Spotlight on Bulgaria: 11 drivers of investment

Though its scenery and culture mark the country as a must-visit destination, investors are increasingly attracted to Bulgaria’s commercial landscape. Its economic performance, for example, is forecast to remain robust in the run-up to 2030, while a host of business-friendly policies have been designed to attract and retain foreign capital.

In addition, geographical and cultural factors only add to the country’s appeal. Bulgaria is famed for its incredibly diverse terrain. Its Black Sea coastline, lake-filled mountains, hot springs, and its expansive Danube river create a destination like no other.

In light of this, we’re proud to have recently opened a dedicated office in Bulgaria’s capital, Sofia, and to celebrate its launch, we explore 12 drivers of investment in Bulgaria.

11 drivers of investment in Bulgaria

A member of the EU

Bulgaria is a member of both NATO and the EU, which it joined in January 2007, allowing it to benefit from EU infrastructure projects and funding. In fact, Bulgaria plans to invest €3.3bn in railway infrastructure by 2027, with the help of the EU – according to the state-owned National Railway Infrastructure Company (NRIC). Sofia is also undergoing an expansion of its metro system, supported by the EU.

As one of the least indebted EU states, Bulgaria plans to adopt the Euro by 2024, as recently reported by Reuters.

A resilient economy

Bulgaria had the second largest economy across the Balkans in 2020, sitting just behind Romania. Despite the impacts of the Covid-19 pandemic, the nation’s economy was relatively resilient compared to the overall Eurozone, seeing a smaller impact from the pandemic on GDP growth than the Eurozone average in 2020. In a bid to encourage further economic growth through cross-border capital investment, Bulgarian Government policy is focused on building a favourable business climate for foreign investors.

Good connectivity

Bulgaria has four major airports that are globally connected: Sofia International Airport (linking you directly to Naples, Rome, London, Munich, Copenhagen, Warsaw, Frankfurt, Istanbul, Paris and more) Plovdiv Airport, Varna Airport, and Burgas Airport, in addition to two major ports in Varna and Burgas, making it well-placed for both business and leisure-related travel.

A strategic location

As one of the largest countries in the Balkans, Bulgaria borders Romania to the north, Serbia and North Macedonia to the west, Greece and Turkey to the south, and the Black Sea to the east. It is considered a gateway to Europe, Russia, Turkey, the Middle East and the CIS countries on the intersection of Europe and Asia. For investors, business leaders and tourists, it’s a well-connected, strategic location.

Part of China’s Belt and Road Initiative

Bulgaria is also a part of China’s Belt and Road Initiative, which is a global infrastructure development strategy adopted by the Chinese government consisting of land corridors and maritime shipping lanes, spanning over nearly 70 countries. This will be attractive for joining routes with Bulgaria and abroad, in addition to supporting its logistics sector.

An active commercial real estate investment landscape

Over the past five years, annual CRE (commercial real estate) investment has averaged a total of €427m, with investors from South Africa, the UK, Russia, and Greece the largest sources of cross-border investment. As has been the case with many countries, investment slowed in 2020, with volumes moderating by 46%. However, the nation’s early signs of a promising rebound are a welcome sight for investors: investment is up +153% in H1 2021 compared to H1 2020.

A young and highly skilled workforce

Bulgaria has a young, mobile workforce that is multi-lingual and skilled in growing sectors such as IT and tech. As digitisation continues to evolve the way we work and live, Bulgaria is strongly positioned to capitalise on the demand for tech-enabled solutions and pioneer a way forward.

Sofia University is also situated in the nation’s capital which is home to 21,725 full time education students, according to The World University Ranking and is UN sustainable development goal benchmarked (SDG). 79% of graduates from universities in Bulgaria were in full time employment in 2020, according to Eurostat compared to the Euro area average of 78% of graduates in employment.

Low unemployment

Often an indicator of a thriving business landscape, in the run-up to the pandemic, Bulgaria’s unemployment rate was at an historic low of 4.2%. Unemployment has since increased to 5.1%, due to the impact of Covid-19 and is forecast to stabilise at 6.3% by 2025. However, this remains markedly below the country’s long-term average unemployment rate of 10.2% as well as below the Eurozone’s projected unemployment rate of 7.5% by 2025.

Above average GDP growth

In addition to relative resilience through the pandemic, Bulgaria’s GDP growth outlook also exceeds the Eurozone’s benchmark GDP growth in every year until 2030, apart from 2022. Over the next five years, GDP is expected to grow by +4.3% in 2021, +4.0% in 2022, +2.9% in 2023, 1.9% in 2024 and +1.5% in 2025.

A strong tourism sector

With a beautiful coastline fringed with summer resorts, world-class beaches and a mountain range punctuated with established ski resorts, Bulgaria’s tourism sector is a holistic one, catering to all tastes and attracting plenty of attention from around the world.

Attractive residency by investment options

Bulgaria offers permanent residency through an investment of (at time of writing) €512,000 into a choice of investment funds which are required to be held for a period of five years, providing a potential opportunity for investors hoping to call the country home.

Find out more about Knight Frank's presence and capabilities in Bulgaria and how we can help you with cross-sector investment opportunities.

Sources: Knight Frank, Oxford Economics, Real Capital Analytics