For prospective property buyers, the beauty and mystique of an exotic locale may seduce, but beyond the poetry of a landscape, there can be many practical complications for buyers like Rachel Gawith, who put down a deposit on a property in Bansko, Bulgaria and wound up engaged in a legal dispute with the agent who sold her the property. Despite this and other setbacks, Gawith has created a substantial Bulgarian portfolio property and currently advises potential investors in Bulgaria about the same difficulties she confronted.

On June 9th Guardian Unlimited carried a thought provoking article by Nikolai Chavdarov about the influx of UK investors in the property market of his native Bulgaria (A New Place in the Sun ). Taking as his starting point the results of the market survey by the Association of International Property Professionals (AIPP) on where UK citizens are buying property abroad, which ranked Bulgaria third after Spain and France, he raises important questions about the country spoiled by indiscriminate development and, by inference, the soundness of the investments that property purchasers are making.

Although, as the AIPP says, the growth in interest in Bulgaria has been extraordinary, their survey is for one year only – 2006. Total direct overseas property investment by UK citizens they estimate to have been in the region of £20bn with Bulgaria receiving 7.7% of that or £1.54bn. It’s worth noting that Spain and France between them accounted for about 50% of the total level of investment. It’s also important to remember that both these countries have long been favourites for property investments by the British.

The significance of British interest in Bulgaria becomes starker when one considers the level of overall investment in Bulgarian property, which BulgarianProperty.com estimated at 5bn Euros in 2006. The proportion of this investment being made by UK citizens is indeed massive, especially when one considers that the number of households of UK citizens in Bulgaria only passed the one thousand mark last year.

On a positive note, there has been an encouraging increase in UK tourism to Bulgaria (up 12% last year on 2005 statistics with about 425,000 visitors). Another attractive feature of the Bulgarian property market has been good rental values in both the residential and commercial sectors. However, rental yields are likely to decline as property prices rise and it is also important to consider location and the quality of building work when gauging rental potential. In the future, the true health of the property market may be evidenced by a robust market in holiday lettings for better off Western Europeans.