the very real possibility that a shift in the exchange rate could leave UK resellers worse off?