Bulgaria has been waiting to join the European Union for twelve years. In 1995, the country submitted an application, and five years later negotiations began. In 2005, an accession agreement was signed, and at the end of 2006, a final decision was made on the timing – the country will become a member of the EU on January 1, 2007.
Bulgaria had to achieve some success in order to join the European Union. First of all, in bringing legislation into line with the norms of European countries. In addition, Bulgaria has strengthened its fight against corruption and organized crime. By the time the country joins the EU, it must complete reforms in the agricultural sector, improve the state of air transportation, and resolve a number of other important issues. The receipt of monetary assistance from the European Union, as well as the degree of attractiveness of Bulgarian real estate for foreign investors, directly depends on the fulfillment of these obligations.
The Europeans set the tone
In 2005, foreign investors invested more than 320 million euros in Bulgarian real estate. Alexey Gubarev, Deputy General Director of Dao Real, says that until recently foreigners had distrust of Bulgarian developers, but today this stage is already over - many English families not only buy real estate, but also move to Bulgaria for permanent residence.
The quality of construction is growing every year, and this is due not only to compliance with European construction standards, but also to the need to offer more and more interesting high-quality offers to potential buyers. As Julia Antonova, an expert at the Obereg company, notes, over the past two years, our compatriots have also begun to be actively interested in Bulgarian real estate, and this is due not so much to pleasant memories of the "sixteenth republic", but rather to a country – a future member of the EU with a progressive economy and very great prospects.
The boom in the Bulgarian real estate market can be called exemplary – in 2004, housing in the country rose in price by 48%, in 2005 — by 36%, by the end of 2006, prices increased by about 54%, and these data are not yet final. In addition, Bulgaria entered the top ten fastest growing tourist destinations last year, which also stimulated price increases. The growth in demand for real estate was not least due to Bulgaria's upcoming accession to the EU – investors are willing to invest, realizing that in the near future many aspects of life in the country will meet European standards. Foreign investors believe that after the country's accession to the EU, the objects they purchased will rise in price even more.
European legislative standards
Bulgaria's accession to the EU promises not only an increase in prices, but also a change in real estate legislation. "In general, the purchase procedure will be simplified," says Yulia Antonova. "Moreover, the simplification will affect both the purchase of land and houses with land plots, which can now be made only for a legal entity."
The Parliamentary Commission has already approved amendments to the Constitution concerning the sale of land to foreigners. Since 2007, citizens of the EU and countries that have signed a bilateral agreement with Bulgaria will be able to purchase land here. The mandatory condition — permanent residence in Bulgaria — is valid only until 2014.
Thanks to EU accession, the country's credit system will be improved. Foreign citizens will have the opportunity to get more profitable mortgage loans when buying a home, but so far Bulgarian real estate sellers offer payment in installments for several years and loans, but at rather high interest rates (9-11 per annum). In addition, the situation will change with the length of stay of foreigners in the country, which will also be brought into line with pan-European standards.
CROATIA is next in line
The current rules presuppose the participation of no more than 27 countries in the EU. That's how many there will be on January 1, 2007. A further increase in their number will require organizational reforms - this could significantly delay Croatia's accession to the European Union, which has already been postponed once. In 2004, the country received the status of a candidate country, and in 2005 concluded a stabilization and association agreement with the EU. Analysts believe that the country will join the EU in 2009.
Investors are ready to take risks
The prospects of joining the EU contributed to the rise of the Croatian real estate market. Today, there is an active housing construction in the country. Investors — primarily Croatian and British — are buying up more or less interesting land plots, which may not be subject to development. By taking risks today, they will be rewarded many times in the future. Now there is a steady increase in real estate prices - by an average of 20% per year. "The price increase," says Elena Nevskaya from the Adriatika company, —began in 1997. But the post-war state was considered unstable and investors did not invest serious funds in it. Now the situation has changed radically, but the prices are already different. Today, Croatia is ahead of many areas of neighboring Italy in terms of infrastructure, transport, and trade development, however, prices are gradually approaching Italian ones."
New laws, additional guarantees
Croatia, like Bulgaria, is gradually bringing its legislation into line with the pan-European one. "The Croatian authorities," says Alexander Hripushin, Deputy General Director of Promet-Trans, "are improving the laws on the turnover of real estate. Land cadastres have been adopted, determining the status of land in all regions of Croatia. The sale of real estate objects that do not have a use permit is prohibited. This document is issued after checking the technical condition and compliance of the facility with the project."
More recently, the Croatian Ministry of Justice, not the Foreign Ministry, has been dealing with foreign investors. An electronic cadastre of property rights will be introduced soon. Since 2007, all real estate agencies in the country must have an authorized capital of 100,000 euros, and their employees must complete training and pass exams. All this will speed up and simplify the purchase procedure, as well as provide additional guarantees to investors.
The situation with the purchase of land by individuals is similar to the Bulgarian one. But with the accession to the EU, it must also change. The mortgage lending system is also awaiting reforms - in the future it will become available to foreigners.
New legislation, the most interesting objects for investment, fast construction time… All this attracts thousands of European investors to Croatia. Russians are still hardly noticeable against their background. It's a pity — they may miss a favorable moment.
MONTENEGRO is waiting for an invitation
Unlike Bulgaria and Croatia, their neighbor Montenegro is only approaching the first stage of joining the European Union. In mid-2006, following a referendum, Montenegro seceded from Serbia and gained independence. Negotiations with the EU on the conclusion of a Stabilization and Association Agreement soon resumed. In 2008, the country expects to become a candidate for membership, and in five to seven years - an EU member. To do this, she will have to carry out a number of reforms in the legal system, in public administration and security bodies, in the field of protection of human rights and freedoms. Already this year, the EU will give Montenegro a loan of 23 million euros to finance economic and social programs.
The country's independence and the course towards joining the EU did not come as a surprise to foreign buyers, due to which prices in the real estate market are rising - over the past two years they have increased by 65%. It should be noted that Russians occupy by no means the last place among investors - thousands of our compatriots already own housing in Montenegro.
Problems must be solved
Today Montenegro is doing everything possible to attract foreign capital. This also applies to the real estate market. According to the new law "On Foreign Investments", non-residents have equal rights to purchase real estate with residents of the country, and this applies to both individuals and legal entities. This law also protects foreign property owners in the country.
But there are also a number of constraints. Many are scared off by the fact that there is practically no mortgage in Montenegro. Another problem is that an individual can buy no more than five acres of land. The legal side of the issue is also lame. There is a possibility to buy a property whose construction permit has not been received. However, Montenegro's policy of attracting foreign capital and reforms aimed at gaining EU membership should solve these problems - the country will become more attractive to foreigners.
However, Montenegro's accession to the EU also has negative aspects for Russians. The rapid rise in real estate prices is unlikely to appeal to those who are saving money for a future purchase. Secondly, visa-free entry to Montenegro for Russians is likely to be canceled after joining the EU. Thirdly, Montenegro is switching to common European standards of financial activity and the offshore regime in the country has been practically eliminated. Therefore, experts advise foreign investors not to delay a minute.
Bulgaria, Croatia and Montenegro are among the most interesting countries for Russians to buy real estate in. Their attractiveness is growing every day - the quality of construction is increasing, legislation is being improved, and living conditions in the country are improving. But at the same time, prices are also rising, so the purchase of real estate should not be postponed until tomorrow. Bought today at a much higher pricebelow the average European, Balkan apartments will turn into extremely attractive European housing in a couple of years.
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