Booming Bulgaria

In the wake of the EU’s announcement that its 27 members have seen just 1.7% year-on-year growth in Q2 2008 – a figure that reflects the wide-reaching effects of the global credit crunch – Bulgaria’s Minister of Energy and Economy, Mr Petar Dimitrov, predicts that his country is well on target for over 6% GDP growth in 2008.

Mr Dimitrov expects Bulgaria to grow between 6.2% and 6.5% this year, a figure that confirms the country’s buoyant economy. At a time when most of Europe is experiencing spectacular hikes in energy and fuel, Bulgaria has, according to Mr Dimitrov, the EU’s lowest electricity, petrol and diesel prices. Add to this the fact that Bulgaria’s measures to check inflation are showing effects – July’s year-on-year inflation rate saw the first drop in 12 months – and it is obvious that the Bulgarian government’s tight economic policies are starting to pay off.

At 14.5%, inflation is currently well above EU average (just over 4%), but the government is more than aware of this and working hard to bring the rate lower. The European Commission expects the rate to fall to under 10% by the end of the year, which suggests that government measures are working. And with the Bulgarian National Bank reserves reaching record levels of €13 billion in July and the government in possession of an impressive budget surplus, there are no signs that the Bulgarian economy is suffering negatively from high inflation.

Government tax revenues have also increased dramatically since both corporate and personal income tax rates were cut to a low 10% at the beginning of the year. “The cut in taxes has had a positive effect on the country’s budget surplus,” comments James Gonzalez, Market Analyst at Obelisk, “and shows the country is really starting to reap the rewards of its economic reforms.” James believes that the Bulgarian government’s next target will be the VAT rate, currently at 20%. “It is thought that the authorities may use the budget surplus to reduce this to 15%,” he comments.

A booming economy and lower tax rates are all good news for the property investor and unsurprisingly, Bulgaria’s property market continues to boom. The latest to see impressive capital gains are plots of land in the vecinity of the capital, Sofia. These have seen increases of between 10% and 15% just this year. Plots near Sofia are commanding prices of €60 to €70 per square metre with this amount rising to over €100 when it comes to plots with utilities and situated within a 15km to 20km radius of the capital. This interest in building land around Sofia reflects the city’s increasing population, boosted by migrant workers attracted to the capital’s employment prospects.

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Poland’s Spending Spree

Fresh on the heels of poor results for Q2 2008 GDP growth throughout most of Western Europe, Poland comes up trumps on several economic fronts, all of which confirm this former Eastern block’s potential for property investment.

Data released by Poland’s Central Statistical Office shows a huge increase in consumer demand. Year-on-year retail sales rose by a massive 14.2% from July 2007 to July 2008 confirming that the Polish population is exercising considerable spending power. One of the reasons behind Poland’s booming consumerism are higher salaries – wages generally have increased by 10% over the last 2 years.

Better wages reflect the improved job market in Poland where there are plenty of employment opportunities created by the booming economy. Poles who had previously relocated abroad, particularly to the UK and France, are now returning home in search of a better job and as a result, unemployment continues to fall consistently. The figure of 9.4% for July is the lowest since 1991 and this trend looks set to continue in the near future.

Figures for Poland’s GDP growth during Q2 have not yet been released and although analysts expect these to be slightly below those for Q1 (6.1%), they are forecast to be well on track for the Economist prediction of 5.4% for 2008 as a whole. Poland’s figures of 6.6% for 2007 were among the best in Europe and well ahead of most of its fellow EU members.

As well as a boom in consumer spending, another sign of Poland’s increasing wealth is its rising number of billionaires. Forbes reports that 6 out of Eastern Europe’s 16 new billionaires in 2008 come from Poland and 5 have the majority of their net worth tied to the Warsaw Stock Exchange. The WIG index saw gains of over 10% in 2007 after 4 years of increases in excess of 25%. Main traders of the Warsaw Stock Exchange include property developers, reflecting the country’s booming construction industry.

The combination of rising wages, falling unemployment and increased spending power mean the demand for housing continues to rise. Poland’s property market has seen some spectacular recent rises – Knight Frank reported a massive 22% in Q4 in 2007 – and although most experts predict more moderate increases for 2008 (between 5% and 10%), they forecast greater things for 2009 and beyond. Property is expected to boom on the back of EURO 2012, which Poland is co-hosting with Ukraine.

According to the Knight Frank Global House Price Index for Q1 2008, there is generally a shortage of houses throughout Poland meaning they are keeping their value. Moderate over-supply of apartments has led to some price drops, but with consumer spending on the up, this tendency is not expected to last. “The excellent economic figures recently issued by Poland show one of the healthiest economies in Europe,” comments James Gonzalez, Market Analyst at Obelisk.

To find out more about Obelisk’s property investment opportunities, contact Obelisk free on 0808 160 0670 (UK) or 1800 932 514 (IRE). Email: info@obeliskinternational.com or visit our website: http://www.obeliskinternational.com/.

For press enquiries, please contact Obelisk’s Marketing Department on (+34) 952 820 319 or email: press@obeliskinternational.com

Turkey Buying Ban Lifted

Investors in Turkey will be pleased to hear that the government has lifted its temporary suspension on the issue of title deeds to foreign nationals and foreign companies. The lifting of the ban means an end to the uncertainty for prospective investors and a return to normal in Land Registries across Turkey.

The background to the ban is the ruling in April by Turkey’s Constitutional Court that a section of Article 35 of the Title Deed Act (known as Tapu) was contrary to the Turkish constitution. The section in question primarily relates to property ownership by foreign companies and the government temporarily suspended the issuing of title deeds while they addressed concerns about large amounts of agricultural land being bought up by foreign companies. The Turkish government needed time to re-draft the law and according to legal experts, the issues surrounding the suspension were linked more to the amount of land that a foreigner could purchase, not whether they should or should not own property and land in Turkey.

New legislation was passed in mid-July and Turkish Land Registries restarted processing applications as of 18th July. The new law will not affect the majority of foreign investors who usually buy property in officially zoned areas around cities, town and holiday resorts. The law concerning the total amount of land which may be owned by foreign nationals and foreign companies is restricted to 2.5 hectares (25,000 square metres) and in any one town, the total area open to foreign ownership is 10% of the area subject to development plans. There are additional changes relating to foreign companies and Turkish companies with foreign shareholders. Essentially, foreign companies may not be used as a vehicle for Turkish property investment and Turkish companies with foreign shareholders may only purchase land for purposes connected with their business, as outlined in their articles of association.

The new law will be welcomed by investors as it will mean that applications for title deeds can get moving again and the changes are not expected to make any significant difference to individual foreign property investors. Turkey remains a popular investment and tourist location, especially now that the country is better served by low cost airlines, making access easier and more cost effective. The new law will reassure prospective investors looking for a good short, medium or long-term investment.

To find out more about Obelisk’s property investment opportunities, contact Obelisk free on 0808 160 0670 (UK) or 1800 932 514 (IRE). Email: info@obeliskinternational.com or visit our website: http://www.obeliskinternational.com.

For press enquiries, please contact Obelisk’s Marketing Department on (+34) 952 820 319 or email: press@obeliskinternational.com